As filed with
the U.S. Securities and Exchange Commission on March 14, 2019
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
B.
Riley Principal Merger Corp.
(Exact name of registrant as specified in
its charter)
| Delaware |
|
6770 |
|
83-2583782 |
(State or other jurisdiction of
incorporation or organization) |
|
(Primary Standard Industrial
Classification Code Number) |
|
(I.R.S. Employer
Identification Number) |
299 Park Avenue
21st
Floor
New York, New York 10171
(212) 457-3300
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of Registrant’s Principal Executive Offices)
Daniel Shribman
B. Riley Principal Merger Corp.
299 Park Avenue
21st
Floor
New York, New York 10171
(212) 457-3300
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Joel L. Rubinstein
Winston & Strawn LLP
200 Park Avenue
New York, New York 10166
(212) 294-6700 |
|
Douglas S. Ellenoff
Stuart Neuhauser
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
(212) 370-1300 |
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box. ☐
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
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 the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| 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 7(a)(2)(B) of the Securities Act.
☐
CALCULATION OF REGISTRATION FEE
Title
of Each Class of Security Being
Registered | |
Amount
Being
Registered | |
Proposed
Maximum
Offering
Price
per
Security(1) | | |
Proposed
Maximum
Aggregate
Offering
Price(1) | | |
Amount
of
Registration
Fee | |
| Units,
each consisting of one share of Class A common stock, $0.0001 par value, and one-half of one redeemable warrant(2) | |
14,375,000
Units | |
$ | 10.00 | | |
$ | 143,750,000 | | |
$ | 17,422.50 | |
| Shares
of Class A common stock included as part of the units(3) | |
14,375,000
Shares | |
| — | | |
| — | | |
| — | (4) |
Redeemable
warrants included as part of the
units(3) | |
7,187,500
Warrants | |
| — | | |
| — | | |
| — | (4) |
| Total | |
| |
| | | |
$ | 143,750,000 | | |
$ | 17,422.50 | |
(1) Estimated
solely for the purpose of calculating the registration fee.
(2) Includes 1,875,000
units, consisting of 1,875,000 shares of Class A common stock and 937,500 redeemable warrants, which may be issued upon exercise
of a 45-day option granted to the underwriters to cover over-allotments, if any.
(3) Pursuant to
Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
(4) No fee pursuant
to Rule 457(g).
The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the U.S. Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not
complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED MARCH 14, 2019
PRELIMINARY PROSPECTUS
$125,000,000
B.
Riley Principal Merger Corp.
12,500,000 Units
B. Riley Principal Merger Corp. is a blank check company
incorporated whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses, which we refer to as our initial business
combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf,
initiated any substantive discussions, directly or indirectly, with any business combination target with respect to an
initial business combination with us.
This is an initial public offering of our securities. Each
unit has an offering price of $10.00 and consists of one share of our Class A common stock and one-half of one redeemable warrant.
Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per
share, subject to adjustment as described herein. The warrants will become exercisable on the later of 30 days after the completion
of our initial business combination or 12 months from the closing of this offering, and will expire five years after the completion
of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. No fractional
warrants will be issued upon separation of the units and only whole warrants will trade. The underwriters have a 45-day option
from the date of this prospectus to purchase up to an additional 1,875,000 units to cover over-allotments, if any.
We will provide
our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account described below as of two business days prior to the consummation of our initial business combination, including
interest earned on the funds held in the trust account and not previously released to pay our franchise and income taxes, divided
by the number of then outstanding shares of Class A common stock that were sold as part of the units sold in this offering, which
we collectively refer to as our public shares, subject to the limitations described herein. If we are unable to complete our initial
business combination within 24 months from the closing of this offering, we will redeem 100% of 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, subject to applicable law and certain conditions
as further described herein.
Our sponsor, B. Riley Principal Sponsor Co., LLC has agreed
to purchase an aggregate of 425,000 units (or 462,500 units if the over-allotment option is exercised in full) at a price of $10.00
per unit, for an aggregate purchase price of $4,250,000 (or $4,625,000 if the over-allotment option is exercised in full),
in a private placement that will close simultaneously with the closing of this offering. The private placement units are identical
to the units sold in this offering, subject to certain limited exceptions as described in this prospectus.
An affiliate of our sponsor has entered into a forward purchase agreement with us which provides for the
purchase by it (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of $25,000,000 in a private
placement to close concurrently with the closing of our initial business combination. The obligations under the forward purchase
agreement do not depend on whether any Class A common stock is redeemed by our public stockholders.
Our initial stockholders, which include our sponsor, own an
aggregate of 3,593,750 shares of our Class B common stock (up to 468,750 shares of which are subject to forfeiture depending on
the extent to which the underwriters’ over-allotment option is exercised), which will automatically convert into shares
of Class A common stock at the time of our initial business combination as described
herein.
Currently, there is no public market for our units, Class A
common stock or warrants. We intend to apply to list our units on the New York Stock Exchange, or the NYSE, under the symbol “BRPM.U”.
We expect that our units will be listed on the NYSE on or promptly after the date of this prospectus. We cannot guarantee that
our securities will be approved for listing on the NYSE. We expect the Class A common stock and warrants comprising the units
will begin separate trading on the 52nd day following the date of this prospectus unless B. Riley FBR, Inc., the representative
of the underwriters, informs us of its decision to allow earlier separate trading, subject to our satisfaction of certain conditions.
Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be
listed on the NYSE under the symbols “BRPM” and “BRPM WS,” respectively.
We are an “emerging growth company” under applicable
federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves
a high degree of risk. See “Risk Factors” beginning on page 32 for a discussion of information that should be considered
in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors
in Rule 419 blank check offerings.
Neither the U.S. Securities and Exchange Commission nor
any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
| | |
Per
Unit | | |
Total | |
| Public offering price | |
$ | 10.00 | | |
$ | 125,000,000 | |
| Underwriting discounts and commissions(1) | |
$ | 0.20 | | |
$ | 2,500,000 | |
| Proceeds, before expenses, to B.
Riley Principal Merger Corp. | |
$ | 9.80 | | |
$ | 122,500,000 | |
| (1) | Includes $100,000
payable to Chardan Capital Markets, LLC for acting as a “qualified independent underwriter”
as defined by the FINRA rules as described herein. The underwriters will receive compensation
in addition to the underwriting discount. Please see the section titled “Underwriting”
for further information relating to the arrangements agreed to between us and the underwriters. |
B. Riley FBR, Inc., an underwriter of this offering and
a member of the Financial Industry Regulatory Authority, or FINRA, has several relationships with the Company, including: (i)
Kenneth Young is our Chief Executive Officer and the President of B. Riley Financial Inc., an affiliate of B. Riley FBR, Inc.
and (ii) Daniel Shribman is our Chief Financial Officer and the President of B. Riley Principal Investments, LLC, an affiliate
of B. Riley FBR, Inc. Therefore, B. Riley FBR, Inc. could have a “conflict of interest” within the meaning of Rule
5121 of the Conduct Rules of FINRA. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA
Rule 5121, which requires that a “qualified independent underwriter,” as defined by the FINRA rules, participate in
the preparation of the registration statement and exercise the usual standards of due diligence with respect to the registration
statement that an underwriter would exercise on its own behalf. Chardan Capital Markets, LLC is acting as the qualified independent
underwriter. Chardan Capital Markets, LLC, which is also acting as an underwriter to the offering, will not receive any separate
consideration for acting as the qualified independent underwriter and will not be reimbursed any expenses incurred as a qualified
independent underwriter.
Of the proceeds we receive from this offering and the sale
of the private placement units described in this prospectus, $125.0 million or $143.75 million if the underwriters’ over-allotment
option is exercised in full ($10.00 per unit in either case) will be deposited into a trust account in the United States at J.P.
Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee, and $1.75 million will be available
to pay fees and expenses in connection with this offering and for working capital following the closing of this offering.
The underwriters are offering the units for sale on a firm
commitment basis. The underwriters expect to deliver the units to the purchasers on or about
, 2019.
Sole Book-Running
Manager
B.
Riley FBR, Inc.
, 2019
TABLE OF CONTENTS
We are responsible for the information contained in this
prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other
information others may give to you. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction
where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate
as of any date other than the date on the front of this prospectus.
SUMMARY
This summary only highlights the more detailed information
appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under the
section of this prospectus entitled “Risk Factors” and our financial statements and the related notes included elsewhere
in this prospectus, before investing.
Unless otherwise stated in this prospectus, or the context
otherwise requires, references to:
| ▪ | “amended
and restated certificate of incorporation” are to our second amended and restated
certificate of incorporation; |
| ▪ | “B.
Riley” are to B. Riley FBR, Inc., the representative of the underwriters in this
offering and an affiliate of B. Riley Financial; |
| ▪ | “B.
Riley Financial” are to B. Riley Financial, Inc., an affiliate of our sponsor and
B. Riley; |
| ▪ | “B.
Riley Principal Investments” are to B. Riley Principal Investments, LLC, a wholly-owned
subsidiary of B. Riley Financial; |
| ▪ | “common
stock” are to our Class A common stock and our Class B common stock, collectively; |
| | ▪ | “forward
purchase agreement” are to the agreement providing for the sale of forward purchase
units to an affiliate of our sponsor (or its designees) in a private placement that will close concurrently
with the closing of our initial business combination;
|
| | ▪ | “forward
purchase units” are to an aggregate 2,500,000 units to be issued to an affiliate
of our sponsor (or its designees) pursuant to the forward purchase agreement;
|
| ▪ | “founder
shares” are to shares of our Class B common stock and the shares of our Class A common stock
issued upon the conversion thereof as provided herein; |
| ▪ | “initial
stockholders” are to our sponsor and any other holders of our founder shares prior
to this offering (or their permitted transferees); |
| ▪ | “management”
or our “management team” are to our officers, directors and director nominees; |
| | ▪ | “private
placement shares” are to the shares of Class A common stock sold as part of the
private placement units;
|
| ▪ | “private
placement units” are to the units issued to our sponsor in a private placement
simultaneously with the closing of this offering, which private placement units are identical
to the units sold in this offering, subject to certain limited exceptions as described
in this prospectus; |
| | ▪ | “private
placement warrants” are to the warrants sold as part of the private placement units;
|
| ▪ | “public
shares” are to shares of our Class A common stock sold as part of the units in
this offering (whether they are purchased in this 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 this offering
(whether they are purchased in this offering or thereafter in the open market), and to
the private placement warrants included in the private placement units if held by third
parties other than our sponsor (or permitted transferees), in each case, following the
consummation of our initial business combination; |
| | ▪ | “public units” are to
our units sold in this offering (whether they are purchased in this offering or thereafter
in the open market, to the private placement units if held by third parties other than
our sponsor (or permitted transferees), and to any private placement units issued to
third parties that are not initial purchasers or executive officers or directors (or permitted transferees)
upon conversion of working capital loans, in each case, following the consummation of
our initial business combination; |
| ▪ | “sponsor”
are to B. Riley Principal Sponsor Co., LLC, a Delaware limited liability company, an
affiliate of B. Riley Financial; |
| | ▪ | “units”
are to our public units and private placement units;
|
| ▪ | “warrants”
are to our public warrants and private placement warrants; and |
| ▪ | “we,”
“us,” “company” or “our company” are to B. Riley
Principal Merger Corp. |
Unless we tell you otherwise, the information in this prospectus
assumes that the underwriters will not exercise their over-allotment option.
General
We are a blank check company incorporated as a Delaware
corporation whose business purpose is to effect a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or other similar business combination with one or more businesses, which we refer
to throughout this prospectus as our initial business combination. We have not selected any specific business combination
target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any
business combination target with respect to an initial business combination with us. While we may pursue an initial business
combination target in any industry or geographic region, we intend to focus on established businesses that have an aggregate enterprise value of approximately $300 million to $1 billion and would benefit from access to public
markets and the operational and strategic expertise of our management team and board of directors. We will seek to capitalize
on the significant experience of our management team in consummating an initial business combination with the ultimate goal
of pursuing attractive returns for our shareholders.
Competitive Strengths
Our management team is led by Kenneth Young and Daniel Shribman
who have over 40 years of combined operating, deal-making and investment experience and hold senior positions at B. Riley Financial
(Nasdaq: RILY), an affiliate of our sponsor, which, through its subsidiaries, provides collaborative financial services and solutions
and covers over 500 companies in research and trading, with a focus on small to mid-cap companies that it believes are underfollowed
or misunderstood by Wall Street. As B. Riley Financial’s affiliate, we intend to draw upon its infrastructure, personnel,
network and relationships. We believe that the extensive operating, deal-making and investment experience of our management team,
paired with B. Riley Financial’s unique sourcing infrastructure, makes us well-situated to identify, source, negotiate and
execute an initial business combination with an attractive company.
Kenneth Young, our Chief
Executive Officer, has served as President of B. Riley Financial since July 2018. Mr. Young also has served as Chief Executive
Officer of B. Riley Principal Investments, a wholly-owned subsidiary of B. Riley Financial, which acquires, invests and operates
companies across several verticals, including communications, media, construction and retail, with a focus on maximizing cash
flows through operational expertise since October 2016. Mr. Young serves as the Chief Executive Officer of magicJackVocalTec
and United Online, both wholly-owned subsidiaries of B. Riley Financial. Mr. Young, pursuant to a consulting agreement with
B. Riley Financial, was appointed Chief Executive Officer of Babcock & Wilcox (“BW”), a global leader in energy
and environmental technologies and services for the power and industrial markets, in November 2018. B. Riley Financial has minority
ownership in Babcock & Wilcox.
Mr. Young has 30 years of operational,
executive and board experience primarily within the communications and finance industry. Mr. Young served as President and Chief
Executive Officer at Lightbridge Communications Corporation (“LCC”), a provider of technical services for wireless
operators, from 2008 to September 2016. Prior to joining LCC, he spent over 16 years in senior executive positions with multiple
corporations, including Southwestern Bell Corporation, AT&T and Cingular Wireless.
Mr. Young has served as
a member of the board of directors of Orion Energy Systems, Inc. (Nasdaq: OESX) since 2017, Sonim Technologies, bebe stores,
inc. and Liberty Tax, Inc. since 2018. Mr. Young is a former member of the board of Globalstar, Inc. (NYSE:
GSAT), Imagine Communications, B. Riley Financial (Nasdaq: RILY), Standard Diversified Opportunities, Inc. and Proxim
Wireless Corp.
Daniel Shribman, our Chief Financial Officer, has been
President of B. Riley Principal Investments since September 2018, when such role was first created, and brings 11 years of
experience in both public and private equity to us. Prior to joining B. Riley Principal Investments, Mr. Shribman
was a Portfolio Manager at Anchorage Capital Group, a special situation asset manager with over $15 billion in assets under
management, from 2010 to 2018. During Mr. Shribman’s tenure at Anchorage, he led investments in dozens of public and
private opportunities across the general industrials, transportation, automotive, aerospace, gaming, hospitality and real
estate industries. These investments ranged from public equities and bonds to deeply distressed securities, par bank debt,
minority owned private equity and majority owned private equity. Mr. Shribman worked in close collaboration with management
teams and boards to maximize shareholder value in the form of both operational turnarounds, capital markets financings and
communication and capital deployment initiatives.
Prior to Anchorage, Mr. Shribman worked at
Tinicum Capital Partners, a private equity firm, and in the restructuring advisory group at Lazard Freres.
For more information relating to our management team’s
relevant business experience, please see the section entitled “Management.”
We believe our management team’s backgrounds and B. Riley
Financial’s unique sourcing infrastructure provide us with the ability to source transactions and identify target businesses
that can thrive as publicly-traded companies. Additionally, over the course of their careers, the members of our management team
and our affiliates have developed extensive networks of contacts and corporate relationships which we believe will provide us
with an important source of initial business combination opportunities. These networks have provided our management team and our
affiliates with deal flow that has resulted in numerous transactions. We anticipate that target business candidates will also
be brought to our attention from various unaffiliated sources, including family offices, investment market participants, private
equity groups, investment banks, consultants, accounting firms and large business enterprises.
Our management team, through its members’ shared experience
at B. Riley Financial and its predecessors, has a track record of identifying targets and making strategic investments, acquisitions
and raising capital.
Bryant R. Riley, one of our director nominees, is the Chairman and
Co-Chief Executive Officer of B. Riley Financial. Mr. Riley led investments in LCC in 2007 and 2009 through B. Riley Financial
Inc.’s predecessor entity Riley Investment Partners and its investment banking team. The period of these investments marked
the beginning of Mr. Young’s tenure as LCC’s President and Chief Executive Officer beginning in 2008 and includes Mr.
Riley’s tenure as LCC’s Chairman. At LCC, Mr. Young and Mr. Riley together executed multiple growth financings and
tuck-in acquisitions, securing multiple rounds of expansion capital from growth-oriented institutional investors, leading up to
LCC’s 2015 acquisition by India-based Tech Mahindra for an enterprise value of approximately $240 million.
B. Riley Principal Investments completed the acquisition of United
Online, a provider of value-priced dial-up/DSL, Internet access, email, Internet security and webhosting, in 2016. Prior to the
acquisition, B. Riley Financial’s investment banking team had followed United Online for several years through its research
platform. Since the acquisition and under B. Riley Financial’s operational guidance, United Online has implemented operational
synergies and strategic initiatives which has resulted in improved operating margins.
B. Riley Financial acquired magicJackVocalTec in November 2018,
an investment of a competitive local carrier of VoIP services and related equipment, for approximately $89 million.
B. Riley Financial’s operating plan for magicJackVocalTec following the acquisition includes minimizing customer attrition
rates while generating cash returns by reducing operating costs.
In January 2018, B. Riley Financial acquired an approximately 29.4%
ownership stake in bebe stores, inc. (“bebe”) (OTCQB: BEBE) and Mr. Young joined bebe’s board of directors, following
a period of extensively working through B. Riley Financial’s restructuring team to avoid bankruptcy and minimize corporate
expenses through the closing of 142 stores. B. Riley Financial initially provided a bridge loan to bebe which was then converted
into its equity position in the company. As an equity sponsor, B. Riley has helped decrease costs, grow the top line and identify
and close bebe’s acquisitions, such as the acquisition of the Brookstone brand in October 2018.
In December 2017, B. Riley Principal Investments served as the lead investor for a $37 million capital raise
by Sonim Technologies (“Sonim”), a provider of a comprehensive ecosystem to connect blue and grey collar workers in
the commercial and public safety markets through ruggedized handsets for voice and data, with emerging opportunities in applications
and data analytics. At the time, Sonim needed to raise debt for working capital and to provide liquidity to longtime venture investors.
B. Riley Principal Investments agreed to provide debt and purchased equity together with a number of other investors brought in
by B. Riley Principal Investments. Mr. Young serves as a member of Sonim’s
board of directors and B. Riley Financial provides management services to Sonim under a management consulting agreement. Since
the investment by B. Riley Principal Investments, Sonim’s revenue grew over 100% through December 31, 2018.
With respect to the foregoing descriptions, past performance
of 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 identify a suitable candidate for our initial business combination. You should not rely on the historical
performance record of our management team or B. Riley Financial or its affiliates as indicative of our future performance. Our
management team has not had experience sponsoring or being a director or officer of any blank check companies in the past. Our
executive officers and directors may have conflicts of interest with other entities to which they owe fiduciary or contractual
obligations with respect to initial business combination opportunities. For a list of our executive officers and directors and
entities for which a conflict of interest may or does exist between such officers and the company, as well as the priority and
preference that such entity has with respect to performance of obligations and presentation of business opportunities to us, please
refer to the table and subsequent explanatory paragraph under “Management — Conflicts of Interest.
We believe our ability to complete
an initial business combination will be enhanced by our having entered into a forward purchase agreement which provides for the purchase by an affiliate of our sponsor (or its designees) of an aggregate of 2,500,000
units for an aggregate purchase price of $25,000,000 in a private placement to close concurrently with the closing of our initial
business combination. We believe this committed capital
will provide us with greater certainty to complete a business combination with potential sellers. The proceeds from the sale of
forward purchase units may be used as part of the consideration to the sellers in our initial business combination, expenses in
connection with our initial business combination or for working capital in the post-transaction company. The forward purchase
will be made regardless of whether any Class A common stock is redeemed by our public stockholders and is intended to provide
us with a minimum funding level for our initial business combination. The purchaser will not have the ability to approve the initial
business combination prior to the signing of a material definitive agreement. The forward purchase units will be issued only in
connection with the closing of the initial business combination.
