This annual report on Form 10-K (this “Report”)
contains forward-looking statements, which reflect our current views with respect to future events and financial performance, and
any other statements of a future or forward-looking nature, constitute "forward-looking statements" for the purpose of
the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management's
expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential,"
"predict," "project," "should," "would" and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may
include, for example, statements about:
The forward-looking statements contained
in this annual report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential
effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading "Risk Factors". Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from
those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
You should read this annual report on Form
10-K with the understanding that our actual future results, levels of activity, performance and events and circumstances may be
materially different from what we expect.
ITEM
1. BUSINESS
General
We are a Delaware corporation formed for
the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, recapitalization or other
similar business combination with one or more businesses, which we refer to throughout this Report as our initial business combination.
We will seek to capitalize on the significant
experience and contacts of our management team to complete our initial business combination. Although we may pursue our initial
business combination in any business, industry or geographic location, we currently intend to focus on opportunities to capitalize
on the ability of our management team, particularly our executive officers, to identify, acquire and operate a business in the
industrial technology, transportation and smart mobility industries, which we believe has many potential target businesses. Following
our initial business combination, our objective will be to implement or support the acquired business' growth and operating strategies.
Over the last several years, there has been
an increase in private equity and venture backed capital invested in the automotive/transportation technology sector. Global venture
capital funding in the transportation industry increased from less than $1 billion in 2012 to approximately $16 billion in 2016,
according to a 2017 Crunchbase report. However, there have been relatively few initial public offerings of business in this industry
in recent years, with only 20 initial public offerings of automotive businesses in the past five years based on a data screen obtained
from Capital IQ that only considered non-over-the-counter automotive initial public offerings and spin-offs in North America with
an enterprise value of greater than $50.0 million. We believe that these trends provide opportunities for us to identify private
businesses that would benefit from a public listing and access to the public capital markets, as well as our management team's
deep experience in these industries.
We believe that our management team is well
positioned to identify attractive businesses within the industrial technology, automotive and smart mobility industries that would
benefit from access to the public markets and the skills of our management team. Our objective is to consummate our initial business
combination with such a business and enhance stockholder value by helping it to identify and recruit management, identify and complete
additional acquisitions, implement operational improvements, and expand its product offerings and geographic footprint. We intend
to utilize our management team's experience and contacts in these industries to achieve this objective. We believe many businesses
in the industrial technology, automotive and smart mobility industries could benefit from access to the public markets but have
been unable to do so due to a number of factors, including the time it takes to conduct a traditional initial public offering,
market volatility and pricing uncertainty. We intend to focus on evaluating more established companies with leading competitive
positions, strong management teams and strong long-term potential for growth and profitability.
Stephen Girsky, our President and Chief Executive
Officer, is a Managing Partner of VectoIQ, LLC, an independent advisory firm based in New York. Mr. Girsky has more than 30 years
of experience working with corporate board executives, labor leaders, OEM leaders, suppliers, dealers and national policy makers.
Mr. Girsky served in a number of capacities at General Motors from November 2009 until July 2014, including Vice Chairman, having
responsibility for global corporate strategy, new business development, global product planning and program management, global
connected consumer/OnStar, and GM Ventures LLC, Global Research & Development and Global Purchasing and Supply Chain. Mr. Girsky
served as Chairman of the Adam Opel AG Supervisory Board from November 2011 to January 2014 and was President of GM Europe from
July 2012 to March 2013. He also served on General Motors' Board of Directors following its emergence from bankruptcy in June 2009
until June 2016. Mr. Girsky has also served as president of Centerbridge Industrial Partners, an affiliate of Centerbridge Partners,
LP and a multibillion dollar investment fund, from 2006 to 2009. Prior to Centerbridge, Mr. Girsky served as Special Advisor to
the Chief Executive Officer and Chief Financial Officer of General Motors from 2005 to 2006, and prior to that Mr. Girsky served
as managing director at Morgan Stanley and as senior analyst of the Morgan Stanley Global Automotive and Auto Parts Research Team.
Mr. Girsky currently serves on the Boards of Directors of United States Steel Corporation (NYSE: X) and Brookfield Business Partners
Limited, the general partner of Brookfield Business Partners, L.P. (NYSE: BBU; TSX BBU.UN), as well as three private companies,
drive.ai, Valens Semiconductor and Millstein & Co.
Mary Chan, our Chief Operating Officer, is
a Managing Partner of VectoIQ, LLC. Ms. Chan joined General Motors in 2012 as President, Global Connected Consumer. In that role,
she was responsible for building the next generation of connected vehicle product and services. Prior to General Motors, Ms. Chan
worked at Dell Inc., where she was Senior Vice President and General Manager of Enterprise Mobility Solutions & Services from
2009 to 2012. At Dell, she was responsible for developing Consumer PC/Gaming products and Enterprise Mobility Application services.
Prior to Dell, with over 20 years of wireless infrastructure experience she was the EVP/President Global Wireless Network Group
at Alcatel-Lucent and SVP of Wireless R&D at Lucent Technologies Inc. Ms. Chan currently serves on the Boards of Directors
of Magna International Inc. (NYSE: MGA), Dialog Semiconductor PLC (ETR: DLG), SBA Communications Corporation (Nasdaq: SBAC) and
Microelectronics Technology Inc. (TPE: 2314).
Steve Shindler, our Chief Financial Officer,
is a Director of NII Holdings, Inc., a provider of differentiated mobile communications services for businesses and high value
consumers in Latin America. Mr. Shindler served as Chief Executive Officer of NII from 2012 until August of 2017 as well as from
2000 to 2008. As Chief Executive Officer, Mr. Shindler successfully transformed NII from a start-up operation into a leading wireless
provider with nearly 11.5 million subscribers. In recent years Mr. Shindler has overseen a financial restructuring of the company
that has included sales of its core businesses in Mexico, Peru, Argentina and Chile. Mr. Shindler joined Nextel Communications,
Inc. in 1996 as Executive Vice President and Chief Financial Officer. Prior to joining Nextel, Mr. Shindler was Managing Director
of Communications Finance at The Toronto Dominion Bank, one of the largest suppliers of capital to the wireless industry. Mr. Shindler
is also a founding partner of RIME Communications Capital, a firm that has invested in early stage media, tech and telcocompanies.
The past performance of the members of our
management team or their affiliates is not a guarantee that we will be able to identify a suitable candidate for our initial business
combination or of success with respect to any business combination we may consummate. You should not rely on the historical record
of the performance of our management or any of their affiliates' performance as indicative of our future performance. None of
our officers or directors has had any experience with any blank check companies in the past.
Proposed Business Combination
Business
Combination Agreement
On March 2, 2020, we entered into a business
combination agreement (the “Business Combination Agreement”) with VCTIQ Merger Sub Corp., a Delaware corporation and
wholly-owned subsidiary of our Company (“Merger Sub”), and Nikola Corporation, a Delaware corporation (“Nikola”),
pursuant to which we will effect a business combination with Nikola (the “Proposed Transaction”).
Pursuant to the Business Combination Agreement,
at the closing of the Proposed Transaction (the “Closing”), Merger Sub will be merged with and into Nikola (the “Merger”),
with Nikola surviving the Merger as a wholly-owned direct subsidiary of us. Immediately prior to the effective time of the Merger
(the “Effective Time”), Nikola will cause the shares of Nikola’s preferred stock issued and outstanding immediately
prior to the Effective Time to be automatically converted into shares of Nikola common stock, and each converted share of Nikola
preferred stock will no longer be outstanding and will cease to exist. At the Effective Time, by virtue of the Merger, all shares
of Nikola common stock issued and outstanding immediately prior to the Effective Time will be canceled and converted into the right
to receive the number of shares of our common stock equal to the exchange ratio of 1.901 set forth in the Business Combination
Agreement (the “Exchange Ratio”). Each Nikola stock option that is outstanding immediately prior to the Effective Time,
whether vested or unvested, will be converted into an option to purchase a number of shares of our common stock equal to the product
(rounded down to the nearest whole number) of (i) the number of shares of Nikola common stock subject to such option immediately
prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent)
equal to (A) the exercise price per share of such option immediately prior to the Effective Time divided by (B) the Exchange Ratio.
The Closing is subject to certain conditions,
including but not limited to the approval of our stockholders and Nikola’s stockholders of the Business Combination Agreement.
The Business Combination Agreement may also be terminated by either party under certain circumstances. Nikola has agreed to customary
“no shop” obligations subject to a customary “fiduciary out,” and Nikola would be required to pay a termination
fee in the amount of $82 million if the Business Combination Agreement is terminated under certain circumstances.
The Closing will occur as promptly as practicable,
but in no event later than three business days following the satisfaction or waiver of all of the closing conditions contained
in the Business Combination Agreement. If, by May 1, 2020, we and Nikola determine that that the Closing is unlikely to be consummated
on or before May 18, 2020, then we will take all actions necessary to obtain the approval of our stockholders to extend our deadline
to consummate our initial business combination to a date after such date but prior to August 31, 2020 in accordance with our amended
and restated certificate of incorporation.
Stockholder Support Agreement
Also on March 2, 2020, certain stockholders
of Nikola holding the votes necessary to approve the Proposed Transaction entered into a Stockholder Support Agreement with us
(the “Stockholder Support Agreement”), pursuant to which such stockholders agreed to vote all of their shares of Nikola
capital stock in favor of the approval and adoption of the Proposed Transaction. Additionally, such stockholders agreed not to
(i) transfer any of their shares of Nikola capital stock (or enter into any arrangement with respect thereto) or (ii) enter into
any voting arrangement that is inconsistent with the Stockholder Support Agreement.
Registration Rights and Lock-Up Agreement
Pursuant
to the Business Combination Agreement and as a condition to the Closing, we, certain persons and entities holding our founder shares
and private units (the “Original Holders”) and certain stockholders of Nikola (the “New Holders”
and, collectively with the Original Holders, the “Holders”) will enter into a Registration Rights and Lock-Up Agreement
at the Closing (the “Registration Rights and Lock-Up Agreement”). Pursuant to the terms of the Registration Rights
and Lock-Up Agreement, we will be obligated to file a registration statement to register the resale of certain securities of VectoIQ
held by the Holders. In addition, pursuant to the terms of the Registration Rights and Lock-Up Agreement and subject to certain
requirements and customary conditions, including with regard to the number of demand rights that may be exercised, the Holders
may demand at any time or from time to time, that we file a registration statement on Form S-3 (or on Form S-1 if Form S-3 is not
available) to register our securities held by such Holders. The Registration Rights and Lock-Up Agreement will also provide the
Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions.
The Registration Rights and Lock-Up Agreement
further provides for the securities of VectoIQ held by the Holders to be locked-up for a period of time following the Closing,
as described below, subject to certain exceptions. The securities held by the Original Holders will be locked-up for one year following
the Closing, subject to earlier release if (i) the reported last sale price of our common stock equals or exceeds $12.00 per share
(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after the Closing or (ii) if we consummate a liquidation, merger, stock
exchange or other similar transaction after the Closing which results in all of our stockholders having the right to exchange their
shares of common stock for cash, securities or other property. The securities held by the New Holders, other than certain entities
controlled by Trevor Milton, the current Chief Executive Officer of Nikola, will be locked-up for 180 days after the Closing. The
securities held by certain entities controlled by Trevor Milton will be locked up for one year following the Closing, except that
they would be permitted to sell or otherwise transfer an aggregate of $70.0 million shares of our common stock commencing 180 days
after the Closing.
