UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

FORM 10-K/A (Amendment No. 2)

 

(Mark One) 

| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---------|--------------------------------------------------------------------------------------|

For the fiscal year ended December 31, 2020 

| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---------|------------------------------------------------------------------------------------------|

For the transition period from                      to                      

 

BREEZE HOLDINGS ACQUISITION CORP. 

(Exact name of registrant as specified in its charter) 

 

 

| Delaware                                                      |   | 001-39718                |   | 85-1849315                             |
|---------------------------------------------------------------|--------|--------------------------|--------|----------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (Commission File Number) |   | (I.R.S. EmployerIdentification Number) |

 

| 955 W. John Carpenter Fwy., Suite 100-929

Irving, TX 75039 |   | 75039      |
|-------------------------------------------------------------|--------|------------|
| (Address of principal executive offices)                    |   | (Zip Code) |

Registrant’s telephone number, including area code: (619) 500-7747

Not Applicable 

(Former name or former address, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act: 

 

| Title of Each Class:                                                                                                  |   | Trading Symbol: |   | Name of Each Exchange on Which Registered: |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------------------------------------------|
| Common Stock, par value $0.0001 per share                                                                             |   | BREZ            |   | The Nasdaq Stock Market LLC                |
| Rights exchangeable into one-twentieth of one share of common stock                                                   |   | BREZR           |   | The Nasdaq Stock Market LLC                |
| Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per whole share |   | BREZW           |   | The Nasdaq Stock Market LLC                |

Securities registered pursuant to Section 12(g) of the Act: None 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

| Large accelerated filer | ☐ |   | Accelerated filer              | ☐ |
|-----------------------------------|---------|--------|-------------------------------------|---------|
|                              |    |   |                                |    |
| Non-accelerated filer        | ☒ |   | Smaller reporting company | ☒ |
|                              |    |   |                                |    |
|                              |    |   | Emerging growth company   | ☒ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☒    No  ☐

As of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s securities were not publicly traded. The registrant’s units began trading on The Nasdaq Capital Market (“NASDAQ”) on November 23, 2020 and the registrant’s shares of common stock, par value $0.0001 (the “Common stock”), warrants and rights began trading on the NASDAQ on December 23, 2020. The aggregate market value of the common stock outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the shares of common stock on December 31, 2020, as reported on the NASDAQ, was $116,725,000 (based on the closing sales price of the common stock on December 31, 2020 of $10.15). 

As of December 31, 2021, 14,640,000 shares of common stock, par value $0.0001, were issued and outstanding. 

 

 

 

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EXPLANATORY NOTE

References throughout this Amendment No. 2 to the Annual Report on Form 10-K to “we,” “us,” the “Company” or “our company” are to Breeze Holding Acquisition Corp., unless the context otherwise indicates.

 

This Amendment No. 2 (“Amendment No. 2”) to the Annual Report on Form 10-K/A amends Amendment No. 1 to the Annual Report on Form 10-K/A of Breeze Holding Acquisition Corp. as of and for the period from June 11, 2020 (inception) through December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”) on June 24, 2021 (the “First Amended Filing”).

 

The Company has re-evaluated its application of ASC 480-10-S99-3A to its accounting classification of the redeemable common stock, par value $0.0001 per share (the “Public Shares”), issued as part of the units sold in the Company’s initial public offering (the “IPO”) on November 23, 2020. Historically, a portion of the Public Shares was classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in the Company’s amended and restated certificate of incorporation (the “Charter”). Pursuant to such re-evaluation, the Company’s management has determined that the Public Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible assets redemption limitation contained in the Charter. In addition, the Company also recorded additional offering costs related to the excess fair value over purchase price for the sale of common stock to the Company’s Underwriters (“Representative Shares”), and to a Company Consultant (“Consultant Shares”) as compensation for the underwriting and consulting services, respectively, in connection with the IPO.  The Company recorded additional paid-in capital related to the relative fair value of the Rights as part of the Units issued in the IPO that were not previously recorded.

 

Therefore, on January 14, 2022, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that: (i) the Company’s audited financial statements included in the previously issued Form 10-K/A filed with the SEC on June 24, 2021 (the “First Amended Filing”), which includes the audited financial statements as of December 31, 2020 and for the period from June 10, 2020 through December 31, 2020; (ii) the unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on July 2, 2021; and (iii) the unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 16, 2021 (collectively, the “Affected Periods”), should be restated to report all Public Shares as temporary equity, record additional offering costs related to the excess fair value over purchase price for the sale of common stock to the Company’s Underwriters (“Representative Shares”), and to a Company Consultant (“Consultant Shares”) as compensation for the underwriting and consulting services, respectively, in connection with the IPO, and the Company recorded additional paid in capital related to the relative fair value of the Rights as part of the Units issued in the IPO that were not previously recorded, and should no longer be relied upon. As such, the Company will file an amendment to the First Amended Filing, and the unaudited condensed financial statements for the periods ended March 31, 2021 and June 30, 2021 will be restated within the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, to be filed with the SEC (the “Q3 Form 10-Q”).

 

The restatement does not have an impact on its cash position and cash held in the trust account established in connection with the IPO (the “Trust Account”).

 

The Company’s management has concluded that a material weakness remains in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. 

 

We are filing this Amendment No. 2 to amend and restate the First Amended Filing with modification as necessary to reflect the restatements. The following items have been amended to reflect the restatements: (i) Part I, Item 1A. Risk Factors; (ii) Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations; (iii) Part II, Item 8. Financial Statements and Supplementary Data; and (iv) Part II, Item 9A Controls and Procedures. In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Form 10-K/A (Exhibits 31.1, 31.2, 32.1 and 32.2).

 

Except as described above, no other information included in the Annual Report on Form 10-K of Breeze Holdings Acquisition Corp. as of December 31, 2020 and for the period from June 11, 2020 (inception) through December 31, 2020, as filed with the SEC on March 31, 2021 (the “Original Filing”) or the First Amended Filing is being amended or updated by this Amendment No. 2 and, other than as described herein, this Amendment No. 2 does not purport to reflect any information or events subsequent to the Original Filing or the First Amended Filing. We have not amended our previously filed Quarterly Report on Form 10-Q for the period affected by the restatement. This Amendment No. 2 continues to describe the conditions as of the date of the Original Filing or the First Amended Filing and, except as expressly contained herein, we have not updated, modified or supplemented the disclosures contained in the Original Filing or the First Amended Filing. Accordingly, this Amendment No. 2 should be read in conjunction with the Original Filing and the First Amended Filing and with our filings with the SEC subsequent to the Original Filing.

 

 

 

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TABLE OF CONTENTS

 

|                                                 | PAGE                                                                                        |
|------------------------------------------------------|---------------------------------------------------------------------------------------------|
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii                                                                                          |
| PART I                                          |                                                                                        | 1 |
| Item 1.A.                                            | Risk Factors                                                                                | 1 |
| PART II                                         |                                                                                        | 23 |
| Item 7.                                         | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
| Item 7A.                                        | Quantitative and Qualitative Disclosures About Market Risk                                  | 27 |
| Item 8.                                         | Financial Statements and Supplementary Data                                                 | 27 |
| Item 9.                                         | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure        | 27 |
| Item 9A.                                        | Controls and Procedures                                                                     | 27 |
| Item 9B.                                        | Other Information.                                                                          | 28 |
| PART III                                        |                                                                                        | 29 |
| Item 14.                                        | Principal Accountant Fees and Services                                                      | 29 |
| PART IV                                         |                                                                                        | 30 |
| Item 15.                                        | Exhibits and Financial Statement Schedules                                                  | 30 |
| Item 16.                                        | Form 10-K Summary                                                                           | 31 |

 

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CERTAIN TERMS 

Unless otherwise stated in this Amendment on Form 10-K/A (this “Report”), or the context otherwise requires, references to: 

|   | • | “common stock” is to our common stock; |
|--------|---------|----------------------------------------------------|

|   | • | “founder shares” are to shares of our common stock initially purchased by our sponsor in a private placement prior to our Initial Public Offering; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “Initial Public Offering” refers to the Initial Public Offering closed on November 23, 2020 (the “Closing Date”) |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “initial stockholders” are to our holders of our founder shares prior to our Initial Public Offering (or their permitted transferees); |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “management” or our “management team” are to our officers and directors; |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | “private placement warrants” are to the warrants issued to our sponsor and I-Bankers Securities, Inc. in a private placement simultaneously with the closing of our Initial Public Offering; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “public shares” are to shares of our common stock sold as part of the units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market); |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “public warrants” are to our redeemable warrants sold as part of the units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market), and to any private placement warrants or warrants issued upon conversion of working capital loans that are sold to third parties that are not our sponsor or executive officers or directors (or permitted transferees) following the consummation of our initial business combination; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “sponsor” is to Breeze Sponsor, LLC, a Delaware limited liability company formed by our chairman and chief executive officer; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “warrants” are to our redeemable warrants, which includes the public warrants as well as the private placement warrants to the extent they are no longer held by the initial purchasers of the private placement warrants or their permitted transferees; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | “rights” are to the rights; and |
|--------|---------|---------------------------------------------|

|   | • | we,” “us,” “company” or “our company” are to Breeze Holdings Acquisition Corp. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 

This Amendment, including, without limitation, statements under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to: 

|   | • | our ability to complete any initial business combination; |
|--------|---------|-----------------------------------------------------------|

|   | • | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | our potential ability to obtain additional financing to complete our initial business combination; |
|--------|---------|----------------------------------------------------------------------------------------------------|

ii

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|   |  |  |
|--------|--|--|

|   | • | our pool of prospective target businesses; |
|--------|---------|--------------------------------------------|

|   | • | the ability of our officers and directors to generate a number of potential investment opportunities; |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | our public securities’ potential liquidity and trading; |
|--------|---------|---------------------------------------------------------------|

|   | • | the lack of a market for our securities; |
|--------|---------|------------------------------------------|

|   | • | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------|

|   | • | the trust account not being subject to claims of third parties; or |
|--------|---------|--------------------------------------------------------------------|

|   | • | our financial performance following our Initial Public Offering. |
|--------|---------|------------------------------------------------------------------|

The forward-looking statements contained in this Amendment 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) and 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. These risks and others described under “Risk Factors” may not be exhaustive. 

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Amendment. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Amendment, those results or developments may not be indicative of results or developments in subsequent periods. 

 

 

iii

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PART I

 

| ITEM 1A. | RISK FACTORS |
|---------------|--------------|

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this report, before making a decision 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. 

Summary of Risk Factors 

|   | • | We are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | You will not be entitled to protections normally afforded to investors of many other blank check companies. |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | • | Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.15 per share. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | • | We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors. |
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|   | • | Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company or the stockholders from a financial point of view. |
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|   | • | We may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. Any such issuances would dilute the interest of our stockholders and likely present other risks. |
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|   | • | Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination. |
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|   | • | Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support. |
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|   | • | Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support. |
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|   | • | Because each unit contains one-twentieth of one right, the units may be worth less than units of other blank check companies. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

|   | • | The obligation of our sponsor and I-Bankers to purchase rights in the open market as described in this prospectus may allow them to make a substantial profit even if an initial business combination subsequently declines in value or is unprofitable for our public stockholders, and may create conflicts of interest in selecting a target business combination. Additionally, such rights purchases may support the market price of the rights during the buyback period. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our warrant agreement and rights agreement will designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants or rights, which could limit the ability of warrant or right holders to obtain a favorable judicial forum for disputes with our company. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Risks Relating to Our Search For, Consummation of, or Inability to Consummate, a Business Combination 

We are a newly formed 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 newly formed company with no operating results, and we will not commence operations until obtaining funding through our initial public offering. 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 have no plans, arrangements or understandings with any prospective target business concerning an initial business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues. 

Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. 

We may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our public shares do not approve of the initial business combination we complete. 

If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. 

Pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares purchased during or after our initial public offering (including in open market and privately negotiated transactions), in 

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favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and representative shares, we would need only 4,187,501, or 36.4%, of the 11,500,000 public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted) in order to have our initial business combination approved. Our initial stockholders own shares representing 20% of our outstanding shares of common stock immediately following the completion of our initial public offering. Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial stockholders to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder approval for such initial business combination. 

Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination. 

At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors may complete an initial business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the initial business combination, unless we seek such stockholder vote. 

 

Accordingly, if we do not seek stockholder approval, 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 an initial business combination with a target. 

We may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the initial 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 consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial business combination with us. 

The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. 

At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the per-share value of shares held by non- redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions. 

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The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock. 

If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market. 

 

The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders. 