Business Strategy
Our management team’s objective is to generate attractive
returns and create value for our shareholders by applying a disciplined strategy of identifying attractive investment opportunities
that could benefit from the addition of capital, management expertise and strategic insight.
We will leverage
our management team’s broad network of potential proprietary and public transaction sources to find an opportunity where
their expertise could effect a positive transformation of the existing business to improve the overall value proposition while
maximizing shareholder value.
Our management team has a proven record of identifying companies
that are under-performing their potential due to a temporary period of dislocation in the markets in which they operate, inefficient
capital allocations, over-levered capital structures, excessive cost structures, incomplete management teams and/or inappropriate
business strategies. In order to increase shareholder value, we intend to identify these dislocations and implement a proven course
correction plan where management agreements are put in place, debt and equity structures are realigned and costs are reduced.
We intend to source initial business combination opportunities
through our management team’s and affiliates’ extensive networks. Over the course of their careers, the members of
our management team have developed a broad network of contacts and corporate relationships, including seasoned executives and
operators, private equity investors, lenders, attorneys, family offices, that we believe will provide our management team with
a robust flow of acquisition opportunities.
We believe successful special purpose acquisition companies
require a differentiated story to make a business combination attractive for potential sellers of businesses who become partners
in a public markets context. We believe that our team will be an attractive partner given our proven track record of both operational and financial
success in small and medium sized public companies and our deep understanding of how to navigate complicated shareholder and capital
markets dynamics in a small and mid-cap context.
Business Combination Criteria
Consistent with this strategy, we have identified the following
general criteria and guidelines that we believe are important in evaluating prospective target businesses. We intend to use these
criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination
with a target business that does not meet these criteria and guidelines. While we intend to utilize these criteria in evaluating
business combination opportunities, we expect that no individual criterion will entirely determine a decision to pursue a particular
opportunity.
Middle-Market
Business. We will seek to acquire one or more businesses with an enterprise value of approximately $300 million to $1
billion, determined in the sole discretion of our officers and directors according to reasonable accepted valuation standards
and methodologies. We believe that middle-market segment provides the greatest number of opportunities for investment and where
we believe we have the strongest network to identify opportunities.
Established
Businesses. We will seek to acquire one or more businesses or assets that have a history of, or potential for, strong,
stable cash flow generation, with predictable and recurring revenue streams.
Complex
Proprietary Opportunities. Our management team has a proven track record of identifying companies that are under-performing
their potential due to a temporary period of dislocation in the markets in which they operate, inefficient capital allocations,
over-levered capital structures and/or excessive cost structures. We expect our management team’s focus on complex situations that
require creative solutions to lead to less competitive transactions where we can combine with attractive businesses
at reasonable valuations. While our management team is focused on complex situations as a means to find attractively-priced transactions,
we do not intend to pursue turnarounds or situations that do not lend themselves to the public markets.
Growth
opportunities through capital investment. We intend to seek candidates who will benefit from additional capital investment
through a business combination.
Strong
management teams with a proven track record. We intend to seek candidates who have strong management teams with
a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We will seek
to partner with potential target’s management team and expect that the operating and financial abilities of our management
and board will help potential target company to unlock opportunities for future growth and enhanced profitability.
Opportunities
for Add-On Acquisitions. We will seek to acquire one or more businesses that we can grow both organically and through
acquisitions. In addition, we believe that our ability to source proprietary opportunities and execute such transactions will
help the business we acquire grow through acquisition, and thus serve as a platform for further add-on acquisitions.
Benefit
from Being a Public Company. We intend to pursue a business combination with a company that we believe will benefit from being
publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a
publicly traded company.
Risk-Adjusted
Return. We intend to acquire one or more companies that we believe can offer attractive risk-adjusted return on investments
for our stockholders.
These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines
as well as other considerations, factors and criteria that our management may deem relevant.
In the event that we decide to enter into our initial business
combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed
in this prospectus, would be in the form of proxy solicitation materials or tender offer documents that we would file with the
U.S. Securities and Exchange Commission (the “SEC”).
Initial Business Combination
NYSE rules require that we must consummate an initial business
combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held
in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount
of any deferred underwriting commissions). If our board of directors is not able to independently determine the fair market value
of our initial business combination, we will obtain an opinion from an independent investment banking firm or an independent valuation
or appraisal firm that regularly provides fairness opinions solely with respect to the satisfaction of such criteria. While we
consider it unlikely that our board will not be able to make such independent determination of fair market value, it may be unable
to do so if the board is less familiar or experienced with the target company’s business, there is a significant amount
of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development,
operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and
the board determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained,
would merely state that the fair market value meets the 80% fair market value test, unless such opinion includes material information
regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion
would be distributed to our stockholders. However, if required under applicable law, any proxy statement that we deliver to stockholders
and file with the SEC in connection with a proposed transaction will include such opinion.
We anticipate structuring our initial
business combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares
will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that
the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or stockholders, or for other reasons, including an Affiliated Joint Acquisition
as described below. However, we will only complete an initial business combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the “Investment
Company Act”. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this
case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number
of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding
shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business
or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned
or acquired is what will be taken into account for purposes of the NYSE’s 80% fair market value test. If the initial business
combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all
of the transactions and we will treat the target businesses together as the initial business combination for purposes of a tender
offer or for seeking stockholder approval, as applicable.
We may, at our option, pursue a business
combination opportunity jointly with one or more entities affiliated with B. Riley Financial and/or one or more investors in
funds or separate accounts managed by B. Riley Financial, which we refer to as an “Affiliated Joint Acquisition.”
Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and B.
Riley Financial considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other
business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital
beyond the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed
capital for closing the initial business combination. An Affiliated Joint Acquisition may be effected through a co-investment
with us in the target business at the time of our initial business combination, or we could raise additional proceeds to
complete the initial business combination by issuing to such parties a class of equity or equity-linked securities. We refer
to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future
issuance” throughout this prospectus. The amount and other terms and conditions of any such specified future issuance
would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to
do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B common
stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial
stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership of founder shares at
20% of the sum of the total number of all shares of common stock outstanding upon completion of this offering excluding the
private placement shares underlying the private placement units plus all shares issued in the specified future issuance,
unless the holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with
respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the
holders of our Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to
the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which
are part of the agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an
initial business combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution
provisions of the Class B common stock; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not
waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock, but
would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified
future issuance would reduce the percentage ownership of holders of both classes of our common stock.
Our Business Combination Process
In evaluating prospective business combinations, we expect
to conduct a due diligence review process that will encompass, among other things, a review of historical and projected financial
and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets,
discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate.
We are not prohibited from pursuing an initial business combination
with a company that is affiliated with B. Riley Financial, its affiliates, our sponsor, officers or directors. In the event we
seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we,
or a committee of independent directors, will obtain an opinion from an independent investment banking firm or an independent
valuation or appraisal firm that regularly provides fairness opinions that our initial business combination is fair to our company
from a financial point of view.
B. Riley Financial and each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of
our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her
fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties
or contractual obligations of B. Riley Financial and our officers or directors will not materially affect our ability to complete
our initial business combination. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to
which B. Riley Financial, investment funds advised by B. Riley Financial or an officer or director has a fiduciary or contractual
obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we
could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such
entity. Our amended and restated certificate of incorporation will provide 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. The determination of whether an opportunity has been expressly offered to a director
of officer solely in his or her capacity as a director or officer of our company will made based on express statements by the
person offering the opportunity, and if a director or officer is unsure of whether an opportunity was offered in such capacity,
he or she shall seek guidance on such determination from the audit committee of our board of directors.
Our sponsor and each of our officers have agreed not to
participate in the formation of, or become a sponsor or officer of, any other special purpose acquisition company
conducting a public offering pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or
with a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), until we have entered into a definitive agreement regarding our initial business combination or we have failed
to complete our initial business combination within 24 months after the closing of this offering.
Corporate Information
Our executive offices are located at 299 Park Avenue, 21st
Floor, New York, NY 10171, and our telephone number is (212) 457-3300. We will maintain a corporate website at www.brileymergercorp.com.
We are 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, or the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our
securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that
an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption
of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage
of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier
of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year
period. References herein to emerging growth company will have the meaning associated with it in the JOBS Act.
THE
OFFERING
In deciding whether to invest in our securities, you should
take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank
check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities
Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully
consider these and the other risks set forth in the section of this prospectus entitled “Risk Factors.”
| Securities
offered |
|
12,500,000
units, at $10.00 per unit, each unit consisting of: |
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▪ one
share of Class A common stock; and
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▪ one-half of one redeemable warrant. |
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| Proposed
NYSE symbols |
|
Units:
“BRPM.U” |
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Class
A Common Stock: “BRPM” |
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|
Warrants:
“BRPM WS” |
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| Trading
commencement and separation of Class A common stock and warrants |
|
The units will begin trading on or promptly after
the date of this prospectus. We expect the Class A common stock and warrants comprising the units will begin separate trading
on the 52nd day following the date of this prospectus unless B. Riley informs us of its decision to allow earlier separate
trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing
when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders
will have the option to continue to hold units or separate their units into the component securities. Holders will need to
have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants.
No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless
you purchase at least two units, you will not be able to receive or trade a whole warrant. |
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| Separate
trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K |
|
In
no event will the Class A common stock and warrants be traded separately until we have filed a Current Report on Form 8-K
with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering.
We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place
three business days from the date of this prospectus. If the underwriters’ over-allotment option is exercised following
the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide
updated financial information to reflect the exercise of the underwriters’ over-allotment option. |
| Units: |
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| Number
outstanding before this offering |
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0 |
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| Number outstanding after this offering |
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12,925,000(1)(2) |
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| Common
stock: |
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| Number outstanding before this offering |
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3,593,750 shares of Class B common stock(3) |
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| Number outstanding after this offering |
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16,050,000 shares of Class A common stock
and Class B common stock(1)(4) |
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| Warrants: |
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| Number
of warrants to be outstanding after this offering and the private placement |
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6,462,500(1)(5) |
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| Exercisability |
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Each warrant
is exercisable to purchase one share of our Class A common stock. |
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| Exercise
price |
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$11.50
per share, subject to adjustment as described herein. |
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| Exercise
period |
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The warrants
will become exercisable on the later of: |
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▪ 30 days after the completion of our initial business combination, or |
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▪ 12 months from the closing of this offering; |
| (1) | Assumes
no exercise of the underwriters’ over-allotment option and the forfeiture by our
initial stockholders of 468,750 founder shares. |
| (2) | Comprised of 12,500,000 units
sold in this offering and 425,000 private placement units. |
| (3) | Includes
up to 468,750 shares that are subject to forfeiture by our initial stockholders depending
on the extent to which the underwriters’ over-allotment option is exercised. |
| (4) | Comprised
of 12,500,000 shares of Class A common stock included in the units to be sold in this
offering, 425,000 shares of Class A common stock included in the private placement units
to be sold in the private placement and 3,125,000 shares of Class B common stock (or
founder shares). The Class B common stock is convertible into shares of our Class A common
stock on a one-for-one basis, subject to adjustment as described below adjacent to the
caption “Founder shares conversion and anti-dilution rights.” |
| (5) | Comprised
of 6,250,000 public warrants included in the units to be sold in this offering and 212,500
private placement warrants included in the private placement units to be sold in the
private placement. |
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provided
in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common
stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders
to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). |
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We are not registering the shares of Class
A common stock issuable upon exercise of the warrants at this time. However, 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 covering the shares of Class A common stock issuable upon exercise of the warrants,
to cause such registration statement to become effective within 60 business days after the closing of our initial business
combination and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire
or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common
stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our
initial business combination, warrantholders may, until such time as there is an effective registration statement and during
any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if
our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that
it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our
option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect
a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available. |
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The warrants will expire at 5:00 p.m., New
York City time, five years after the completion of our initial business combination or earlier upon redemption or
liquidation and, for so long as they are held by our sponsor, will not be exercisable more than five years
from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule
5110(f)(2)(G)(i). On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the
trust account. |
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| Redemption
of warrants |
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Once the
warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private
placement warrants): |
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▪
in whole and not in part; |
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▪
at a price of $0.01 per warrant; |
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▪
upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and |
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▪
if, and only if, the last sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day
period ending on the third trading day prior to the date on which we send the notice of redemption to the warrantholders. |
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We will
not redeem the warrants unless a registration statement under the Securities Act covering the shares of Class A common stock
issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock
is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such
cashless exercise is exempt from registration under the Securities Act. 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 this offering. |
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If we
call the warrants for redemption as described above, our management will have the option to require all holders that wish
to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise
their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the
number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares
of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price
by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair
market value” (defined below) of the Class A common stock over the exercise price of the warrants by (y) the fair market
value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for
the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders
of warrants. |
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Please
see the section of this prospectus entitled “Description of Securities —Warrants — Public Stockholders’
Warrants” for additional information. |
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None
of the private placement warrants will be redeemable by us so long as they are held by the sponsor or its permitted transferees. |
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| Forward Purchase Agreement |
|
Prior to this offering, an affiliate of our sponsor
entered into a forward purchase agreement with us which provides for the purchase by it (or its designees) of an aggregate
of 2,500,000 units for an aggregate purchase price of $25,000,000 in a private placement to close concurrently with the
closing of our initial business combination.
The proceeds from the sale of the forward purchase
units may be used as part of the consideration to the sellers in the initial business combination, expenses in connection
with our initial business combination or for working capital in the post-business combination company. The forward purchase
will be required to be made regardless of whether any Class A common stock is redeemed by our public stockholders and is
intended to provide us with a minimum funding level for our initial business combination. The purchaser will not have the
ability to approve the initial business combination prior to the signing of a material definitive agreement. The forward
purchase units will be issued only in connection with the closing of the initial business combination.
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| Founder shares |
|
In connection with our initial formation
in 2012, a wholly-owned subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our
outstanding equity. On November 19, 2018, we conducted a 1:3,593,750 stock split and reclassification of our common
stock, resulting in our sole stockholder owning 3,593,750 founder shares. We expect that all of our equity will be
contributed to our sponsor prior to effectiveness of this registration statement. The number of founder shares
outstanding was determined based on the expectation that the founder shares would represent 20% of the outstanding shares
after this offering. As such, our initial stockholders will collectively own founder shares representing 20% of our
issued and outstanding shares after this offering excluding the private placement shares underlying the private placement
units. On March 12, 2019, 20,000 founder shares were transferred to each of Patrick J. Bartels, Jr., James L. Kempner,
Timothy M. Presutti and Robert Suss, our independent director nominees, at their par value. Neither our sponsor nor any
of our officers or directors have expressed an intention to purchase any units in this offering. Up to 468,750 founder
shares will be subject to forfeiture by our initial stockholders depending on the extent to which the underwriters’
over-allotment option is exercised so that our initial stockholders will maintain ownership of founder shares
representing 20% of our common stock after this offering excluding the private placement shares underlying the
private placement units. We will effect a stock dividend or share contribution prior to this offering should the size of
the offering change, in order to maintain such ownership percentage. |
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The founder
shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that: |
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▪
the founder shares are shares of Class B common stock that automatically convert into shares of our Class A common stock at
the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution
rights, as described herein; |
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▪
the founder shares are subject to certain transfer restrictions, as described in more detail below; |
|
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▪
our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (i)
waive their redemption rights with respect to their founder shares, private placement shares and public shares in connection
with the completion of our initial business combination, (ii) waive their redemption rights with respect to their founder
shares, private placement shares and public shares in connection with a stockholder vote to approve an amendment to our
amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete our initial business combination within 24 months from the closing of this
offering and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder
shares and private placement shares if we fail to complete our initial business combination within 24 months from
the closing of this offering, although they will be entitled to liquidating distributions from the trust account with
respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time
frame. |
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▪
pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares or private placement
shares held by them and any public shares purchased during or after this offering (including in open market and privately
negotiated transactions) in favor of our initial business combination. If we submit our initial business combination to our
public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the initial business combination. As a result, in addition to our initial stockholders
founder shares, we would need only 4,475,001, or 35.8%, of the 12,500,000 public shares sold in this offering to be voted
in favor of an initial business combination (assuming all outstanding shares are voted and the private placement shares to
be issued to our sponsor are voted in favor of the transaction ) in order to have our initial business combination approved
(assuming the over-allotment option is not exercised); and |
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▪
the founder shares are entitled to registration rights. |
Transfer restrictions on founder shares |
|
Our initial stockholders
have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after
the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last
sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock
exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of
common stock for cash, securities or other property (except as described herein under the section of this prospectus entitled
“Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”). Any
permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect
to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. |
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Founder
shares conversion and anti-dilution
rights |
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The shares of Class B common stock will automatically
convert into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment
as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or
deemed issued in connection with our initial business combination, the ratio at which shares of Class B common stock shall
convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of
Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number
of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate,
on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after
giving effect to any redemptions of Class A common stock by public stockholders), including all shares of Class A common stock
issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed
issued by the Company in connection with or in relation to the consummation of our initial business combination (including
the shares, but not the warrants, underlying the forward purchase units), excluding any shares of Class A common stock or
equity-linked securities exercisable for or convertible into Class A common stock issued, or to be issued, to any seller in
the initial business combination and any private placement units issued to our sponsor upon conversion of working capital
loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis. |
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The term “equity-linked securities” refers to any debt or equity securities that are
convertible, exercisable or exchangeable for shares of Class A common stock issued in a financing transaction in connection
with our initial business combination, including but not limited to a private placement of equity or debt. Securities could
be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon the conversion
or exercise of convertible securities, warrants or similar securities. |
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| Voting
Rights |
|
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted
to a vote of our stockholders, with each share of common stock entitling the holder to one vote. |
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| Private
placement units |
|
Our sponsor has agreed to purchase an aggregate
of 425,000 units (or 462,500 units if the over-allotment option is exercised in full) at a price of $10.00 per unit,
for an aggregate purchase price of $4,250,000, or $4,625,000 if the over-allotment option is exercised in full. The private
placement units are identical to the units sold in this offering except that the private placement warrants underlying the
private placement units, so long as they are held by our sponsor or its permitted transferees, (i) will not be redeemable
by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited
exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial business combination,
(iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long
as they are held by our sponsor, will not be exercisable more than five years from the effective date of the registration
statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i). A portion of the purchase
price of the private placement units will be added to the proceeds from this offering to be held in the trust account such
that at the time of closing $125,000,000 (or $143,750,000 if the underwriters exercise their over-allotment
option in full) will be held in the trust account. If we do not complete our initial business combination within 24 months
from the closing of this offering, the proceeds from the sale of the private placement units held in the trust account will
be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement
units (and the underlying securities) will expire worthless. |
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The
private placement warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor
or its permitted transferees. If the private placement warrants are held by holders other than the sponsor or its 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 this offering. |
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| Transfer
restrictions on private placement units and underlying securities |
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The private placement units (including the
underlying private placement shares, private placement warrants and shares of Class A common stock issuable upon exercise
of the private placement warrants) will not be transferable, assignable or saleable until 30 days after the completion of
our initial business combination (except as described under the section of this prospectus entitled “Principal Stockholders
— Restrictions on Transfers of Founder Shares and Private Placement Units”). Following such period, the private
placement units (including the underlying private placement shares, private placement warrants and shares of Class A common
stock issuable upon exercise of the private placement warrants) will be transferable, assignable or saleable, except that
the private placement units and underlying securities will not trade. In addition, the private placement units and the
shares and warrants underlying those units may not be sold transferred, assigned, pledged, or hypothecated, or 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 of which this
prospectus forms a part or commencement of sales of the public offering, except to any underwriter and selected dealer participating
in the offering and their bona fide officers or partners, provided that all securities so transferred remain subject to the
lockup restriction above for the remainder of the time period. |
|
Cashless exercise of private placement warrants |
|
If
holders of private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering
their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product
of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market
value” (defined below) of the Class A common stock over the exercise price of the warrants by (y) the fair market value.