Subscription Agreements
In
connection with the execution of the Business Combination Agreement, effective as of March 2, 2020, we entered into separate
subscription agreements (each, a “Subscription Agreement”) with a number of investors (each a “Subscriber”),
pursuant to which the Subscribers agreed to purchase, and we agreed to sell to the Subscribers, an aggregate of 52,500,000 shares
of our common stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of
$525 million, in a private placement (the “PIPE”).
The closing of the sale of the PIPE Shares
pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent
consummation of the Proposed Transaction. The purpose of the PIPE is to raise additional capital for use by the combined company
following the Closing.
Pursuant to the Subscription Agreements,
we granted certain registration rights to the Subscribers, including our agreement that, within 45 calendar days after the Closing
(the “Filing Deadline”), we will file with the SEC a registration statement registering the resale of the PIPE Shares
(the “Resale Registration Statement”), and will use our commercially reasonable efforts to have the Resale Registration
Statement declared effective as soon as practicable after the filing thereof. Under certain circumstances described in the Subscription
Agreements, including if the Resale Registration Statement has not been filed with the SEC by the Filing Deadline, additional
payments by us may be assessed with respect to the PIPE Shares The additional payments by us would accrue on the applicable registrable
securities at a rate of 0.5% of the aggregate purchase price paid for such registrable securities per month, subject to certain
terms and limitations (including a cap of 5.0% of the aggregate purchase price).
Business Strategy
Our business strategy is to identify and
complete our initial business combination with a company that complements the experience of our management team and can benefit
from our management team's expertise. Our selection process is expected to leverage our management team's contacts in the industrial
technology, automotive and smart mobility industries globally, which we believe will provide us with access to attractive business
combination opportunities in these industries. Our management team has experience:
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managing and operating businesses in the industrial technology, automotive and smart mobility industries;
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developing and growing companies, both organically and through acquisitions and investments;
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evaluating and managing the growth of new products and technologies;
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identifying, recruiting and mentoring management personnel;
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sourcing, structuring, acquiring and selling businesses;
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fostering relationships with sellers, capital providers and target management teams; and
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accessing the capital markets across various business cycles.
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Following the completion of our initial public
offering, we began the process of communicating with the network of relationships of our management team and their affiliates to
articulate the parameters for our search for a potential target initial business combination and began the process of pursuing
and reviewing potential opportunities.
Business Combination Criteria
Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses and, in
evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other
things, meetings with incumbent management and employees, document reviews and inspection of facilities, as applicable, as well
as a review of financial and other information that will be made available to us. We intend 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 or guidelines.
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Focus on industrial technology, transportation and smart mobility business positioned to benefit from our management team's
extensive experience and contacts in these sectors. We believe our strategy leverages our management team's distinctive background
and vast network of industry leaders in the target industry.
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Emphasis on companies that can benefit from a public listing and access to the public capital markets. We will primarily seek
a target that we believe will benefit from being publicly traded and will be able to effectively utilize the broader access to
capital and the public profile that are associated with being a publicly traded company.
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We will target businesses that are market leaders, with established technologies and attractive financial metrics and/or prospects,
where we believe that our industry expertise and relationships can be used to create opportunities for value creation, whether
for acquisitions, capital investments in organic growth opportunities or in generating greater operating efficiencies. While this
may include business with a history of revenue growth and profitability, we may also target businesses that are underperforming
that that we believe can benefit from our expertise and/or technology.
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We intend to seek target businesses that have established management teams, but that we believe could benefit from the industry
experience and contacts of our management.
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Middle-market businesses. We believe targeting businesses in the middle market will provide the greatest number of opportunities
for investment and will maximize the collective network of our management team.
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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 team may deem relevant. In the event
that we decide to enter into our initial business combination with a target business that does not meet the above criteria and
guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related
to our initial business combination, which, would be in the form of proxy solicitation materials or tender offer documents that
we would file with the SEC.
Competitive Strengths
We believe we have the following competitive
strengths:
Status as a Public Company
We believe our structure will make us an
attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other business combination. In this situation, the owners of the
target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares
of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses
might find this method a more certain and cost-effective method to becoming a public company than the typical initial public offering.
In a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts
that will likely not be present to the same extent in connection with a business combination with us. Furthermore, once the business
combination is consummated, 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, that could prevent the offering
from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of
providing management incentives consistent with stockholders' interests than it would have as a privately-held company. It can
offer further benefits by augmenting a company's profile among potential new customers and vendors and aid in attracting talented
employees. However, there is currently no market for our securities and a market for our securities may not develop. As a result,
this purported benefit may not be realized.
While we believe that our status as a public
company will make us an attractive business partner, some potential target businesses may view the inherent limitations in our
status as a blank check company as a deterrent and may prefer to effect a business combination with a more established entity
or with a private company. These inherent limitations include limitations on our available financial resources, which may be inferior
to those of other entities pursuing the acquisition of similar target businesses; the requirement that we seek stockholder approval
of a business combination or conduct a tender offer in relation thereto, which may delay the consummation of a transaction; and
the existence of our outstanding warrants, which may represent a source of future dilution.
Financial Position and Flexibility
With funds available for a business combination
in the amount of $238,333,632 as of December 31, 2019, assuming no redemptions, and the possibility of further supplementing this
amount with the proceeds from a $25,000,000 contingent forward purchase agreement, we can offer a target business a variety of
options to facilitate a business combination and fund future expansion and growth of its business. Because we are able to consummate
a business combination using the cash proceeds from our initial public offering, our share capital, debt or a combination of the
foregoing, we have the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target
business to address the needs of the parties. However, if a business combination requires us to use substantially all of our cash
to pay for the purchase price, we may need to arrange third party financing to help fund our business combination. Since we have
no specific business combination under consideration, we have not taken any steps to secure third party financing. Accordingly,
our flexibility in structuring a business combination may be subject to these constraints.
Initial Business Combination
General
We are not presently engaged in, and we will
not engage in, any operations for an indefinite period of time. 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 units, the forward purchase securities
(if any), our common and preferred equity (if any), new debt, or a combination of these, as the consideration to be paid in effecting
a business combination which has not yet been identified. Accordingly, investors in our securities are investing without first
having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination
may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires
to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking
a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various federal
and state securities laws. In the alternative, we may seek to consummate 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, although we will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal operations.
We will have until 24 months from the closing
of our initial public offering, or May 18, 2020, to consummate an initial business combination. If we are unable to consummate
our initial business combination within the applicable time period, we will, as promptly as reasonably possible but not more than
ten business days thereafter, redeem the public shares for a pro rata portion of the funds held in the trust account and 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.
Subject to our officers' and directors' pre-existing
fiduciary duties and the limitation that a target business have an aggregate fair market value of at least 80% of the balance in
the trust account (excluding any taxes payable on interest earned) at the time of the execution of a definitive agreement for our
initial business combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying
and selecting a prospective acquisition candidate. Except for the general criteria and guidelines set forth above under the caption
"Business Strategy," we have not established any other specific attributes or criteria (financial or otherwise) for prospective
target businesses. To the extent we effect a business combination with a financially unstable company or an entity in its early
stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous
risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although
our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will
properly ascertain or assess all significant risk factors.
Sources of Target Businesses
We believe based on our combined team's business knowledge and past experience that there are numerous acquisition
candidates. We expect that our principal means of identifying potential target businesses will be through the extensive contacts
and relationships of our management team. While our founders, executive officers and directors are not required to commit any specific
amount of time in identifying or performing due diligence on potential target businesses, our founders, executive officers and
directors believe that the relationships they have developed and their access to their contacts and resources will generate a number
of potential business combination opportunities that will warrant further investigation. We also anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds,
private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. 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 they think we may be interested in on an unsolicited basis, since many of these
sources will have read this Report and know what types of businesses we are targeting. Our founders, executive 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. Our executive officers and directors must present to us all target business opportunities that have a fair market
value of at least 80% of the value of the trust account (excluding any taxes payable on interest earned) at the time of the agreement
to enter into the initial business combination, subject to any pre-existing fiduciary or contractual obligations. Cowen Investments
is under no obligation to present us with potential acquisition targets. While we do not presently anticipate engaging the services
of professional firms or other individuals that specialize in business acquisitions on any formal basis other than with respect
to the Business Combination Marketing Agreement entered into in connection with our initial public offering, we may engage these
firms or other individuals in the future, in which event we may pay a finder's fee, consulting fee or other compensation to be
determined in an arm's length negotiation based on the terms of the transaction. In no event, however, will our sponsor, executive
officers, directors or their respective affiliates be paid any finder's fee, consulting fee or other compensation prior to, or
for any services they render in order to effectuate, the consummation of an initial business combination (regardless of the type
of transaction that it is) other than the $10,000 monthly administrative services fee we pay to our sponsor, the repayment of any
loans from our sponsor, officers and directors for working capital purposes and reimbursement of any out-of-pocket expenses.
Our audit committee reviews and approves
all reimbursements and payments made to our sponsor, executive officers, directors or their respective affiliates, with any interested
director abstaining from such review and approval. We have no present intention to enter into a business combination with a target
business that is affiliated with any of our founders, executive officers, directors or their respective affiliates. However, we
are not restricted from entering into any such transactions and may do so if (i) such transaction is approved by a majority of
our disinterested independent directors and (ii) we obtain an opinion from an independent investment banking firm, or another independent
entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, that the business combination
is fair to our unaffiliated stockholders from a financial point of view.
Selection of a Target Business and Structuring of a Business
Combination
Subject to our executive officers' and directors'
pre-existing fiduciary duties and the limitations that target businesses have an aggregate fair market value of at least 80% of
the balance in the trust account (excluding any taxes payable on interest earned) at the time of the execution of a definitive
agreement for our initial business combination, as described below in more detail, and that we must acquire a controlling interest
in the target business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective
target business. Except for the general criteria and guidelines set forth above under the caption "Business Strategy,"
we have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating
a prospective target business, our management may consider a variety of factors, including one or more of the following:
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financial condition and results of operation;
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growth potential;
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brand recognition and potential;
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experience and skill of management and availability of additional personnel;
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capital requirements;
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competitive position;
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barriers to entry;
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stage of development of the products, processes or services;
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existing distribution and potential for expansion;
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degree of current or potential market acceptance of the products, processes or services;
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proprietary aspects of products and the extent of intellectual property or other protection for products or formulas;
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impact of regulation on the business;
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regulatory environment of the industry;
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costs associated with effecting the business combination;
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industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates;
and
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macro competitive dynamics in the industry within which the company competes.
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These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above
factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our
business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information
which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties
we may engage, although we have no current intention to engage any such third parties.
The time and costs required to select and
evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree
of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which
a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise
complete a business combination.
Fair Market Value of Target Business
The target business or businesses that we
acquire must collectively have an aggregate fair market value equal to at least 80% of the balance of the funds in the trust account
(excluding any taxes payable on interest earned) at the time of the execution of a definitive agreement for our initial business
combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance.
We currently anticipate structuring our initial
business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other
reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target business 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 business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital stock of a target. In this case, we could 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 valued for purposes of the 80% fair market
value test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the
sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. Since
we have no specific business combination under consideration, we have not entered into any such fund-raising arrangement and have
no current intention of doing so. The fair market value of the target will be determined by our Board of Directors based upon one
or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or
book value). The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction
will provide public stockholders with our analysis of the fair market value of the target business, as well as the basis for our
determinations. If our board is not able to independently determine that the target business has a sufficient fair market value,
we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria.