Any potential target business with which we enter into negotiations concerning an initial business combination will be aware that we must complete our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination). Consequently, such target business may obtain leverage over us in negotiating an 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 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, in which case our public stockholders may only receive $10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless. 

We must complete our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination). We may not be able to find a suitable target business and complete our initial business combination within such time period. If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive $10.15 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption of their shares. See “— 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 $10.15 per share” and other risk factors below. 

If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our common stock. 

If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. 

 

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Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. 

In addition, if such purchases are made, the public “float” of our common stock or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange. 

If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. 

We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares, which will include the requirement that a beneficial holder must identify itself. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the initial vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed. See the section of this prospectus entitled “Item 1. Business — Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination — Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights.” 

You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss. 

Our public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination, (ii) the redemption of any public shares properly submitted 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 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial offering if we extend the period of time to consummate a business combination) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination), subject to applicable law and as further described herein. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. 

Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations. 

Although we expect to focus our search for a target business in the energy industry, we may seek to complete a business combination with an operating company in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our business combination with another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business 

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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 complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission. 

Past performance by our management team, may not be indicative of future performance of an investment in the 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) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s or their affiliates’ performance as indicative of the future performance of an investment in the company or the returns the company will, or is likely to, generate going forward. Our officers and directors have not had experience with blank check companies or special purpose acquisition companies in the past.

Because we intend to seek a business combination with a target business or businesses in the energy industry, we expect our future operations to be subject to risks associated with this industry. 

We intend to focus our search for a target business in the energy industry. Accordingly, we may pursue a target business in these sectors or any other sector within the energy industry. Because we have not yet selected or approached any specific target business or sector, we cannot provide specific risks of any business combination. However, risks inherent in investments in the energy industry include, but are not limited to, the following: 

 

|   | • | Volatility of oil and natural gas prices; |
|--------|---------|-------------------------------------------|

|   | • | Price and availability of alternative fuels, such as solar, coal, nuclear and wind energy; |
|--------|---------|--------------------------------------------------------------------------------------------|

|   | • | Competitive pressures in the utility industry, primarily in wholesale markets, as a result of consumer demand, technological advances, greater availability of natural gas and other factors; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Significant federal, state and local regulation, taxation and regulatory approval processes as well as changes in applicable laws and regulations; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The speculative nature of and high degree of risk involved in investments in the upstream, midstream and energy services sectors, including relying on estimates of oil and gas reserves and the impacts of regulatory and tax changes; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Drilling, exploration and development risks, including encountering unexpected formations or pressures, premature declines of reservoirs, blow-outs, equipment failures and other accidents, cratering, sour gas releases, uncontrollable flows of oil, natural gas or well fluids, adverse weather conditions, pollution, fires, spills and other environmental risks, any of which could lead to environmental damage, injury and loss of life or the destruction of property; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Proximity and capacity of oil, natural gas and other transportation and support infrastructure to production facilities; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

|   | • | Availability of key inputs, such as strategic consumables, raw materials and drilling and processing equipment; |
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|   | • | The supply of and demand for oilfield services and equipment in the United States and internationally; |
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|   | • | Available pipeline, storage and other transportation capacity; |
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|   | • | Changes in global supply and demand and prices for commodities; |
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|   | • | Impact of energy conservation efforts; |
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|   | • | Technological advances affecting energy production and consumption; |
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|   | • | Overall domestic and global economic conditions; |
|--------|---------|--------------------------------------------------|

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|   |  |  |
|--------|--|--|

|   | • | Availability of, and potential disputes with, independent contractors; |
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|   | • | Natural disasters, terrorist acts and similar dislocations; |
|--------|---------|-------------------------------------------------------------|

|   | • | Impact of COVID-19 on demand, labor markets, and other macro-economic factors affecting the energy industry, and |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | Value of U.S. dollar relative to the currencies of other countries. |
|--------|---------|---------------------------------------------------------------------|

We may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s area of expertise. 

Although we focus on identifying companies in the energy sector, we will consider an initial business combination outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment, if an opportunity were available, in an initial business combination candidate. In the event we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value. 

Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. 

Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal 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 receive only approximately $10.15 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption of their shares. See “— 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 $10.15 per share” and other risk factors below. 

Resources could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. 

We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share on the redemption of their shares. See “— 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 $10.15 per share” and other risk factors below. 

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Our key personnel may negotiate employment or consulting agreements as well as reimbursement of out-of-pocket expenses, if any, with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation or reimbursement for out-of-pocket expenses, if any, 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 completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the initial business combination. Additionally, they may negotiate reimbursement of any out-of-pocket expenses incurred on our behalf prior to the consummation of our initial business combination, should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination, or as reimbursement for such out-of-pocket expenses. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our 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 completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination. 

Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. 

Our sponsor and I-Bankers hold 2,875,000 founder shares. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and I-Bankers purchased an aggregate of 5,425,000 private placement warrants, each exercisable for one share of our common stock at $11.50 per share, for a purchase price of $5,425,000, or $1.00 per warrant, that will also be worthless if we do not complete a business combination. 

The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the 12-month anniversary of the closing of our initial public offering nears, which is the deadline for our completion of an initial business combination (unless extended to up to 18 months from the closing of our initial public offering). 

Since our sponsor, executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. 

At the closing of our initial business combination, our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. These financial interests of our sponsor, executive officers and directors may influence their motivation in identifying and selecting a target business combination and completing an initial business combination. 

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Risks Relating to Our Securities 

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. 

 

Our securities are currently listed on NASDAQ. However, we cannot assure you that our securities will continue to be listed on NASDAQ in the future or prior to our initial business combination. 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 amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (300 round-lot holders). 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 $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time. If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: 

|   | • | a limited availability of market quotations for our securities; |
|--------|---------|-----------------------------------------------------------------|

|   | • | reduced liquidity for our securities; |
|--------|---------|---------------------------------------|

|   | • | a determination that our 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; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | a limited amount of news and analyst coverage; and |
|--------|---------|----------------------------------------------------|

|   | • | a decreased ability to issue additional securities or obtain additional financing in the future. |
|--------|---------|--------------------------------------------------------------------------------------------------|

You will not be entitled to protections normally afforded to investors of many other blank check companies. 

Since the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an 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, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of our initial public offering and the sale of the private placement warrants 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 have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination. 

If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 10% of our common stock, you will lose the ability to redeem all such shares in excess of 10% of our common stock. 

If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 10% of the shares sold in our initial public offering without our prior consent, which we refer to as the “Excess Shares.” 

 

However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 10% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss. 

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Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless. 

We have encountered and continue to expect to encounter competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar technical, human and other resources to ours, and our financial resources are relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable are limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if we are obligated to pay cash for the shares of common stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination. This may place us at a competitive disadvantage in successfully negotiating an initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on the liquidation of our trust account and our warrants will expire worthless. 

If the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for at least 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination), we may be unable to complete our initial business combination. 

The funds available to us outside of the trust account may not be sufficient to allow us to operate for 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination), assuming that our initial business combination is not completed during that time. We believe that, upon the closing of our initial public offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination); however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.15 per share upon our liquidation. See “— 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 $10.15 per share” and other risk factors below. 

If the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management team to fund our search for an initial business combination, to pay our franchise and income taxes and to complete our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial business combination. 

Of the net proceeds of our initial public offering and the sale of the private placement warrants, $947,443 was available to us initially outside the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. None of our sponsor, members of our management team or any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.15 per share on our redemption of our public shares, and our rights and warrants will expire worthless. 

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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 $10.15 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, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. 

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.15 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 for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.15 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.15 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers, directors or members of our sponsor will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. 

Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders. 

In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.15 per share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.15 per share due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. 

While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.15 per share. 

We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers. 

We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will also be required to waive) any right, title, interest or claim of any kind in or to any monies in the trust account and not to seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by 

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us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions. 

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages. 

 

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. 

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. 

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. 

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. 

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination) may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 18th month from the closing of our initial public offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures. 

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business 

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combination) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. 

We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors. 

We may not 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 bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, 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 have not registered the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. 

We have not registered the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering. However, there may be instances in which holders of our public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants. 

The grant of registration rights to our initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our common stock. 

Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees can demand that we register their shares of our common stock at the time of our initial business combination. In addition, holders of our private placement warrants and their permitted transferees can demand that we register the private placement warrants and the shares of common stock issuable upon exercise of the private placement warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants or the common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price 

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of our common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common stock that is expected when the common stock owned by our initial stockholders, holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered. 

We may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. Any such issuances would dilute the interest of our stockholders and likely present other risks. 

Our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. Immediately after our initial public offering, there were 67,875,000 authorized but unissued shares of common stock available for issuance, which amount takes into account shares of common stock reserved for issuance upon exercise of outstanding warrants and the conversion of the rights. There are no shares of preferred stock issued and outstanding. 

We may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination activity). However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our stockholders. However, our executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to 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 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. 

 

The issuance of additional shares of common or preferred stock: 

|   | • | may significantly dilute the equity interest of investors in our initial public offering; |
|--------|---------|-------------------------------------------------------------------------------------------|

|   | • | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
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|   | • | could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | may adversely affect prevailing market prices for our units, common stock, rights and/or warrants. |
|--------|---------|----------------------------------------------------------------------------------------------------|

Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination. 

Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for an initial business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus entitled “Item 10. Directors, Executive Officers and Corporate Governance — Directors and Executive Officers.” 

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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. 

Following the completion of our initial public offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our officers and directors are, and may in the future become, affiliated with entities that are engaged in business activities similar to those intended to be conducted by us following our initial business combination. . 

Our officers and directors 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 or contractual duties. Any such companies may present additional conflicts of interest in pursuing an acquisition target. 

Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. 

 

For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see the sections of this prospectus entitled “Item 10. Directors, Executive Officers and Corporate Governance— Directors and Executive Officers,” “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest” and “Item 13. Certain Relationships and Related Transactions, and Director Independence.” 

 

Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests. 

We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours. 

In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support. 

In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination. and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation requires the approval of holders of 65% of our common stock, and amending our warrant agreement requires a vote of holders of at least 65% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (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 12 months (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business transaction) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity. To the extent any such amendments would be deemed to fundamentally change the nature of any securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination. 

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Certain agreements related to our initial public offering may be amended without stockholder approval. 

Certain agreements, including the underwriting agreement relating to our initial public offering, the investment management trust agreement between us and Continental Stock Transfer & Trust Company, the letter agreement among us and our sponsor, executive officers, directors and director nominees, the registration rights agreement among us and our initial stockholders, the administrative services agreement between us and our sponsor, and the business combination marketing agreement may be amended without stockholder approval. These agreements contain various provisions that our public stockholders might deem to be material. 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. 

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. 

 

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. We may not redeem the warrants when a holder may not exercise such warrants. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees. 

 

Our warrants and founder shares 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 issued warrants to purchase 11,500,000 shares of our common stock as part of the units offered in our initial public offering and, simultaneously with the closing of our initial public offering, we issued in a private placement warrants to purchase an aggregate of 5,425,000 shares of common stock at $11.50 per share. Our initial stockholders currently own an aggregate of 2,875,000 founder shares. The founder shares are convertible into shares of common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor makes any working capital loans, up to $1,000,000 of such loans may be converted into warrants, at the price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. 

To the extent we issue shares of common stock to effectuate an initial business combination, the potential for the issuance of a substantial number of additional shares of common stock upon exercise of these warrants and conversion rights could make us a less attractive business combination vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our common stock and reduce the value of the shares of common stock issued to complete the initial business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate an initial business combination or increase the cost of acquiring the target business. 

The private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised by the holders on a cashless basis. 

Because each unit contains one-twentieth of one right, the units may be worth less than units of other blank check companies. 

Each unit contains one-twentieth of one right. Pursuant to the rights agreement, the rights may only be exercised for a whole number of shares, which means you must hold 20 rights in order to receive one share of common stock. We have established the components of the units in this way in order to reduce the dilutive effect of the rights upon completion of our initial business combination. While we believe this makes us a more attractive merger partner for target businesses, this unit structure may nevertheless cause our units to be worth less than if they included a right to purchase one whole share. 

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 The obligation of our sponsor and I-Bankers to purchase rights in the open market may allow them to make a substantial profit even if an initial business combination subsequently declines in value or is unprofitable for our public stockholders, and may create conflicts of interest in selecting a target business combination. Additionally, such rights purchases may support the market price of the rights during the buyback period. 