The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10
trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant
agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held
by the sponsor or its permitted transferees is because it is not known at this time whether they will be affiliated with us
following an initial business combination. If they remain affiliated with us, their ability to sell our securities in the
open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities
except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities,
an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike
public stockholders who could sell the shares of Class A common stock issuable upon exercise of the warrants freely in the
open market, the insiders could be significantly restricted from doing so. As a result, we believe that allowing the holders
to exercise such warrants on a cashless basis is appropriate. |
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| Proceeds to be held in trust account |
|
The rules of the NYSE provide that at least
90% of the gross proceeds from this offering and the sale of the private placement units be deposited in a trust account.
Of the net proceeds of this offering and the sale of the private placement units, $125,000,000, or $10.00 per unit ($143,750,000,
or $10.00 per unit, if the underwriters’ over-allotment option is exercised in full), or 100% of the gross proceeds
from this offering, will be placed into a trust account in the United States at J.P. Morgan Chase Bank, N.A., with Continental
Stock Transfer & Trust Company acting as trustee. |
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Except with respect to interest earned on
the funds held in the trust account that may be released to us to pay our franchise and income tax obligations (less up to
$100,000 of interest to pay dissolution expenses), the proceeds from this offering and the sale of the private placement units
will not be released from the trust account until the earliest of (a) the completion of our initial business combination,
(b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and
restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of this offering and (c) the redemption
of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this
offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our
creditors, if any, which could have priority over the claims of our public stockholders. |
| Anticipated
expenses and funding sources |
|
Except
as described above with respect to the payment of taxes, unless and until we complete our initial business combination, no
proceeds held in the trust account will be available for our use. The proceeds held in the trust account will be invested
only in U.S. government securities with a maturity of 180 days or less or in money market funds meeting certain conditions
under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We will
disclose in each quarterly and annual report filed with the SEC prior to our initial business combination whether the proceeds
deposited in the trust account are invested in U.S. government treasury obligations or money market funds or a combination
thereof. Based upon current interest rates, we expect the trust account to generate approximately $1,875,000 of interest annually
assuming an interest rate of 1.5% per year; however, we can provide no assurances regarding this amount. Unless and until
we complete our initial business combination, we may pay our expenses only from: |
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▪
the net proceeds of this offering and the sale of the private placement units not held in the trust account, which will
be approximately $1,000,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering;
and |
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▪
any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties,
although they are under no obligation to advance funds or invest in us, and provided that any such loans will not have any
claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of an initial business
combination. |
|
Conditions to completing
our initial business combination |
|
NYSE
rules require that we must consummate an initial business combination with one or more
operating businesses or assets with a fair market value equal to at least 80% of the
net assets held in the trust account (net of amounts disbursed to management for working
capital purposes, if permitted, and excluding the amount of any deferred underwriting
commissions). If our board of directors is not able to independently determine the fair
market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm or an independent valuation or appraisal firm that regularly
provides fairness opinions. While we consider it unlikely that our board of directors
will not be able to make such independent determination of fair market value, it may
be unable to do so if the board of directors is less familiar or experienced with the
target company’s business, there is a significant amount of uncertainty as to the
value of the company’s assets or prospects, including if such company is at an
early stage of development, operations or growth, or if the anticipated transaction involves
a complex financial analysis or other specialized skills and the board of directors determines
that outside expertise would be helpful or necessary in conducting such analysis. Since
any opinion, if obtained, would merely state that the fair market value meets the 80%
fair market value test, unless such opinion includes material information regarding the
valuation of a target business or the consideration to be provided, it is not anticipated
that copies of such opinion would be distributed to our stockholders. However, if required
under applicable law, any proxy statement that we deliver to stockholders and file with
the SEC in connection with a proposed transaction will include such opinion. There is
no limitation on our ability to raise funds privately, or through loans in connection
with our initial business combination, including pursuant to forward purchase agreements
we may enter into following consummation of this offering.
We will complete our initial business combination only
if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding
voting securities of the target or is otherwise not required to register as an investment company under the Investment
Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to our initial business combination may collectively own a minority interest in the post-business
combination company, depending on valuations ascribed to the target and us in the business combination transaction. If
less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes
of NYSE’s 80% fair market value test, provided that in the event that the business combination involves more than
one target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and
we will treat the transactions together as our initial business combination for purposes of a tender offer or for seeking
stockholder approval, as applicable. |
| Permitted
purchases of public shares and public warrants by our affiliates |
|
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, initial stockholders, directors, officers, advisors
or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either
prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial
stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with
applicable law and the NYSE rules. However, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will
not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller
or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act;
however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers
will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act
to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will
be used to purchase shares or public warrants in such transactions prior to completion of our initial business combination.
See “Proposed Business — Permitted purchases of our securities” for a description of how our sponsor, initial
stockholders, directors, officers, advisors or any of their affiliates will select which stockholders to purchase securities
from in any private transaction. |
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The
purpose of any such purchases of shares 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 warrantholders 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. In addition, if
such purchases are made, the public “float” of our shares of Class A common stock or warrants may be reduced and
the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities exchange. |
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| Redemption
rights for public stockholders upon completion of our initial business combination |
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We will
provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of
our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account as of two business days prior to the consummation of our initial business combination, including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes,
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust
account is initially anticipated to be $10.00 per public share. The per-share amount we will distribute to investors who
properly redeem their shares will not be reduced by the fee payable to B. Riley pursuant to the business combination
marketing agreement. See the section entitled “Underwriting (Conflicts of Interest) - Business Combination Marketing
Agreement.” There will be no redemption rights upon the completion
of our initial business combination with respect to our warrants. Our sponsor, officers and directors have entered into a
letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder
shares and private placement shares held by them and any public shares they may acquire during or after this offering in
connection with the completion of our initial business combination or otherwise. |
| Manner
of conducting redemptions |
|
We will provide our
public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our
initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek
stockholder approval of a proposed initial business combination or conduct a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek stockholder approval under the law or stock
exchange listing requirements. Asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more
than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation
would require stockholder approval. |
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The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two
methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply
whether or not we maintain our registration under the Exchange Act or our listing on the NYSE. Such provisions may be amended
if approved by holders of 65% of our common stock entitled to vote thereon. |
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If a stockholder
vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant
to our amended and restated certificate of incorporation: |
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▪
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and |
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▪
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially
the same financial and other information about the initial business combination and the redemption rights as is required under
Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
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Upon the public announcement of our initial business combination, if we elect to conduct redemptions
pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. |
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In the
event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders
not tendering more than a specified number of public shares, which number will be based on the requirement that we may not
redeem public shares in an amount that would cause our net tangible assets 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. If public stockholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not complete the initial business combination. |
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If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder
meeting, we will: |
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▪
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies, and not pursuant to the tender offer rules, and |
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▪
file proxy materials with the SEC. |
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If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the
holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the
voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. |
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Our initial stockholders
will count towards this quorum and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote
their founder shares, private placement shares and any public shares purchased during or after this offering (including in
open market and privately negotiated transactions) in favor of our initial business combination. For purposes of seeking approval
of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial
business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares,
we would need only 4,475,001, or 35.8%, of the 12,500,000 public shares sold in this offering to be voted in favor of
an initial business combination (assuming all outstanding shares are voted and the private placement shares to be issued
to our sponsor are voted in favor of the transaction) in order to have our initial business combination approved (assuming
the over-allotment option is not exercised). These quorum and voting thresholds, and the voting agreements of our initial
stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may
elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. |
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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, at the holder's option, either deliver their stock certificates to our transfer agent or deliver their
shares to our transfer agent electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal at Custodian)
system prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of
proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the
initial business combination. If we conduct redemptions in connection with a stockholder vote, we may also require a public
stockholder seeking redemption of its public shares to submit a written request for redemption to our transfer
agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The
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 indicate whether we are requiring public stockholders to
satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any
redemptions without the need for further communication or action from the redeeming public stockholders,
which could delay redemptions and result in additional administrative cost. If the proposed initial
business combination is not approved and we continue to search for a target company, we will promptly return
any certificates or shares delivered by public stockholders who elected to redeem their shares. |
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Our
amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001 upon 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. For example, the proposed initial business combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business
combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the
proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial
business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned
to the holders thereof. |
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| Limitation
on redemption rights of stockholders holding 20% or more of the shares sold in this offering if we hold stockholder vote |
|
Notwithstanding
the foregoing redemption rights, 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 will provide 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 redeeming its shares with respect to more than an aggregate of 20% of the shares sold
in this offering, without our prior consent. We believe the restriction described above will discourage stockholders from
accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as
a means to force us or our management to purchase their shares at a significant premium to the then-current market price or
on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 20% of the shares
sold in this offering could threaten to exercise its redemption rights against an initial business combination if such holder’s
shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms.
By limiting our stockholders’ ability to redeem to no more than 20% of the shares sold in this offering, we believe
we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial
business combination, particularly in connection with an initial business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including all shares held by those stockholders that hold more than 20% of the shares
sold in this offering) for or against our initial business combination. |
| Redemption
rights in connection with proposed amendments to our certificate of incorporation |
|
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the
requirement to deposit proceeds of this offering and the private placement of units into the trust account and not release
such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein)
may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of
the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of
our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may
be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable
provisions of the Delaware General Corporation Law, or DGCL, or applicable stock exchange rules. Under our amended and
restated certificate of incorporation, we may not issue additional securities that can vote on amendments to our amended
and restated certificate of incorporation or on our initial business combination or that would entitle holders thereof to
receive funds from the trust account. Our initial stockholders, who will collectively beneficially own 20% of our common
stock excluding the private placement shares underlying the private placement units upon the closing of this offering
(assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and
restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
Our sponsor, executive officers, and directors have agreed, pursuant to a written agreement with us, that they will not
propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months
from the closing of this offering unless we provide our public stockholders with the opportunity to redeem their shares
of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by
the number of then outstanding public shares. Our sponsor, officers and directors have entered into a letter agreement
with us pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private
placement shares and any public shares held by them in connection with the completion of our initial business
combination. |
| Release
of funds in trust account on closing of our initial business combination |
|
On
the completion of our initial business combination, the funds held in the trust account will be used to pay amounts due to
any public stockholders who exercise their redemption rights as described above under “Redemption rights for public
stockholders upon completion of our initial business combination.” We will use the remaining funds to pay B. Riley the
fee payable under the business combination marketing agreement described under the heading “Underwriting (Conflicts
of Interest) - Business Combination Marketing Agreement,” to pay all or a portion of the consideration
payable to the target or owners of the target of our initial business combination and to pay other expenses associated with
our initial business combination. If our initial business combination is paid for using equity or debt securities, or not
all of the funds released from the trust account are used for payment of the consideration in connection with our initial
business combination or used for redemptions of our Class A common stock, we may apply the balance of the cash released to
us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction
businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination,
to fund the purchase of other companies or for working capital. |
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| Redemption
of public shares and distribution and liquidation if no initial business combination |
|
Our
amended and restated certificate of incorporation provides that we will have only 24 months from the closing of this offering
to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month
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. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the
24-month time period. |
| |
|
Our sponsor, officers
and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to any founder shares or private placement shares held by them if we fail
to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders
acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time
period. |
| |
|
|
| Limited
payments to insiders |
|
There
will be no finder’s fees, reimbursement, consulting fee, non-cash payments, monies in respect of any payment of a loan
or other compensation paid by us to our sponsor, officers or directors, or any affiliate of our sponsor or officers prior
to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination
(regardless of the type of transaction that it is). However, the following payments will be made to our sponsor, officers
or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held in the trust
account prior to the completion of our initial business combination: |
| |
|
|
| |
|
▪
Repayment of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational
expenses; |
| |
|
|
| |
|
▪
Payment to an affiliate of our sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial
and administrative support; |
| |
|
|
| |
|
▪
Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination;
and |
| |
|
|
| |
|
▪ Repayment
of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance
transaction costs in connection with an intended initial business combination, the terms of which have not been determined
nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such working capital loans may be
convertible into private placement-equivalent units at a price of $10.00 per unit at the option of the lender. Such units
would be identical to the private placement units, including as to exercise price, exercisability and exercise period
of the underlying warrants. The terms of such working capital loans by our sponsor or its affiliates, or our
officers and directors, if any, have not been determined and no written agreements exist with respect to such
loans. |
| |
|
Our
audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our
or their affiliates. |
| |
|
|
| Audit Committee |
|
We will
establish and maintain an audit committee, which will be composed entirely of independent directors as and when required by
the rules of the NYSE and Rule 10A of the Exchange Act, to, among other things, monitor compliance with the terms described
above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be
charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause
compliance with the terms of this offering. For more information, see the section of this prospectus entitled “Management - Committees
of the Board of Directors - Audit Committee.” |
| |
|
|
| Indemnity |
|
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) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date
of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets,
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 this 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 or directors will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses. |
| Conflicts
of Interest |
|
Our
sponsor is an affiliate of B. Riley, an underwriter in this offering. As a result, B.
Riley is deemed to have a “conflict of interest” within the meaning of Rule
5121 of the Financial Industry Regulatory Authority (“Rule 5121”).
Accordingly, this offering is being made in compliance
with the applicable requirements of Rule 5121. Rule 5121 requires that a “qualified independent underwriter,”
as defined in Rule 5121, participate in the preparation of the registration statement and prospectus and exercise the
usual standards of due diligence with respect thereto. Chardan Capital Markets, LLC has agreed to act as a “qualified
independent underwriter” for this offering. Chardan Capital Markets, LLC will receive $100,000 for acting as a qualified
independent underwriter. We have agreed to indemnify Chardan Capital Markets, LLC against certain liabilities incurred
in connection with acting as a “qualified independent underwriter,” including liabilities under the Securities
Act. In addition, no underwriter with a conflict of interest will confirm sales to any account over which it exercises
discretionary authority without the specific prior written approval of the account holder.
B. Riley Financial manages several investment vehicles.
Funds and separate accounts managed by B. Riley Financial or its affiliates may compete with us for business combination
opportunities. If these funds or separate accounts decide to pursue any such opportunity, we may be precluded from procuring
such opportunities. In addition, investment ideas generated within B. Riley Financial may be suitable for both us and
for a current or future B. Riley Financial fund or separate account and may be directed to such investment vehicle rather
than to us. Neither B. Riley Financial nor members of our management team who are also employed by B. Riley Financial
have any obligation to present us with any opportunity for a potential business combination of which they become aware,
unless presented to such member solely in his or her capacity as an officer of the company. B. Riley Financial and/or
our management, in their capacities as employees of B. Riley Financial or in their other endeavors, currently are required
to present certain investment opportunities and potential business combinations to the various related entities described
above, current B. Riley Financial investment vehicles, or third parties, before they present such opportunities to us.
B. Riley Financial and our management may have similar obligations to future investment vehicles or third parties.
Notwithstanding the foregoing, we may, at our option,
pursue an Affiliated Joint Acquisition opportunity with any such fund or other investment vehicle. Any such parties would
co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and B. Riley Financial
considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons
exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the
amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital
for closing the initial business combination. Such entity may co-invest with us in the target business at the time of
our initial business combination, or we could raise additional proceeds to complete the initial business combination by
making a specified future issuance to any such fund or vehicle. |
RISKS
We are a newly formed company that has conducted no operations
and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate
no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the
background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted
in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally
afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings
differ from this offering, please see the section of this prospectus entitled “Proposed Business — Comparison of This
Offering to Those of Blank Check Companies Subject to Rule 419.” You should carefully consider these and the other risks
set forth in the section of this prospectus entitled “Risk Factors” beginning on page 32 of this prospectus.
SUMMARY
FINANCIAL DATA
The following table summarizes the relevant financial data
for our business and should be read with our financial statements, which are included in this prospectus. We have not had any
significant operations to date, so only balance sheet data is presented.
| | |
December 31,
2018 | | |
December 31,
2017 | |
| Balance Sheet Data: | |
| | | |
| | |
| Working capital (deficiency) | |
$ | (171,121 | ) | |
| (7,479 | ) |
| Total assets | |
$ | 212,158 | | |
| - | |
| Total liabilities | |
$ | 220,779 | | |
| 7,479 | |
| Stockholder’s (deficit) | |
$ | (8,621 | ) | |
| (7,479 | ) |
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 prospectus,
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.
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 this 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 independent registered public accounting firm’s
report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
The report of our independent
registered public accounting firm on our financial statements includes an explanatory paragraph stating that our ability to continue
as a going concern is dependent on the consummation of this offering. We believe that we can continue to operate without obtaining
additional working capital until the consummation of this offering. The financial statements do not include any adjustments that
might result from our inability to consummate this offering or our ability to continue as a going concern. Moreover, there is no
assurance that we will consummate our initial business combination. These factors raise substantial doubt about our ability to
continue as a going concern.
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. In such case, 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. Please see the section of this prospectus entitled “Proposed Business — Stockholders May Not Have the
Ability to Approve Our Initial Business Combination” for additional information.
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, private placement shares, as well as any public shares
purchased during or after this offering (including in open market and privately negotiated transactions), in favor of our
initial business combination. As a result, in addition to our initial stockholders’ founder shares, we would need only
4,475,001, or 35.8%, of the 12,500,000 public shares sold in this offering to be voted in favor of an initial business
combination (assuming all outstanding shares are voted and the private placement shares to be issued to our sponsor are
voted in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment
option is not exercised). Our initial stockholders will own founder shares and private placement shares representing 22.1% of
our outstanding shares of common stock immediately following the completion of this 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. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the
Class B common stock result in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B
common stock at the time of our business combination. The above considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital structure. The amount of the fee payable to B. Riley pursuant to the
terms of the business combination marketing agreement will not be adjusted for any shares that are redeemed in connection with
an initial business combination.
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 24 months
from the closing of this offering. 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 $10.00 per share, or less than such
amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate of incorporation provides
that we must complete our initial business combination within 24 months from the closing of this offering. We may not be able to
find a suitable target business and complete our initial business combination within such time period. Our ability to complete
our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets
and the other risks described herein. If we 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 $10.00 per share, and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 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 $10.00 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 Class A
common stock or warrants.
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.
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 warrantholders 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 Class A 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 proxy rules or tender offer 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 proxy materials or tender offer documents, 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. 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 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 addition, if we conduct redemptions
in connection with a stockholder vote, a public stockholder seeking redemption of its public shares must also submit a written
request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such
shares is included. 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 “Proposed Business — Redemption Rights for Public Stockholders upon Completion
of our Initial Business Combination — Tendering Stock Certificates in Connection with Redemption Rights or a Tender Offer.”
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, and then only in connection
with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described
herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of this offering and (iii) the redemption
of our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering,
subject to applicable law and as further described herein. In no other circumstances will a public stockholder have any right or
interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account
with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants,
potentially at a loss.
The NYSE may delist our securities from trading on its exchange,
which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We intend to apply to have our units listed on the NYSE on or
promptly after the date of this prospectus and our common stock and warrants on or promptly after their date of separation. We
cannot guarantee that our securities will be approved for listing on the NYSE. Although after giving effect to this offering we
expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE listing standards, we cannot
assure you that our securities will be, or will continue to be, listed on the NYSE in the future or prior to our initial business
combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain
certain financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization
and a minimum number of holders of our securities.
Additionally, in connection with our initial business combination,
we will be required to demonstrate compliance with the NYSE’s initial listing requirements, which are more rigorous than
the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For
instance, our share price would generally be required to be at least $4.00 per share, our market capitalization would be required
to be at least $150,000,000, our publicly-held shares would need to have a market value of at least $40,000,000 and we would need
at least 400 round lot shareholders. We cannot assure you that we will be able to meet those initial listing requirements at that
time.
If the NYSE delists our securities from trading on its exchange
and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on
an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ■ | a
limited availability of market quotations for our securities; |
| |
■ |
reduced liquidity for our securities; |
| |
■ |
a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| |
■ |
a limited amount of news and analyst coverage; and |
| |
■ |
a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement Act of 1996, which
is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as
“covered securities.” Because we expect that our units and eventually our Class A common stock and warrants will be
listed on the NYSE, our units, Class A common stock and warrants will be covered securities under the statute. Although the states
are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if
there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict
the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our
initial business combination.