We will not be required to obtain an opinion
from an investment banking firm as to the fair market value if our Board of Directors independently determines that the target
business complies with the 80% threshold.
Lack of Business Diversification
For an indefinite period of time after consummation
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line
of business. By consummating our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse
impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s Management
Team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business' management may not prove to be correct. The future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. Consequently, members of our
management team may not become a part of the target's management team, and the future management may not have the necessary skills,
qualifications or abilities to manage a public company. Further, it is also not certain whether one or more of our directors will
remain associated in some capacity with us following our initial business combination. Moreover, members of our management team
may not have significant experience or knowledge relating to the operations of the particular target business. Our key personnel
may not remain in senior management or advisory positions with the combined company. The determination as to whether any of our
key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business combination,
we may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have the ability
to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management.
Stockholders May Not Have the Ability to Approve an Initial
Business Combination
In connection with any proposed business
combination, we will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose
at which stockholders may seek to redeem their shares, without voting and, if they do vote, regardless of whether they vote for
or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account
(net of taxes payable as of two business days prior to the consummation of the initial business combination), or (2) provide our
stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder
vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable
as of two business days prior to the consummation of the initial business combination), in each case subject to the limitations
described herein. We will seek stockholder approval if it is required by applicable law or stock exchange listing requirement,
provided, that we may also decide to seek stockholder approval for business or other reasons.
Under Nasdaq rules, stockholder approval
would be required for our initial business combination if, for example:
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we issue (other than in a public offering for cash) a number of shares of common stock that would either (a) be equal to or
in excess of 20% of the number of shares of common stock then outstanding or (b) have voting power equal to or in excess of 20%
of the voting power then outstanding;
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any of our directors, officers or substantial security holders (as defined by Nasdaq rules) has a 5% or greater interest, directly
or indirectly, in the target business or assets to be acquired and if the number of shares of common stock to be issued, or if
the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either (a) 1% of the
number of shares of common stock or 1% of the voting power outstanding before the issuance in the case of any of our directors
and officers or (b) 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance in the
case of any substantial security holders; or
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the issuance or potential issuance of shares of our common stock will result in our undergoing a change of control.
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If we determine to engage in a tender offer,
such tender offer will be structured so that each stockholder may tender any or all of his, her or its shares rather than some
pro rata portion of his, her or its shares. The decision as to whether we will seek stockholder approval of a proposed business
combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would
otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct
proxy solicitations in conjunction with their initial business combinations and related redemptions of public shares for cash upon
consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid
such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially
the same financial and other information about the initial business combination as is required under the SEC's proxy rules. We
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, if we seek stockholder approval, a majority of the shares of common stock voted at a stockholder meeting are voted in favor
of the business combination.
We chose our net tangible asset threshold
of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as amended.
However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital
closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial
business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation and this may force us to
seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate
such initial business combination and we may not be able to locate another suitable target within the applicable time period, if
at all. Public stockholders may therefore have to wait 24 months from the closing of the initial public offering in order to be
able to receive a pro rata share of the trust account.
Our founders and our executive officers and
directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business combination, including
the founder shares and the shares of common stock underlying the private units, (2) not to redeem any shares of common stock in
connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any shares of common stock
in any tender in connection with a proposed initial business combination.
Permitted Purchases of Our Securities
None of our founders, executive officers,
directors, director nominees or their affiliates has indicated any intention to purchase units or shares of common stock in the
initial public offering or from persons in the open market or in private transactions. However, 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 founders, directors, director nominees, executive officers, advisors or any of their affiliates
may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following
the completion of our initial business combination, although they are under no obligation to do so. None of the funds held in the
trust account will be used to purchase public shares or public warrants in such transactions. There is no limit on the number of
shares or warrants such persons may purchase, or any restriction on the price that they may pay. Any such price per share 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. However, such persons 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 founders, directors, director
nominees, executive officers, advisors or any of their affiliates determine to make any such purchases of public shares 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 or public
warrants in such transactions. If any of our founders, directors, director nominees, executive officers, advisors or any of their
affiliates engage in such transactions, they will not make any such purchases when they are in possession of any material non-public
information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We cannot currently
determine whether any of our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as that would be dependent upon
several factors, including but not limited to the timing and size of any such purchase. Depending on the circumstances, any of
our insiders may decide to make purchases of our securities pursuant to a Rule 10b5-1 plan or may determine that acting pursuant
to such a plan is not required under the Exchange Act.
Our founders, executive officers, directors,
director nominees and their affiliates anticipate that they may identify the stockholders with whom they 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 founders,
executive officers, directors, director nominees or their affiliates enter into a private purchase, they would identify and contact
only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust
account or vote against the business combination.
We do not currently anticipate that purchases
of our public shares or public warrants by any of our founders, directors, director nominees, executive officers, advisors or any
of their affiliates, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private
transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any
such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements. None of our founders, directors, director nominees, officers, advisors or any of their affiliates will purchase shares
of our common stock if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption Rights
At any meeting called to approve an initial
business combination, public stockholders may seek to redeem their shares of common stock without voting and, if they do vote,
regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount
then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, less
any taxes then due but not yet paid (which taxes may be paid only from the interest earned on the funds in the trust account).
Alternatively, we may provide our public stockholders with the opportunity to sell their shares of common stock to us through a
tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount
on deposit in the trust account as of two business days prior to the consummation of the initial business combination, less any
taxes then due but not yet paid.
We may also require public stockholders seeking
redemption, whether they are a record holder or hold their shares in "street name," to either (i) tender their certificates
to our transfer agent or (ii) deliver their shares to the transfer agent electronically using The Depository Trust Company's DWAC
(Deposit/Withdrawal At Custodian) System, at the holder's option, in each case prior to a date set forth in the proxy materials
sent in connection with the proposal to approve the business combination.
There is a nominal cost associated with the
above-referenced delivery 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 holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption
rights. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated. However, in the event we require stockholders seeking to exercise redemption rights to deliver their shares
prior to the consummation of the proposed business combination and the proposed business combination is not consummated, this may
result in an increased cost to stockholders.
Any proxy solicitation materials we furnish
to stockholders in connection with a vote for any proposed business combination will indicate whether we are requiring stockholders
to satisfy such certification and delivery requirements. Accordingly, a stockholder would have from the time the stockholder received
our proxy statement up until the vote on the proposal to approve the business combination to deliver his shares if he wishes to
seek to exercise his redemption rights. This time period varies depending on the specific facts of each transaction. However, as
the delivery process can be accomplished by the stockholder, whether or not he is a record holder, or his shares are held in "street
name," in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his shares through
the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this fact.
Please see the risk factor titled "We will require public stockholders who wish to redeem their shares of common stock in
connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult
for them to exercise their redemption rights prior to the deadline for exercising their rights" for further information on
the risks of failing to comply with these requirements.
The foregoing is different from the procedures
historically used by some blank check companies. Traditionally, in order to perfect redemption rights in connection with a blank
check company's business combination, the company 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 redemption rights. After the business combination was approved, the company would contact
such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an "option
window" after the consummation of the business combination during which he could monitor the price of the company's stock
in the market. If the price rose above the redemption price, he could sell his or her shares in the open market before actually
delivering his 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 a "continuing" right surviving past the consummation of
the business combination until the holder delivered its certificate. The requirement for physical or electronic delivery prior
to the meeting ensures that a holder's election to redeem his shares 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 vote on the proposed business combination. Furthermore, if a holder of a public share delivered
his certificate in connection with an election of their redemption and subsequently decides prior to the vote on the proposed business
combination not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically
or electronically).
If the initial business combination is not
approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account as of two business days prior to the consummation
of the initial business combination. In such case, we will promptly return any shares delivered by public holders.
Liquidation if No Business Combination
Our amended and restated certificate of incorporation
provides that we will have only 24 months from the closing of our initial public offering to complete an initial business combination.
If we have not completed an initial business combination by such date, we will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest not previously released to the Corporation to pay taxes (less taxes payable and up to $100,000 of such net interest to
pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our Board of Directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. 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 24-month time period.
Our founders, executive officers, directors
and director nominees have agreed that they will not propose any amendment to our amended and restated certificate of incorporation
that would stop our public stockholders from redeeming their shares of common stock in connection with a business combination
or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination
within 24 months from the closing of this unless we provide our public stockholders with the opportunity to redeem their shares
of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, net of franchise and income taxes payable, divided by the number of then outstanding public shares. This redemption
right shall apply in the event of the approval of any such amendment, whether proposed by our founders, any executive officer,
director or director nominee, or any other person.
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 100% of our outstanding public
shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the 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 100% of our public shares in the event we do not complete
our initial business combination within the required time period is not considered a liquidation distribution under Delaware law
and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case
of a liquidation distribution. If we are unable to complete a business combination within the prescribed time frame, we will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which
interest shall be net of taxes payable), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders' rights
as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board
of Directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares
as soon as reasonably possible following the 24-month anniversary of the closing of the initial public offering, and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent
of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary
of such date.
Because we will not be complying with Section
280 of the DGCL, 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.
We are required to use our reasonable best
efforts to have all third parties (including any vendors or other entities we engage after the initial public offering) and any
prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they may have
in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening
the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision
for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account
to our public stockholders. Nevertheless, we cannot assure you of this fact as there is no guarantee that vendors, service providers
and prospective target businesses will execute such agreements. If any third party refuses to execute an agreement waiving such
claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and
will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party's
engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or
skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. Our underwriters and auditor are
the only third parties we are currently aware of that may not execute a waiver. Nor is there any guarantee that, even if they execute
such agreements with us, they will not seek recourse against the trust account.
In the event that the proceeds in the trust
account are reduced below: (1) $10.10 per public share or (2) such lesser amount per public share held in the trust account as
of the date of the liquidation of the trust account, due to reductions in the value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay our franchise and income taxes, and our sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in certain instances. 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 $10.10 per share.
We anticipate notifying the trustee of the
trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than ten business days
to effectuate such distribution. Our founders have waived their rights to participate in any liquidation distribution with respect
to the founder shares and private shares. There will be no distribution from the trust account with respect to our warrants, which
will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account
and the interest earned on the funds held in the trust account that we are permitted to withdraw to pay such expenses.
If we are unable to complete an initial business
combination and expend all of the net proceeds of the initial public offering, other than the proceeds deposited in the trust account,
and without taking into account interest, if any, earned on the trust account, the initial per-share redemption price would be
$10.10. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference
to the claims of public stockholders.
Our public stockholders shall be entitled
to receive funds from the trust account only in the event of our failure to complete a business combination within the required
time period or if the stockholders seek to redeem their respective shares upon a business combination which is actually completed
by us or upon certain amendments to our charter documents as described elsewhere herein. In no other circumstances shall a stockholder
have any right or interest of any kind to or in the trust account.
Our founders will not participate in any
redemption distribution from our trust account with respect to such founder shares. Additionally, any loans made by our officers,
directors, sponsors or their affiliates for working capital needs will be forgiven and not repaid if we are unable to complete
an initial business combination.
If we are forced to file a bankruptcy case
or an involuntary bankruptcy case is filed against us which 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 to our public stockholders at least $10.10 per share.
If we are forced to file a bankruptcy case
or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent
conveyance." As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore,
because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after twenty-four months
from the closing of the initial public offering, this may be viewed or interpreted as giving preference to our public stockholders
over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as
having breached their fiduciary duties 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.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation
contain certain requirements and restrictions that will apply to us until the consummation of our initial business combination.