Our sponsor and I-Bankers entered into agreements in accordance with the guidelines of Rule 10b5-1 under the Exchange Act, to place limit orders, through an independent broker-dealer registered under Section 15 of the Exchange Act which is not affiliated with us nor part of the underwriting or selling group, to purchase an aggregate of up to 10,000,000 of our rights (7,500,000 by our sponsor and 2,500,000 by I-Bankers) in the open market at market prices, not to exceed $0.10 per right, during the period commencing on the later of (i) the date separate trading of the rights commenced or (ii) sixty calendar days after the end of the “restricted period” under Regulation M, continuing until the date that is the earlier of (a) eight months from the date of our initial public offering and (b) the date that we announce that we have entered into a definitive agreement in connection with our initial business combination. The limit orders will require our sponsor and I-Bankers to purchase any rights offered for sale (and not purchased by another investor) at or below a price of $0.10, until the earlier of (x) the expiration of the foregoing buyback period or (y) the date such purchases reach 10,000,000 rights in total (7,500,000 by our sponsor and 2,500,000 by I-Bankers). 

If our sponsor and I-Bankers purchase the maximum number of rights at the maximum purchase price and if we complete a business combination, such rights will convert into an aggregate of 500,000 shares of our common stock at an effective purchase price of $2.00 per share. As a result of the low acquisition cost of such shares, our sponsor and I-Bankers could make a substantial profit even if we select and consummate an initial business combination with an acquisition target that subsequently declines in value or is unprofitable for our public stockholders. Thus, such parties may have more of an economic incentive for us to enter into an initial business combination with a riskier, weaker-performing or financially unstable business, or an entity lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for the shares. 

In addition, these rights will be worthless if we do not complete an initial business combination. As such, the personal and financial interests of our affiliates may influence their motivation in identifying and selecting a target business combination and completing an initial business combination. This risk may become more acute as the 12-month deadline following the closing of our initial public offering nears (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination), which is the deadline for the completion of our initial business combination. 

Finally, such right purchases may serve to support the market price of the rights during such period at a price above that which would prevail in the absence of such purchases by our sponsor and I-Bankers. However, the agreement to purchase rights shall terminate at the end of the buyback period or the earlier purchase of the maximum number of rights by our sponsor and I-Bankers. The termination of the support provided by the right purchases may materially adversely affect the market price of any remaining rights held by holders of our rights. 

General Risks 

Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) outbreak. 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be adversely affected in a material way. 

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If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination. 

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including: 

|   | • | restrictions on the nature of our investments; and |
|--------|---------|----------------------------------------------------|

|   | • | restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In addition, we may have imposed upon us burdensome requirements, including: |
|--------|---------|------------------------------------------------------------------------------|

|   | • | registration as an investment company; |
|--------|---------|----------------------------------------|

|   | • | adoption of a specific form of corporate structure; and |
|--------|---------|---------------------------------------------------------|

|   | • | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
|--------|---------|-------------------------------------------------------------------------------------------------------|

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor. 

We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our securities are not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted 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 18 months from the closing of our initial public offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity; or (iii) absent an initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the closing of our initial public offering if we extend the period of time to consummate a business combination), our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.15 per share on the liquidation of our trust account and our rights and warrants will expire worthless. 

We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate. 

Our operations are dependent upon a relatively small group of individuals 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 completed our initial business combination. 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. 

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The requirements of being a public company may strain our resources and divert management’s attention. 

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ and other applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses. 

We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. 

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile. 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination. 

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021. 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 initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. 

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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 the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. 

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. 

 

Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders 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, which may have the effect of discouraging lawsuits against our directors, officers, other 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 our directors, officers, other employees or stockholders 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 except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. 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, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. 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. 

Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 

The determination of the offering price of our units and the size of our initial public offering was more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company. 

Prior to our public offering there has been no public market for any of our securities. The public offering price of the units and the terms of the rights and warrants were negotiated between us and the underwriters. In determining the size of our initial public offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of our initial public offering, prices and terms of the units, including the common stock, rights and warrants underlying the units, included: 

|   | • | the history and prospects of companies whose principal business is the acquisition of other companies; |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | • | prior offerings of those companies; |
|--------|---------|-------------------------------------|

|   | • | our prospects for acquiring an operating business at attractive values; |
|--------|---------|-------------------------------------------------------------------------|

 

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|   | • | a review of debt-to-equity ratios in leveraged transactions; |
|--------|---------|--------------------------------------------------------------|

|   | • | our capital structure; |
|--------|---------|------------------------|

|   | • | an assessment of our management and their experience in identifying operating companies; |
|--------|---------|------------------------------------------------------------------------------------------|

|   | • | general conditions of the securities markets at the time of our initial public offering; and |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | • | other factors as were deemed relevant. |
|--------|---------|----------------------------------------|

Although these factors were considered, the determination of our offering price was more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results. 

Our warrant agreement and rights agreement will designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants or rights, which could limit the ability of warrant or right holders to obtain a favorable judicial forum for disputes with our company. 

Our warrant agreement and right agreement will provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. 

Notwithstanding the foregoing, these provisions of the warrant agreement and rights agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants or rights shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement or rights agreement, as applicable. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement or rights agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants or rights, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder or right holder in any such enforcement action by service upon such warrant or right holder’s counsel in the foreign action as agent for such warrant or right holder. 

This choice-of-forum provision may limit a warrant or right holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement or rights agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors. 

 

Risks Relating to Restatement of Our Previously Issued Financial Statements

 

Our warrants are accounted for as liabilities and changes in the value of our warrants could have a material effect on our financial results.

 

On April 12, 2021, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities instead of equity on the SPAC’s balance sheet. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our public warrants and private placement warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value reported in our statement of operations for each reporting period.

 

As a result, included on our balance sheet as of December 31, 2020 contained elsewhere in this report are derivative liabilities related to embedded features contained within our warrants. ASC 815-40 provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.

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We identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management also evaluates the effectiveness of our internal controls and we will disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

In 10-K/A Amendment #1, we identified a material weakness in our internal control over financial reporting related to the previous classification of our warrants as equity instead of liabilities. Management concluded that a deficiency in internal control over financial reporting existed relating to the accounting treatment for complex financial instruments and that the failure to properly account for such instruments constituted a material weakness as defined in the SEC regulations. On June 10, 2021, our audit committee authorized management to restate our audited financial statements for the year ended December 31, 2020, and, accordingly, management concluded that the control deficiency that resulted in the incorrect classification of our warrants constituted a material weakness as of December 31, 2020. This material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures for our previously filed audited balance sheet related to our initial public offering dated November 25, 2020 and our audited financial statements for the year ended December 31, 2020.

 

In this 10-K/A Amendment #2, we identified a material weakness in our internal control over financial reporting related to the Company’s accounting treatment of all of the Public Shares as temporary equity as described in the Explanatory Note to this Amendment. The Company also recorded additional offering costs related to the excess fair value over purchase price for the sale of indirect interests in the Representative Shares by the Company to the Company’s Underwriter and Consultant as compensation for underwriting and consulting services in connection with the Initial Public Offering as well as recording additional paid in capital related to the relative fair value of the Rights are part of the Units issued in the Initial Public Offering that were not previously recorded as described in the Explanatory Note to this Amendment. However, the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or net cash flows.

 

We have implemented a remediation plan, described under Item 9A, Evaluation of Disclosure Controls and Procedures, to remediate the material weakness surrounding our historical presentation of our warrants, redeemable shares, representative shares and rights,  but can give no assurance that the measures we have taken will prevent any future material weaknesses or deficiencies in internal control over financial reporting. Even though we have strengthened our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

 

We may face litigation and other risks and uncertainties as a result of the material weakness in our internal control over financial reporting and the restatement of our financial statements.

 

Following this issuance of the SEC Statement, on April 12, 2021, management and the Audit Committee concluded that it was appropriate to restate (i) certain items on the Company’s previously issued audited balance sheet dated as of November 25, 2020, which was related to our IPO, and (ii) the Company’s previously issued audited financial statements as of December 31, 2020. See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As part of such process, we identified a material weakness in our internal controls over financial reporting.

 

As a result of such material weakness, the restatement of previously issued financials of the Company, the change in accounting for the warrants and other matters raised or that may in the future be raised by the SEC, we face potential for litigation, inquiries from the SEC and other regulatory bodies, other disputes or proceedings which may include, among other things, monetary judgments, penalties or other sanctions, claims invoking the federal and state securities laws and contractual claims. As of the date of this report, we have no knowledge of any such litigation, inquires, disputes or proceedings. However, we can provide no assurance that such litigation, inquiries, disputes or proceedings will not arise in the future. Any such litigation, inquiries, disputes or proceedings, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete our initial business combination.

 

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PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Special Note Regarding Forward-Looking Statements 

All statements other than statements of historical fact included in this Amendment including, without limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Amendment, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Amendment. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. 

Overview 

We are a blank check company formed under the laws of the State of Delaware on June 11, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our business combination using cash from the proceeds of the Initial Public Offering and the sale of the private placement warrants, our capital stock, debt or a combination of cash, stock and debt. 

As indicated in the accompanying financial statements, at December 31, 2020, we had $693,818 in cash and working capital of $626,554 (excluding franchise tax payable). We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our initial business combination will be successful. 

Results of Operations 

We have neither engaged in any operations nor generated any revenues to date. Our only activities from June 11, 2020 (inception) through December 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. 

For the period from June 11, 2020 (inception) through December 31, 2020, we had a net loss of $2,537,690 which consisted of operating and formation costs of $344,223, expensed offering costs of $395,625, and a change in fair value of warrant liabilities of $1,807,500, offset by interest income in our money market account of $178, and an unrealized gain on marketable securities held in our trust account of $9,480. 

Liquidity and Capital Resources 

On November 23, 2020, we consummated the Initial Public Offering of 10,000,000 units at a price of $10.00 per unit, generating gross proceeds of $100,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,425,000 private placement warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $5,425,000. 

On November 23, 2020, in connection with the underwriters’ full exercise of their over-allotment option, we consummated the sale of an additional 1,500,000 units, generating total gross proceeds of $15,000,000. 

Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the private placement warrants, a total of $116,725,000 was placed in the trust account. We incurred $4,099,907 in transaction costs, including $2,300,000 of underwriting fees, $1,322,350 of representative share offering costs, and $477,557 of other offering costs.

 

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As of December 31, 2020, we had cash and marketable securities held in the trust account of $116,734,480 (including $9,480 of unrealized gains) consisting of U.S. Treasury Bills with a maturity of 180 days or less. Interest income on the balance in the trust account may be used by us to pay taxes. Through December 31, 2020, we did not withdraw any interest earned on the trust account.

 

For the period from June 11, 2020 (inception) through December 31, 2020, cash used in operating activities was $253,625, which was due to our net loss of $2,537,690, and unrealized gains on marketable securities held in Trust Account of $9,480, offset in part by a change in fair value of warrant liabilities of $1,807,500, and expensed offering costs added back to net loss of $395,625, and changes in working capital of $90,420. 

 

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less deferred underwriting commissions and income taxes payable), to complete our business combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

 

As of December 31, 2020, the Company had $693,818 in cash held outside of the Trust Account and working capital of $626,554 (excluding franchise tax payable and common stock payable). 

 

In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the initial stockholders or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay such loaned amounts. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,000,000 of such loans may be convertible into warrants identical to the private placement warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to our sponsor, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

 

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. 

 

Off-balance sheet financing arrangements 

 

We did not have any off-balance sheet arrangements as of December 31, 2020. 

 

Contractual obligations 

 

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay Breeze Financial, Inc. a monthly fee of $5,000 for office space, administrative and support services to the Company, and monthly D&O insurance premium payments of $11,697 ending February 28, 2022. We began incurring these fees on November 23, 2020 and will continue to incur these fees monthly until the earlier of the completion of the business combination and the Company’s liquidation. 

 

The underwriters are entitled to a deferred fee of $0.275 per share, or $3,162,500 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement. 

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Critical Accounting Policies 

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: 

 

Warrant Liabilities

 

We account for the warrants issued in connection with our initial public offering in accordance with Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815”), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statement of Operations in the period of change.

 

Representative and Consultant Shares

 

Pursuant to the underwriting agreement (the “Underwriting Agreement”) between the Company and I-Bankers Securities (the “Representative”), on November 23, 2020, the Company issued to the Representative and its designee 250,000 shares of common stock and separately agreed to issue the Company’s Consultant 15,000 shares of common stock for nominal consideration in a private placement intended to be exempt from registration under Section 4(a)(2) of the Act. The Company accounts for the Representative Shares and Consultant Shares as a deferred offering cost of the Initial Public Offering. Accordingly, the offering cost will be allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to the Warrants will be expensed immediately in the Statement of Operations, while offering costs allocated to the redeemable Public Shares will be deferred and subsequently charged to temporary shareholder’s equity upon the completion of the Initial Public Offering.