You will not be entitled to protections normally afforded
to investors of many other blank check companies.
Since the net proceeds of this offering and the sale of
the private placement units 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 this offering and the
sale of the private placement units and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating
this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly,
investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately
tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule
419. Moreover, if this 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. For a more detailed comparison of our offering to offerings that comply with Rule 419, please
see the section of this prospectus entitled “Proposed Business — Comparison of This Offering to Those of Blank Check
Companies Subject to Rule 419.”
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed
to hold in excess of 20% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 20% of our
Class A common stock.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended
and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of
the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the shares
sold in this 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 20% and, in order to dispose of such shares,
would be required to sell your stock in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition
for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are
unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on
our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
We expect to encounter intense competition from other entities
having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities competing for the types of businesses we intend to acquire. Many of these individuals
and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions
of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human
and other resources or more industry knowledge than we do, and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with
the net proceeds of this offering and the sale of the private placement units, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated
to pay cash for the shares of Class A 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 $10.00 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 $10.00 per share, or less in certain circumstances, 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 $10.00 per share” and other risk factors below.
If the net proceeds of this offering and the sale of
the private placement units not being held in the trust account are insufficient to allow us to operate for at least the next
24 months, we may be unable to complete our initial business combination, in which case our public stockholders may only receive
$10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the trust account may not
be sufficient to allow us to operate for at least the next 24 months, assuming that our initial business combination is not completed
during that time. We believe that, upon the closing of this offering, the funds available to us outside of the trust account will
be sufficient to allow us to operate for at least the next 24 months; 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 $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 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 $10.00 per share” and other risk factors below.
If the net proceeds of this offering and the sale of
the private placement units 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 this offering and the sale of the
private placement units, only approximately $1,000,000 will be available to us initially outside the trust account to fund our
working capital requirements. In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess
with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account
would decrease by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase
or decrease. Conversely, in the event that the offering expenses are less than our estimate of $750,000, the amount of funds
we intend to be held outside the trust account would increase by a corresponding amount. 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 nor any of their affiliates is under any obligation to advance
funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds
released to us upon completion of our initial business combination. Up to $1,500,000 of such working capital loans may be convertible
into private placement-equivalent units at a price of $10.00 per unit at the option of the lender. Prior to the 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 obtain these loans, we may be unable to complete our initial business
combination. 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 $10.00 per share on our redemption of our public shares, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 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 $10.00 per share” and other risk factors below.
Subsequent to the completion of our initial business combination,
we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant
negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all
of your investment.
Even if we conduct extensive due diligence on a target business
with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular
target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that
factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be
forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result
in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously
known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash
items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative
market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants
to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt
financing to partially finance the initial business combination. Accordingly, any stockholders who choose to remain stockholders
following the 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 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 initial
business combination constituted an actionable material misstatement or omission.
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 $10.00 per
share.
Our placing of funds in the trust account may not protect those
funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than Marcum LLP,
as set forth below), 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. Marcum LLP, our independent registered
public accounting firm, and the underwriters of the offering will not execute agreements with us waiving such claims to the monies
held in the trust account.
Examples of possible instances where we may engage a third party
that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
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 $10.00 per share initially held in the trust account, due to claims of such creditors. Pursuant
to the letter agreement, the form of which is filed as Exhibit 10.1 to the registration statement of which this prospectus forms
a part, 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) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, 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 this 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 or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and
prospective target businesses.
Our directors may decide not to enforce 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) $10.00 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 $10.00 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 $10.00 per share.
We may not have sufficient funds to satisfy indemnification
claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the
fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of
any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever.
Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside
of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors
may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These
provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even
though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment
may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant
to these indemnification provisions.
If, after we distribute the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds, and 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.
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:
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restrictions on the nature of our investments; and |
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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:
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registration as an investment company; |
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adoption of a specific form of corporate structure; and |
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In order not to be regulated as an investment company under
the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning,
holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business will be to identify and complete 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 180 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. This offering is 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 to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the
closing of this offering; or (iii) absent an initial business combination within 24 months from the closing of this offering, our
return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we
do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed
to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses
for which we have not allotted funds and may hinder our ability to complete 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
$10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 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 $10.00 per share” and other risk factors below.
Changes in laws or regulations, or a failure to comply with
any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business
combination and results of operations.
We are subject to laws and regulations enacted by national,
regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation and application
may also change from time to time and those changes could have a material adverse effect on our business, investments and results
of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material
adverse effect on our business, including our ability to negotiate and complete our initial business combination and results of
operations.
Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our
initial business combination within 24 months from the closing of this offering may be considered a liquidating distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However,
it is our intention to redeem our public shares as soon as reasonably possible following the 18th month from the closing
of this offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with
the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing
and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However,
because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective
target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.)
or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary
of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As
such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more)
and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of this offering is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three
years, as in the case of a liquidating distribution.
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.
In accordance with NYSE corporate governance requirements, we
are not required to hold an annual meeting until no later than one full year after our first fiscal year end following our listing
on NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes
of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting.
We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination,
and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to the consummation of our initial 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 are not registering the shares of Class A common stock
issuable upon exercise of the warrants under the Securities Act or any state securities laws 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 are not registering the shares of Class A common stock issuable
upon exercise of the warrants under the Securities Act or any state securities laws 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 Class A 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 Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants
in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example,
any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus,
the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.
If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit
holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis,
and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares
upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant
not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section
18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will
not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event
will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the
event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws 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 Class A 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 this 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.
If you exercise your public warrants on a “cashless
basis,” you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants
for cash.
There are circumstances in which the exercise of the public
warrants may be required or permitted to be made on a cashless basis. First, if a registration statement covering the shares of
Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing
of our initial business combination, warrantholders may, until such time as there is an effective registration statement, exercise
warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption from registration. Second,
if our Class A common stock is at any 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,
and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws
to the extent an exemption is not available. Third, if we call the public warrants for redemption, our management will have the
option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless
basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock
equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants,
multiplied by the excess of the “fair market value” (as defined in the next sentence) of the Class A common stock over
the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported last
sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice
of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable.
As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants
for cash.
The grant of registration rights to our initial stockholders
may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect
the market price of our Class A common stock.
Pursuant to the forward purchase agreement and an agreement
to be entered into concurrently with the issuance and sale of the securities in this offering, the forward purchaser and our initial
stockholders and their permitted transferees can demand that we register the forward purchase units (including the underlying
securities), the private placement units, the private placement shares, the private placement warrants, the shares of Class A
common stock issuable upon exercise of the founder shares and the private placement warrants held, or to be held, by them and
holders of securities that may be issued upon conversion of working capital loans may demand that we register such units, shares,
warrants or the Class A 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 of our Class A common stock. In addition, the existence of the registration rights may make our initial
business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase
the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market
price of our Class A common stock that is expected when the securities owned by our initial stockholders or holders of working
capital loans or their respective permitted transferees are registered.
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.
We may pursue business combination opportunities in any industry
or geographic region, except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate
our initial business combination with another blank check company or similar company with nominal operations. Because we have not
yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the
possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial
condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent
in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity
lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of
a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors
or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and
leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot
assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if
such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders
following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely
to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach
by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
Past performance by B. Riley Financial, its affiliates and
our management team may not be indicative of future performance of an investment in the Company.
Past performance by B. Riley Financial, its affiliates and 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 performance as indicative of our future performance of an investment in the company or the returns
the company will, or is likely to, generate going forward. Our management team has not had experience with blank check companies
or special purpose acquisition companies in the past.
In evaluating a prospective
target business for our initial business combination, our management will rely on the availability of all the funds from the
sale of the forward purchase units to be used as part of the consideration to the sellers in the initial business
combination. If the sale of the forward purchase units fails to close, we may lack sufficient funds to consummate our initial
business combination.
An affiliate of our sponsor has
entered into a forward purchase agreement with us which provides for the purchase by it (or its designees) of an aggregate of
2,500,000 units for an aggregate purchase price of $25,000,000 in a private placement to close concurrently with the closing
of our initial business combination. The funds from the sale of forward purchase units may be used as part of the
consideration to the sellers in our initial business combination, expenses in connection with our initial business
combination or for working capital in the post-transaction company. The obligations under the forward purchase agreement do
not depend on whether any public stockholders elect to redeem their shares and provide us with a minimum funding level for
the initial business combination. However, if the sale of the forward purchase units does not close for any reason, including
by reason of the failure by the purchaser to fund the purchase price, for example, we may lack sufficient funds to consummate
our initial business combination. Additionally, the purchaser’s obligations to purchase the forward purchase units are
subject to termination prior to the closing of the sale of the forward purchase units by mutual written consent of the
company and the purchaser, or, automatically if, among other things: (i) this offering is not consummated on or prior to the
one year anniversary of the date of the forward purchase agreement; and (ii) our initial business combination is not
consummated within the time period required by our amended and restated certificate of incorporation. In addition, the
purchaser’s obligation to purchase the forward purchase units is subject to fulfillment of customary closing
conditions, including that our initial business combination must be consummated substantially concurrently with the purchase
of the forward purchase units.
We may seek business combination opportunities in industries
or sectors which may or may not be outside of our management’s area of expertise.
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 units will not ultimately
prove to be less favorable to investors in this 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 some or all of these 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 $10.00 per share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 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 $10.00 per share” and other risk factors below.
We may seek business combination opportunities with a financially
unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could subject us to volatile
revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete our initial business combination with
a financially unstable business or an entity lacking an established record of revenues or earnings, we may be affected by numerous
risks inherent in the operations of the business with which we combine. These risks include volatile revenues or earnings and difficulties
in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a
particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not
have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with
no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent
investment banking firm or 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 from a financial point of view.
Unless we complete our initial business combination with an
affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or from an independent
valuation or appraisal firm that regularly prepares fairness opinions that the price we are paying is fair to our company from
a financial point of view.
In addition, if our board of directors is not able to determine
the fair market value of the target business or businesses, in connection with the NYSE rules that require that our initial business
combination must occur with one or more operating businesses or assets with a fair market value equal to at least 80% of the net
assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding
the amount of any deferred underwriting commissions), we will obtain an opinion from an independent investment banking firm or
from an independent valuation or appraisal firm that regularly prepares fairness opinions solely with respect to the satisfaction
of such criteria.
Other than the two circumstances described above, we are not
required to obtain an opinion from an independent investment banking firm or from an independent valuation or appraisal firm. If
no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market
value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer
documents or proxy solicitation materials, as applicable, related to our initial business combination.
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.
We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one
at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated
certificate of incorporation. 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 Class A common stock, par value $0.0001 per share, 25,000,000 shares of Class B common
stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after this
offering, there will be 80,612,500 and 21,875,000 (assuming, in each case, that the underwriters have not exercised their over-allotment
option) authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance,
which amount takes into account the shares of Class A common stock reserved for issuance upon exercise of outstanding warrants
but not the shares of Class A common stock issuable upon conversion of Class B common stock. Immediately after the consummation
of this offering, there will be no shares of preferred stock issued and outstanding. Shares of Class B common stock are convertible
into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including
in certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial business combination.
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 will provide that we may not issue securities
that can vote with common stockholders on matters related to our pre-initial business combination activity). We may also issue
shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our
initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation.
However, our amended and restated certificate of incorporation will provide, 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 to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24
months from the closing of this offering 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:
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may significantly dilute the equity interest of investors in this offering; |
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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 |
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
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
$10.00 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 $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will
expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 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 $10.00 per share” and other risk factors below.
Our ability to successfully effect our initial business combination
and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following
our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination
business.
Our ability to successfully effect our initial business combination
is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently
be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions
following our initial business combination, it is likely that some or all of the management of the target business will remain
in place. While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot assure
you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar
with such requirements. In addition, the officers and directors of an initial business combination candidate may resign upon completion
of our initial business combination. The departure of an initial business combination target’s key personnel could negatively
impact the operations and profitability of our post-combination business. The role of an initial business combination candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate
that certain members of an initial business combination candidate’s management team will remain associated with the initial
business combination candidate following our initial business combination, it is possible that members of the management of an
initial business combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the
operations and profitability of our post-combination business.
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.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to
receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in
determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the company after
the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection
with the initial business combination. 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. 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.
We may have a limited ability to assess the management of
a prospective target business and, as a result, may effect our initial business combination with a target business whose management
may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value
of our stockholders’ investment in us.
When evaluating the desirability of effecting our initial business
combination with a prospective target business, our ability to assess the target business’s management may be limited due
to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may
prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following
the 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.
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. In particular, certain of our officers and directors are employed by B. Riley Financial which make investments
in securities or other interests of or relating to companies in industries we may target for our initial business combination.
Our directors and officers 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 “Management — Directors and Officers.”
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 this 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 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.
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 will provide 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.
The determination of whether an opportunity has been expressly offered to a director of officer solely in his or her capacity
as a director or officer of our company will be made based on express statements by the person offering the opportunity, and if
a director or officer is unsure of whether an opportunity was offered in such capacity, he or she shall seek guidance on such
determination from the audit committee of our board of directors. Depending on the facts or circumstances, there may be challenges
in determining whether an opportunity was expressly offered to a director or officer solely in his or her capacity as a director
or officer of our company, and such determinations may not be resolved in our favor, in which case a potential target business
may be presented to another entity prior to its presentation to us.
Please see
“Management — Directors, Director Nominees and Executive Officers,” “Management — Conflicts of
Interest” and “Certain Relationships and Related Party Transactions” for a discussion of our
officers’ and directors’ business affiliations and potential conflicts of interest.
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, or we may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates
of B. Riley Financial. 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.
We may engage in an initial business combination with one
or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or
existing holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor, officers and directors
with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers or directors. Our directors
and officers also serve as officers and board members of other entities, including, without limitation, those described under the
section of this prospectus entitled “Management — Conflicts of Interest.” Such entities may compete with us for
business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for
us to complete our initial business combination with any entities with which they are affiliated, and there have been no preliminary
discussions concerning an initial business combination with any such entity or entities. Although we will not be specifically focusing
on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated
entity met our criteria for an initial business combination as set forth in the section of this prospectus entitled “Proposed
Business — Selection of a Target Business and Structuring of our Initial Business Combination” and such transaction
was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment
banking firm, or from an independent valuation or appraisal firm that regularly prepares fairness opinions, regarding the fairness
to our stockholders from a financial point of view of an initial business combination with one or more domestic or international
businesses affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as
a result, the terms of the initial business combination may not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Moreover, we may, at our option, pursue an affiliated joint
acquisition opportunity with B. Riley Financial, its affiliates or with other entities to which an officer or director has a fiduciary,
contractual or other obligation or duty. Any such parties may co-invest with us in the target business at the time of our initial
business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to
any such parties, which may give rise to certain conflicts of interest. In order to satisfy applicable regulatory or other legal
requirements applicable to an Affiliated Joint Acquisition, our initial business combination may be effected on less favorable
terms than otherwise would apply if the initial business combination were not an Affiliated Joint Acquisition.
We may acquire a target business through an Affiliated Joint
Acquisition with one or more affiliates of B. Riley Financial. This may result in conflicts of interest as well as dilutive issuances
of our securities.
We may, at our option, pursue an Affiliated Joint Acquisition
opportunity with an entity affiliated with B. Riley Financial. Any such parties would co-invest only if (i) permitted by
applicable regulatory and other legal limitations; (ii) we and B. Riley Financial considered a transaction to be mutually beneficial
to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including
such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business combination
and/or the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition may
be effected through a co-investment with us in the target business at the time of our initial business combination, or we could
raise additional proceeds to complete the initial business combination by issuing to such parties a class of equity or equity-linked
securities. Accordingly, such persons or entities may have a conflict between their interests and ours.
In addition, any specified future issuance in connection
with Affiliated Joint Acquisition would trigger the anti-dilution provisions of our Class B common stock, which, unless waived,
would result in an adjustment to the conversion ratio of our Class B common stock such that our initial stockholders and their
permitted transferees, if any, would retain their aggregate percentage ownership of founder shares at 20% of the sum of the total
number of all shares of common stock outstanding upon completion of this offering excluding private placement shares underlying the private placement units plus all shares issued in the specified future
issuance. If such adjustment is not waived as described elsewhere in this prospectus, the specified future issuance would not
reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of
our Class A common stock.
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 connection with our initial formation in 2012, a wholly-owned
subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our outstanding equity. On November 19,
2018, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning
3,593,750 founder shares. We expect that all of our equity will be contributed to our sponsor prior to effectiveness of this registration
statement. The number of founder shares outstanding was determined based on the expectation that such founder shares would represent
20% of the outstanding shares after this offering. On March 12, 2019, 20,000 founder shares were transferred to each of Patrick
J. Bartels, Jr., James L. Kempner, Timothy M. Presutti and Robert Suss, our independent director nominees, at their par value.
The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor has agreed
to purchase an aggregate of 425,000 units (or 462,500 units if the over-allotment option is exercised in full) at a price of $10.00
per unit, that will also be worthless if we do not complete an initial business combination. Holders of founder shares and
private placement shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination
and (B) not to redeem any founder shares or private placement shares in connection with a stockholder vote to approve a
proposed initial business combination or in connection with a tender offer. In addition, we may obtain loans from our sponsor,
affiliates of our sponsor or an officer or director. The personal and financial interests of our 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.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this prospectus
to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur
substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless we
have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
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our inability to pay dividends on our common stock; |
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
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other disadvantages compared to our competitors who have less debt. |
We may only be able to complete one business
combination with the proceeds of this offering and the sale of the private placement units, and forward purchase units, which will cause us to be solely
dependent on a single business which may have a limited number of services and limited operating activities. This lack of
diversification may negatively impact our operating results and profitability.
Of the net proceeds from this offering and the sale of the
private placement units, $125,000,000 (or $143,750,000 if the underwriters’ over-allotment option is exercised in full)
will be available to complete our initial business combination and pay related fees and expenses. The proceeds from the sale of the forward purchase units will be $25,000,000.
We may effectuate our initial business combination with a single
target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate
our initial business combination with more than one target business because of various factors, including the existence of complex
accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing
our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive
and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of
risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in
different industries or different areas of a single industry. In addition, we intend to focus our search for an initial business
combination in a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or |
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dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may subject us to numerous economic,
competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which
we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses
that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent
on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability,
to complete our initial business combination. We do not, however, intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination. With multiple business combinations, we could also face additional risks,
including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there
are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products
of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We may attempt to complete our initial business combination
with a private company about which little information is available, which may result in an initial business combination with a
company that is not as profitable as we suspected, if at all.
In pursuing our initial business combination strategy, we may
seek to effectuate our initial business combination with a privately held company. Very little public information generally exists
about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in an initial business combination with a company that is not as profitable
as we suspected, if at all.
Our management may not be able to maintain control of a target
business after our initial business combination.
We may structure an initial business combination so that the
post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets
of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue
a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of
a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than
a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may
subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock
than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control
of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will possess
the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption threshold.
The absence of such a redemption threshold may make it possible for us to complete an initial business combination with which a
substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation will not
provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (such 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.
As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders
do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination
and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered
into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In
the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business
combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem
any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead
may search for an alternate business combination.
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 will require the approval of holders of 65% of our common stock. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, and that all other modifications or amendments will require the vote or written
consent of the holders of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to
the terms of the private placement warrants, a majority 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 to modify
the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination
within 24 months from the closing of this offering. 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.
The provisions of our amended and restated certificate of
incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the
release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account such that
the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated, may be amended
with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check
companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement
to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation will
provide that any of its provisions related to pre-initial business combination activity (including the requirement to deposit
proceeds of this offering and the private placement of units into the trust account and not release such amounts except in specified
circumstances, and to provide redemption rights to public stockholders as described herein and including to permit us to withdraw
funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially
reduced or eliminated) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding
provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders
of 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation
may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions
of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended
and restated certificate of incorporation. Our initial stockholders, who will collectively beneficially own up to 22.1% of our
common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in
any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to
vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of
incorporation which govern our pre-initial business combination behavior more easily than some other blank check companies, and
this may increase our ability to complete an initial business combination with which you do not agree. Our stockholders may pursue
remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have agreed, pursuant to
a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of this offering unless we provide our public stockholders with the opportunity to
redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to
the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements
are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not
parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against
our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders
would need to pursue a stockholder derivative action, subject to applicable law.