These provisions, including provisions regarding the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within the required time period, cannot be amended without the approval
of holders of at least 65% of our common stock. If we seek to amend any provisions of our amended and restated certificate of incorporation
that would stop our public stockholders from redeeming or selling their shares to us in connection with a business combination
or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination
within 24 months from the closing of our initial public offering, we will provide dissenting public stockholders with the opportunity
to redeem their public shares in connection with any such vote. This redemption right shall apply in the event of the approval
of any such amendment, whether proposed by our founders, any executive officer, director or director nominee, or any other person.
Our founders, executive officers and directors have agreed to waive any redemption rights with respect to any common stock held
by them, and any public shares they may hold in connection with any vote to amend our amended and restated certificate of incorporation.
Specifically, our amended and restated certificate of incorporation provides, among other things, that:
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we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our
stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder
vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable),
in each case subject to the limitations described herein;
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, if we seek stockholder approval, a majority of the shares of common stock voted at a stockholder meeting are voted in favor
of the business combination;
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if our initial business combination is not consummated within 24 months from the closing of our initial public offering, then
we will redeem all of the outstanding public shares and thereafter liquidate and dissolve the Company;
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we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
transaction prior to our initial business combination; and
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prior to our initial business combination, we may not issue additional stock that participates in any manner in the proceeds
of the trust account, or that votes as a class with the common stock sold in the initial public offering on any matter.
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Competition
In identifying, evaluating and selecting
a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of
these entities are well established and have extensive experience identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources
will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential
target businesses that we could acquire with the net proceeds of the initial public offering, our ability to compete in acquiring
certain sizable target businesses may be limited by our available financial resources.
The following also may not be viewed favorably
by certain target businesses:
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our obligation to seek stockholder approval of a business combination or engage in a tender offer may delay the completion
of a transaction;
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our obligation to redeem shares of common stock held by our public stockholders may reduce the resources available to us for
a business combination;
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our outstanding warrants, and the potential future dilution they represent.
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Any of these factors may place us at a competitive
disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public
entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held
entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable
terms.
If we succeed in effecting a business combination,
there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent
to a business combination, we will have the resources or ability to compete effectively.
Employees
We have four executive officers. These individuals
are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary
to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for the business combination and the stage of the business combination process the company is in. Accordingly, once a suitable
target business to acquire has been located, management will spend more time investigating such target business and negotiating
and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to locating
a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe
is necessary to our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
Periodic Reporting and Audited Financial Statements
We have registered our units, common stock
and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and
current reports with the SEC. In accordance with the requirements of the Exchange Act, this report contains financial statements
audited and reported on by our independent registered public accountants. You may request a copy of our filings with the SEC (excluding
exhibits) at no cost by writing or telephoning us at the following address or telephone number:
VectoIQ Acquisition Corp.
1354 Flagler Drive
Mamaroneck, NY 10543
Tel: (646) 475-8506
We will provide stockholders with audited
financial statements of the prospective target business as part of any proxy solicitation materials or tender offer documents sent
to stockholders to assist them in assessing the target business. These financial statements will need to be prepared in accordance
with or reconciled to United States generally accepted accounting principles or international financial reporting standards. We
cannot assure you that any particular target business identified by us as a potential acquisition candidate will have the necessary
financial statements. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business.
In addition, a target company may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the
internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
ITEM
1A. RISK FACTORS
This
Report contains forward-looking information based on our current expectations. You should carefully consider the
risks and uncertainties described below together with all of the other information contained in this Report, including our consolidated
financial statements and the related notes appearing at the end of this Report, before deciding whether to invest in our units.
If any of the following events occur, our business, financial condition and operating results may be materially adversely affected.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
In
addition to the risks and uncertainties set forth below, we face certain material risks and uncertainties related to the Proposed
Transaction with Nikola. In addition, if we succeed in effecting the Proposed Transaction, we will face additional and different
risks and uncertainties related to the business of Nikola. Such material risks will be set forth in the registration statement
on Form S-4, including a proxy statement/prospectus/information statement, that we file with the SEC in connection with the Proposed
Transaction.
We are a blank check company with no operating history and
no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company with no operating
results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination with one or more target businesses. We may be unable to complete our initial business
combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
Past performance by our management team may not be indicative
of future performance of an investment in our company.
Information regarding performance by, or
businesses associated with, our management team and their affiliates is presented for informational purposes only. Past performance
by our management team is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial business
combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical
record of our management team's or their affiliates' performance as indicative of our future performance of an investment in the
company or the returns the company will, or is likely to, generate going forward. None of our officers or directors has had experience
with any blank check companies in the past.
The requirement that the target business or businesses that
we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less
any taxes payable on interest earned and less any interest earned thereon that is released to us for taxes) at the time of the
execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may
complete such a business combination with.
Pursuant to the Nasdaq listing rules, the
target business or businesses that we acquire must collectively have an aggregate fair market value of at least 80% of the assets
held in the trust account (excluding any taxes payable on interest earned) at the time of the agreement to enter into the initial
business combination. This restriction may limit the type and number of companies that we may complete an initial business combination
with. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to
liquidate, and you will only be entitled to receive your pro rata portion of the funds in the trust account.
Our public stockholders may not be afforded an opportunity
to vote on our proposed initial business combination, which means we may consummate our initial business combination even though
a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve
our initial business combination unless the business combination would require stockholder approval under applicable law or stock
exchange rules or if we decide to hold a stockholder vote for business or other reasons. For instance, Nasdaq rules currently allow
us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we
were seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration in any business
combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our issued and
outstanding shares, we would seek stockholder approval of such business combination. However, except as required by applicable
law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed business combination or
will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be
based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require
us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority
of the issued and outstanding shares of common stock do not approve of the business combination we consummate. Please see "Item
1 Business” for additional information. Our founders control a substantial interest in us and thus may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
If we seek stockholder approval of our initial business combination,
our founders, executive officers and directors have agreed to vote in favor of such initial business combination, regardless of
how our public stockholders vote.
Unlike many other blank check companies in
which the founders, executive officers, directors and director nominees agree to vote their founder shares in accordance with the
majority of the votes cast by the public stockholders in connection with an initial business combination, our founders, executive
officers, directors and director nominees have agreed (and their permitted transferees will agree), pursuant to the terms of a
letter agreement entered into with us, to vote any common stock held by them in favor of our initial business combination. We expect
that our founders, executive officers, directors and director nominees, and their permitted transferees will own at least approximately
20% of the issued and outstanding shares of our common stock at the time of any such stockholder vote. Accordingly, if we seek
stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received
than would be the case if such persons agreed to vote their founder shares in accordance with the majority of the votes cast by
our public stockholders.
Your only opportunity to affect the investment decision regarding
a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us, you
will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Because our
Board of Directors may consummate our initial business combination without seeking stockholder approval, public stockholders may
not have the right or opportunity to vote on the business combination. Accordingly, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time
(which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we
describe our initial business combination.
The ability of our public stockholders to redeem their shares
for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for
us to enter into our initial business combination with a target.
We may enter into a transaction agreement
with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If
too many public stockholders exercise their redemption rights, we may not be able to meet such closing condition, and as a result,
would not be able to proceed with such business combination. Furthermore, in no event will we redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business combination or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
Our amended and restated certificate of incorporation will require us to provide all of our public stockholders with an opportunity
to redeem all of their shares in connection with the consummation of any initial business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon the consummation
of our initial business combination, or such greater amount necessary to satisfy a closing condition as described above, we would
not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our initial business combination transaction
with us.
The forward purchase investor has the ability to excuse itself
from its obligation to purchase forward purchase shares for any reason.
Pursuant to the contingent forward purchase
agreement we entered into in connection with our initial public offering, the forward purchase investor may purchase up to 2,500,000
forward purchase shares, plus a number of forward purchase warrants equaling the number of forward purchase shares acquired, for
total gross proceeds of up to $25,000,000. Pursuant to such agreement, if, upon notification of our intention to enter into an
initial business combination, the forward purchase investor decides not to purchase such forward purchase securities for any reason,
it will be excused from its obligation to purchase such forward purchase shares. This excusal right could give the forward purchase
investor significant influence over our decision of whether or not to proceed with an initial business combination with a particular
target business. We may not be able to obtain any or enough additional funds to account for such shortfall, which may impact our
ability to consummate an initial business combination. Any such shortfall would also reduce the amount of funds that we have available
for working capital of the post-business combination company.
In evaluating a prospective target business for our initial
business combination, our management may rely on the availability of all of the funds from the sale of the forward purchase securities
to be used as part of the consideration to the sellers in the initial business combination. If the sale of some or all of the forward
purchase securities fails to close, we may lack sufficient funds to consummate our initial business combination.
We have entered into the contingent forward
purchase agreement pursuant to which the forward purchase investor may purchase an aggregate of up to 2,500,000 forward purchase
shares, plus one of our redeemable warrants for each forward purchase share, for total gross proceeds of up to $25,000,000. These
forward purchase shares and forward purchase warrants would be purchased in a private placement to close simultaneously with the
consummation of our initial business combination. The contingent forward purchase agreement allows the forward purchase investor
to be excused from its purchase obligation in connection with a specific business combination if, within five days following written
notice delivered by us of our intention to enter into such business combination, the forward purchase investor notifies us that
it has decided not to proceed with the purchase for any reason. The funds from the sale of the forward purchase securities may
be used as part of the consideration to the sellers in the initial business combination, for expenses in connection with the initial
business combination or for the combined company's working capital needs. This commitment is independent of the percentage of stockholders
electing to redeem their public shares and provides us with a minimum funding level for the initial business combination. However,
if the sale of the forward purchase securities does not close by reason of the failure by the forward purchase investor to fund
the purchase price for the forward purchase securities, for example, we may lack sufficient funds to consummate our initial business
combination. In the event of any failure to fund by the forward purchase investor, we may not be able to obtain additional funds
to account for such shortfall on terms favorable to us or at all. Any such shortfall would also reduce the amount of funds that
we have available for working capital of the post-business combination company. While the forward purchase investor has represented
to us that it has sufficient funds to satisfy its obligations under the contingent forward purchase agreement, we have not obligated
the forward purchase investor to reserve funds for such obligations.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares may not allow us to consummate the most desirable business combination or optimize
our capital structure.
In connection with the successful consummation
of our initial business combination, we may redeem up to that number of shares of common stock that would permit us to maintain
net tangible assets of $5,000,001 upon the consummation of our initial business combination. If our initial business combination
requires us to use substantially all of our cash to pay the purchase price, the redemption threshold may be further limited. Alternatively,
we may need to arrange third party financing to help fund our business combination in case a larger percentage of stockholders
exercise their redemption rights than we expect. If the acquisition involves the issuance of our shares as consideration, we may
be required to issue a higher percentage of our shares to the target or its stockholders to make up for the failure to satisfy
a minimum cash requirement. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring
indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination
available to us.
The requirement that we maintain a minimum net worth or retain
a certain amount of cash could increase the probability that our business combination would be unsuccessful and that you would
have to wait for liquidation in order to redeem your shares.
If, pursuant to the terms of our proposed
business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate
the business combination and regardless of whether we proceed with redemptions under the tender or proxy rules, the probability
that our business combination would be unsuccessful is increased. If our business combination is unsuccessful, you would not receive
your pro rata portion of the trust account until we liquidate. If you are in need of immediate liquidity, you could attempt to
sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share
in our trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected
in connection with our redemption until we liquidate, or you are able to sell your shares in the open market.