 

Common stock subject to possible redemption

 

We account for common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our balance sheet.

 

Net Earnings (Loss) Per Share

 

Net income per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period. As the Public Shares are considered to be redeemable at fair value, and a redemption at fair value does not amount to a distribution different than other shareholders, redeemable and non-redeemable shares of common stock are presented as one class of shares in calculating net income per share of common stock. As a result, the calculated net income per share is the same for redeemable and non-redeemable shares of common stock.

 

Emerging Growth Company 

 

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.

 

25

----

 

 

This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. 

 

Recent Accounting Standards

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

26

----

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

 

This information appears following Item 16 of this Amendment and is included herein by reference.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES 

 

Evaluation of Disclosure Controls and Procedures 

 

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2020, due to the restatement of our audited balance sheet as of November 25, 2020 and audited financial statements as of and for the year ended December 31, 2020 related to the accounting for complex financial instruments, as described in Note 2 to the accompanying audited financial statements, which combined constitutes a material weakness in our internal control over financial reporting.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management concluded that a deficiency in internal control over financial reporting existed relating to the accounting treatment for complex financial instruments and that the failure to properly account for such instruments constituted a material weakness as defined in the SEC regulations. This material weakness resulted in the restatement of the Company’s audited financial statement as of November 25, 2020 and audited financial statements as of and for the year ended December 31, 2020  (the “Prior Reports”).

 

Management’s Report on Internal Controls Over Financial Reporting 

 

This Amendment on Form 10-K/A does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. 

 

Restatement of Previously Issued Financial Statements

 

On June 24, 2021, we revised our prior position on accounting for warrants and restated our financial statements to reclassify the Company’s warrants as described in the Explanatory Note to 10-K/A Amendment #1. However, the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or net cash flows.

 

On January 14, 2022, we restated our financial statements to reclassify the Company’s accounting treatment of all of the Public Shares as temporary equity as described in the Explanatory Note to this Amendment. The Company also recorded additional offering costs related to the excess fair value over purchase price for the sale of indirect interests in the Representative Shares by the Company to the Company’s Underwriter and Consultant as compensation for underwriting and consulting services in connection with the Initial Public Offering as well as recording additional paid in capital related to the relative fair value of the Rights are part of the Units issued in the Initial Public Offering that were not previously recorded as described in the Explanatory Note to this Amendment. However, the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or net cash flows.

 

Changes in Internal Control over Financial Reporting 

 

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially 

27

----

 

affect, our internal control over financial reporting. In light of the restatement of our financial statement included in this restated Annual Report, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

ITEM 9B. OTHER INFORMATION. 

None. 

28

----

 

PART III 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 

The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered. 

Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information for the respective periods and other required filings with the SEC for the period from June 11, 2020 (inception) through December 31, 2020 totaled $78,045. The above amounts include interim procedures and audit fees. 

Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Marcum for consultations concerning financial accounting and reporting standards for the period from June 11, 2020 (inception) through December 31, 2020. 

Tax Fees. We did not pay Marcum for tax planning and tax advice for the period from June 11, 2020 (inception) through December 31, 2020. 

All Other Fees. We did not pay Marcum for other services for the period from June 11, 2020 (inception) through December 31, 2020. 

Pre-Approval Policy 

Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit). 

29

----

 

PART IV 

| ITEM 15. | EXHIBITS, FINANCIAL STATEMENTS SCHEDULES |
|---------------|------------------------------------------|

| (a) | The following documents are filed as part of this Amendment: |
|-----|--------------------------------------------------------------|

| (1) | Financial Statements (As Restated): |
|-----|-------------------------------------|

 

|                                                    | Page |
|---------------------------------------------------------|------|
| Report of Independent Registered Public Accounting Firm | F-2  |
| Balance Sheet                                           | F-3  |
| Statement of Operations                                 | F-4  |
| Statement of Changes in Stockholders’ Deficit     | F-5  |
| Statement of Cash Flows                                 | F-6  |
| Notes to Financial Statements                           | F-7  |

 

| (2) | Financial Statement Schedules: |
|-----|--------------------------------|

None. 

30

----

 

| (3) | Exhibits |
|-----|----------|

We hereby file as part of this Amendment the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov. 

 

| Exhibit No. |   | Description                                                                                                                                                                                                                       |
|------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                                                                                   |
| 3.3              |   | Amended and Restated Certificate of Incorporation (incorporated by reference to exhibit 3.3 of the registrant’s Form S-1 (file no. 333-249677)                                                                                   |
|             |   |                                                                                                                                                                                                                                   |
| 4.1              |   | Warrant Agreement, dated November 23, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1)                                                                                       |
|             |   |                                                                                                                                                                                                                                   |
| 4.2              |   | Rights Agreement, dated November 23, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as rights agent. (1)                                                                                         |
|             |   |                                                                                                                                                                                                                                   |
| 4.3              |   | Description of Registrant’s Securities (filed as exhibit 4.3 to the Form 10-K filed March 31, 2021).                                                                                                                             |
|             |   |                                                                                                                                                                                                                                   |
| 10.1             |   | Letter Agreement, dated November 23, 2020, by and among the Company, Breeze Sponsor, LLC and each of the officers and directors of the Company. (1)                                                                                    |
|             |   |                                                                                                                                                                                                                                   |
| 10.2             |   | Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant. (1)                                                                                                                   |
|             |   |                                                                                                                                                                                                                                   |
| 10.3             |   | Registration Rights Agreement, dated November 23, 2020, by and among the Company and certain holders party thereto. (1)                                                                                                                |
|             |   |                                                                                                                                                                                                                                   |
| 10.4             |   | Administrative Services Agreement, dated November 23, 2020, by and between the Company and Breeze Sponsor, LLC. (1)                                                                                                                    |
|             |   |                                                                                                                                                                                                                                   |
| 10.9             |   | Securities Escrow Agreement, by and among the Company, Breeze Sponsor, LLC and each of the officers and directors of the Company. (incorporated by reference to exhibit 10.9 of the registrant’s Form S-1 (file no. 333-249677). |
|             |   |                                                                                                                                                                                                                                   |
| 14               |   | Code of Ethics (incorporated by reference to exhibit 14 of the registrant’s Form S-1 (file no. 333-249677).                                                                                                                      |
|             |   |                                                                                                                                                                                                                                   |
| 31.1             |   | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                               |
|             |   |                                                                                                                                                                                                                                   |
| 32.1             |   | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**                                       |

 

| * | Filed herewith. |
|---|-----------------|

| ** | Furnished herewith. |
|----|---------------------|

| (1) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on November 27, 2020. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| ITEM 16. | FORM 10-K SUMMARY |
|---------------|-------------------|

Not applicable. 

31

----

 

SIGNATURES 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this Amendment on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. 

January 14, 2022 

 

| BREEZE HOLDINGS ACQUISITION CORP. |
|-----------------------------------|
|                              |
| /s/ J. Douglas Ramsey             |
| Name: J. Douglas Ramsey           |
| Title: Chief Executive Officer    |

Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

 

| Name                    |   | Position                                                                   |   | Date             |
|-------------------------|--------|----------------------------------------------------------------------------|--------|------------------|
|                    |   |                                                                       |   |             |
| /s/ J. Douglas Ramsey   |   | Chairman, Chief Executive Officer and Chief                                |   | January 14, 2022 |
| J. Douglas Ramsey       |   | Financial Officer

(Principal Executive, Financial and Accounting Officer) |   |
|                    |   |                                                                       |   |             |
| /s/ Russell D. Griffin  |   | President and Director                                                     |   | January 14, 2022 |
| Russell D. Griffin      |   |                                                                       |
|                    |   |                                                                       |   |             |
| /s/ Daniel L. Hunt      |   | Director                                                                   |   | January 14, 2022 |
| Daniel L. Hunt          |   |                                                                       |
|                    |   |                                                                       |   |             |
| /s/ Albert S. McLelland |   | Director                                                                   |   | January 14, 2022 |
| Albert S. McLelland     |   |                                                                       |
|                    |   |                                                                       |   |             |
| /s/ Bill Stark          |   | Director                                                                   |   | January 14, 2022 |
| Bill Stark              |   |                                                                       |
|                    |   |                                                                       |   |             |
| /s/ Robert L. Thomas    |   | Director                                                                   |   | January 14, 2022 |
| Robert L. Thomas        |   |                                                                       |

 

 

32

----

 

 

BREEZE HOLDINGS ACQUISITION CORP. 

INDEX TO FINANCIAL STATEMENTS 

 

| Report of Independent Registered Public Accounting Firm | F-2    |
|---------------------------------------------------------|--------|
| Financial Statements (As Restated):                     |   |
| Balance Sheet                                           | F-3    |
| Statement of Operations                                 | F-4    |
| Statement of Changes in Stockholders’ Deficit     | F-5    |
| Statement of Cash Flows                                 | F-6    |
| Notes to Financial Statements                           | F-7    |

 

F-1

----

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Stockholders and the Board of Directors of 

Breeze Holdings Acquisition Corp. 

 

Opinion on the Financial Statements 

 

We have audited the accompanying balance sheet of Breeze Holdings Acquisition Corp. (the “Company”) as of December 31, 2020, the related statements of operations, changes in stockholders’ deficit and cash flows for the period from June 11, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from June 11, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. 

+

Restatement of Financial Statements

 

As discussed in Note 2 to the financial statements, the accompanying financial statements as of December 31, 2020 and for the period from June 11, 2020 (inception) through December 31, 2020 have been restated.   

Basis for Opinion 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. 

/s/ Marcum LLP 

Marcum LLP 

We have served as the Company’s auditor since 2020. 

New York, NY 

March 31, 2021, except for the effects of the restatement discussed in Note 2 – Amendment 1, as to which the date is June 24, 2021, and Note 2 – Amendment 2 and Note 12, as to which the date is January 14, 2022. 

F-2

----

 

BREEZE HOLDINGS ACQUISITION CORP. 

BALANCE SHEET 

DECEMBER 31, 2020

(As Restated)

 

 

| ASSETS                                                                                                                                                                          |   |   |        |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
| Current assets                                                                                                                                                                  |   |   |        |   |
| Cash                                                                                                                                                                            |   | $      | 693,818     |   |
| Prepaid expenses                                                                                                                                                                |   |   | 136,949     |   |
| Total Current Assets                                                                                                                                                            |   |   | 830,767     |   |
| Cash and marketable securities held in Trust Account                                                                                                                            |   |   | 116,734,480 |   |
| Prepaid expenses                                                                                                                                                                |   |   | 23,292      |   |
| Total Assets                                                                                                                                                                    |   | $      | 117,588,539 |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                     |   |   |        |   |
| Current liabilities                                                                                                                                                             |   |   |        |   |
| Accounts payable and accrued expenses                                                                                                                                           |   | $      | 67,264      |   |
| Franchise tax payable                                                                                                                                                           |   |   | 23,156      |   |
| Common stock payable                                                                                                                                                            |   |   | 74,850      |   |
| Current maturities of long-term liabilities                                                                                                                                     |   |   | 136,949     |   |
| Total Current Liabilities                                                                                                                                                       |   |   | 302,219     |   |
| Warrant liabilities                                                                                                                                                             |   |   | 17,487,000  |   |
| Other long-term liabilities                                                                                                                                                     |   |   | 23,292      |   |
| Total Liabilities                                                                                                                                                               |   |   | 17,812,511  |   |
| Commitments                                                                                                                                                                     |   |   |        |   |
| Common stock subject to possible redemption, 11,500,000 shares at redemption value                                                                                              |   |   | 115,000,000 |   |
| Stockholders’ Deficit                                                                                                                                                     |   |   |        |   |
| Preferred stock, $0.0001 par value; 1,000,000 authorized; none issued and outstanding                                                                                           |   |   | —     |   |
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,625,000 shares issued and 3,125,000 outstanding (excluding 11,500,000 shares subject to possible redemption) |   |   | 313         |   |
| Additional paid-in capital                                                                                                                                                      |   |   | —     |   |
| Accumulated deficit                                                                                                                                                             |   |   | (15,224,285 | )      |
| Total Stockholders’ Deficit                                                                                                                                               |   |   | (15,223,972 | )      |
| TOTAL LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT                                                                                  |   | $      | 117,588,539 |   |

 

The accompanying notes are an integral part of the financial statements. 

F-3

----

 

BREEZE HOLDINGS ACQUISITION CORP. 