Our initial stockholders may exert a substantial influence
on actions requiring a stockholder vote, potentially in a manner that you do not support.
Upon the closing of this offering, our initial
stockholders will own founder shares and private placement shares representing 22.1% of our issued and outstanding shares of
common stock (assuming they do not purchase any units in this offering). Accordingly, they may exert a substantial influence
on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended
and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase
any units in this offering or if our initial stockholders purchase any additional shares of common stock in the aftermarket
or in privately negotiated transactions, this would increase their control. Factors that would be considered in making such
additional purchases would include consideration of the current trading price of our Class A common stock. In addition, our
board of directors, whose members were elected by our initial stockholders, is and will be divided into two classes, each of
which, other than the initial term, will generally serve for a term of two years with only one class of directors being
elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our
initial business combination, in which case all of the current directors will continue in office until at least the
completion of the initial business combination. If there is an annual meeting, as a consequence of our
“staggered” board of directors, only a minority of the board of directors will be considered for election and our
initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.
Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business
combination.
The purchase of our founder shares was at a nominal
price and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class B common
stock.
The difference between the public offering price per share
(allocating all of the unit purchase price to the Class A common stock and none to the half-warrant included in the unit) and
the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to you
and the other investors in this offering. The purchase of our founder shares was at a nominal price, significantly contributing
to this dilution. Upon the closing of this offering, and assuming no value is ascribed to the warrants included in the units,
you and the other public stockholders will incur an immediate and substantial dilution of approximately 87.30% (or $8.73 per share,
assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible book
value per share of $1.27 and the initial offering price of $10.00 per unit. In addition, because of the anti-dilution
rights of the founder shares, any equity or equity-linked securities issued or deemed issued in connection with our initial business
combination would be disproportionately dilutive to our Class A common stock.
We may amend the terms of the warrants with the approval by the holders of at least 50% of the then outstanding public warrants.
As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares
of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, and that all other modifications or amendments will require the vote or written
consent of the holders of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to
the terms of the private placement warrants, a majority of the then outstanding private placement warrants. Although
our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock
purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise
at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time
after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported
sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to
the date on which we give proper notice of such redemption and provided certain other conditions are met. 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 this offering. 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 the sponsor or its permitted transferees.
Our warrants and founder shares may have an adverse effect
on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
We will be issuing warrants to purchase 6,250,000
shares of our Class A common stock (or up to 7,187,500 shares of Class A common stock if the underwriters’
over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the
closing of this offering, we will be issuing in a private placement units which will have underlying warrants to purchase an
aggregate of 212,500 shares of Class A common stock (or up to 231,250 if the underwriters’ over-allotment option is
exercised in full) at $11.50 per share. Warrants to purchase 1,250,000 shares of our Class A common stock will be included in
the forward purchase units. Our initial stockholders currently own an aggregate of 3,593,750 founder shares. The founder
shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein.
In addition, if our sponsor or its affiliates, or any of our officers or directors, makes any working capital loans, up to
$1,500,000 of such loans may be converted into private placement-equivalent units at a price of $10.00 per unit at the option
of the lender. Such units would be identical to the private placement units, including as to exercise price, exercisability
and exercise period of the underlying warrants.
To the extent we issue shares of Class A common stock to effectuate
an initial business combination, the potential for the issuance of a substantial number of additional shares of Class A 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 Class A common stock and reduce the
value of the shares of Class A 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 units are identical to the units sold
this offering except that the private placement warrants, so long as they are held by our sponsor or its permitted transferees,
(i) they will not be redeemable by us, (ii) they (including the Class A common stock issuable upon exercise of these warrants)
may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion
of our initial business combination, (iii) they may be exercised by the holders on a cashless basis, (iv) will be entitled to
registration rights and (v) for so long as they are held by our sponsor, will not be exercisable more than five years from the
effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i).
The determination of the offering price of our units and
the size of this offering is 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 this offering there has been no public market for any
of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the underwriters.
In determining the size of this 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 this offering, prices and terms
of the units, including the Class A common stock and warrants underlying the units, include:
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the history and prospects of companies whose principal business is the acquisition of other companies; |
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prior offerings of those companies; |
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our prospects for acquiring an operating business; |
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a review of debt to equity ratios in leveraged transactions; |
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our capital structure; |
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an assessment of our management and their experience in identifying operating companies; |
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general conditions of the securities markets at the time of this offering; and |
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other factors as were deemed relevant. |
Although these factors were considered, the determination of
our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have
no historical operations or financial results.
There is currently no market for our securities and a market
for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Stockholders
therefore have no access to information about prior market history on which to base their investment decision. Following this offering,
the price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The federal proxy rules require that the proxy statement with
respect to the vote on an initial business combination include historical and pro
forma financial statement disclosure. We will include the same financial statement disclosure in connection
with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may
be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board,
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with
the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements
may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements
in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame.
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 Class
A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer
be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less
attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active
trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, we,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another public company which is neither an emerging growth company nor
an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accountant standards used.
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, 2020.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, 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.
Provisions in our amended and restated certificate of incorporation
and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
our Class A common stock and could entrench management.
Our amended and restated certificate of incorporation will contain
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.
Provisions in our amended and restated certificate of incorporation
and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended
and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted
by applicable law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting
a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our certificate of incorporation
or our bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine (except as to any claim
(i) as to which the Court of Chancery 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), (ii) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery,
or (iii) for which the Court of Chancery does not have subject matter jurisdiction, including, without limitation, any claim arising
under the federal securities laws, as to which the federal district court for the District of Delaware will be the sole and exclusive
forum).
However, this
exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore,
this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations
thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision, and our stockholders will not
be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Although we
believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits
to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Cyber incidents or attacks directed at us could result in
information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems,
infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties
or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential
data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected
against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any
vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences
on our business and lead to financial loss.
If we effect our initial business combination with a company
with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively
impact our operations.
If we effect our initial business combination with a company
with operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets; |
| |
■ |
rules and regulations regarding currency redemption; |
| |
■ |
complex corporate withholding taxes on individuals; |
| |
■ |
laws governing the manner in which future business combinations may be effected; |
| |
■ |
tariffs and trade barriers; |
| |
■ |
regulations related to customs and import/export matters; |
| |
■ |
longer payment cycles and challenges in collecting accounts receivable; |
| |
■ |
tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States; |
| |
■ |
currency fluctuations and exchange controls; |
| |
■ |
rates of inflation; |
| |
■ |
cultural and language differences; |
| |
■ |
employment regulations; |
| |
■ |
crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
| |
■ |
deterioration of political relations with the United States; and |
| |
■ |
government appropriations of assets. |
We may not be able to adequately address these additional risks.
If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition.
Recently enacted tax reform legislation in the U.S. could
adversely affect our business and financial condition following a business combination.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into
law, making significant changes to the Internal Revenue Code. Changes under the Tax Act include, but are not limited to, a
corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, a one-time transition
tax on the mandatory deemed repatriation of cumulative foreign earnings, a limitation of the tax deduction for interest expense
to 30% of adjusted earnings (except for certain small businesses), a limitation of the deduction for net operating losses
to 80% of current year taxable income and the elimination of net operating loss carrybacks, a one-time taxation of offshore
earnings at reduced rates regardless of whether they are repatriated, the elimination of U.S. tax on foreign earnings (subject
to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation
expense over time, and modifying or repealing many business deductions and credits (including reducing the business tax credit
for certain clinical testing expenses incurred in the testing of orphan drugs). The overall impact of the Tax Act is uncertain,
and it could make completing a business combination with us less appealing than with companies in other countries. In addition,
it is uncertain if and to what extent various states will conform to the Tax Act and what effect any legal challenges will
have on the Tax Act, including litigation in the U.S. and international challenges brought by organizations such as the World
Trade Organization. The impact of the Tax Act on holders of our common stock is also uncertain and could be adverse. Investors
should consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing
in or holding our common stock.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus may constitute “forward-looking
statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to,
statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future.
In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example,
statements about:
| |
■ |
our ability to select an appropriate target business or businesses; |
| |
■ |
our ability to complete our initial business combination; |
| |
■ |
our expectations around the performance of the prospective target business or businesses; |
| |
■ |
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, as a result of which they would then receive expense reimbursements; |
| |
■ |
the proceeds of the forward purchase units being available to us; |
| |
■ |
our potential ability to obtain additional financing to complete our initial business combination; |
| |
■ |
our pool of prospective target businesses; |
| |
■ |
the ability of our officers and directors to generate a number of potential acquisition 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 this offering. |
The forward-looking statements contained in this prospectus
are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be
no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the section of this prospectus entitled “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.
USE
OF PROCEEDS
We are offering 12,500,000 units at an offering price of $10.00
per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private
placement warrants will be used as set forth in the following table.
| | |
Without
Over-Allotment
Option | | |
Over-Allotment
Option
Fully Exercised | |
| Gross proceeds | |
| | |
| |
| Gross
proceeds from units offered to public(1) | |
$ | 125,000,000 | | |
$ | 143,750,000 | |
| Gross proceeds from private placement units offered
in the private placement to the sponsor | |
| 4,250,000 | | |
| 4,625,000 | |
| Total gross proceeds | |
$ | 129,250,000 | | |
$ | 148,375,000 | |
| | |
| | | |
| | |
| Offering
expenses(2) | |
| | | |
| | |
| Underwriting
commissions (2% of gross proceeds from units offered to public) (3) | |
$ | 2,500,000 | | |
$ | 2,875,000 | |
| Legal fees and expenses | |
| 250,000 | | |
| 250,000 | |
| Accounting fees and expenses | |
| 50,000 | | |
| 50,000 | |
| SEC/FINRA Expenses | |
| 39,500 | | |
| 39,500 | |
| Travel and road show | |
| 25,000 | | |
| 25,000 | |
| NYSE listing and filing fees | |
| 85,000 | | |
| 85,000 | |
| Director and Officer liability insurance premiums | |
| 100,000 | | |
| 100,000 | |
| Printing and engraving expenses | |
| 45,000 | | |
| 45,000 | |
| Miscellaneous | |
| 155,500 | | |
| 155,500 | |
| Total offering expenses (excluding underwriting commissions) | |
$ | 750,000 | | |
$ | 750,000 | |
| Proceeds after offering expenses | |
$ | 126,000,000 | | |
$ | 144,750,000 | |
| Held in trust account | |
$ | 125,000,000 | | |
$ | 143,750,000 | |
| % of public offering size | |
| 100 | % | |
| 100 | % |
| Not held in trust account | |
$ | 1,000,000 | | |
$ | 1,000,000 | |
The following table shows the use of the approximately $1,000,000
of net proceeds not held in the trust account.(3)
| | |
Amount | | |
% of Total | |
| Due diligence (excluding accounting and legal due diligence) of prospective target(s) | |
$ | 200,000 | | |
| 20.0 | % |
| Legal and accounting expenses attendant to the due diligence investigations, structuring and negotiations of an initial business transaction | |
| 100,000 | | |
| 10.0 | % |
| Legal and Accounting related to regulatory reporting requirements | |
| 150,000 | | |
| 15.0 | % |
| Administrative and support services | |
| 240,000 | | |
| 24.0 | % |
| Other miscellaneous expenses, listing fees and liquidation reserves | |
| 310,000 | | |
| 31.0 | % |
| Total | |
$ | 1,000,000 | | |
| 100.0 | % |
(1) Includes gross
proceeds from this offering of $125,000,000 (or $143,750,000 if the underwriters’ overallotment option is exercised in full).
(2) A portion of the
offering expenses will be paid from the proceeds of loans from our sponsor of up to $300,000 as described in this prospectus.
As of December 31, 2018, we had borrowed $50,000 (of up to $300,000 available to us) under the promissory note with our sponsor
to be used for a portion of the expenses of this offering. These amounts will be repaid upon completion of this offering out of
the $750,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions).
In the event that offering expenses are more than as set forth in this table, they will be repaid using a portion of the $1,000,000
of offering proceeds not held in the trust account and set aside for post-closing working capital expenses. In the event that
offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses.
(3) These expenses
are estimates only and do not include interest which may be available to us from the trust account. Our actual expenditures for
some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting
expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon
the level of complexity of such business combination. In the event we identify an initial business combination target in a specific
industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement
of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist
with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations
among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific
category of expenses, would not be available for our expenses.
The rules of the NYSE provide that at least 90% of the gross
proceeds from this offering and the sale of the private placement units be deposited in a trust account. Of the net proceeds of
this offering and the sale of the private placement units, $125,000,000 (or $143,750,000 if the underwriters’ over-allotment
option is exercised in full) will be placed in a trust account in the United States at J.P. Morgan Chase Bank, N.A., with Continental
Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government treasury bills with a maturity
of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which
invest only in direct U.S. government treasury obligations. We estimate that the interest earned on the trust account will be
approximately $1,875,000 per year, assuming an interest rate of 1.5% per year; however, we can provide no assurance regarding
this amount. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our
franchise and income tax obligations, the proceeds from this offering and the sale of the private placement units will not be
released from the trust account until the earliest to occur of: (a) the completion of our initial business combination, (b) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of this offering, and (c) the redemption of our public shares
if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable
law.
The net proceeds held in the trust account may be used as consideration
to pay the sellers of a target business with which we ultimately complete our initial business combination. If our initial business
combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment
of the consideration in connection with our initial business combination or used for redemptions of our Class A common stock, we
may apply the balance of the cash released from the trust account for general corporate purposes, including for maintenance or
expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing
our initial business combination, to fund the purchase of other companies or for working capital. There is no limitation on our
ability to raise funds privately or through loans in connection with our initial business combination, including pursuant to forward
purchase agreements we may enter into following consummation of this offering.
We believe that amounts not held in trust will be sufficient
to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary
due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence,
depending on the circumstances of the relevant prospective business combination, only after we have negotiated and signed a letter
of intent or other preliminary agreement that addresses the terms of an initial business combination. However, if our estimate
of the costs of undertaking in-depth due diligence and negotiating an initial business combination is less than the actual amount
necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable.
If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from
our sponsor, members of our management team or their affiliates, but such persons are not under any obligation to advance funds
to, or invest in, us.
Commencing on the date of this prospectus, we have agreed to
pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative
support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Prior to the closing of this offering, our sponsor has agreed
to loan us up to $300,000 to be used for a portion of the expenses of this offering. As of December 31, 2018, we had borrowed
$50,000 under the promissory note with our sponsor to be used for a portion of the expenses of this offering. This loan is non-interest
bearing, unsecured and due at the earlier of December 31, 2019 or the closing of this offering. The loan will be repaid upon the
closing of this offering out of the offering proceeds not held in the trust account.
In addition, in order to finance transaction costs in connection
with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors
may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay
such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of
funds held outside the trust account. In the event that our initial 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 to repay such loaned amounts. Up to $1,500,000 of such working capital loans may be convertible into private placement-equivalent
units at a price of $10.00 per unit at the option of the lender. Such units would be identical to the private placement units,
including as to exercise price, exercisability and exercise period of the underlying warrants. The terms of such working capital
loans by our sponsor or its affiliates, or 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.
Prior to this offering, an affiliate of our sponsor entered into a forward purchase agreement with us
which provides for the purchase by it (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of
$25,000,000 in a private placement to close concurrently with the closing of our initial business combination.
The proceeds from the sale of the forward purchase units may be used as part of the consideration
to the sellers in the initial business combination, expenses in connection with our initial business combination or for working
capital in the post-transaction company. The forward purchase will be required to be made regardless of whether any Class A common
stock is redeemed by our public stockholders and is intended to provide us with minimum funding level for our initial business
combination.
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,
initial stockholders, directors, officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated
transactions or in the open market either prior to or following the completion of our initial business combination. There is no
limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such
transactions, subject to compliance with applicable law and NYSE rules. However, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such
transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed
to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such
purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private
transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any
such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions
prior to completion of our initial business combination. See “Proposed Business — Permitted purchases of our securities”
for a description of how our sponsor, initial stockholders, directors, officers, advisors or any of their affiliates will select
which stockholders to purchase securities from in any private transaction.
The purpose of any such purchases of shares 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 warrantholders 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. In addition, if such purchases are made, the public “float” of our shares of
Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may
make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
We may not redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon 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) and
the agreement for our initial business combination may require 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 so that we cannot satisfy the net tangible asset
requirement or any net worth or cash requirements, we would not proceed with the redemption of our public shares or the initial
business combination, and instead may search for an alternate business combination.
A public stockholder 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 to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our
initial business combination within 24 months from the closing of this offering and (iii) the redemption of our public shares if
we are unable to complete our initial business combination within 24 months following the closing of this offering, subject to
applicable law and as further described herein and any limitations (including but not limited to cash requirements) created by
the terms of the proposed initial business combination. In no other circumstances will a public stockholder have any right or interest
of any kind to or in the trust account.
Our sponsor, officers and directors have entered into
a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder
shares, private placement shares and any public shares held by them in connection with the completion of our initial business
combination. In addition, our initial stockholders have agreed to waive their rights to liquidating distributions from the
trust account with respect to any founder shares or private placement shares held by them if we fail to complete our initial
business combination within the prescribed time frame. However, if our sponsor or any of our officers, directors or
affiliates acquires public shares in or after this offering, they will be entitled to liquidating distributions from the
trust account with respect to such public shares if we fail to complete our initial business combination within the
prescribed time frame.
DIVIDEND
POLICY
We have not paid any cash dividends on our common stock
to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash
dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition
subsequent to completion of our initial business combination. If we increase or decrease the size of the offering we will effect
a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class
B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial
stockholders at 20.0% of the issued and outstanding shares of our common stock upon the consummation of this offering excluding
the private placement shares underlying the private placement units. Further, if we incur any indebtedness in connection with
our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in
connection therewith.
DILUTION
The difference between the public offering price per share of
Class A common stock, assuming no value is attributed to the warrants included in the units we are offering pursuant to this prospectus
or the private placement warrants, and the pro forma net tangible book value per share of our Class A common stock after this offering
constitutes the dilution to investors in this offering. Such calculation does not reflect any dilution associated with the sale
and exercise of warrants, including the private placement warrants, which would cause the actual dilution to the public stockholders
to be higher, particularly where a cashless exercise is utilized. Net tangible book value per share is determined by dividing our
net tangible book value, which is our total tangible assets less total liabilities (including the value of Class A common stock
which may be redeemed for cash), by the number of outstanding shares of our Class A common stock.
At December 31, 2018, our net tangible book value was $(171,121),
or approximately $(0.05) per share of common stock. After giving effect to the sale of 12,500,000 shares of Class A common stock
included in the units we are offering by this prospectus (or 14,375,000 shares of Class A common stock if the underwriters’
over-allotment option is exercised in full), the sale of the 425,000 shares of Class A common stock underlying private placement
units (or 462,500 shares of Class A common stock underlying the private placement units if the underwriters’ over-allotment
option is exercised in full) and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma
net tangible book value at December 31, 2018 would have been $5,000,001, or approximately $1.27 per share (or $1.12 per share
if the underwriters’ over-allotment option is exercised in full), representing an immediate increase in net tangible book
value (as decreased by the value of the approximately 12,099,138 shares of Class A common stock that may be redeemed for cash,
or 13,974,138 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) of $1.32 per
share (or $1.17 per share if the underwriters’ over-allotment option is exercised in full) to our initial stockholders as
of the date of this prospectus and dilution to public stockholders from this offering will be $8.73 per share (or $8.88 if the
underwriters’ over-allotment option is exercised in full).