The requirement that we complete our initial business combination
within 24 months from the closing of the initial public offering may give potential target businesses leverage over us in negotiating
our initial business combination and may limit the amount of time we have to conduct due diligence on potential business combination
targets, in particular as we approach our dissolution deadline, which could undermine our ability to consummate our initial business
combination on terms that would produce value for our stockholders.
Any potential target business with which
we enter into negotiations concerning our initial business combination will be aware that we must consummate our initial business
combination within 24 months from the closing of our initial public offering. Consequently, such target businesses may obtain leverage
over us in negotiating our initial business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to consummate our initial business combination
within the required time period, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate.
Our founders, executive officers, directors
and director nominees, have agreed that we must complete our initial business combination within 24 months from the closing of
our initial public offering. We may not be able to find a suitable target business and consummate our initial business combination
within such time period. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, volatility in the capital and debt markets and the other risks described herein.
If we are unable to consummate our initial
business combination within the require time period, we will, as promptly as reasonably possible but not more than five business
days thereafter, distribute the aggregate amount then on deposit in the trust account (net of taxes payable, and less up to $100,000
of interest to pay dissolution expenses), pro rata to our public stockholders by way of redemption and cease all operations except
for the purposes of winding up of our affairs, as further described herein. This redemption of public stockholders from the trust
account shall be effected as required by function of our amended and restated certificate of incorporation and prior to any voluntary
winding up.
If we seek stockholder approval of our initial business combination
pursuant to a proxy solicitation, our founders, directors, director nominees, executive officers, advisors and their affiliates
may elect to purchase shares from stockholders, in which case they may influence a vote in favor of a proposed business combination
that you do not support.
If we seek stockholder approval of our initial
business combination pursuant to a proxy solicitation (meaning we would not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules), our founders, directors, director nominees, executive officers, advisors
or any of their affiliates are permitted to purchase shares of our common stock in privately negotiated transactions or in the
open market either prior to or following the consummation of our initial business combination. Any such purchase would be required
to include a contractual acknowledgement that the selling stockholder, although he may still be the record holder of the shares
being sold, would, upon consummation of such sale, no longer be the beneficial owner of such shares and would agree not to exercise
the redemption rights applicable to such shares. In the event that our founders, directors, executive officers, advisors or any
of their affiliates purchase shares of common stock in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, any such selling stockholders would be required to revoke their prior elections to
redeem their shares of common stock prior to the consummation of the transaction.
The purpose of such purchases could be to
(1) increase the likelihood of obtaining stockholder approval of the initial business combination or (2) 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 the business
combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of an initial
business combination that may not otherwise have been possible.
Purchases of shares of our common stock in the open market
or in privately negotiated transactions by our founders, directors, director nominees, executive officers, advisors or their affiliates
may make it difficult for us to maintain the listing of our common stock on Nasdaq following the consummation of an initial business
combination.
If our founders, directors, director nominees,
executive officers, advisors or their affiliates purchase shares of our common stock in the open market or in privately negotiated
transactions, the public "float" of our common stock and the number of beneficial holders of our securities would both
be reduced, possibly making it difficult to maintain the listing or trading of our securities on Nasdaq following consummation
of the initial business combination.
You will not have any rights or interests in funds from the
trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your
securities, potentially at a loss.
Our public stockholders shall be entitled
to receive funds from the trust account only (i) in the event of a redemption to public stockholders prior to any winding up in
the event we do not consummate our initial business combination or our liquidation, (ii) if they redeem their shares in connection
with an initial business combination that we consummate or, (iii) if they redeem their shares in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to
redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the
initial public offering or (B) with respect to any other provision relating to our pre-business combination activity and related
stockholders' rights. In no other circumstances will a stockholder have any right or interest of any kind to the funds in the trust
account. Accordingly, to liquidate your investment, you may be forced to sell your securities, potentially at a loss.
You will not be entitled to protections normally afforded
to investors of many other blank check companies.
Since the net proceeds of the initial public
offering are intended to be used to complete our initial business combination with a target business that has not been identified,
we may be deemed to be a "blank check" company under the United States securities laws. However, since we will have net
tangible assets in excess of $5,000,000 upon the successful consummation of the initial public offering and will file a Current
Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC
to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections
of those rules. Among other things, this means our units will be immediately tradable and we may have a longer period of time to
complete our initial business combination than do companies subject to Rule 419. Moreover, offerings subject to Rule 419 would
prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account
were released to us in connection with our consummation of an initial business combination. For a more detailed comparison of our
offering to offerings that comply with Rule 419, please see "Proposed Business—Comparison of This Offering to Those
of Blank Check Companies Subject to Rule 419."
If we seek stockholder approval of our initial business combination
pursuant to a proxy solicitation (meaning we would not conduct redemptions pursuant to the tender offer rules), and if you or a
"group" of stockholders are deemed to hold in excess of 15% of the issued and outstanding shares of our common stock,
you will lose the ability to redeem all such shares in excess of 15% of the issued and outstanding shares of our common stock.
If we seek stockholder approval of our initial
business combination pursuant to a proxy solicitation (meaning we would not conduct redemptions pursuant to the tender offer rules),
our amended and restated certificate of incorporation will provide that a public stockholder, individually or 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), would be restricted from seeking redemption rights with respect to an aggregate
of more than 15% of the shares of common stock sold in the initial public offering without our prior written consent. Your inability
to redeem an aggregate of more than 15% of the shares of common stock sold in the initial public offering will reduce your influence
over our ability to consummate our initial business combination and you could suffer a material loss on your investment in us if
you sell such excess shares in open market transactions. As a result, you will continue to hold that number of shares exceeding
15% and, in order to dispose of such shares, you would be required to sell your shares in open market transaction, potentially
at a loss.
If the funds not being held in the trust account are insufficient
to allow us to operate for at least 24 months following the closing of our initial public offering, we may be unable to complete
our initial business combination.
The funds available to us outside of the
trust account, plus the interest earned on the funds held in the trust account that may be available to us, may not be sufficient
to allow us to operate for at least 24 months following the closing of our initial public offering, assuming that our initial business
combination is not consummated during that time. Of the funds available to us, we could use a portion of the funds available to
us to pay fees to consultants to assist us with our search for a target business.
We could also use a portion of the funds
as a down payment or to fund a "no-shop" provision (a provision in letters of intent designed to keep target businesses
from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with
respect to a particular proposed business combination, although we do not have any current intention to do so. If we are unable
to fund such down payments or "no shop" provisions, our ability to close a contemplated transaction could be impaired.
Furthermore, if we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and
were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our
initial business combination, our public stockholders may only receive $10.10 per share or potentially less than $10.10 per share
on our redemption, and our warrants will expire worthless.
Subsequent to our consummation of our initial business combination,
we may be required to take write-downs or write-offs, or we may be subject to restructuring and impairment or other charges that
could have a significant negative effect on our financial condition, results of operations and the price of our common stock, which
could cause you to lose some or all of your investment.
Even if we conduct thorough due diligence
on a target business with which we combine, this diligence may not surface all material issues that may be present with a particular
target business. Factors outside of the target business and outside of our control may, at any time, arise. As a result of these
factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges
that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may
arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these
charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to
violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business
or by virtue of our obtaining post-combination debt financing.
If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.10 per
share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other
than our independent registered public accounting firm), prospective target businesses 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, such parties may not execute such agreements, or even if they execute such agreements
they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account.
If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has
not executed a waiver if management believes that such third party's engagement would be significantly more beneficial to us than
any alternative. Our independent registered public accounting firm and the underwriters of the initial public offering will not
execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we may
engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where 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. Upon redemption of our public shares,
if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption
right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption
amount received by public stockholders could be less than the $10.10 per share initially held in the trust account, due to claims
of such creditors.
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) $10.10 per public share or (2) such lesser amount per public share
held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay our franchise and income taxes (less up to $100,000 of interest
to pay dissolution expenses), except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the trust account and except as to any claims under our indemnity of the underwriters of the initial public offering against
certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party
claims. 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. 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 $10.10 per
public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser
amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce indemnification obligations
against our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public
stockholders.
In the event that the proceeds in the trust
account are reduced below (1) $10.10 per public share or (2) such lesser amount per public share held in the trust account as of
the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses) and
our sponsor asserts that it is unable to satisfy obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine on our behalf whether to take legal action against our sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these
indemnification obligations on our behalf, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.10 per share.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may
make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including restrictions on the nature of our investments and
restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including registration as an investment company with the SEC,
adoption of a specific form of corporate structure and reporting, record keeping, voting, proxy and disclosure requirements and
other rules and regulations.
If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to consummate our initial business combination.
Changes in laws or regulations, or a failure to comply with
any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application also may change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or
regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to complete
our initial business combination, and results of operations.
We may not be able to complete our initial business combination
within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate.
We must complete our initial business combination
within 24 months from the closing of our initial public offering. We may not be able to find a suitable target business and complete
our initial business combination within such time period or we may be unable to consummate a business combination due to a downturn
in industry or economic conditions or due to other factors that may occur. If we have not completed our initial business combination
within 24 months from the closing of our initial public offering, we will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any
interest earned on the funds held in the trust account, less up to $100,000 of interest to pay dissolution expenses and net of
interest that may be used by us to pay our franchise and income taxes payable, divided by the number of then outstanding public
shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our Board of Directors, dissolve and liquidate, subject (in
the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them.
Our amended and restated certificate of incorporation
provides that we will continue in existence only until 24 months from the closing of our initial public offering. As promptly as
reasonably possible following the redemptions we are required to make to our public stockholders in such event, subject to the
approval of our remaining stockholders and our Board of Directors, we would dissolve and liquidate, subject to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. We cannot assure you that we
will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well
beyond the third anniversary of the date of distribution. Accordingly, we cannot assure you that third parties will not seek to
recover from our stockholders’ amounts owed to them by us.
If we are forced to file a bankruptcy case
or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent
conveyance." As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore,
because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of
the time we have to complete an initial business combination, this may be viewed or interpreted as giving preference to our public
stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may
be viewed as having breached their fiduciary duties 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.
The grant of registration rights to our founders, executive
officers, directors and director nominees may make it more difficult to complete our initial business combination, and the future
exercise of such rights may adversely affect the market price of our common stock.
Pursuant to an agreement to be entered into
on the date of our initial public offering, our founders, anchor investor, executive officers, directors and director nominees,
and their respective permitted transferees, can demand that we register for resale an aggregate of 5,750,000 founder shares and
890,000 private units and underlying securities. Pursuant to the contingent forward purchase agreement, we have agreed that we
will use our commercially reasonable efforts (i) to file within 30 days after the closing of the initial business combination a
registration statement with the SEC registering the resale of the forward purchase securities and the common stock underlying the
forward purchase warrants, (ii) to cause such registration statement to be declared effective promptly thereafter and (iii) to
maintain the effectiveness of such registration statement until the earliest of (A) such date as all of the securities covered
thereby have been sold or otherwise transferred and (B) the date all of the securities covered thereby can be sold publicly without
restriction or limitation under Rule 144 under the Securities Act, and without the requirement to be in compliance with Rule 144(c)(1)
under the Securities Act.
We will bear the cost of registering these
securities. The registration and availability of such a significant number of securities for trading in the public market may have
an adverse effect on the market price of our securities. In addition, the existence of the registration rights may make our initial
business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase
the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market
price of our securities that is expected when the securities owned by our founders, executive officers, directors and director
nominees, or their respective permitted transferees, are registered for resale.