STATEMENT OF OPERATIONS 

FOR THE PERIOD FROM JUNE 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020

(As Restated) 

 

| Operating and formation costs                                  |   | $      | 344,223    |   |
|----------------------------------------------------------------|--------|--------|------------|--------|
|      Loss from operations                  |   |   | (344,223   | )      |
| Other income (expense):                                        |   |   |       |   |
| Interest income                                                |   |   | 178        |   |
| Unrealized gain on marketable securities held in Trust Account |   |   | 9,480      |   |
| Expensed offering costs                                        |   |   | (395,625   | )      |
| Change in fair value of warrant liabilities                    |   |   | (1,807,500 | )      |
|     Total other expenses, net              |   |   | (2,193,467 | )      |
| Net loss                                                       |   | $      | (2,537,690 | )      |
|                                                           |   |   |       |   |
| Basic and diluted weighted average shares outstanding          |   |   | 4,650,246  |   |
| Basic and diluted net loss per share of Common Stock           |   | $      | (0.55      | )      |

 

The accompanying notes are an integral part of the financial statements. 

F-4

----

 

BREEZE HOLDINGS ACQUISITION CORP. 

STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT 

FOR THE PERIOD FROM JUNE 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020

(As Restated)

 

 

|                                                                  |   | Common Stock |      |   |   |   |    |                       |   |   |                                                                |   |   |                                |        |
|-----------------------------------------------------------------------|--------|--------------|-----------|--------|--------|--------|---------|----------------------------|--------|--------|---------------------------------------------------------------------|--------|--------|-------------------------------------|-------------|
|                                                                  |   | Shares       |      |   | Amount |   |    | Additional Paid-in Capital |   |   | Accumulated         Deficit |   |   | Total

Stockholders’

Deficit |        |
| Balance – June 11, 2020 (inception)                             |   |         | —   |   |   | $      | — |                       |   | $      | —                                                             |   |   | $                                   | —     |   |   | $ | — |   |
| Common stock issued to the Sponsor (1)                                |   |         | 2,875,000 |   |   |   | 288     |                       |   |   | 24,712                                                              |   |   |                                | —     |   |   |   | 25,000 |   |
| Common stock issued to the Representative                             |   |         | 250,000   |   |   |   | 25      |                       |   |   | 1,247,475                                                           |   |   |                                | —     |   |   |   | 1,247,500 |   |
| Excess of cash received over fair value of Private Placement Warrants |   |         | —   |   |   |   | — |                       |   |   | 325,500                                                             |   |   |                                | —     |   |   |   | 325,500 |   |
| Allocation of IPO proceeds to Rights, net of offering costs           |   |         |      |   |   |   |    |                       |   |   | 4,214,968                                                           |   |   |                                |        |   |   |   | 4,214,968 |   |
| Accretion of Common stock to redemption value                         |   |         | —   |   |   |   | — |                       |   |   | (5,812,655                                                          | )      |   |                                | (12,686,595 | ) |   |   | (18,499,250 | ) |
| Net loss                                                              |   |         | —   |   |   |   | — |                       |   |   | —                                                             |   |   |                                | (2,537,690  | ) |   |   | (2,537,690 | ) |
| Balance – December 31, 2020                                     |   |         | 3,125,000 |   |   | $      | 313     |                       |   | $      | —                                                             |   |   | $                                   | (15,224,285 | ) |   | $ | (15,223,972 | ) |

 

| (1) | On June 11, 2020, the Company issued an aggregate of 100 shares of common stock to the Sponsor for an aggregate purchase price of $25,000. On July 15, 2020, the Company effected a stock split of 28,750-for-1 of its common stock resulting in an aggregate of 2,875,000 shares of common stock held by the Sponsor. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The accompanying notes are an integral part of the financial statements. 

F-5

----

 

BREEZE HOLDINGS ACQUISITION CORP. 

STATEMENT OF CASH FLOWS 

FOR THE PERIOD FROM JUNE 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020

(As Restated) 

 

| Cash Flows from Operating Activities:                                         |   |   |         |   |
|-------------------------------------------------------------------------------|--------|--------|--------------|--------|
| Net Loss                                                                      |   | $      | (2,537,690   | )      |
| Adjustments to reconcile net loss to net cash used in operating activities:   |   |   |         |   |
| Expensed offering costs on issuance of warrants                               |   |   | 395,625      |   |
| Unrealized gain on marketable securities held in Trust Account                |   |   | (9,480       | )      |
| Change in fair value of warrant liabilities                                   |   |   | 1,807,500    |   |
| Changes in operating assets and liabilities:                                  |   |   |         |   |
| Accounts payable and accrued expenses                                         |   |   | 67,264       |   |
| Franchise tax payable                                                         |   |   | 23,156       |   |
| Net cash used in operating activities                                         |   |   | (253,625     | )      |
| Cash Flows from Investing Activities:                                         |   |   |         |   |
| Investment of cash in Trust Account                                           |   |   | (116,725,000 | )      |
| Net cash used in investing activities                                         |   |   | (116,725,000 | )      |
| Cash Flows from Financing Activities:                                         |   |   |         |   |
| Proceeds from sale of common stock to initial stockholders and representative |   |   | 25,000       |   |
| Proceeds from sale of Units, net of underwriting discounts paid               |   |   | 112,700,000  |   |
| Proceeds from sale of Private Placement Warrants                              |   |   | 5,425,000    |   |
| Proceeds from promissory note – related party                           |   |   | 145,617      |   |
| Repayment of promissory note – related party                            |   |   | (145,617     | )      |
| Payment of offering costs                                                     |   |   | (477,557     | )      |
| Net cash provided by financing activities                                     |   |   | 117,672,443  |   |
| Net Change in Cash                                                            |   |   | 693,818      |   |
| Cash – Beginning of period, June 11, 2020 (inception)                   |   |   | —      |   |
| Cash – End of period                                                    |   | $      | 693,818      |   |
| Supplemental disclosure of non-cash financing activities:                     |   |   |         |   |
| Accretion of common stock subject to redemption value                         |   | $      | 18,499,250   |   |
| Value of common stock subject to redemption                                   |   | $      | 115,000,000  |   |
| Initial classification of warrant liabilities                                 |   | $      | 15,679,500   |   |
| Offering costs in exchange for common stock                                   |   | $      | 25,000       |   |
| Fair value of Public Rights issued to investors, net of offering costs        |   | $      | 4,214,968    |   |
| Fair value of  Representative and Consultants Shares                |   | $      | 1,322,350    |   |

 

The accompanying notes are an integral part of the financial statements. 

 

F-6

----

 

 

BREEZE HOLDINGS ACQUISITON CORP. 

NOTES TO FINANCIAL STATEMENTS 

FOR THE PERIOD FROM JUNE 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 

Note 1 — Description of Organization and Business Operations 

Breeze Holdings Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on June 11, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). 

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. 

As of December 31, 2020, the Company had not commenced any operations. All activity for the period from June 11, 2020 (inception) through December 31, 2020 relates to the Company’s formation, the Initial Public Offering (“Initial Public Offering”), which is described below, and, after the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. 

The registration statement for the Company’s Initial Public Offering was declared effective on November 23, 2020. On November 25, 2020, the Company consummated the Initial Public Offering of 11,500,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public Shares”), generating gross proceeds of $115,000,000, which is described in Note 4. 

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,425,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Breeze Sponsor, LLC, a Delaware limited liability company (the “Sponsor”) and I-Bankers Securities, Inc., generating gross proceeds of $5,425,000, which is described in Note 5. 

Following the closing of the Initial Public Offering on November 25, 2020, an amount of $116,725,000 ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below. 

Transaction costs incurred in connection with the Initial Public Offering amounted to $4,099,907, consisting of $2,300,000 of underwriting fees, $1,322,350 of representative share offering costs, and $477,557 of other offering costs. As of December 31, 2020, cash of $693,818 was held outside of the Trust Account and was available for working capital purposes. 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete an initial Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable) at the time of the agreement to enter into the initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). 

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account (initially $10.15 per share), plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. 

F-7

----

 

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”) and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined in Note 6) and any Public Shares purchased by it during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares, regardless of whether they vote for or against a Business Combination. 

If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares, without the Company’s prior written consent. 

The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by November 25, 2021 (which can be extended up to 6 months) and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.

 

 On November 22, 2021, the Company announced that its sponsor, Breeze Sponsor, LLC, timely deposited an aggregate of $1,150,000 (the “Extension Payment”), representing $0.10 per public share, into the Company’s trust account in order to extend the date by which the Company has to consummate a business combination from November 25, 2021 to February 25, 2022 (the “Extension”). The Sponsor loaned the Extension Payment to the Company in exchange for a promissory note in the amount of the Extension Payment. The loan under the promissory note is non-interest bearing and will be repaid upon the consummation of a business combination. The Company’s stockholders are not entitled to vote on or redeem their shares in connection with such extension.  

 

The Company will have until February 25, 2022 (which can be extended up to 3 months) to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s 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 the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period. 

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and will not apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. 

F-8

----

 

Liquidity

As of December 31, 2020, the Company had $693,818 in cash held outside of the Trust Account and working capital of $626,554 (excluding franchise tax payable and common stock payable).

 

The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $25,000 from the sale of the Founder Shares, and a loan of $300,000 under an unsecured and non-interest bearing promissory note (see Note 6). Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity needs have been satisfied from the net proceeds from the private placement held outside of the Trust Account.

 

Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing accounts payable and accrued liabilities, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. 

 

Risks and uncertainties 

 

Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

 Note 2 — Restatement of Previously Issued Financial Statements

 

Amendment 1 to 10-K/A

 

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing the Company’s warrants. As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 11,500,000 redeemable warrants (the “Public Warrants”) that were included in the units issued by the Company in its initial public offering (the “IPO”) and (ii) the 5,425,000 redeemable warrants that were issued to the Company’s sponsor in a private placement that closed concurrently with the closing of the Initial Public Offering (together with the Public Warrants, the “Warrants”). The Company previously accounted for the Warrants as components of equity.

 

In further consideration of the guidance in Accounting Standards Codification (“ASC”) Topic 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” ("ASC 815"), the Company concluded that a provision in the warrant agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC Topic 820, “Fair Value Measurement” (“ASC 820”), with changes in fair value recognized in the Statements of Operations in the period of change.

 

F-9

----

 

 

The Company’s accounting for the warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported operating expenses, net cash flows or cash.

 

|                                                                                                               |   | As Previously

Reported in

10-K |        |   | Adjustment |   |        | As Restated

10-K/A

Amendment 1 |   |
|--------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-------------|--------|------------|--------|-------------|----------------------------------|--------|
| Balance Sheet as of December 31, 2020 (audited)                                                                    |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Warrant liabilities                                                                                                |   | $                                | —     |   |       | $      | 17,487,000  |                             |   | $ | 17,487,000 |   |
| Total liabilities                                                                                                  |   |                             | 250,661     |   |       |   | 17,487,000  |                             |   |   | 17,737,661 |   |
| Common stock subject to possible redemption                                                                        |   |                             | 112,337,876 |   |       |   | (17,487,000 | )                                |   |   | 94,850,876 |   |
| Common stock                                                                                                       |   |                             | 356         |   |       |   | 173         |                             |   |   | 529 |   |
| Additional paid-in capital                                                                                         |   |                             | 5,334,211   |   |       |   | (4,750,513  | )                                |   |   | 583,698 |   |
| Accumulated deficit                                                                                                |   |                             | (334,565    | )      |       |   | 4,750,340   |                             |   |   | 4,415,775 |   |
| Statement of Operations for the period from June 11, 2020 (inception) to December 31, 2020 (audited)               |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Expensed offering costs                                                                                            |   | $                                | —     |   |       | $      | (437,660    | )                                |   | $ | (437,660 | ) |
| Change in fair value of warrant liabilities                                                                        |   |                             | —     |   |       |   | 8,117,500   |                             |   |   | 8,117,500 |   |
| Loss on sale of private placement warrants                                                                         |   |                             | —     |   |       |   | (2,929,500  | )                                |   |   | (2,929,500 | ) |
| Other income                                                                                                       |   |                             | 9,658       |   |       |   | 4,750,340   |                             |   |   | 4,759,998 |   |
| Net income                                                                                                         |   | $                                | (334,565    | )      |       | $      | 4,750,340   |                             |   | $ | 4,415,775 |   |
| Basic and diluted weighted average shares outstanding, Redeemable Common Stock                                     |   |                             | 11,067,771  |   |       |   | (1,722,858  | )                                |   |   | 9,344,913 |   |
| Basic and diluted weighted average shares outstanding, Non-Redeemable Common Stock                                 |   |                             | 3,557,229   |   |       |   | 1,722,858   |                             |   |   | 5,280,087 |   |
| Basic and diluted net income per share, Non-Redeemable Common Stock                                                |   | $                                | (0.09       | )      |       | $      | (0.61       | )                                |   | $ | (0.70 | ) |
| Statement of Cash Flows for the period from June 11, 2020 (inception) to December 31, 2020 (audited)               |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Cash flow from operating activities:                                                                               |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Net income                                                                                                         |   | $                                | (334,565    | )      |       | $      | 4,750,340   |                             |   | $ | 4,415,775 |   |
| Adjustments to reconcile net income to net cash used in operating activities:                                      |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Expensed offering costs on issuance of Public Warrants                                                             |   |                             |        |   |       |   | 437,660     |                             |   |   | 437,660 |   |
| Loss on sale of private placement warrants                                                                         |   |                             |        |   |       |   | 2,929,500   |                             |   |   | 2,929,500 |   |
| Change in fair value of warrant liabilities                                                                        |   |                             | —     |   |       |   | (8,117,500  | )                                |   |   | (8,117,500 | ) |
| Supplemental disclosure of non-cash investing and financing activities:                                            |   |                             |        |   |       |   |        |                             |   |   |   |   |
| Initial measurement of warrants issued in connection with the Initial Public Offering accounted for as liabilities |   |                             | —     |   |       |   | 25,604,500  |                             |   |  