The following table illustrates the dilution to the public stockholders
on a per-share basis, assuming no value is attributed to the warrants included in the units or the private placement warrants:
| |
|
|
No
exercise of
over-allotment
option |
|
|
|
Exercise
of
over-allotment
option in full |
|
| Public
offering price |
|
|
|
|
$ |
10.00 |
|
|
|
|
|
$ |
10.00 |
|
| Net
tangible book value before this offering |
|
$ |
(0.05) |
|
|
|
|
|
$ |
(0.05) |
|
|
|
|
| Increase
attributable to public stockholders and sale of the private placement units |
|
$ |
1.32 |
|
|
|
|
|
$ |
1.17 |
|
|
|
|
| Pro
forma net tangible book value after this offering |
|
|
|
|
$ |
1.27 |
|
|
|
|
|
$ |
1.12 |
|
| Dilution
to public stockholders |
|
|
|
|
$ |
8.73 |
|
|
|
|
|
$ |
8.88 |
|
| Percentage
of dilution to public stockholders |
|
|
|
|
|
87.30 |
% |
|
|
|
|
|
88.80 |
% |
For purposes of presentation, we have reduced our pro forma
net tangible book value after this offering (assuming no exercise of the underwriters’ over-allotment option) by $120,991,378
because holders of up to approximately 96.8% of our public shares may redeem their shares for a pro rata share of the aggregate
amount then on deposit in the trust account at a per share redemption price equal to the amount in the trust account as set forth
in our proxy materials or tender offer documents (initially anticipated to be the aggregate amount held in trust two days prior
to the commencement of our tender offer or stockholders meeting, including interest earned on the funds held in the trust account
and not previously released to us to pay our franchise and income taxes), divided by the number of shares of Class A common stock
sold in this offering.
The following table sets forth information with respect
to our initial stockholders, private placement unitholders and the public stockholders:
| | |
Shares
Purchased | | |
Total
Consideration | | |
Average
Price Per | |
| | |
Number | | |
Percentage | | |
Amount | | |
Percentage | | |
Share | |
| Initial
Stockholders(1)(2) | |
| 3,125,000 | | |
| 19.47 | % | |
$ | — | | |
| 0.00 | % | |
$ | 0.00 | |
| Private Placement Unitholders | |
| 425,000 | | |
| 2.65 | % | |
| 4,250,000 | | |
| 3.29 | % | |
$ | 10.00 | |
| Public Stockholders | |
| 12,500,000 | | |
| 77.88 | % | |
| 125,000,000 | | |
| 96.71 | % | |
$ | 10.00 | |
| | |
| 16,050,000 | | |
| 100.00 | % | |
$ | 129,250,000 | | |
| 100.00 | % | |
| | |
| (1) | Assumes no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of an aggregate of 468,750
shares of Class B common stock held by our initial stockholders. |
| (2) | Total consideration paid by initial stockholders represents total amount paid by our initial stockholder for its shares in
a predecessor entity. |
The pro forma net tangible book value per share after the offering
is calculated as follows:
| | |
Without
Over-
allotment | | |
With
Over-
allotment | |
| Numerator: | |
| | |
| |
| Net tangible book value before this offering | |
$ | (171,121 | ) | |
$ | (171,121 | ) |
| Net
proceeds from this offering and sale of the private placement units, net of expenses(1) | |
| 126,000,000 | | |
| 144,750,000 | |
| Plus: Offering costs paid for in advance | |
| 162,500 | | |
| 162,500 | |
| Less:
Proceeds held in trust subject to redemption to maintain net tangible assets of $5,000,001(2) | |
| (120,991,378 | ) | |
| (139,741,378 | ) |
| | |
$ | 5,000,001 | | |
$ | 5,000,001 | |
| | |
Without
Over-
allotment | | |
With
Over-
allotment | |
| Denominator: | |
| | |
| |
| Shares of Class B common stock outstanding
prior to this offering | |
| 3,593,750 | | |
| 3,593,750 | |
| Shares of Class B common stock forfeited if over-allotment
is not exercised | |
| (468,750 | ) | |
| — | |
| Shares of Class A common stock included in the units
offered | |
| 12,500,000 | | |
| 14,375,000 | |
| Shares of Class A common stock included in the private
placement units offered | |
| 425,000 | | |
| 462,500 | |
| Less: Shares subject to redemption | |
| (12,099,138 | ) | |
| (13,974,138 | ) |
| | |
| 3,950,862 | | |
| 4,457,112 | |
(1) Expenses applied
against gross proceeds include offering expenses of $750,000 and underwriting commissions of $2,500,000 (or $2,875,000
if the underwriters’ over-allotment option is exercised in full). See “Use of Proceeds.”
(2) 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, initial stockholders, directors, executive officers, advisors or their
affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination. In the event of any such purchases of our shares prior to the completion
of our initial business combination, the number of shares of Class A common stock subject to redemption will be reduced by the
amount of any such purchases, increasing the pro forma net tangible book value per share. See “Proposed Business —
Effecting Our Initial Business Combination — Permitted Purchases of Our Securities.”
CAPITALIZATION
The following table sets forth our capitalization at December
31, 2018, and as adjusted to give effect to the sale of our units in this offering and the sale of the private placement units
and the application of the estimated net proceeds derived from the sale of such securities, assuming no exercise by the underwriters
of its over-allotment option:
| | |
DECEMBER
31, 2018 | |
| | |
Actual | | |
As
Adjusted | |
| Notes
payable to related party(1) | |
$ | 50,000 | | |
$ | — | |
| Class
A common stock, $0.0001 par value, 100,000,000 shares authorized; -0- and 12,099,138 shares are subject to possible redemption,
respectively(2) | |
| — | | |
| 120,991,378 | |
| Preferred stock, $0.0001 par value, 1,000,000 shares
authorized; none issued and outstanding, actual and as adjusted | |
| — | | |
| — | |
| Class
A common stock, $0.0001 par value, 100,000,000 shares authorized; -0- and 825,862 shares issued and outstanding (excluding
-0- and 12,099,138 shares subject to possible redemption), actual and as adjusted, respectively(3) | |
| — | | |
| 83 | |
| Class B common stock, $0.0001 par value, 25,000,000
shares authorized, 3,593,750 and 3,125,000 shares issued and outstanding, actual and as adjusted, respectively | |
| 359 | | |
| 313 | |
| Additional paid-in capital | |
| — | | |
| 5,008,585 | |
| Accumulated deficit | |
| (8,980 | ) | |
| (8,980 | ) |
| Total stockholders’ (deficit)
equity | |
| (8,621 | ) | |
| 5,000,001 | |
| Total capitalization | |
$ | 41,379 | | |
$ | 125,991,379 | |
(1) Our sponsor
has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. The “as adjusted”
information gives effect to the repayment of any loans made under this note out of the proceeds from this offering and the sale
of the private placement units. As of December 31, 2018, we had borrowed $50,000 under the promissory note with our sponsor to
be used for a portion of the expenses of this offering.
(2) Upon the completion
of our initial business combination, we will provide our stockholders with the opportunity to redeem their public shares for cash
equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the
consummation of the initial business combination including interest earned on the funds held in the trust account and not previously
released to us to pay our franchise and income taxes, subject to the limitations described herein whereby our net tangible assets
will be maintained at a minimum of $5,000,001 and any limitations (including, but not limited to, cash requirements) created
by the terms of the proposed initial business combination.
(3) Actual share
amount is prior to any forfeiture of founder shares by our sponsor and as adjusted amount assumes no exercise of the underwriters’
over-allotment option.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a blank check company incorporated as a
Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses. We have not selected any specific business
combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or
indirectly, with any business combination target with respect to an initial business combination with us. We intend to
effectuate our initial business combination using cash from the proceeds of this offering and the private placement of the
private placement units, the proceeds of the sale of our shares in connection with our initial business combination
(including pursuant to our existing forward purchase agreement, other forward purchase agreements or backstop agreements we
may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt
issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
The issuance of additional shares in connection with an
initial business combination to the owners of the target or other investors and in connection with the forward purchase:
| |
■ |
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock; |
| |
■ |
may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| |
■ |
could cause a change in control if a substantial number of shares of our common stock is 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; |
| |
■ |
may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
| |
■ |
may adversely affect prevailing market prices for our Class A common stock and/or warrants. |
Similarly, if we issue debt securities or otherwise incur significant
debt to bank or other lenders or the owners of a target, it could result in:
| |
■ |
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| |
■ |
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| |
■ |
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| |
■ |
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
| |
■ |
our inability to pay dividends on our common stock; |
| |
■ |
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
| |
■ |
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| |
■ |
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| |
■ |
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
| |
■ |
other purposes and other disadvantages compared to our competitors who have less debt. |
As indicated in the accompanying financial statements, at
December 31, 2018, we had $49,658 in cash and $162,500 in deferred offering costs. Further, we expect to continue to incur significant
costs in the pursuit of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete
our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any
revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this
offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination.
We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has
been no significant change in our financial or trading position and no material adverse change has occurred since the date of our
audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective
business combination candidates. We expect our expenses to increase substantially after the closing of this offering.
Liquidity and Capital Resources
As indicated in the accompanying financial statements, at
December 31, 2018, we had $49,658 in cash and a working capital deficit of $171,121. Further, we have incurred and expect to continue
to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this uncertainty
through this offering are discussed above. We cannot assure you that our plans to raise capital or to consummate an initial business
combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going
concern.
Our liquidity needs have been satisfied prior to
the completion of this offering through up to $300,000 in loans available from our sponsor under an unsecured promissory
note. We estimate that the net proceeds from (i) the sale of the units in this offering, after deducting offering expenses
of approximately $750,000, underwriting commissions of $2,500,000 ($2,875,000 if the underwriters’
over-allotment option is exercised in full), and (ii) the sale of the private placement units for a purchase price of
$4,250,000 (or $4,625,000 if the over-allotment option is exercised in full), will be $126,000,000 (or $144,750,000 if
the underwriters’ over-allotment option is exercised in full). Of this amount,
$125,000,000 (or $143,750,000 if the underwriters’ over-allotment option is exercised in
full) will be held in the trust account. The proceeds held in the trust account will be invested only in U.S. government
treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7
under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining $1,000,000
will not be held in the trust account. In the event that our offering expenses exceed our estimate of $750,000, we may
fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held
outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are
less than our estimate of $750,000, the amount of funds we intend to be held outside the trust account would increase by
a corresponding amount.
We intend to use substantially all of the funds held in
the trust account, including any amounts representing interest earned on the trust account, and the proceeds from the forward
purchase to complete our initial business combination. We may withdraw interest to pay franchise and income taxes. We estimate
our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion
of this offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation
per annum, which we may pay from funds from this offering held outside of the trust account or from interest earned on the funds
held in our trust account and released to us for this purpose.
Our annual income tax obligations will depend on the amount
of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the
trust account will be sufficient to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in
part, as consideration to complete our initial 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.
Prior to the completion of our initial business combination,
we will have available to us the approximately $1,000,000 of proceeds held outside the trust account. We will use these funds to
identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the
offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure, negotiate and complete an initial business combination.
In order to fund working capital deficiencies or finance
transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain
of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business
combination, we would repay such loaned amounts. In the event that our initial 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 $1,500,000 of such working capital loans may be convertible into private placement-equivalent
units at a price of $10.00 per unit at the option of the lender. Such units would be identical to the private placement units,
including as to exercise price, exercisability and exercise period of the underlying warrants. The terms of such working capital
loans by our sponsor or its affiliates, or 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 expect our primary liquidity requirements during that period
to include approximately $300,000 for legal, accounting, due diligence, travel and other expenses associated with structuring,
negotiating and documenting successful business combinations; $150,000 for legal and accounting fees related to regulatory reporting
requirements; $85,000 for NYSE continued listing fees; $240,000 for office space, utilities and secretarial and administrative
support; and approximately $225,000 for working capital that will be used for miscellaneous expenses and reserves (including taxes
net of anticipated interest income).
These amounts are estimates and may differ materially from our
actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing,
fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop”
provision (a provision 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 an agreement where we paid for the right to receive exclusivity
from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined
based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such
funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for,
or conducting due diligence with respect to, prospective target businesses.
Other than in connection with the forward purchase, we do
not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating
our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and
negotiating an initial 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 initial business combination. Moreover, we may need to obtain additional financing
either to complete our initial business combination or because we become obligated to redeem a significant number of our public
shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in
connection with such business combination. In addition, we intend to target businesses larger than we could acquire with the net
proceeds of this offering and the sale of the private placement units, and may as a result be required to seek additional financing
to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would only complete
such financing simultaneously with the completion of our initial business combination. 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. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain
additional financing in order to meet our obligations.
Controls and Procedures
We are not currently required to maintain an effective system
of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control
requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2020. Only in the event that we are deemed to be
a large accelerated filer or an accelerated filer would we be required to comply with the independent registered public accounting
firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public
accounting firm attestation requirement.
Prior to the closing of this offering, we have not completed
an assessment, nor has our independent registered public accounting firm tested our systems, of internal controls. We expect to
assess the internal controls of our target business or businesses prior to the completion of our initial business combination and,
if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an
effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for our initial business
combination may have internal controls that need improvement in areas such as:
| |
■ |
staffing for financial, accounting and external reporting areas, including segregation of duties; |
| |
■ |
reconciliation of accounts; |
| |
■ |
proper recording of expenses and liabilities in the period to which they relate; |
| |
■ |
evidence of internal review and approval of accounting transactions; |
| |
■ |
documentation of processes, assumptions and conclusions underlying significant estimates; and |
| |
■ |
documentation of accounting policies and procedures. |
Because it will take time, management involvement and perhaps
outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market
expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities,
particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also
take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on internal controls is complete,
we will retain our independent registered public accounting firm to audit and render an opinion on such report when required by
Section 404 of the Sarbanes-Oxley Act. The independent registered public accounting firm may identify additional issues concerning
a target business’s internal controls while performing their audit of internal control over financial reporting.
Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of this offering and the sale of the private
placement units held in the trust account will be invested in U.S. government treasury bills with a maturity of 180 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct
U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated
material exposure to interest rate risk.
Related Party Transactions
In connection with our initial formation in 2012, a wholly-owned
subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our outstanding equity. On November 19,
2018, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning
3,593,750 founder shares. We expect that all of our equity will be contributed to our sponsor prior to effectiveness of this registration
statement. The number of founder shares outstanding was determined based on the expectation that such founder shares would represent
20% of the outstanding shares upon completion of this offering excluding the private placement shares underlying the private placement
units. On March 12, 2019, 20,000 founder shares were transferred to each of Patrick J. Bartels, Jr., James L. Kempner, Timothy
M. Presutti and Robert Suss, our independent director nominees, at their par value. If we increase or decrease the size of the
offering we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable,
with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the
ownership of our initial stockholders at 20.0% of the issued and outstanding shares of our common stock upon the consummation
of this offering.
Commencing on the date of this prospectus, we have agreed to
pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative
support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our sponsor, 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. Our audit committee will review on
a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will determine
which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket
expenses incurred by such persons in connection with activities on our behalf.
Prior to the consummation of this offering, our sponsor has
agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing,
unsecured and are due at the earlier of December 31, 2019 or the closing of this offering. The loan will be repaid upon the closing
of this offering out of the $750,000 of offering proceeds that has been allocated to the payment of offering expenses (other than
underwriting commissions).
In addition, in order to finance transaction costs in connection
with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors
may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay
such loaned amounts. In the event that our initial 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 $1,500,000 of such working capital loans may be convertible into private placement-equivalent units at a price of $10.00
per unit at the option of the lender. Such units would be identical to the private placement units, including as to exercise price,
exercisability and exercise period of the underlying warrants. The terms of such working capital loans by our sponsor or its affiliates,
or 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.
Our sponsor has agreed to purchase an aggregate of 425,000
units (or 462,500 units if the over-allotment option is exercised in full) at a price of $10.00 per unit for an aggregate
purchase price of $4,250,000, or $4,625,000 if the over-allotment option is exercised in full. The private placement units will
be identical to the units sold in this offering except that the underlying private placement warrants, so long as they are held
by our sponsor or its permitted transferees, (i) will not be redeemable by us, (ii) may not (including the Class A common stock
issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders
until 30 days after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis
and (iv) will be entitled to registration rights. The holders will be permitted to transfer the private placement units held by
them to certain permitted transferees, including our officers and directors and other persons or entities affiliated with or related
to them, but the transferees receiving such securities will be subject to the same agreements with respect to such securities
as our sponsor. Otherwise, the private placement units have terms and provisions that are identical to those being sold as part
of this offering, including as to exercise price, exercisability and exercise period of the underlying warrants.
Pursuant to a registration rights agreement we will enter into
with our initial stockholders on or prior to the closing of this offering, we may be required to register certain securities for
sale under the Securities Act. These holders, and holders of warrants issued upon conversion of working capital loans, if any,
are entitled under the registration rights agreement to make up to three demands that we register certain of our securities held
by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415
under the Securities Act. In addition, these holders have the right to include their securities in other registration statements
filed by us. We will bear the costs and expenses of filing any such registration statements. See the section of this prospectus
entitled “Certain Relationships and Related Party Transactions.”
Off-Balance Sheet Arrangements; Commitments and Contractual
Obligations; Quarterly Results
As of December 31, 2018, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
No unaudited quarterly operating data is included in this prospectus, as we have conducted no operations to date.
JOBS Act
The JOBS Act, enacted in 2012, contains provisions that, among
other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth
company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective
date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards,
and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards
is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply
with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits
of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the
JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal
controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required
of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with
any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of independent
registered public accounting firm providing additional information about the audit and the financial statements (auditor discussion
and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation
and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for
a period of five years following the completion of this offering or until we are no longer an “emerging growth company,”
whichever is earlier.
PROPOSED
BUSINESS
Overview
We are a blank check company incorporated as a Delaware
corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination with one or more businesses, which we refer to throughout this
prospectus as our initial business combination. We have not selected any specific business combination target and we have
not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business
combination target with respect to an initial business combination with us. While we may pursue an initial business
combination target in any industry or geographic region, we intend to focus on established businesses that have an aggregate enterprise value of approximately $300 million to $1 billion and would benefit from access to public
markets and the operational and strategic expertise of our management team and board of directors. We will seek to capitalize
on the significant experience of our management team in consummating an initial business combination with the ultimate goal
of pursuing attractive returns for our shareholders.
Competitive Strengths
Our management team is led by Kenneth Young and Daniel Shribman
who have over 40 years of combined operating, deal-making and investment experience and hold senior positions at B. Riley Financial
(Nasdaq: RILY), an affiliate of our sponsor, which, through its subsidiaries, provides collaborative financial services and solutions
and covers over 500 companies in research and trading, with a focus on small to mid-cap companies that it believes are underfollowed
or misunderstood by Wall Street. As B. Riley Financial’s affiliate, we intend to draw upon its infrastructure, personnel,
network and relationships. We believe that the extensive operating, deal-making and investment experience of our management team,
paired with B. Riley Financial’s unique sourcing infrastructure, makes us well-situated to identify, source, negotiate and
execute an initial business combination with an attractive company.
Kenneth Young, our Chief Executive Officer, has served as
President of B. Riley Financial since July 2018. Mr. Young has served as Chief Executive Officer of B. Riley Principal Investments,
a wholly-owned subsidiary of B. Riley Financial, which acquires, invests and operates companies across several verticals, including
communications, media, construction and retail, with a focus on maximizing cash flows through operational expertise since October
2016. Mr. Young serves as the Chief Executive Officer of magicJackVocalTec and United Online, both wholly-owned subsidiaries of
B. Riley Financial. Mr. Young, pursuant to a consulting agreement with B. Riley Financial, was appointed Chief Executive Officer
of Babcock & Wilcox (“BW”), a global leader in energy and environmental technologies and services for the power
and industrial markets, in November 2018. B. Riley Financial has minority ownership in Babcock & Wilcox.
Mr. Young has 30 years of operational, executive and board experience
primarily within the communications and finance industry. Mr. Young served as President and Chief Executive Officer at Lightbridge
Communications Corporation (“LCC”), a provider of technical services for wireless operators, from 2008 to September
2016. Prior to joining LCC, he spent over 16 years in senior executive positions with multiple corporations, including Southwestern
Bell Corporation, AT&T and Cingular Wireless.