Because we are not limited to any particular business or
specific geographic location or any specific target business, industry or sector with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business' operations.
Although we intend to focus on the industrial
technology, transportation and smart mobility industries, we may pursue acquisition opportunities in any geographic region and
in any business industry or sector. Except for the limitations that a target business have a fair market value of at least 80%
of the value of the trust account (excluding any taxes payable on interest earned) and that we are not permitted to effectuate
our initial business combination with another blank check company or similar company with nominal operations, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Because we have not yet identified or
approached any specific target business with respect to our initial business combination, there is no basis to evaluate the possible
merits or risks of any particular target business's operations, results of operations, cash flows, liquidity, financial condition
or prospects. To the extent we consummate our initial business combination, we may be affected by numerous risks inherent in the
business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking
an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially
unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular
target business, we may not properly ascertain or assess all of the significant risk factors or that we will have adequate time
to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control
or reduce the chances that those risks will adversely impact a target business. An investment in our units may not ultimately prove
to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition target.
We may seek acquisition opportunities outside the industrial
technology, transportation and smart mobility industries, which may be outside of our management's areas of expertise.
We will consider a business combination outside
the industrial technology, transportation and smart mobility industries, which may be outside of our management's areas of expertise,
if a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity
for our company. In the event we elect to pursue an acquisition outside of the areas of our management's expertise, our management's
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding
the areas of our management's expertise would not be relevant to an understanding of the business that we elect to acquire. As
a result, our management may not be able to adequately ascertain or assess all of the significant risk factors relevant to such
acquisition. Accordingly, any stockholder who chooses to remain a stockholder following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value.
Although we identified general criteria and guidelines that
we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a
target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial business combination will not have all of these positive attributes. If we consummate our initial business combination
with a target that does not meet some or all of these criteria or guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce our initial business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law or the rules
of Nasdaq, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain
stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share or potentially
less than $10.10 per share on our redemption, and our warrants will expire worthless.
Management's flexibility in identifying and selecting a prospective
acquisition candidate, along with our management's financial interest in consummating our initial business combination, may lead
management to enter into an acquisition agreement that is not in the best interest of our stockholders.
Subject to the Nasdaq listing rules requirement
that our initial business combination occur with one or more target businesses or assets that together have an aggregate fair market
value of at least 80% of the value of the trust account (excluding any taxes payable on interest earned) at the time of the agreement
to enter into such initial business combination, we will have virtually unrestricted flexibility in identifying and selecting a
prospective acquisition candidate. Investors will be relying on management's ability to identify business combinations, evaluate
their merits, conduct or monitor diligence and conduct negotiations. Management's flexibility in identifying and selecting a prospective
acquisition candidate, along with management's financial interest in consummating our initial business combination, may lead management
to enter into an acquisition agreement that is not in the best interest of our stockholders.
We may seek acquisition opportunities with an early stage
company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business
combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent
investment banking firm or an independent accounting firm, and consequently, an independent source may not confirm that the price
we are paying for the business is fair to our stockholders from a financial point of view.
Unless we consummate our initial business
combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or
an independent accounting firm that the price we are paying is fair to our stockholders from a financial point of view. If no opinion
is obtained, our stockholders will be relying on the judgment of our Board of Directors, who will determine fair market value based
on standards generally accepted by the financial community. Our Board of Directors will have significant discretion in choosing
the standard used to establish the fair market value of the target acquisition. Such standards used will be disclosed in our tender
offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We may issue additional shares of common stock or preferred
shares to complete our initial business combination or under an employee incentive plan upon or after consummation of our initial
business combination, which would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
will authorize the issuance of 100,000,000 shares of common stock, and 1,000,000 shares of preferred stock, par value $0.0001 per
share. We may issue a substantial number of additional shares of common stock or shares of preferred stock, par value $0.0001 per
share, to complete our initial business combination or under an employee incentive plan upon or after consummation of our initial
business combination. However, our amended and restated certificate of incorporation provides that we may not issue any additional
shares of capital stock that would entitle the holders thereof to receive funds from the trust account or vote as a class with
our public shares on an initial business combination. Although no such issuance will affect the per share amount available for
redemption from the trust account, the issuance of additional common stock or preferred shares:
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may significantly dilute the equity interest of investors in the initial public offering, who will not have preemption rights
in respect of such an issuance;
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may subordinate the rights of holders of shares of common stock if one or more classes of preferred stock are created, and
such preferred shares are issued, with rights senior to those afforded to our common stock;
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could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other
things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our
present officers and directors; and
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may adversely affect prevailing market prices for our units, common stock and/or warrants.
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Resources could be wasted in researching acquisitions that
are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We anticipate that the investigation of each
specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments
will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide
not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely
would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate
our initial business combination for any number of reasons including those beyond our control. Any such event will result in a
loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or
merge with another business. If we are unable to complete our initial business combination, our public stockholders may only receive
$10.10 per share or potentially less than $10.10 per share on our redemption, and our warrants will expire worthless.
Provisions in our amended and restated certificate of incorporation
and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
our common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
These provisions include a staggered Board of Directors and the ability of our Board of Directors to designate the terms of, and
issue new series of, preferred stock, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities. We are also subject to anti-takeover
provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult
the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market
prices for our securities.
Our amended and restated certificate of incorporation provides,
subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain
stockholder litigation matters, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with
us or our directors, officers, employees or stockholders.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers
and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State
of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder's counsel. Any person or entity purchasing or otherwise acquiring any interest in shares of our
capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of
incorporation.
This choice of forum provision may limit
a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court
were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable
or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which
could harm our business, operating results and financial condition.
We do not currently intend to hold an annual meeting of stockholders
until after our consummation of a business combination and you will not be entitled to any of the corporate protections provided
by such a meeting.
We do not currently intend to hold an annual
meeting of stockholders until after we consummate a business combination (unless required by Nasdaq), and thus may not be in compliance
with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors,
in accordance with a company's certificate of incorporation and bylaws, unless such election is made by written consent in lieu
of such a meeting. If our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they
may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
We may reincorporate in another jurisdiction in connection
with our initial business combination and such reincorporation may result in taxes imposed on stockholders.
We may, in connection with our initial business
combination, reincorporate in the jurisdiction in which the target company or business is located or in another jurisdiction. The
transaction may require a stockholder to recognize taxable income in the jurisdiction in which the stockholder is a tax resident
or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to stockholders
to pay such taxes. Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after
the reincorporation.
Our ability to successfully effect our initial business combination
and to be successful thereafter will be largely dependent upon the efforts of our executive officers, directors and key personnel,
some of whom may join us following our initial business combination. The loss of our executive officers, directors, or key personnel
could negatively impact the operations and profitability of our business.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the
continued service of our executive officers and directors, at least until we have consummated our initial business combination.
In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating management time among various business activities, including identifying potential
business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance
on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors
or executive officers could have a detrimental effect on us. Additionally, we do not intend to have any full-time employees prior
to the consummation of our initial business combination.
The role of such key persons in the target
business, however, cannot presently be ascertained. Although some of such persons may remain with the target business in senior
management or advisory positions following our initial business combination, it is likely that some or all of the management of
the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business
combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar
with such requirements.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to
receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in
determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with
the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the consummation of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe
the ability of such individuals to remain with us after the consummation of our initial business combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however,
that any of our key personnel will remain with us after the consummation of our initial business combination. Our key personnel
may not remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will
remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess the management of
a prospective target business and, as a result, may effect our initial business combination with a target business whose management
may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business' management may
be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target's management, therefore,
may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target's
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted.
The officers and directors of an acquisition candidate may
resign upon consummation of our initial business combination. The loss of an acquisition target's key personnel could negatively
impact the operations and profitability of our post-combination business.
The role of an acquisition candidate's key
personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate
that certain members of an acquisition candidate's management team will remain associated with the acquisition candidate following
our initial business combination, it is possible that some members of the management team of an acquisition candidate will not
wish to remain in place.
None of Cowen, any of its affiliates or our advisors has
an obligation to provide us with potential investment opportunities or to devote any specified amount of time or support to our
company's business.
Although we expect to benefit from Cowen
and Company LLC’s (“Cowen”) and its affiliates' network of relationships and processes for sourcing, executing
and evaluating potential acquisition targets, neither Cowen nor any of its affiliates has any legal or contractual obligation to
seek on our behalf or to present to us investment opportunities that might be suitable for our business, and may allocate any such
opportunities at its discretion to us or other parties. We have no investment management, advisory, consulting or other agreement
in place with Cowen or any of its affiliates that obligates them to undertake efforts on our behalf or that govern the manner in
which they will allocate investment opportunities. Additionally, while we anticipate that certain of the advisors listed under
"Management—Other Advisors" may provide us referrals to potential target businesses and be available from time
to time to consult with us regarding potential business combination opportunities, none of these advisors are required to commit
any specified amount of time to our affairs. Even if Cowen, one of its affiliates or one of our advisors refers an opportunity
to us, no assurance can be given that such opportunity will result in an acquisition agreement or our initial business combination.
Certain of our officers and directors are now, and all of
them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business
opportunity should be presented.
Until we consummate our initial business
combination, we intend to engage in the business of identifying and combining with one or more businesses. Our officers and directors
are, or may in the future become, affiliated with entities that are engaged in a similar business. Our officers also may become
aware of business opportunities, which may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary duties or contractual obligations. Accordingly, they may have conflicts of interest in determining to which entity a
particular business opportunity should be presented. These conflicts may not be resolved in our favor or that a potential target
business would not be presented to another entity prior to its presentation to us.
We may engage in our initial business combination with one
or more target businesses that have relationships with entities that may be affiliated with our founders, executive officers, directors
or director nominees, which may raise potential conflicts of interest.
We have not adopted a policy that expressly
prohibits our directors, director nominees, executive officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party
or have an interest. Additionally, in light of the involvement of our founders, executive officers, directors and director nominees,
and each of their affiliates, with other entities, we may decide to acquire one or more businesses affiliated with our founders,
executive officers or directors, or any of their affiliates. Our directors also serve as executive officers and board members for
other entities. Our founders, executive officers, directors and director nominees are not currently aware of any specific opportunities
for us to consummate our initial business combination with any entities with which they are affiliated, and there have been no
discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on,
or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated
entity met our criteria for our initial business combination as set forth in "Proposed Business—Effecting our initial
business combination—Selection of a target business and structuring of our initial business combination" and such transaction
was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment
banking firm or an independent account firm regarding the fairness to our stockholders from a financial point of view of a business
combination with one or more domestic or international businesses affiliated with our founders, executive officers, directors,
or director nominees, potential conflicts of interest still may exist and, as a result, the terms of the business combination may
not be as advantageous to our public stockholders as they would be absent any conflicts of interest. Our directors have a fiduciary
duty to act in the best interests of our stockholders, whether or not a conflict of interest may exist.
Since each of our founders, executive officers, directors
and director nominees will lose any investment in us if our initial business combination is not consummated, and our officers and
directors have significant financial interests in us, a conflict of interest may arise in determining whether a particular acquisition
target is appropriate for our initial business combination.