25,604,500 |   |
| Value of common stock subject to redemption                                                                        |   |                             | 112,337,876 |   |       |   | (17,487,000 | )                                |   |   | 94,850,876 |   |

 

Amendment 2 to 10-K/A

 

In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to possible redemption to be classified outside of permanent equity. The Company had previously classified a portion of the redeemable common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. The Company restated its financial statements to classify all redeemable common stock as temporary equity at redemption value and any related impact, as the threshold in its charter would not change the nature of the underlying shares as redeemable and thus would be required to be classified outside of permanent equity. The Company also recorded additional offering costs related to the excess fair value over purchase price for the sale of common stock to the Company’s Underwriters (“Representative Shares”), and to the Company’s Consultant (“Consultant Shares”) as compensation for the underwriting and consulting services, respectively, in connection with the Initial Public Offering (see Note 6).  In addition, the Company recorded additional paid-in capital related to the relative fair value of the Rights as part of the Units issued in the Initial Public Offering that were not previously recorded (see Note 9).

The reclassification of amounts from permanent equity to temporary equity resulted in non-cash financial statement corrections and will have no impact on the Company’s current or previously reported cash position, operating expenses or total operating, investing or financing cash flows. Further, the additional offering costs recorded in relation to the Representative Shares and Consultant Shares, and recording of the Rights issued in the Initial Public Offering also result in non-cash financial statement corrections and will have no 

F-10

----

 

impact on the Company’s current or previously reported cash position, and investing or financing cash flows. In connection with the change in presentation for the redeemable common stock subject to possible redemption, the Company has restated its earnings per share calculation to allocate income and losses shared pro rata between redeemable and nonredeemable common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, redeemable and nonredeemable common stock share pro rata in the income and losses of the Company.

The following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:

 

|                                            |   |   | As Previously

Reported in

Form 10-K/A

Amendment 1 |   |   | Adjustment   |   |   | As Restated  |
|-------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|--------------|--------|--------|--------------|
| Balance Sheet as of December 31, 2020 (audited) |   |   |                                                 |   |   |         |   |   |         |
| Common Stock Payable                            |   | $      | —                                              |   | $      | 74,850       |   | $      | 74,850       |
| Total liabilities                               |   |   | 17,737,661                                           |   |   | 74,850       |   |   | 17,812,511   |
| Common stock subject to possible redemption     |   |   | 94,850,876                                           |   |   | 20,149,124   |   |   | 115,000,000  |
| Common stock                                    |   |   | 529                                                  |   |   | (216)        |   |   | 313          |
| Additional paid-in capital                      |   |   | 583,698                                              |   |   | (583,698)    |   |   | —      |
| Accumulated deficit                             |   |   | 4,415,775                                            |   |   | (19,640,060) |   |   | (15,224,285) |
| Total Stockholders’ Equity (Deficit)      |   |   | 5,000,002                                            |   |   | (20,223,974) |   |   | (15,223,972) |
|                                            |   |   |                                                 |   |   |         |   |   |         |

 

Changes in the Statement of Operations for the period from June 11, 2020 (inception) through December 31, 2020

 

|                                                                               |   | As Previously

Reported in

Form 10-K/A

Amendment 1 |        |   | Adjustment |        |       | As Restated |       |
|------------------------------------------------------------------------------------|--------|------------------------------------------------------|-------------|--------|------------|-------------|------------|-------------|------------|
| Expensed offering costs                                                            |   |                                                 | (437,660    | )      |       |        | 42,035     |        |       |   | (395,625 | ) |
| Loss on sale of private placement warrants                                         |   |                                                 | (2,929,500) |   |       | 2,929,500   |       |        | —    |   |
| Change in fair value of warrant liabilities                                        |   |                                                 | 8,117,500   |   |       | (9,925,000) |       |        | (1,807,500 | ) |
| Net income (loss)                                                                  |   | $                                                    | 4,415,775   |   |       | $           | (6,953,465 | )           |       | $ | (2,537,690 | ) |
| Basic and diluted weighted average shares outstanding, Redeemable Common Stock     |   |                                                 | 9,344,913   |   |       |        | (9,344,913 | )           |       |   | — |   |
| Basic and diluted weighted average shares outstanding, Non-Redeemable Common Stock |   |                                                 | 5,280,067   |   |       |        | (5,280,067 | )           |       |   | — |   |
| Basic and diluted net loss per share, Non-Redeemable Common Stock                  |   | $                                                    | (0.70       | )      |       | $           | 0.70       |        |       | $ | — |   |
| Basic and diluted weighted average shares outstanding                              |   |                                                 | —     |   |       |        | 4,650,246  |        |       |   | 4,650,246 |   |
| Basic and diluted net loss per share of Common Stock                               |   | $                                                    | —     |   |       | $           | (0.55      | )           |       | $ | (0.55 | ) |

 

F-11

----

 

 

Changes in the Statement of Stockholders’ Deficit for the period ended December 31, 2020

 

|                                                                                                                      |        |                  |        |                            |               |                     |        |                             |        |               |                 |        |        |                  |        |        |   |                 |        |  |
|----------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|----------------------------|---------------|---------------------|--------|-----------------------------|--------|---------------|-----------------|--------|--------|------------------|--------|--------|---|-----------------|--------|--|
|                                                                                                                 |   | Common Stock     |   | Additional Paid-in Capital |          | Accumulated Deficit |   | Total Stockholders' Deficit |
|                                                                                                                 |   | Shares           |   | Amount                     |          |
| As Previously Reported in Form 10-K Amendment 1:                                                                     |   |             |   |                       |          |                |   |                        |   |          |
| Balance - June 11, 2020 (inception)                                                                                  |   | —     |   |                       | $             | —        |   |                        | $      | —  |            |   | $      | —     |   |   | $ | —    |   |  |
| Common stock issued to Sponsor                                                                                       |   | 2,875,000   |   |                       | 288      |                |   | 24,712                 |   |          | —    |   |   | 25,000      |   |        |
| Common stock issued to Representative                                                                                |   | 250,000     |   |                       | 25       |                |   | (25)                        |   |          | —    |   |   | —     |   |        |
| Sale of 11,500,000 Units, net of underwriting discount, offering costs and initial classification of public warrants |   | 11,500,000  |   |                       | 1,150    |                |   | 95,408,953             |   |          | —    |   |   | 95,410,103  |   |        |
| Common stock subject to possible redemption                                                                          |   | (9,344,913)      |   |                       | (934)         |                |   | (94,849,942)                |   |          | —    |   |   | (94,850,876)     |   |        |
| Net income                                                                                                           |   | —     |   |                       | —  |                |   | —                |   |          | 4,415,775  |   |   | 4,415,775   |   |        |
| Balance - December 31, 2020                                                                                          |   | 5,280,087   |   |                       | $             | 529            |   |                        | $      | 583,698  |            |   | $      | 4,415,775   |   |   | $ | 5,000,002  |   |  |
| Adjustment:                                                                                                          |   |             |   |                       |          |                |   |                        |   |          |
| Balance - June 11, 2020 (inception)                                                                                  |   | —     |   |                       | $             | —        |   |                        | $      | —  |            |   | $      | —     |   |   | $ | —    |   |  |
| Common stock issued to Sponsor                                                                                       |   | —     |   |                       | —  |                |   | —                |   |          | —    |   |   | —     |   |        |
| Common stock issued to Representative                                                                                |   | —     |   |                       | —  |                |   | 1,247,500              |   |          | —    |   |   | 1,247,500   |   |        |
| Excess of cash received over fair value of Private Placement Warrants                                                |   | —     |   |                       | —  |                |   | 325,500                |   |          | —    |   |   | 325,500     |   |        |
| Sale of 11,500,000 Units, net of underwriting discount, offering costs and initial classification of public warrants |   | (11,500,000)     |   |                       | (1,150)       |                |   | (95,408,953)                |   |          | —    |   |   | (95,410,103)     |   |        |
| Common stock subject to possible redemption                                                                          |   | 9,344,913   |   |                       | 934      |                |   | 94,849,942             |   |          | —    |   |   | 94,850,876  |   |        |
| Allocation of IPO proceeds to Rights                                                                                 |   | —     |   |                       | —  |                |   | 4,214,968              |   |          | —    |   |   | 4,214,968   |   |        |
| Accretion of Common stock subject to possible redemption amount, as restated                                         |   | —     |   |                       | —  |                |   | (5,812,655)                 |   |          | (12,686,595)    |   |   | (18,499,250)     |   |        |
| Net loss                                                                                                             |   | —     |   |                       | —  |                |   | —                |   |          | (6,953,465)     |   |   | (6,953,465)      |   |        |
| Balance - December 31, 2020                                                                                          |   | (2,155,087)      |   |                       | $             | (216)               |   |                        | $      | (583,698)     |            |   | $      | (19,640,060)     |   |   | $ | (20,223,974)    |   |  |
| As Restated:                                                                                                         |   |             |   |                       |          |                |   |                        |   |          |
| Balance - June 11, 2020 (inception)                                                                                  |   | —     |   |                       | $             | —        |   |                        | $      | —  |            |   | $      | —     |   |   | $ | —    |   |  |
| Common stock issued to the Sponsor                                                                                   |   | 2,875,000   |   |                       | 288      |                |   | 24,712                 |   |          | —    |   |   | 25,000      |   |        |
| Common stock issued to the Representative                                                                            |   | 250,000     |   |                       | 25       |                |   | 1,247,475              |   |          | —    |   |   | 1,247,500   |   |        |
| Excess of cash received over fair value of Private Placement Warrants                                                |   | —     |   |                       | —  |                |   | 325,500                |   |          | —    |   |   | 325,500     |   |        |
| Allocation of IPO proceeds to Rights                                                                                 |   | —     |   |                       | —  |                |   | 4,214,968              |   |          | —    |   |   | 4,214,968   |   |        |
| Accretion of Common stock subject to possible redemption amount, as restated                                         |   | —     |   |                       | —  |                |   | (5,812,655)                 |   |          | (12,686,595)    |   |   | (18,499,250)     |   |        |
| Net loss                                                                                                             |   | —     |   |                       | —  |                |   | —                |   |          | (2,537,690)     |   |   | (2,537,690)      |   |        |
| Balance at December 31, 2020                                                                                         |   | 3,125,000   |   |                       | $             | 313            |   |                        | $      | —  |            |   | $      | (15,224,285)     |   |   | $ | (15,223,972)    |   |  |

 

F-12

----

 

 

Statement of Cash Flows from June 11 (inception) through December 31, 2020

 

|                                                                          |   | As Previously

Reported in

Form 10-K/A

Amendment 1 |       |   | Adjustment |                    |       | As Restated |    |
|-------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|--------|------------|-------------------------|------------|-------------|---------|
| Net loss                                                                      |   | $                                                    | 4,415,775  |   |       | $                       | (6,953,465 | )           |    | $ | (2,537,690 | ) |
| Adjustments to reconcile net income to net cash used in operating activities: |   |                                                 |       |   |       |                    |       |        |    |   |   |   |
| Expensed offering costs on issuance of warrants                               |   |                                                 | 437,660    |   |       | (42,035)                |       |        |    | 395,625 |   |
| Change in fair value of warrant liabilities                                   |   | (8,117,500                                           |       |   |       | 9,925,000               |       |        |    | 1,807,500 |   |
| Changes in operating assets and liabilities:                                  |   |                                                 |       |   |       |                    |       |        |    |   |   |   |
| Loss on sale of private placement warrants                                    |   |                                                 | 2,929,500  |   |       | (2,929,500)             |       |        | — |   |
| Supplemental disclosure of non-cash financing activities:                     |   |                                                 |       |   |       |                    |       |        |    |   |   |   |
| Offering Costs in exchange for common stock                                   |   | $                                                    | —    |   |       | $                       | 25,000     |        |    | $ | 25,000 |   |
| Accretion of common stock subject to redemption value                         |   | $                                                    | —    |   |       | $                       | 18,499,250 |        |    | $ | 18,499,250 |   |
| Fair value of Representative and Consultant Shares                            |   | $                                                    | —    |   |       | $                       | 1,322,350  |        |    | $ | 1,322,350 |   |
| Fair value of Public Rights issued to investors, net of offering costs        |   | $                                                    | —    |   |       | $                       | 4,214,968  |        |    | $ | 4,214,968 |   |
| Initial classification of warrant liabilities                                 |   | $                                                    | 25,604,500 |   |       | $                       | (9,925,000 | )           |    | $ | 15,679,500 |   |
| Value of common stock subject to redemption                                   |   | $                                                    | 94,850,876 |   |       | $  20,149,124 |       |        | $       | 115,000,000 |   |

 

Note 3 — Summary of Significant Accounting Policies 

Basis of presentation 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. 