Mr. Young has served as a member of the board of directors
of Orion Energy Systems, Inc. (Nasdaq: OESX) since 2017, Sonim Technologies, bebe stores, inc. and Liberty Tax, Inc. since 2018.
Mr. Young is a former member of the board of Globalstar, Inc. (NYSE: GSAT), Imagine Communications, B. Riley Financial (Nasdaq:
RILY), Standard Diversified Opportunities, Inc. and Proxim Wireless Corp. We believe Mr. Young is qualified to serve on our
board of directors due to his extensive financial services experience.
Daniel Shribman, our Chief Financial Officer, is President of
B. Riley Principal Investments and brings 11 years of experience in both public and private equity to us. Prior to joining
B. Riley Principal Investments, Mr. Shribman was a Portfolio Manager at Anchorage Capital Group, a special situation asset manager
with over $15 billion in assets under management, from 2010 to 2018. During Mr. Shribman’s tenure at Anchorage, he led investments in dozens
of public and private opportunities across the general industrials, transportation, automotive, aerospace, gaming, hospitality
and real estate industries. These investments ranged from public equities and bonds to deeply distressed securities, par bank debt,
minority owned private equity and majority owned private equity. Mr. Shribman worked in close collaboration with management teams
and boards to maximize shareholder value in the form of both operational turnarounds, capital markets financings and communication
and capital deployment initiatives.
Prior to Anchorage, Mr. Shribman worked at
Tinicum Capital Partners, a private equity firm, and in the restructuring advisory group at Lazard Freres.
For more information relating to our management team’s
relevant business experience, please see the section entitled “Management.”
Our management team expects to benefit from attention from a
wide range of investment bankers and other investment market participants to assist with our initial business combination in part
because of our fee arrangement with the underwriters of this offering. A special purpose acquisition company of our size would
typically be obligated to pay the underwriters of its initial public offering deferred underwriting compensation at the time of
its business combination in an amount equal to 3.5% of the proceeds of its initial public offering, whether or not the underwriters
perform any work relating to the initial business combination. We believe that this typical arrangement not only greatly reduces
resources available to pay other financial advisors, finders, consultants and equity capital market participants who could add
value to our initial business combination process, but also reduces the number of bankers and other investment market participants
willing to prioritize the sharing of proprietary deal flow. We, on the other hand, have not agreed to pay any deferred underwriting
commission, but rather have entered into a business combination marketing agreement, which obligates B. Riley to perform certain
services in connection with our initial business combination as described in the section of this prospectus entitled “Underwriting
(Conflicts of Interest).”
We believe our management team’s backgrounds and B. Riley
Financial’s unique sourcing infrastructure provide us with the ability to source transactions and identify target businesses
that can thrive as publicly-traded companies. Additionally, over the course of their careers, the members of our management team
and our affiliates have developed extensive networks of contacts and corporate relationships which we believe will provide us with
an important source of initial business combination opportunities. These networks have provided our management team and our affiliates
with deal flow that has resulted in numerous transactions. We anticipate that target business candidates will also be brought to
our attention from various unaffiliated sources, including family offices, investment market participants, private equity groups,
investment banks, consultants, accounting firms and large business enterprises.
Our management team, through its members’ shared experience
at B. Riley Financial and its predecessors, has a track record of identifying targets and making strategic investments, acquisitions
and raising capital.
Bryant R. Riley, one of our director nominees, is the Chairman and
Co-Chief Executive Officer of B. Riley Financial. Mr. Riley led investments in LCC in 2007 and 2009 through B. Riley Financial
Inc.’s predecessor entity Riley Investment Partners and its investment banking team. The period of these investments marked
the beginning of Mr. Young’s tenure as LCC’s President and Chief Executive Officer beginning in 2008 and includes Mr.
Riley’s tenure as LCC’s Chairman. At LCC, Mr. Young and Mr. Riley together executed multiple growth financings and
tuck-in acquisitions, securing multiple rounds of expansion capital from growth-oriented institutional investors, leading up to
LCC’s 2015 acquisition by India-based Tech Mahindra for an enterprise value of approximately $240 million.
B. Riley Principal Investments completed the acquisition of United
Online, a provider of value-priced dial-up/DSL, Internet access, email, Internet security and webhosting, in 2016. Prior to the
acquisition, B. Riley Financial’s investment banking team had followed United Online for several years through its research
platform. Since the acquisition and under B. Riley Financial’s operational guidance, United Online has implemented operational
synergies and strategic initiatives which has resulted in improved operating margins.
B. Riley Financial acquired magicJackVocalTec in November 2018,
an investment of a competitive local carrier of VoIP services and related equipment, for approximately $89 million.
B. Riley Financial’s operating plan for magicJackVocalTec following the acquisition includes minimizing customer attrition
rates while generating cash returns by reducing operating costs.
In January 2018, B. Riley Financial acquired an approximately 29.4%
ownership stake in bebe (OTCQB: BEBE) and Mr. Young joined bebe’s board of directors, following a period of extensively working
through B. Riley Financial’s restructuring team to avoid bankruptcy and minimize corporate expenses through the closing of
142 stores. B. Riley Financial initially provided a bridge loan to bebe which was then converted into its equity position in the
company. As an equity sponsor, B. Riley has helped decrease costs, grow the top line and identify and close bebe’s acquisitions,
such as the acquisition of the Brookstone brand in October 2018.
In December 2017, B. Riley Principal Investments served as the lead
investor for a $37 million capital raise by Sonim Technologies (“Sonim”), a provider of a comprehensive ecosystem to
connect blue and grey collar workers in the commercial and public safety markets through ruggedized handsets for voice and data,
with emerging opportunities in applications and data analytics. At the time, Sonim needed to raise debt for working capital and
to provide liquidity to longtime venture investors. B. Riley Principal Investments agreed to provide debt and purchased equity
together with a number of other investors brought in by B. Riley Principal Investments. Mr. Young serves as a member of Sonim’s board of directors and B. Riley Financial provides management services
to Sonim under a management consulting agreement. Since the investment by B. Riley Principal Investments, Sonim’s revenue
grew over 100% through December 31, 2018.
With respect to the foregoing descriptions, past performance
of 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 identify a suitable candidate for our initial business combination. You should not rely on the historical
performance record of our management team or B. Riley Financial or its affiliates as indicative of our future performance. Our
management team has not had experience sponsoring or being a director or officer of any blank check companies in the past. Our
executive officers and directors may have conflicts of interest with other entities to which they owe fiduciary or contractual
obligations with respect to initial business combination opportunities. For a list of our executive officers and directors and
entities for which a conflict of interest may or does exist between such officers and the company, as well as the priority and
preference that such entity has with respect to performance of obligations and presentation of business opportunities to us, please
refer to the table and subsequent explanatory paragraph under “Management — Conflicts of Interest.”
We believe our ability to complete an initial business
combination will be enhanced by our having entered into a forward purchase agreement which provides for the purchase by an
affiliate of our sponsor (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of $25,000,000
in a private placement to close concurrently with the closing of our initial business combination. We believe
this committed capital will provide us with greater certainty to complete a business combination with potential sellers. The
proceeds from the sale of forward purchase units may be used as part of the consideration to the sellers in our initial
business combination, expenses in connection with our initial business combination or for working capital in the
post-transaction company. The forward purchase will be made regardless of whether any Class A common stock is redeemed by our
public stockholders and is intended to provide us with a minimum funding level for our initial business combination. The
purchaser will not have the ability to approve the initial business combination prior to the signing of a material definitive
agreement. The forward purchase units will be issued only in connection with the closing of the initial business
combination.
Business Strategy
Our management team’s objective is to generate attractive
returns and create value for our shareholders by applying a disciplined strategy of identifying attractive investment opportunities
that could benefit from the addition of capital, management expertise and strategic insight.
We will leverage our
management team’s broad network of potential proprietary and public transaction sources to find an opportunity where their
expertise could effect a positive transformation of the existing business to improve the overall value proposition while maximizing
shareholder value.
Our management team has a proven record of identifying companies
that are under-performing their potential due to a temporary period of dislocation in the markets in which they operate, inefficient
capital allocations, over-levered capital structures, excessive cost structures, incomplete management teams and/or inappropriate
business strategies. In order to increase shareholder value, we intend to identify these dislocations and implement a proven course
correction plan where management agreements are put in place, debt and equity structures are realigned and costs are reduced.
We intend to source initial business combination opportunities
through our management team’s and affiliates’ extensive networks. Over the course of their careers, the members of
our management team have developed a broad network of contacts and corporate relationships, including seasoned executives and
operators, private equity investors, lenders, attorneys, family offices, that we believe will provide our management team with
a robust flow of acquisition opportunities.
We believe successful special purpose acquisition companies
require a differentiated story to make a business combination attractive for potential sellers of businesses who become partners
in a public markets context. We believe that our team will be an attractive partner given our proven track record of both operational and financial
success in small and medium sized public companies and our deep understanding of how to navigate complicated shareholder and capital
markets dynamics in a small and mid-cap context.
Business Combination Criteria
Consistent with this strategy, we have identified the following
general criteria and guidelines that we believe are important in evaluating prospective target businesses. We intend to use these
criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination
with a target business that does not meet these criteria and guidelines.
We have identified
the following criteria that we believe are important and that we intend to use in evaluating business combination opportunities.
While we intend to utilize these criteria in evaluating business combination opportunities, we expect that no individual criterion
will entirely determine a decision to pursue a particular opportunity. Further, any particular business combination opportunity
which we ultimately determine to pursue may not meet one or more of these criteria.
Middle-Market
Business. We will seek to acquire one or more businesses with an enterprise value of approximately $300 million to
$1 billion, determined in the sole discretion of our officers and directors according to reasonable accepted valuation standards
and methodologies. We believe that middle-market segment provides the greatest number of opportunities for investment and where
we believe we have the strongest network to identify opportunities.
Established Businesses. We
will seek to acquire one or more businesses or assets that have a history of, or potential for, strong, stable cash flow generation,
with predictable and recurring revenue streams.
Complex Proprietary
Opportunities. Our management team has a proven track record of identifying companies that are
under-performing their potential due to a temporary period of dislocation in the markets in which they operate, inefficient
capital allocations, over-levered capital structures and/or excessive cost structures. We expect our management team’s
focus on complex situations that require creative solutions to lead to less competitive transactions where we can
combine with attractive businesses at reasonable valuations. While our management team is focused on complex situations as a
means to find attractively-priced transactions, we do not intend to pursue turnarounds or situations that do not lend
themselves to the public markets.
Growth opportunities
through capital investment. We intend to seek candidates who will benefit from additional capital investment through a
business combination.
Strong management
teams with a proven track record. We intend to seek candidates who have strong management teams with a proven track
record of driving revenue growth, enhancing profitability and generating strong free cash flow. We will seek to partner with
potential target’s management team and expect that the operating and financial abilities of our management and board will
help potential target company to unlock opportunities for future growth and enhanced profitability.
Opportunities
For Add-On Acquisitions. We will seek to acquire one or more businesses that we can grow both organically and through
acquisitions. In addition, we believe that our ability to source proprietary opportunities and execute such transactions will help
the business we acquire grow through acquisition, and thus serve as a platform for further add-on acquisitions.
Benefit from Being
a Public Company. We intend to pursue a business combination with a company that we believe will benefit from being publicly
traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded
company.
Risk-Adjusted Return. We
intend to acquire one or more companies that we believe can offer attractive risk-adjusted return on investments for our stockholders.
These criteria are
not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based,
to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may
deem relevant. In the event that we decide to enter into a business combination with a target business that does not meet the above
criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications
related to our initial business combination, which, as discussed is this prospectus, would be in the form of proxy solicitation
materials or tender offer documents that we would file with the SEC.
These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines
as well as other considerations, factors and criteria that our management may deem relevant.
In the event that we decide to enter into our initial business
combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed
in this prospectus, would be in the form of proxy solicitation materials or tender offer documents that we would file with the
SEC.
Initial Business Combination
NYSE rules require that we must consummate an initial business
combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held
in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount
of any deferred underwriting commissions). If our board of directors is not able to independently determine the fair market value
of our initial business combination, we will obtain an opinion from an independent investment banking firm or an independent valuation
or appraisal firm that regularly provides fairness opinions solely with respect to the satisfaction of such criteria. While we
consider it unlikely that our board will not be able to make such independent determination of fair market value, it may be unable
to do so if the board is less familiar or experienced with the target company’s business, there is a significant amount of
uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development,
operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the
board determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained,
would merely state that the fair market value meets the 80% fair market value test, unless such opinion includes material information
regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion
would be distributed to our stockholders. However, if required under applicable law, any proxy statement that we deliver to stockholders
and file with the SEC in connection with a proposed transaction will include such opinion.
We anticipate structuring our initial business combination either
(i) in such a way so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of
the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company
owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target
management team or stockholders, or for other reasons, including an Affiliated Joint Acquisition as described below. However, we
will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50%
or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own
a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business
combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all
of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the
equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion
of such business or businesses that is owned or acquired is what will be taken into account for purposes of NYSE’s 80% fair
market value test. If the initial business combination involves more than one target business, the 80% fair market value test will
be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial business
combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
We may, at our option, pursue a business combination
opportunity jointly with one or more entities affiliated with B. Riley Financial and/or one or more investors in funds or
separate accounts managed by B. Riley Financial, which we refer to as an “Affiliated Joint Acquisition.” Any such
parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and B. Riley
Financial considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business
reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond
the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital
for closing the initial business combination. An Affiliated Joint Acquisition may be effected through a co-investment with us
in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the
initial business combination by issuing to such parties a class of equity or equity-linked securities. We refer to this
potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance”
throughout this prospectus. The amount and other terms and conditions of any such specified future issuance would be
determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so.
This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B common stock,
any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders
and their permitted transferees, if any, would retain their aggregate percentage ownership of founder shares at 20% of the
sum of the total number of all shares of common stock outstanding upon completion of this offering excluding the private
placement shares underlying the private placement units plus all shares issued in the specified future issuance, unless the
holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with respect to
the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our
Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion
ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the
agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an initial business
combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class
B common stock; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not waived, the specified future
issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage
ownership of holders of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce
the percentage ownership of holders of both classes of our common stock.
Our Business Combination Process
In evaluating prospective business combinations, we expect to
conduct a thorough due diligence review process that will encompass, among other things, a review of historical and projected financial
and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion
with customers and suppliers, legal reviews and other reviews as we deem appropriate.
We are not prohibited from pursuing an initial business combination
with a company that is affiliated with B. Riley Financial, its affiliates, our sponsor or our officers or directors. In the event
we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or an independent
valuation or appraisal firm that regularly prepares fairness opinions that our initial business combination is fair to our company
from a financial point of view.
Our officers and directors will indirectly own founder shares
and/or private placement units following this offering. Because of this ownership, our sponsor and our officers and directors
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to
evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included
by a target business as a condition to any agreement with respect to our initial business combination.
B. Riley Financial and our officers and directors may have a
conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our
initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Certain members of our management team are employed by B. Riley
Financial. B. Riley Financial is continuously made aware of potential business opportunities, one or more of which we may desire
to pursue for an initial business combination; we have not, however, selected any specific business combination target and we have
not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination
target.
We have not selected any specific business combination target
and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business
combination target with respect to an initial business combination with us.
B. Riley Financial and each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of
our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her
fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties
or contractual obligations of B. Riley Financial and our officers or directors will not materially affect our ability to complete
our initial business combination. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to
which B. Riley Financial, investment funds advised by B. Riley Financial or an officer or director has a fiduciary or contractual
obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we
could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such
entity. Our amended and restated certificate of incorporation will provide 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. The determination of whether an opportunity has been expressly offered to a director
of officer solely in his or her capacity as a director or officer of our company will made based on express statements by the
person offering the opportunity, and if a director or officer is unsure of whether an opportunity was offered in such capacity,
he or she shall seek guidance on such determination from the audit committee of our board of directors.
Our sponsor and each of our officers have agreed not
to participate in the formation of, or become a sponsor or officer of, any other special purpose acquisition company
conducting a public offering pursuant to the Securities Act or with a class of securities registered under the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have
failed to complete our initial business combination within 24 months after the closing of this offering.
We believe our ability to complete an initial business combination
will be enhanced by our having entered into a forward purchase agreement which provides for the purchase by an affiliate of our sponsor (or its designees) of an aggregate of 2,500,000
units for an aggregate purchase price of $25,000,000 in a private placement to close concurrently with the closing of our initial
business combination. We believe this committed capital will provide us with greater
certainty to complete a business combination with potential sellers. The proceeds from the sale of forward purchase units may
be used as part of the consideration to the sellers in our initial business combination, expenses in connection with our initial
business combination or for working capital in the post-transaction company. The forward purchase will be made regardless of whether
any Class A common stock is redeemed by our public stockholders and is intended to provide us with a minimum funding level for
our initial business combination. The purchaser will not have the ability to approve the initial business combination prior to
the signing of a material definitive agreement. The forward purchase units will be issued only in connection with the closing
of the initial business combination.
Our Management Team
Members of our management team are not obligated to devote any
specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until
we have completed our initial business combination. The amount of time that any member of our management team will devote in any
time period will vary based on whether a target business has been selected for our initial business combination and the current
stage of the business combination process.
We believe our management team’s operating and transaction
experience and relationships with companies will provide us with a substantial number of potential business combination targets.
Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships
in various industries. This network has grown through the activities of our management team sourcing, acquiring and financing businesses,
our management team’s relationships with sellers, financing sources and target management teams and the experience of our
management team in executing transactions under varying economic and financial market conditions. See the section of this prospectus
entitled “Management” for a more complete description of our management team’s experience.
Status as a Public Company
We believe our structure will make us an attractive business
combination partner to target businesses. As a public company, we offer a target business an alternative to the traditional initial
public offering through a merger or other business combination with us. Following an initial business combination, we believe the
target business would have greater access to capital and additional means of creating management incentives that are better aligned
with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its
profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction
with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares
of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock and cash,
allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations associated
with being a public company, we believe target businesses will find this method a more expeditious and cost effective method to
becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly
longer period of time than the typical business combination transaction process, and there are significant expenses in the initial
public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not be present
to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed initial business combination is
completed, the target business will have effectively become public, whereas an initial public offering is always subject to the
underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering
from occurring or could have negative valuation consequences. Following an initial business combination, we believe the target
business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’
interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further benefits by
augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s
backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check
company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business
combination, negatively.
We are an “emerging growth company,” as defined
in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the independent registered public accounting firm attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that
an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend
to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier
of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year
period.
Financial Position
With funds available for an initial business combination
initially in the amount of $150,000,000 (which includes amounts to be received pursuant to the forward purchase agreement),
before fees and expenses associated with our initial business combination, we offer a target business a variety of options such
as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening
its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using
our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination
that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have
not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged in, and we will not engage
in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination
using cash from the proceeds of this offering, the forward purchase agreement and the private placement of the private placement
units, the proceeds of the sale of our shares in connection with our initial business combination (including pursuant to forward
purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares
issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the
foregoing. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity
or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection
with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance of the cash
released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the
post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private
offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account.
In addition, we intend to target businesses larger than we could acquire with the net proceeds of this offering, the forward purchase
agreement and the sale of the private placement units, and may as a result be required to seek additional financing to complete
such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our initial business combination. In the case of an initial business
combination funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the
initial business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder
approval of such financing. There are no prohibitions on our ability to raise funds privately, or through loans in connection
with our initial business combination. At this time, other than the forward purchase agreement, we are not a party to any arrangement
or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Sources of Target Businesses
We anticipate that target business candidates will be brought
to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources
may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these
sources will have read this prospectus and know what types of businesses we are targeting. B. Riley Financial, our officers and
directors, as well as our sponsor and their affiliates, may also bring to our attention target business candidates that they become
aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise
necessarily be available to us as a result of the business relationships of our officers and directors and our sponsor and their
affiliates. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may
pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder
may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with
a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily
tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no
event, however, will our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers
are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other
compensation by the company prior to, or in connection with any services rendered for any services they render in order to effectuate,
the completion of our initial business combination (regardless of the type of transaction that it is). None of our sponsor, executive
officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees
or consulting fees from a prospective business combination target in connection with a contemplated initial business combination.