In February 2018, our founders purchased
an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. Certain
members of our management team also have a financial interest in our sponsor. In March 2018, our sponsor transferred 15,000 founder
shares to each of our independent director nominees. Additionally, 435,606 founder shares were forfeited by our sponsor and acquired
by our anchor investor. In May 2018, Cowen Investments forfeited 287,500 founder shares. Additionally, in May 2018, our sponsor
purchased 254,829 founder shares for an aggregate purchase price of $1,108, or approximately $0.004 per share, and our anchor investor
purchased 32,671 founder shares for an aggregate purchase price of $142, or approximately $0.004 per share. The founder shares
will be worthless if we do not consummate an initial business combination. In addition, in connection with the consummation of
our initial public offering, our sponsor purchased 525,909 private units, for an aggregate purchase price of $5,259,090, our anchor
investor purchased 67,424 private units for an aggregate purchase price of $674,240 and Cowen Investments purchased 296,667 private
units, for an aggregate purchase price of $2,966,670. All of the foregoing private units will also be worthless if we do not consummate
our initial business combination. The personal and financial interests of our founders, executive officers, directors and director
nominees may influence their motivation in identifying and selecting a target business combination, completing an initial business
combination and influencing the operation of the business following the initial business combination.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete our initial business combination, which may adversely affect our financial condition and thus
negatively impact the value of our stockholders' investment in us.
Although we have no commitments as of the
date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding debt following the initial public
offering, we may choose to incur substantial debt to complete initial business combination. Furthermore, we may issue a substantial
number of additional common or preferred shares to complete our initial business combination or under an employee incentive plan
upon or after consummation of our initial business combination. We and our officers and directors have agreed that we will not
incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or
to any monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption
from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to
repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we
breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation
of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such
financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available
for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in
government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We may only be able to complete one business combination
with the proceeds of our initial public offering, and the sale of the private units, which will cause us to be solely dependent
on a single business, which may have a limited number of products or services. This lack of diversification may negatively impact
our operations and profitability.
The net proceeds from our initial public
offering and the sale of the private units provided us with approximately $232,300,000 that we may use to complete our initial
business combination. Furthermore, the forward purchase investor has the ability to excuse itself from its obligation to purchase
forward purchase shares for any reason under the terms of the contingent forward purchase agreement. If the forward purchase investor
does not exercise such excusal right, we may have up to an additional $25,000,000 available to us for our initial business combination.
However, if the sale of some or all of the forward purchase securities fails to close, we may lack sufficient funds to consummate
our initial business combination. Please see the risk factors titled "The forward purchase investor has the ability to excuse
itself from its obligation to purchase forward purchase shares for any reason," and "In evaluating a prospective target
business for our initial business combination, our management will rely on the availability of all of the funds from the sale of
the forward purchase securities to be used as part of the consideration to the sellers in the initial business combination. If
the sale of some or all of the forward purchase securities fails to close, we may lack sufficient funds to consummate our initial
business combination," for further information on these risks.
We may effectuate our initial business combination
with a single target business or multiple target businesses simultaneously. However, we may not be able to effectuate our initial
business combination with more than one target business because of various factors, including the existence of complex accounting
issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results
and the financial condition of several target businesses as if they had been operated on a combined basis. By consummating our
initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive
and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks
or offsetting of losses, unlike other entities, which may have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject
us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously consummate business combinations
with multiple prospective targets, which may hinder our ability to consummate our initial business combination and give rise to
increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us,
and delay our ability, to complete the initial business combination. With multiple business combinations, we could also face additional
risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if
there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could
negatively impact our profitability and results of operations.
We may attempt to consummate our initial business combination
with a private company about which little information is available, which may result in our initial business combination with a
company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we
may seek to effectuate our initial business combination with a privately held company. Very little public information typically
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business
combination on the basis of limited information, which may result in our initial business combination with a company that is not
as profitable as we suspected, if at all.
Our management team and our stockholders may not be able
to maintain control of a target business after our initial business combination.
We currently anticipate structuring our initial
business combination to acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may,
however, structure our initial business combination where we merge directly with the target business or where we acquire less than
100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders
or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business
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 business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us
in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new
shares in exchange for all of the outstanding capital stock of a target. In this case, we could 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.
In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining
a larger share of the company's stock than we initially acquired. Accordingly, this may make it more likely that we will not be
able to maintain our control of the target business.
Unlike many blank check companies, we do not have a specified
maximum redemption threshold. The absence of such a redemption threshold may make it easier for us to consummate our initial business
combination with which a substantial majority of our stockholders do not agree.
Since we have no specified percentage threshold
for redemption contained in our amended and restated certificate of incorporation, our structure is different in this respect from
the structure that has been used by many blank check companies. Historically, blank check companies would not be able to consummate
an initial business combination if the holders of such company's public shares voted against a proposed business combination and
elected to redeem more than a specified maximum percentage of the shares sold in such company's initial public offering, which
percentage threshold was typically between 19.99% and 39.99%. As a result, many blank check companies were unable to complete a
business combination because the amount of shares voted by their public stockholders electing redemption exceeded the maximum redemption
threshold pursuant to which such company could proceed with its initial business combination. As a result, we may be able to consummate
our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction
and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions
in connection with our initial business combination pursuant to a tender offer, have entered into privately negotiated agreements
to sell their shares to us or our founders, executive officers, directors, advisors or their affiliates. However, in no event will
we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation
of our initial business combination. Furthermore, the redemption threshold may be further limited by the terms and conditions of
our initial business combination. If too many public stockholders exercise their redemption rights so that we cannot satisfy the
net tangible asset requirement or any net worth or cash requirements, we would not proceed with the redemption of our public shares
and the related business combination, and instead may search for an alternate business combination, we would not proceed with the
redemption of our public shares and the related business combination, and instead may search for an alternate business combination.
Holders of warrants will not participate in liquidating distributions
if we are unable to complete an initial business combination within the required time period.
If we are unable to complete an initial business
combination within the required time period and we liquidate the funds held in the trust account, the warrants will expire, and
holders will not receive any of such proceeds with respect to the warrants. In this case, holders of warrants are treated in the
same manner as holders of warrants of blank check companies whose units are comprised of shares and warrants, as the warrants in
those companies do not participate in liquidating distributions. Nevertheless, the foregoing may provide a financial incentive
to public stockholders to vote in favor of any proposed initial business combination as each of their whole warrants would entitle
the holder to purchase one share of common stock, resulting in an increase in their overall economic stake in our company. If a
business combination is not approved, the warrants will expire and will be worthless.
If we do not maintain a current and effective prospectus
relating to the warrant shares issuable upon exercise of the warrants, public holders will only be able to exercise such warrants
on a "cashless basis" which would result in a fewer number of shares being issued to the holder had such holder exercised
the warrants for cash.
If we do not maintain a current and effective
prospectus relating to the warrant shares issuable upon exercise of the public warrants at the time that holders wish to exercise
such warrants, they will only be able to exercise them on a "cashless basis" provided that an exemption from registration
is available. As a result, the number of warrant shares that a holder will receive upon exercise of its public warrants will be
fewer than it would have been had such holder exercised its warrant for cash. Further, if an exemption from registration is not
available, holders would not be able to exercise their warrants on a cashless basis and would only be able to exercise their warrants
for cash if a current and effective prospectus relating to the issuance of the warrant shares is available. Under the terms of
the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective
prospectus relating to the warrant shares until the expiration of the warrants. However, we cannot assure you that we will be able
to do so. If we are unable to do so, the potential "upside" of the holder's investment in our Company may be reduced
or the warrants may expire worthless. In no event will we be required to net cash settle any warrant, or issue securities or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under the Securities Act or applicable state securities laws. If the issuance of the warrant shares upon exercise of the warrants
is not so registered or qualified or exempt from registration or qualification, the holder of such warrants shall not be entitled
to exercise such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants
as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock included in the
units. Notwithstanding the foregoing, the private warrants may be exercisable for unregistered warrant shares for cash even if
the prospectus relating to the warrant shares issuable upon exercise of the warrants is not current and effective.
Our management's ability to require holders of our warrants
to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of
the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for redemption
after the redemption criteria described elsewhere in this Report have been satisfied, our management will have the option to require
any holder that wishes to exercise his, her or its warrants (including any warrants held by our founders, anchor investor or any
of their permitted transferees) to do so on a "cashless basis." If our management chooses to require holders to exercise
their warrants on a cashless basis, the number of warrant shares received by a holder upon exercise will be fewer than it would
have been had such holder exercised his warrants for cash. This will have the effect of reducing the potential "upside"
of the holder's investment in our company.
We may amend the terms of the warrants in a manner that may
be adverse to holders with the approval by the holders of at least 65% of the then outstanding public warrants.
Our warrants will be issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
will provide that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any
change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a
manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although
our ability to amend the terms of the warrants with the consent of at least 65% of the then outstanding public warrants is unlimited,
examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the
warrants into stock or cash, shorten the exercise period or decrease the number of warrant shares issuable upon exercise of a warrant.
Our warrants may have an adverse effect on the market price
of our common stock and make it more difficult to effectuate our initial business combination.
We have issued warrants to purchase 23,890,000
shares of our common stock. Furthermore, pursuant to the contingent forward purchase agreement and subject to an excusable right,
the forward purchase investor has committed to purchase up to 2,500,000 forward purchase shares, plus one of our redeemable warrants
for each forward purchase share. In each case, the warrants are exercisable at a price of $11.50 per whole share of common stock.
To the extent we issue shares of common stock to effectuate a business transaction, the potential for the issuance of a substantial
number of additional shares of common stock upon exercise of these warrants could make us a less attractive acquisition vehicle
to a target business. Any such issuance will increase the number of issued and outstanding shares of common stock and reduce the
value of the shares of common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult
to effectuate a business combination or increase the cost of acquiring the target business.
The ability of our public stockholders to exercise their
redemption rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.
If our initial business combination requires
us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise
redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption, or we may
need to arrange third party financing to help fund our initial business combination. In the event that the acquisition involves
the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a shortfall
in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher
than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.
We may be unable to consummate an initial business combination
if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain
stockholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account
or attempt to sell their shares in the open market.
A potential target may make it a closing
condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible
assets we are required to have pursuant to our organizational documents available at the time of closing. If the number of our
public stockholders electing to exercise their redemption rights has the effect of reducing the amount of money available to us
to consummate an initial business combination below such minimum amount required by the target business and we are not able to
locate an alternative source of funding, we will not be able to consummate such initial business combination and we may not be
able to locate another suitable target within the applicable time period, if at all. In that case, public stockholders may have
to remain stockholders of our company and wait the full 24 months from the closing of the initial public offering, in order to
be able to receive a portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which
case they may receive less than they would have in a liquidation of the trust account.
If we seek stockholder approval of our initial business combination,
we intend to offer each public stockholder the option to vote in favor of the proposed business combination and still seek redemption
of such stockholders' shares.
In connection with any meeting held to approve
an initial business combination, we will offer each public stockholder (but not our founders, officers or directors) the right
to have his, her or its shares of common stock redeemed for cash (subject to the limitations described elsewhere in this Report)
without voting and, if they do vote, regardless of whether such stockholder votes for or against such proposed business combination.
We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and a majority of the outstanding shares of common stock voted are voted in favor of the business combination. This is different
than other similarly structured blank check companies where stockholders are offered the right to redeem their shares only when
they vote against a proposed business combination. This threshold and the ability to seek redemption while voting in favor of a
proposed business combination may make it more likely that we will consummate our initial business combination.