Emerging growth company 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it 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 independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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. 

 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 election to opt out is irrevocable. The Company has 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, the Company, 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 the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of estimates 

The preparation of the financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 

F-13

----

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. 

Cash and cash equivalents 

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2020. 

Cash and marketable securities held in Trust Account 

At December 31, 2020, substantially all of the assets held in the Trust Account were U.S. Treasury securities. The Company accounts for its securities held in the Trust Account in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 320, “Debt and Equity Securities.” These securities are classified as trading securities with unrealized gains/losses, if any, recognized through the statement of operations. 

Common stock subject to possible redemption (as restated)

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

As of December 31, 2020, the common stock reflected in the updated balance sheet are reconciled in the following table:

 

| Gross proceeds                                                                                |   | $      | 115,000,000 |   |
|-----------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
| Less:                                                                                         |   |   |        |   |
| Proceeds allocated to Public Warrants                                                         |   |   | 10,580,000  |   |
| Issuance costs allocated to common stock                                                      |   |   | 3,704,282   |   |
|       Proceeds allocated to Public Right, net of offering costs |   |   | 4,214,968   |   |
| Plus:                                                                                         |   |   |        |   |
| Accretion of carrying value to redemption value                                               |   |   | 18,499,250  |   |
| Common stock subject to possible redemption                                                   |   | $      | 115,000,000 |   |

 

Offering Costs associated with the Initial Public Offering (as restated)

The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $4,099,907 as a result of the Initial Public Offering (consisting of a $2,300,000 underwriting fee, $1,322,350 of representative founder share offering costs, and $477,557 of other offering costs). The Company recorded $3,704,282 of offering costs as a reduction of equity in connection with the shares of common stock and public rights included in the Units. The Company immediately expensed $395,625 of offering costs in connection with the Public Warrants and Private Placement that were classified as liabilities.

Warrant Liabilities 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. 

F-14

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This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Public Warrants was estimated using a Monte Carlo simulation approach and the fair value of the Private Placement Warrants was estimated using a Modified Black-Scholes model (see Note 11).

Income taxes 

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. 

 

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement’s recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. 

 

Net loss per share (as restated)

Net loss per share of common stock is computed by dividing net loss by the weighted average number of common shares outstanding during the period. As the Public Shares are considered to be redeemable at fair value, and a redemption at fair value does not amount to a distribution different than other shareholders, redeemable and non-redeemable shares of common stock are presented as one class of shares in calculating net income per share of common stock. As a result, the calculated net loss per share is the same for redeemable and non-redeemable shares of common stock. 

The following table reflects the calculation of basic and diluted net loss per common share (in dollars, except per share amounts):

 

|                                                                                             |   | For the Period

from June 11,

2020

(Inception)

through

December 31,

2020 |       |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|------------|
| Numerator:                                                                                       |   |                                                                          |       |   |
| Net loss                                                                                         |   | $                                                                             | (2,537,690 | ) |
| Denominator:                                                                                     |   |                                                                          |       |   |
|           Weighted average shares Common Stock |   |                                                                          | 4,650,246  |   |
| Basic and diluted net loss per share Common Stock                                                |   | $                                                                             | (0.55      | ) |

 

Concentration of credit risk 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal Deposit Insurance Corporate coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. 

F-15

----

 

Fair Value of Financial Instruments

The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

The carrying amounts reflected in the balance sheet for cash, prepaid expenses and accrued offering costs approximate fair value due to their short-term nature.

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

See Note 11 for additional information on assets and liabilities measured at fair value.

Recent accounting pronouncements 

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. 

Note 4 — Initial Public Offering 

Pursuant to the Initial Public Offering, the Company sold 10,000,000 units at a price of $10.00 per unit (the “Units”) on November 23, 2020. Each Unit consists of one share of the Company’s common stock, $0.0001 par value, one Right to receive one-twentieth (1/20) of one share of common stock upon the consummation of an initial business combination and one redeemable warrant (the “Warrants”). In connection with the underwriters’ exercise of the over-allotment option on November 25, 2020, the Company sold an additional 1,500,000 Units, at a purchase price of $10.00 per Unit. Each Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share. Each Warrant will become exercisable on the later of 30 days after the completion of the Company’s initial Business Combination or 12 months from the closing of the Initial Public Offering and will expire five years after the completion of the Company’s initial Business Combination or earlier upon redemption or liquidation. However, if the Company does not complete its initial Business Combination on or prior to the 12-month period allotted to complete the Business Combination (or up to 18 months if the Company extends the period of time), the Warrants will expire at the end of such period. If the Company is unable to deliver registered shares of common stock to the holder upon exercise of Warrants issued in connection with the 11,500,000 public Units during the exercise period, there will be no net cash settlement of these Warrants and the Warrants will expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the warrant agreement. 

Note 5 — Private Placement 

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,425,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $5,425,000.  Each Private Placement Warrant is exercisable to purchase one share of common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, certain of the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. 

F-16

----

 

Note 6 — Related Party 

Transactions Founder Shares 

On June 11, 2020, the Company issued an aggregate of 100 shares of common stock to the Sponsor for an aggregate purchase price of $25,000. Accordingly, as of June 30, 2020, the $25,000 payment due to the Company was recorded to the par value and additional paid-in-capital sections of the balance sheet. On July 15, 2020, the Company effected a stock split of 28,750-for-1 of its common stock resulting in an aggregate of 2,875,000 shares of common stock held by the initial stockholders so that the initial stockholders will own 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial shareholders do not purchase any Units in the Initial Public Offering and excluding the representative). The Founder Shares are identical to the common stock included in the Units that were sold in the Initial Public Offering except that the Founder Shares are subject to certain transfer restrictions, as described in more detail below. 

The Company’s initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the last sale price of the Company’s 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 90 days after the Company’s initial Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction after the initial Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. 

Administrative Support Agreement 

The Company entered into an agreement whereby, commencing on November 23, 2020 through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company will pay an affiliate of the Sponsor a total of $5,000 per month for office space, utilities and secretarial and administrative support services. For the period from November 23, 2020 through December 31, 2020, the Company incurred $6,333 in fees for these services, of which such amount is included in accounts payable and accrued expenses in the accompanying balance sheet. 

Related Party Loans and Costs 

On June 11, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 pursuant to an unsecured promissory note (the “Note”) to cover expenses related to the Initial Public Offering and the Company’s organizational and initial financing activities. The Note was non-interest bearing and payable on the earlier of (i) December 31, 2020, (ii) the consummation of the Initial Public Offering or (iii) the date on which the Company determined not to proceed with the Initial Public Offering. The outstanding amount of $145,617 under the Promissory Note was repaid on November 25, 2020. 

In addition, in order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). The Working Capital Loans may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,000,000 of the Working Capital Loans may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. 

The Company will have until 12 months from the closing of the Initial Public Offering to consummate its initial Business Combination. However, if the Company anticipates that it may not be able to consummate its initial Business Combination within 12 months, it may, by resolution of its board if requested by the Sponsor, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing additional funds into the Trust Account. In order to extend the time available for the Company to consummate its initial Business Combination, the Sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the Trust Account for each three-month extension, $1,150,000 ($0.10 per share) on or prior to the date of the applicable deadline, up to an aggregate of $2,300,000, or approximately $0.20 per share. Any such payments would be made in the form of a loan. Any such loans will be non-interest bearing and payable upon the consummation of the Company’s initial Business Combination. If the Company completes an initial Business Combination, it would repay such loaned amounts out of the proceeds of the Trust Account released to it. If the Company does not complete a Business Combination, it will not repay such loans. Furthermore, the letter agreement with the Company’s initial stockholders contains a provision pursuant to which the Sponsor has agreed to waive its right to be repaid for such loans out of the funds held in the Trust Account in the event that the Company does not complete a Business Combination. In the event that the Company receives notice from the Sponsor five days prior to the applicable deadline of its wish for the Company to effect an extension, the Company intends to issue a press release announcing such intention at 

F-17

----

 

least three days prior to the applicable deadline. In addition, the Company intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete its initial Business Combination.

Representative and Consultant Shares (as restated)

Pursuant to the underwriting agreement (the “Underwriting Agreement”) between the Company and I-Bankers Securities (the “Representative”), on November 23, 2020, the Company issued to the Representative and its designee 250,000 shares of common stock and separately agreed to issue the Company’s Consultant 15,000 shares of common stock for nominal consideration in a private placement intended to be exempt from registration under Section 4(a)(2) of the Act. In August 2021, the Company issued to the Consultant such Consultant Shares. The Company accounts for the Representative Shares and Consultant Shares as a deferred offering cost of the Initial Public Offering. Accordingly, the offering cost will be allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to the Warrants will be expensed immediately in the Statement of Operations, while offering costs allocated to the redeemable Public Shares will be deferred and subsequently charged to temporary shareholder’s equity upon the completion of the Initial Public Offering. 

 

The Company estimated the fair value of the Representative Shares and Consultant Shares to be $1,322,350 based upon the price of the common stock issued ($4.99 per share) to the Representative and Consultant. The holders of the Representative Shares and Consultant Shares have agreed not to transfer, assign or sell any such shares until later of (i) 30 days after the completion of a Business Combination and 180 days pursuant to FINRA Conduct Rule 5110(e)(1) following the effective date of the Registration Statement to anyone other than (i) the Representative or an underwriter or selected dealer in connection with the Offering, or (ii) a bona fide officer or partner of the Representative or of any such underwriter or selected dealer. Additionally, pursuant to FINRA Conduct Rule 5110(e), the Representative Shares and Consultant Shares will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the Registration Statement.

 

In addition, the holders of Representative Shares and Consultant Shares have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the time specified in the certificate of incorporation.

 

Note 7 — Commitments 

 

Pursuant to a registration rights and stockholder agreement entered into on November 23, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration and stockholder rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements. In the case of the private placement warrants and representative shares issued to I-Bankers Securities, the demand registration rights provided will not be exercisable for longer than five years from the effective date of the registration statement in compliance with FINRA Rule 5110(g)(8)(C) and the piggyback registration right provided will not be exercisable for longer than seven years from the effective date of the registration statement in compliance with FINRA Rule 5110(g)(8)(D). The Company will bear the expenses incurred in connection with the filing of any such registration statements.

 

 Underwriting Agreement 

 

The Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 1,500,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On November 25, 2020, the underwriters fully exercised their over-allotment option to purchase an additional 1,500,000 Units at $10.00 per Unit.

 

Business Combination Marketing Agreement

 

The Company has engaged I-Bankers Securities, Inc. as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce 

F-18

----

 

the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay I-Bankers Securities, Inc. a cash fee for such services upon the consummation of a Business Combination in an amount equal to 2.75% of the gross proceeds of Initial Public Offering, or $3,162,500. 