We will require public stockholders who wish to redeem their
shares of common stock in connection with a proposed business combination to comply with specific requirements for redemption that
may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their 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 expiration date set forth in the tender offer documents mailed to
such holders, or in the event we distribute proxy materials, up to two business days prior to the vote on the proposal to approve
the business combination, or to deliver their shares to the transfer agent electronically using The Depository Trust Company's
DWAC (Deposit/Withdrawal At Custodian) System, at the holder's option. In order to obtain a physical stock certificate, a stockholder's
broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding
that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because
we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain
a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System,
this may not be the case. Under our bylaws, we are required to provide at least 10 days advance notice of any stockholder meeting,
which would be the minimum amount of time a stockholder would have to determine whether to exercise redemption rights. Accordingly,
if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to
meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares. In the event that a stockholder
fails to comply with the various procedures that must be complied with in order to validly tender or redeem public shares, its
shares may not be redeemed.
Additionally, despite our compliance with
the proxy rules or tender offer rules, as applicable, stockholders may not become aware of the opportunity to redeem their shares.
Redeeming stockholders may be unable to sell their securities
when they wish to in the event that the proposed business combination is not approved.
We will require public stockholders who wish
to redeem their shares of common stock in connection with any proposed business combination to comply with the delivery requirements
discussed above for redemption. If such proposed business combination is not consummated, we will promptly return such certificates
to the tendering public stockholders. Accordingly, investors who attempted to redeem their shares in such a circumstance will be
unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price
for our common stock may decline during this time and you may not be able to sell your securities when you wish to, even while
other stockholders that did not seek redemption may be able to sell their securities.
Because of our structure, other companies may have a competitive
advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense competition
from other entities having a business objective similar to ours, including private equity groups, venture capital funds, leveraged
buyout funds, operating businesses and other blank check companies competing for acquisitions. Many of these entities are well
established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many
of these competitors possess greater technical, human and other resources than we do, and our financial resources will be relatively
limited when contrasted with those of many of these competitors. Therefore, our ability to compete in acquiring certain sizable
target businesses may be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of our initial business combination
may delay the consummation of a transaction. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating
our initial business combination.
Certain provisions of our amended and restated certificate
of incorporation that relate to our probusiness combination activity (and corresponding provisions of the agreement governing the
release of funds from our trust account) may be amended with the approval of holders of at least 65% of our issued and outstanding
common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore,
to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial
business combination that some of our stockholders may not support.
Some other blank check companies have a provision
in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company's pre-business
combination activity, without approval by holders of a certain percentage of the company's shares. In those companies, amendment
of these provisions typically requires approval by holders holding between 90% and 100% of the company's public shares. Our amended
and restated certificate of incorporation provides that amendments to any its provisions relating to our pre-initial business combination
activity and related stockholder rights, including the substance and timing of our obligation to redeem 100% of our public shares
if we do not complete out initial business combination within the required time period, may be amended if approved by holders of
at least 65% of our outstanding common stock. If an amendment to any such provision is approved by the requisite stockholder vote,
then the corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended.
In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common
stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. Subsequent to the initial public offering
and prior to the consummation of our initial business combination, we may not issue additional securities that can vote as a class
with our public shares on amendments to our amended and restated certificate of incorporation. Our founders, executive officers
and directors collectively beneficially own approximately 21% of our outstanding common stock, and they may participate in any
vote to amend amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in
any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation
which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our
ability to complete our initial business combination with which you do not agree. In certain circumstances, our stockholders may
pursue remedies against us for any breach of our amended and restated certificate of incorporation.
We may be unable to obtain additional financing to complete
our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination. If we are unable to complete our initial business combination, our public stockholders
may only receive $10.10 per share or potentially less than $10.10 per share on our redemption, and the warrants will expire worthless.
Although we believe that the net proceeds
of our initial public offering and the sale of the private units, founder shares and forward purchase securities, including the
interest earned on the proceeds held in the trust account that may be available to us for our initial business combination, will
be sufficient to consummate our initial business combination, because we have not yet identified any prospective target business
we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of the initial public offering
and the sale of the private units and forward purchase securities, including the interest earned on the proceeds held in the trust
account that may be available to us for our initial business combination, prove to be insufficient, either because of the size
of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation
to repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial business
combination, the forward purchase investor's election to be excused from its purchase obligations or the terms of negotiated transactions
to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon
the proposed business combination. Financing may not be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to consummate our initial business combination, or the sale of some or all of the
forward purchase securities fails to close, we would be compelled to either restructure the transaction or abandon that particular
initial business combination and seek an alternative target business candidate. If we are unable to complete our initial business
combination, our public stockholders may only receive $10.10 per share or potentially less than $10.10 per share on our redemption,
and the warrants will expire worthless. In addition, even if we do not need additional financing to consummate our initial business
combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional
financing could have a material adverse effect on the continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Our founders, executive officers, directors and director
nominees have a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
Upon consummation of our offering, our founders,
executive officers, directors and director nominees own approximately 21% of the issued and outstanding shares of our common stock.
In addition, our founders, executive officers, directors or any of their affiliates could determine in the future to make purchases
in the open market or in private transactions, to the extent permitted by law, in order to influence the vote or magnitude of the
number of stockholders seeking to tender their shares to us. In connection with any vote for a proposed business combination our
founders, as well as all of our executive officers and directors, have agreed to vote the shares of common stock owned by them
immediately before the initial public offering, the shares of common stock underlying the private units, as well as any shares
of common stock acquired in the initial public offering or in the aftermarket in favor of such proposed business combination.
In addition, our Board of Directors is divided
into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in
each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our business combination,
in which case all of the current directors will continue in office until at least the completion of the business combination. If
there is an annual meeting, as a consequence of our "staggered" Board of Directors, only a portion of the Board of Directors
will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our
business combination.
Our founders paid an aggregate of $25,000, or approximately
$0.004 per founder share; accordingly, you will experience immediate and substantial dilution from the purchase of our public shares.
The difference between the public offering
price per share (allocating all of the unit purchase price to the public shares and none to the warrants included in the public
units) and the pro forma net tangible book value per share of common stock after the initial public offering constitutes the dilution
to you and the other investors in the initial public offering. Our founders acquired the founder shares at a nominal price, significantly
contributing to this dilution. Upon closing of the initial public offering, you and the other public stockholders will incur an
immediate and substantial dilution of approximately 91.9% or $9.16 per share of common stock (the difference between the pro forma
net tangible book value per share of $0.81 and the initial public offering price of $10.00 per share of common stock).
Nasdaq may delist our securities from trading on its exchange,
which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions.
We cannot assure you that our securities
will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business combination. On January 7, 2020,
we received a written notice from the Listing Qualifications Department of Nasdaq indicating that we are not in compliance with
listing Rule 5620(a), due to our failure to hold an annual meeting of stockholders within twelve months of the end of our fiscal
year end. The notice was only a notification of deficiency, not of imminent delisting, and had no effect on the listing or trading
of our securities on the NASDAQ Capital Market.
The notice stated that we had until
February 21, 2020 to submit a plan to regain compliance with Listing Rule 5620(a). We submitted a plan to regain compliance
with Listing Rule 5620(a) within the required timeframe. If Nasdaq accepts our plan, Nasdaq may grant us an extension of up to
180 calendar days from the fiscal year end, or until June 29, 2020, to evidence compliance with Listing Rule 5620(a). If Nasdaq
does not accept our plan, we will have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel. We cannot assure
you that we will be able to regain compliance with the annual meeting requirement or that our securities will continue to be listed
on Nasdaq.
Additionally, in order to continue listing
our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and stock
price levels. Generally, we must maintain a minimum number of holders of our securities. Additionally, in connection with our
initial business combination, we will be required to demonstrate compliance with Nasdaq's initial listing requirements, which
are more rigorous than Nasdaq's continued listing requirements, in order to continue to maintain the listing of our securities
on Nasdaq. For instance, our stock price would generally be required to be at least $4 per share. We cannot assure you that we
will be able to meet those initial listing requirements at that time. If Nasdaq delists any of our securities from trading on
its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could
be quoted on an over-the counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our common stock is a "penny stock" which will require brokers trading in our common stock to
adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our
securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement
Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as "covered securities." Because we expect that our units and eventually our common stock and warrants
will be listed on Nasdaq, our units, common stock and warrants will qualify as covered securities under such statute. Although
the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict
the sale of securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered
securities under such statute and we would be subject to regulation in each state in which we offer our securities.
Certain agreements related to our initial public offering
may be amended without stockholder approval.
Certain agreements, including the underwriting
agreement relating to the initial public offering, the trust agreement between us and Continental Stock Transfer and Trust Company,
the letter agreements among us and our founders, executive officers, directors and director nominees, and the registration rights
agreement among us and our founders, executive officers, directors and director nominees, may be amended without stockholder approval.
These agreements contain various provisions that our public stockholders might deem to be material. For example, the underwriting
agreement related to our initial public offering contains a covenant that the target company that we acquire must have a fair market
value equal to at least 80% of the balance in the trust account at the time of signing the definitive agreement for the transaction
with such target business (excluding any taxes payable on interest earned) so long as we obtain and maintain a listing for our
securities on Nasdaq. While we do not expect our board to approve any amendment to any of these agreements prior to our initial
business combination, it may be possible that our board, in exercising its business judgment and subject to its fiduciary duties,
chooses to approve one or more amendments to any such agreement in connection with the consummation of our initial business combination.
Any such amendment may have an adverse effect on the value of an investment in our securities.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The United States federal proxy rules require
that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in
connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or International Financial Reporting Standard as issued by the International Accounting Standards Board,
or IFRS, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements
in accordance with federal proxy rules and consummate our initial business combination within our 24-month time frame.
Compliance obligations under the Sarbanes-Oxley Act may make
it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing a business combination.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2019. Only in the event we are deemed to be a large accelerated filer, or an accelerated filer will we be required
to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are
a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we seek to complete our business combination may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such business combination.
We are an "emerging growth company" and we cannot
be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive
to investors.
We are an "emerging growth company"
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging
growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market
value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year before
that time, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict
whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our
securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than
they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities
may be more volatile.
Further, Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised, and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accountant standards used.
We may face risks related to businesses in the industrial
technology, transportation and smart mobility industries.
Business combinations with businesses in
the industrial technology, transportation and smart mobility industries entail special considerations and risks. If we are successful
in completing a business combination with such a target business, we may be subject to, and possibly adversely affected by, the
following risks:
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an inability to compete effectively in a highly competitive environment with many incumbents having substantially greater resources;
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an inability to manage rapid change, increasing consumer expectations and growth;
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an inability to build strong brand identity and improve customer satisfaction and loyalty;
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a reliance on proprietary technology to provide services and to manage our operations, and the failure of this technology to
operate effectively, or our failure to use such technology effectively;
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an inability to deal with our customers' privacy concerns;
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an inability to attract and retain customers;
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an inability to license or enforce intellectual property rights on which our business may depend;
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any significant disruption in our computer systems or those of third parties that we would utilize in our operations;
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
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potential liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of
materials that we may distribute;
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competition for the discretionary spending of customers, which may intensify in part due to advances in technology and changes
in consumer expectations and behavior;
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disruption or failure of our networks, systems or technology as a result of computer viruses, "cyber-attacks," misappropriation
of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar
events;
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an inability to obtain necessary hardware, software and operational support; and
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reliance on third-party vendors or service providers.
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Any of the foregoing could have an adverse
impact on our operations following a business combination. However, our efforts in identifying prospective target businesses will
not be limited to the industrial technology, transportation and smart mobility industries. Accordingly, if we acquire a target
business in another industry, these risks we will be subject to risks attendant with the specific industry in which we operate
or target business which we acquire, which may or may not be different than those risks listed above.