 

Open Market Purchases 

 

The Sponsor has agreed to enter into an agreement in accordance with the guidelines of Rule 10b5-1 under the Exchange Act, to place limit orders, through an independent broker-dealer registered under Section 15 of the Exchange Act which is not affiliated with the Company nor part of the underwriting or selling group, to purchase an aggregate of up to 7,500,000 of our rights in the open market at market prices, not to exceed $0.10 per right during the period commencing on the later of (i) the date separate trading of the rights commences or (ii) sixty calendar days after the end of the “restricted period” under Regulation M, continuing until the date that is the earlier of (a) eight (8) months from the date of the prospectus utilized in the Initial Public Offering and (b) the date that the Company announces that it has entered into a definitive agreement in connection with its initial Business Combination, or earlier in certain circumstances as described in the limit order agreement. The limit orders will require the Sponsor to purchase any rights offered for sale (and not purchased by another investor) at or below a price of $0.10, until the earlier of (x) the expiration of the buyback period or (y) the date such purchases reach 7,500,000 rights in total. The Sponsor will not have any discretion or influence with respect to such purchases and will not be able to sell or transfer any rights purchased in the open market pursuant to such agreements until following the consummation of a Business Combination. It is intended that the broker’s purchase obligation will be subject to applicable law, including Regulation M under the Exchange Act, which may prohibit or limit purchases pursuant to the limit order agreement in certain circumstances. I-Bankers Securities has also agreed to purchase up to 2,500,000 of the Company’s rights in the open market at market prices not to exceed $0.10 per right, on substantially similar terms as the Sponsor.

 

Note 8 — Warrants

Public Warrants may only be exercised for a whole number of shares. No fractional shares are issued upon exercise of the Public Warrants. The Public Warrants are exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.

We will not be obligated to deliver any shares of common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable for cash, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.

We have agreed that as soon as practicable, but in no event later than 15 business days, after the closing of our initial business combination, we will use our reasonable best efforts to file, and within 60 business days after the closing of our initial business combination, to have declared effective, a registration statement relating to the shares of common stock issuable upon exercise of the warrants and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but will use our best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available. 

Once the warrants become exercisable, we may call the warrants for redemption: 

|   | • | in whole and not in part; |
|--------|---------|---------------------------|

|   | • | at a price of $0.01 per warrant; |
|--------|---------|----------------------------------|

F-19

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|   |  |  |
|--------|--|--|

|   | • | upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date we send to the notice of redemption to the warrant holders. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

We may not redeem the warrants when a holder may not exercise such warrants. 

In addition, if (x) we issue additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance), (the “Newly Issued Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our common stock during the 20 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. 

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders. 

No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number of shares of common stock to be issued to the warrant holder. 

The private placement warrants (including the common stock issuable upon exercise of the private placement warrants) will (with limited exceptions) not be transferable, assignable or salable until 30 days after the completion of our initial business combination and they will not be redeemable by us so long as they are held by the original holders or their permitted transferees. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the public units. If the private placement warrants are held by holders other than the original holders or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in our IPO. 

The Sponsor and I-Bankers Securities purchased from the Company an aggregate of 5,425,000 Warrants at a price of $1.00 per Warrant (a purchase price of $5,425,000), in a private placement that occurred simultaneously with the completion of the Initial Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one share of common stock at $11.50. The purchase price of the Private Placement Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account pending completion of the Company’s initial Business Combination. The Private Placement Warrants (including the common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will be non-redeemable so long as they are held by the original holders or their permitted transferees. If the Private Placement Warrants are held by someone other than the original holders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants included in the Units being sold in the Initial Public Offering. Otherwise, the Private Placement Warrants have terms and provisions that are substantially identical to those of the Warrants being sold as part of the Units in the Initial Public Offering. 

If the Company does not complete a Business Combination, then the proceeds will be part of the liquidating distributions to the public stockholders and the Warrants issued to the Sponsor and I-Bankers Securities will expire worthless. 

As of December 31, 2020, there were 11,500,000 Public Warrants and 5,425,000 Private Placement Warrants outstanding. The Company classifies the outstanding Public Warrants and Private Placement Warrants as warrant liabilities on the Balance Sheet in accordance with the guidance contained in ASC 815-40.

F-20

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The warrant liabilities were initially measured at fair value upon the closing of the Initial Public Offering and subsequently re-measured at each reporting period using a Monte-Carlo model. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. The Company recognized gains (losses) in connection with changes in the fair value of warrant liabilities of $1,807,500 within change in fair value of warrant liabilities in the Statement of Operations during the periodfrom June 11, 2020 through December 31, 2020.

Note 9 — Stockholders’ Deficit 

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2020, there were no shares of preferred stock issued or outstanding. 

Common Stock — The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of common stock are entitled to one vote for each share. At December 31, 2020, there were 3,125,000 shares of common stock issued and outstanding, excluding 11,500,000 shares of common stock subject to possible redemption.

 

Rights 

 

Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Right will automatically receive one-twentieth (1/20) of a share of common stock upon consummation of the Business Combination, even if the holder of a Right converted all shares held by him, her or it in connection with the Business Combination or an amendment to the Company’s certificate of incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of the Business Combination, each holder of a Right will be required to affirmatively convert his, her or its Rights in order to receive the one-twentieth (1/20) of a share of common stock underlying each Right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of Rights in order to receive his, her or its additional share of common stock upon consummation of the Business Combination. The shares issuable upon exchange of the Rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of Rights to receive the same per share consideration the holders of shares of common stock will receive in the transaction on an as-converted into common stock basis. 

The Company will not issue fractional shares in connection with an exchange of Rights. As a result, the holders of the Rights must hold Rights in multiples of 20 in order to receive shares for all of the holders’ Rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company liquidates the funds held in the trust account, holders of Rights will not receive any of such funds with respect to their Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Rights, and the Rights will expire worthless. Additionally, in no event will the Company be required to net cash settle the Rights. Accordingly, the Rights may expire worthless. 

Note 10 — Income Taxes (as restated)

The Company’s net deferred tax assets (liabilities) as of December 31, 2020 is as follows: 

 

| Deferred tax assets:                  |   |   |    |   |
|---------------------------------------|--------|--------|---------|--------|
| Net operating loss carryforwards      |   | $      | 72,287  |   |
| Total deferred tax assets             |   |   | 72,287  |   |
| Valuation allowance                   |   |   | (70,259 | )      |
| Deferred tax liabilities:             |   |   |    |   |
| Unrealized gain on investments        |   |   | (2,028  | )      |
| Total deferred tax liabilities        |   |   | (2,028  | )      |
| Deferred tax assets, net of allowance |   | $      | — |   |

 

F-21

----

 

 

The income tax provision for the period from June 11, 2020 (inception) through December 31, 2020 consists of the following: 

 

| Federal                       |   |   |    |   |
|-------------------------------|--------|--------|---------|--------|
| Current                       |   | $      | — |   |
| Deferred                      |   |   | (70,259 | )      |
| State                         |   |   |    |   |
| Current                       |   |   | — |   |
| Deferred                      |   |   | — |   |
| Change in valuation allowance |   |   | 70,259  |   |
| Income tax provision          |   | $      | — |   |

 

As of December 31, 2020, the Company has available U.S. federal operating loss carry forwards of approximately $344,223 that may be carried forward indefinitely.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. As of December 31, 2020, the valuation allowance was $70,259. 

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2020 is as follows: 

 

| Statutory federal income tax rate                  |   |   | 21.0  | %  |
|----------------------------------------------------|--------|--------|-------|----|
| Change in fair market value of warrant liabilities |   |   | (15.0 | )% |
| Nondeductible transaction costs                    |   |   | (3.3  | )% |
| Change in valuation allowance                      |   |   | (2.8  | )% |
| Income tax provision                               |   |   | 0.0   | %  |

 

The Company files income tax returns in the U.S. federal and Texas jurisdictions both of which remain open and subject to examination. 

Note 11 — Fair Value Measurements (as restated)

The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis at December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: 

 

| Description                                                                                                  |   | Level 1 |        |   | Level 2 |   |    | Level 3 |   |
|--------------------------------------------------------------------------------------------------------------|--------|---------|-------------|--------|---------|--------|---------|---------|--------|
| Assets                                                                                                       |   |    |        |   |    |   |    |    |   |   |   |   |
| Investment held in Trust Account:                                                                            |   |    |        |   |    |   |    |    |   |   |   |   |
| Marketable securities held in Trust Account – U.S. Treasury

   Securities Money Market Fund |   | $       | 116,734,480 |   |    | $      | — |    |   | $ | — |   |
| Liabilities                                                                                                  |   |    |        |   |    |   |    |    |   |   |   |   |
| Warrant liability – Public Warrants                                                                    |   | $       | 11,845,000  |   |    | $      | — |    |   | $ | — |   |
| Warrant liability – Private Placement Warrants                                                         |   | $       | —     |   |    | $      | — |    |   | $ | 5,642,000 |   |

 

The Company utilized a Monte Carlo simulation model for the initial valuation the Public Warrants. The subsequent measurement of the Public Warrants as of December 31, 2020 is classified as Level 1 due to the use of an observable market quote in an active market under the ticker BREZW. The quoted price of the Public Warrants was $1.03 per warrant as of December 31, 2020.

 

The Company utilizes a Modified Black-Scholes model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the Private Placement warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury 

F-22

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zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.

The aforementioned warrant liabilities are not subject to qualified hedge accounting.

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement in December 2020 when the Public Warrants were separately listed and traded.

The following table provides the significant inputs to the Monte Carlo Simulation for the initial measurement of the fair value of the Public Warrants: 

 

|                                             |   | At November 25,

2020 (Initial

Measurement) |    |
|--------------------------------------------------|--------|----------------------------------------------|---------|
| Stock Price on Valuation Date                    |   | $                                            | 10.00   |   |
| Strike price                                     |   | $                                            | 11.50   |   |
| Probability of completing a Business Combination |   |                                         | 100     | % |
| Term (in years)                                  |   |                                         | 6.08    |   |
| Volatility                                       |   |                                         | 24.0    | % |
| Risk-free rate                                   |   |                                         | 0.53    | % |
| Dividend yield                                   |   |                                         | — |   |
| Fair value of warrants                           |   | $                                            | 0.92    |   |

 

The following table provides the significant inputs to the Modified Black Scholes model for the fair value of the Private Placement Warrants:

 

|                                             |   | At November 25,

2020 (Initial

Measurement) |    |   | As of December

31, 2020 |   |
|--------------------------------------------------|--------|----------------------------------------------|---------|--------|--------------------------|--------|
| Stock price                                      |   | $                                            | 10.00   |   |                     | $      | 10.15 |   |
| Strike price                                     |   | $                                            | 11.50   |   |                     | $      | 11.50 |   |
| Probability of completing a Business Combination |   |                                         | 88      | %      |                     |   | 88 | % |
| Dividend yield                                   |   |                                         | — |   |                     |   | — |   |
| Term (in years)                                  |   | 6.08                                         |    |   | 5.98                     |   |
| Volatility                                       |   |                                         | 21.7    | %      |                     |   | 15.9 | % |
| Risk-free rate                                   |   |                                         | 0.53    | %      |                     |   | 0.5 | % |
| Fair value of warrants                           |   | $                                            | 0.94    |   |                     | $      | 1.04 |   |

 

The following table presents the changes in the fair value of warrant liabilities:

 

|                                            |   | Private

Placement |      |   | Public |   |       | Warrant

Liabilities |   |
|-------------------------------------------------|--------|--------------------|-----------|--------|--------|--------|------------|----------------------|--------|
| Fair value as of June 11, 2020 (inception)      |   | $                  | —   |   |   | $      | —    |                 |   | $ | — |   |
| Initial measurement at November 25, 2020        |   |               | 5,099,500 |   |   |   | 10,580,000 |                 |   |   | 15,679,500 |   |
| Change in valuation inputs or other assumptions |   |               | 542,500   |   |   |   | 1,265,000  |                 |   |   | 1,807,500 |   |
| Fair value as of December 31, 2020              |   | $                  | 5,642,000 |   |   | $      | 11,845,000 |                 |   | $ | 17,487,000 |   |

 

Note 12 — Subsequent Events 

 

On November 22, 2021, the Company announced that its sponsor, Breeze Sponsor, LLC, timely deposited an aggregate of $1,150,000 (the “Extension Payment”), representing $0.10 per public share, into the Company’s trust account in order to extend the date by which the Company has to consummate a business combination from November 25, 2021 to February 25, 2022 (the “Extension”). The Sponsor loaned the Extension Payment to the Company in exchange for a promissory note in the amount of the Extension Payment. The loan under the promissory note is non-interest bearing and will be repaid upon the consummation of a business combination. The Company’s stockholders are not entitled to vote on or redeem their shares in connection with such extension.

 

F-23

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The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements. 

F-24