We have agreed to pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial and
administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing
an initial business combination. Some of our officers and directors may enter into employment or consulting agreements with the
post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements will
not be used as a criterion in our selection process of an initial business combination candidate.
We are not prohibited from pursuing an initial business combination
with an initial business combination target that is affiliated with our sponsor, officers or directors or making the initial business
combination through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we
seek to complete our initial business combination with an initial business combination target that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking
firm or an independent valuation or appraisal firm that regularly prepares fairness opinions that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
As more fully discussed in the section of this prospectus entitled
“Management — Conflicts of Interest,” if any of our officers or directors becomes aware of an initial business
combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual
obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such
business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual
obligations that may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity
with an entity to which B. Riley Financial or an officer or director has a fiduciary or contractual obligation. Any such entity
may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the initial business combination by making a specified future issuance to any such entity.
Selection of a Target Business and Structuring of our Initial
Business Combination
NYSE rules require that we must consummate an initial business
combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held
in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount
of any deferred underwriting commissions). If our board of directors is not able to independently determine the fair market value
of our initial business combination, we will obtain an opinion from an independent investment banking firm or an independent valuation
or appraisal firm that regularly prepares fairness opinions solely with respect to the satisfaction of such criteria. While we
consider it unlikely that our board will not be able to make such independent determination of fair market value, it may be unable
to do so if the board is less familiar or experienced with the target company’s business, there is a significant amount of
uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development,
operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the
board determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained,
would merely state that the fair market value meets the 80% fair market value test, unless such opinion includes material information
regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion
would be distributed to our stockholders. However, if required under applicable law, any proxy statement that we deliver to stockholders
and file with the SEC in connection with a proposed transaction will include such opinion.
We anticipate structuring our initial business combination so
that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests
or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction
company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives
of the target management team or stockholders or for other reasons, but we will only complete such business combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more
of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest
in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction.
For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the
issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such
business or businesses that is owned or acquired is what will be taken into account for purposes of NYSE’s 80% fair market
value test. If the business combination involves more than one target business, the 80% fair market value test will be based on
the aggregate value of all of the target businesses. There is no basis for investors in this offering to evaluate the possible
merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with
a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular
target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we expect to conduct
a due diligence review, which may encompass, among other things, meetings with incumbent management and employees, document reviews,
interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that will
be made available to us and other reviews as we deem appropriate. We may also retain consultants with expertise relating to a prospective
target business.
The time required to select and evaluate a target business and
to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable
with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business
with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after the completion of our
initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line
of business. In addition, we intend to focus our search for an initial business combination in a single industry. By completing
our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and |
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cause us to depend on the marketing and sale of a single product or limited number of products or services. |
Limited Ability to Evaluate the Target’s Management
Team
Although we intend to closely scrutinize the management of a
prospective target business when evaluating the desirability of effecting our initial business combination with that business,
our assessment of the target business’ management may not prove to be correct. In addition, the future management may not
have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our
management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether
any of the members of our management team will remain with the combined company will be made at the time of our initial business
combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our
initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain
in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial business combination.
Following an initial business combination, we may seek to recruit
additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability
to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial
Business Combination
We may conduct redemptions without a stockholder vote pursuant
to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange
rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic
explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required
under Delaware law for each such transaction.
Type of Transaction | |
Whether
Stockholder
Approval is
Required |
| Purchase of assets | |
No |
| Purchase of stock of target not involving a merger with the company | |
No |
| Merger of target into a subsidiary of the company | |
No |
| Merger of the company with a target | |
Yes |
Under NYSE’s listing rules, stockholder approval would
be required for our initial business combination if, for example:
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we issue (other than in a public offering for cash) shares of Class A common stock that will either (a) be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding; |
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any of our directors, officers or substantial security holders (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares of Class A common stock to be issued, or if the number of shares of Class A common stock into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of Class A common stock or 1% of the voting power outstanding before the issuance in the case of any of directors and officers or (b) 5% of the number of shares of Class A common stock or 5% of the voting power outstanding before the issuance in the case of any substantial securityholders; or |
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the issuance or potential issuance of common stock will result in our undergoing a change of control. |
Permitted Purchases of our Securities
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,
initial stockholders, directors, officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated
transactions or in the open market either prior to or following the completion of our initial business combination. There is no
limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such
transactions, subject to compliance with applicable law and NYSE rules. However, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such
transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed
to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such
purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private
transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any
such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions
prior to completion of our initial business combination.
The purpose of any such purchases of shares 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 warrantholders 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. In addition, if such purchases are made, the public “float” of our shares of
Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may
make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors and/or their affiliates anticipate
that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates may pursue privately negotiated
purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders
following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers,
directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders
who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial
business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination.
Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation
M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors and/or their
affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases
are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2)
and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the
safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will not make purchases
of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon Completion
of our Initial Business Combination
We will provide our public stockholders with the opportunity
to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days
prior to the consummation of the initial business combination including interest earned on the funds held in the trust account
and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares,
subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00
per public share. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have
agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held
by them in connection with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public stockholders with
the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination either (i) in connection with a stockholder meeting called to approve the initial business combination
or (ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval
of a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will
be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require
us to seek stockholder approval under applicable law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our
company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to
amend our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial
business combination with a target company in a manner that requires stockholder approval, we will not have discretion as to
whether to seek a stockholder vote to approve the proposed initial business combination. So long as we
obtain and maintain a listing for our securities on NYSE, we will be required to comply with NYSE's shareholder approval rules.
The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two
methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply
whether or not we maintain our registration under the Exchange Act or our listing on the NYSE. Such provisions may be amended
if approved by holders of 65% of our common stock entitled to vote thereon.
If a stockholder vote is not required and we do not decide to
hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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▪ |
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
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▪ |
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement of our initial business combination,
we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock
in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange
Act.
In the event we conduct redemptions pursuant to the tender offer
rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange
Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.
In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares
which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in an
amount that would cause our net tangible assets to be less than $5,000,001 upon 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. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and
not complete the initial business combination.
If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder
meeting, we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and |
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▪ |
file proxy materials with the SEC. |
If we seek stockholder approval, we will complete our initial
business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business
combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital
stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled
to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant to the letter agreement, our sponsor,
officers and directors have agreed to vote their founder shares, private placement shares and any public shares purchased during
or after this offering (including in open market and privately negotiated transactions) in favor of our initial business combination.
For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect
on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’
founder shares, we would need only 4,475,001 or 35.8%, of the 12,500,000 public shares sold in this offering to be voted in
favor of an initial business combination (assuming all outstanding shares are voted and the private placement shares to be issued
to our sponsor are voted in favor of the transaction) in order to have our initial business combination approved (assuming the
over-allotment option is not exercised). These quorum and voting thresholds, and the voting agreements of our initial stockholders,
may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem
its public shares irrespective of whether they vote for or against the proposed transaction.
Our amended and restated certificate of incorporation will provide
that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon 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. For example, the proposed initial business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete
the initial business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be
returned to the holders thereof.
Limitation on Redemption upon Completion of our Initial
Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing, if we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 20% of the shares sold in this offering, which we refer to as the “Excess Shares.” Such restriction
shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks
of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
initial business combination as a means to force us or our management to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate
of 20% of the shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not
purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our
stockholders’ ability to redeem no more than 20% of the shares sold in this offering without our prior consent, we believe
we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial
business combination, particularly in connection with an initial business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with Redemption
Rights or a Tender Offer
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, at the
holder's option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent
electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal at Custodian) system prior to the date set forth
in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two
business days prior to the vote on the proposal to approve the initial business combination. If we conduct redemptions
in connection with a stockholder vote, a public stockholder seeking redemption of its public shares must also submit a
written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial
owner of such shares is included. The 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 indicate whether we are requiring
public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send
out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on
the initial business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek
to exercise its redemption rights. In the event that a stockholder fails to comply with these or any other procedures, its
shares may not be redeemed. Given the relatively short exercise period, it is advisable for stockholders to use
electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically
charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder.
However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender
their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such
delivery must be effectuated.
Any request to redeem such shares, once made, may be
withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, as applicable. Furthermore, if a holder of
a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior
to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return
the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public
shares electing to redeem their shares will be distributed promptly after the completion of our initial business
combination.
If our initial business combination is not approved or completed
for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their
shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered
by public holders who elected to redeem their shares.
If our initial proposed initial business combination is not
completed, we may continue to try to complete an initial business combination with a different target until 24 months from the
closing of this offering.
Redemption of Public Shares and Liquidation if no Initial
Business Combination
Our amended and restated certificate of incorporation provides
that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable
to complete our initial business combination within such 24-month 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. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business
combination within the 24-month time period.
Our sponsor, officers and directors have entered into a
letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account
with respect to any founder shares and private placement shares held by them if we fail to complete our initial business combination
within 24 months from the closing of this offering. However, if our sponsor, officers or directors acquire public shares in or
after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares
if we fail to complete our initial business combination within the allotted 24-month time period.
Our sponsor, officers and directors have agreed, pursuant to
a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of this offering unless we provide our public stockholders with the opportunity to
redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to
the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and
not previously released to us to pay our franchise and income taxes divided by the number of then outstanding public shares. However,
we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon 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). If this optional redemption right is exercised with respect to an excessive number
of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the
amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated with implementing
our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $1,000,000
of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose.
We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any franchise and income tax
obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing
our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay franchise and
income taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional
amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of this offering
and the sale of the private placement units, other than the proceeds deposited in the trust account, and without taking into account
interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would
be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors
which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption
amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution
must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if
there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets
to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers
(other than Marcum LLP), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
Marcum LLP, our independent registered public accounting firm, and the underwriters of the offering will not execute agreements
with us waiving such claims to the monies held in the trust account.
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. 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) $10.00 per public share and (ii) the actual amount per
public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due
to reductions in the value of the trust assets, 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 this 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 or directors will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced
below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn
to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor
to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on
our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors
in exercising their business judgment may choose not to do so 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. We have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our
sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual
value of the per-share redemption price will not be less than $10.00 per public share.
We will seek to reduce the possibility that our sponsor will
have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than
Marcum LLP), prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims
under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities
Act. We will have access to up to approximately $1,000,000 from the proceeds of this offering with which to pay any such potential
claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that our offering
expenses exceed our estimate of $750,000, we may fund such excess with funds from the funds not to be held in the trust account.
In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely,
in the event that the offering expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside
the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our
initial business combination within 24 months from the closing of this offering may be considered a liquidating distribution under
Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account distributed
to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within 24 months from the closing of this offering, is not considered a liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to
other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims
of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating
distribution. If we are unable to complete our initial business combination within 24 months from the closing of this offering,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem 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. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following
our 18th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing
and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are
a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will
seek to have all vendors, service providers (other than Marcum LLP), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood
that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable
only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share
or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due
to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable
as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under
the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will
not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our
stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00
per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed
as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from
the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the redemption
of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not
complete our initial business combination within 24 months from the closing of this offering, and (iii) the redemption of all of
our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject
to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in
connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described
above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated
certificate of incorporation, may be amended with a stockholder vote.
Comparison of Redemption or Purchase Prices in Connection
with Our Initial Business Combination and if We Fail to Complete Our Initial Business Combination
The following table compares the redemptions and other permitted
purchases of public shares that may take place in connection with the completion of our initial business combination and if we
are unable to complete our initial business combination within 24 months from the closing of this offering.
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Redemptions in
Connection with our
Initial Business
Combination |
|
Other Permitted
Purchases of Public
Shares by us or our
Affiliates |
|
Redemptions if we fail to
Complete an Initial
Business Combination |
| Calculation of redemption price |
|
Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.00 per public share), including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place, if all of the redemptions would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed initial business combination. |
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market prior to or following completion of our initial business combination. There is no limit to the prices that our sponsor, directors, officers, advisors or their affiliates may pay in these transactions. |
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If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount, then on deposit in the trust account (which is initially anticipated to be $10.00 per public share 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. |
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|
Redemptions in
Connection with our
Initial Business
Combination |
|
Other Permitted
Purchases of Public
Shares by us or our
Affiliates |
|
Redemptions if we fail to
Complete an Initial
Business Combination |
| Impact to remaining stockholders |
|
The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of franchise and income taxes payable. |
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If the permitted purchases described above are made there would be no impact to our remaining stockholders because the purchase price would not be paid by us. |
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The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions. |
Comparison of This Offering to Those of Blank Check Companies
Subject to Rule 419
The following table compares the terms of this offering to the
terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds,
underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company
subject to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419
apply to our offering.
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Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Escrow of offering proceeds |
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$125,000,000 of the net proceeds of this
offering and the sale of the private placement units will be deposited into a trust account in the United States at J.P. Morgan
Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. |
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Approximately $112,500,000 of the offering
proceeds would be deposited into either an escrow account with an insured depositary institution or in a separate bank account
established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the
account. |
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|
|
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| Investment of net proceeds |
|
$125,000,000 of the net offering proceeds
and the sale of the private placement units held in trust will be invested only in U.S. government treasury bills with a maturity
of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which
invest only in direct U.S. government treasury obligations. |
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Proceeds could be invested only in specified
securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct obligations
of, or obligations guaranteed as to principal or interest by, the United States. |
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|
Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Receipt of interest on escrowed funds |
|
Interest on proceeds from the trust account to be paid to stockholders is reduced by (i) any income or franchise taxes paid or payable, and (ii) in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $100,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our dissolution and liquidation. |
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Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection with our completion of a business combination. |
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| Limitation on fair value or net assets of target business |
|
NYSE rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions). |
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The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds. |
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|
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| Trading of securities issued |
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We expect the units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless B. Riley informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, an additional Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the over-allotment option. |
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No trading of the units or the underlying Class A common stock and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account. |
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Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Exercise of the warrants |
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The warrants cannot be exercised until the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering. |
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The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account. |
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| Election to remain an investor |
|
We will provide our public stockholders with
the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit
in the trust account as of two business days prior to the consummation of our initial business combination, including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income
taxes, upon the completion of our initial business combination, subject to the limitations described herein. We may not be
required by law to hold a stockholder vote. If we are not required by law and do not otherwise decide to hold a stockholder
vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the
tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under the
SEC’s proxy rules. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will
remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be
permitted to complete our initial business combination until the expiration of the tender offer period. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. |
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A prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to decide if it elects to remain a stockholder of the company or require the return of its investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued. |
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|
Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Business combination deadline |
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If we are unable to complete an initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the 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. |
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If a business combination has not been completed within 24 months after the effective date of the company’s registration statement, funds held in the trust or escrow account are returned to investors. |
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|
Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Limitation on redemption rights of stockholders holding more than 20% of the shares sold in this offering if we hold a stockholder vote |
|
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 will provide that a public stockholder (including our affiliates), 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 Excess Shares (more than an aggregate of 20% of the shares sold in this offering). Our public stockholders’ inability to redeem Excess Shares will reduce their influence over our ability to complete our initial business combination and they could suffer a material loss on their investment in us if they sell any Excess Shares in open market transactions. |
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Many blank check companies provide no restrictions on the ability of stockholders to redeem shares based on the number of shares held by such stockholders in connection with an initial business combination. |
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| Tendering stock certificates in connection with redemption rights or a tender offer |
|
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, at the
holder's option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using the Depository Trust Company's DWAC (Deposit/Withdrawal
at Custodian) system prior to the date set forth the proxy materials or tender offer documents, as applicable. In the case
of proxy materials, this date may be up to two business days
prior to the vote on the proposal to approve the initial business combination. If we conduct redemptions in connection with a stockholder vote, a public stockholder seeking redemption of its public shares
must also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name
of the beneficial owner of such shares is included. The 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 indicate whether we
are requiring public stockholders to satisfy such delivery requirements. The 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 indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a
public stockholder would have from the time we send out our tender offer materials until the close of the tender offer
period, or up to two business days prior to the vote on the initial business combination if we distribute proxy materials, as
applicable, to tender its shares if it wishes to seek to exercise its redemption rights. |
|
In order to perfect redemption rights in connection with their business combinations, holders could vote against a proposed initial business combination and check a box on the proxy card indicating such holders were seeking to exercise their redemption rights. After the business combination was approved, the company would contact such stockholders to arrange for them to deliver their certificate to verify ownership. |
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|
Terms of Our Offering |
|
Terms Under a Rule 419 Offering |
| Release of funds |
|
Except with respect to interest earned on
the funds held in the trust account that may be released to us to pay our franchise and income tax obligations, the proceeds
from this offering and the sale of the private placement units held in the trust account will not be released from the trust
account until 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
to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial
business combination within 24 months from the closing of this offering and (iii) the redemption of 100% of our public shares
if we are unable to complete an initial business combination within the required time frame (subject to the requirements of
applicable law). On the completion of our initial business combination, all amounts held in the trust account will be released
to us, less amounts released to a separate account controlled by the trustee for disbursal to redeeming stockholders. We will
use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under
“Redemption rights for public stockholders upon completion of our initial business combination,” to pay all or
a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay
other expenses associated with our initial business combination. |
|
The proceeds held in the escrow account are
not released until the earlier of the completion of a business combination or the failure to effect a business combination
within the allotted time. |
Competition
In identifying, evaluating and selecting a target business for
our initial business combination, we may encounter intense competition from other entities having a business objective similar
to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking
strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target business.
Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce
the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage
in successfully negotiating an initial business combination.
Facilities
Our executive offices are located at 299 Park Avenue, 21st
Floor, New York, NY 10171, and our telephone number is (212) 457-3300. Our executive offices are provided to us by an affiliate
of our sponsor. Commencing on the date of this prospectus, we have agreed to pay an affiliate of our sponsor a total of $10,000
per month for office space, utilities and secretarial and administrative support. We consider our current office space adequate
for our current operations.
Employees
We currently have two officers. These individuals are not obligated
to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to
our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for our initial business combination and the stage of the initial business
combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business
combination.
Periodic Reporting and Financial Information
We will register our units, Class A common stock and warrants
under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited
and reported on by our independent registered public accountants.
We will provide stockholders with audited financial statements
of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to
assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance
with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential
targets we may conduct an initial business combination with because some targets may be unable to provide such statements in time
for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to
prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot
be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination
candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures
for the fiscal year ending December 31, 2020 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large
accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our
internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. Prior to the date of this
prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section
12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have
no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent
to the consummation of our initial business combination.
We will remain an emerging growth company until the earlier
of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our shares of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior
June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior
three-year period.
Legal Proceedings
There is no material litigation, arbitration or governmental
proceeding currently pending against us or any members of our management team in their capacity as such.
MANAGEMENT
Officers, Directors and Director Nominees
Our officers, directors and director nominees are as follows:
Name |
|
Age |
|
Position |
| Kenneth Young |
|
55 |
|
Chief Executive Officer and Director |
| Daniel Shribman |
|
35 |
|
Chief Financial Officer and Director |
| Patrick J. Bartels, Jr. |
|
43 |
|
Director Nominee |
| James L. Kempner |
|
61 |
|
Director Nominee |
| Timothy M. Presutti |
|
50 |
|
Director Nominee |
| Bryant R. Riley |
|
52 |
|
Director Nominee |
| Robert Suss |
|
48 |
|
Director Nominee |
Kenneth Young, our
Chief Executive Officer and Director, has served as President of B. Riley Financial since July 2018. Mr. Young has served
as Chief Executive Officer of B. Riley Principal Investments, a wholly-owned subsidiary of B. Riley Financial, which acquires,
invests and operates companies across several verticals, including communications, media, construction and retail, with a focus
on maximizing cash flows through operational expertise since October 2016. Mr. Young serves as the Chief Executive Officer of magicJackVocalTec and United Online, both wholly-owned
subsidiaries of B. Riley Financial. Mr. Young, through a consulting agreement with B.
Riley Financial, was appointed Chief Executive Officer of Babcock & Wilcox, a global leader in energy and environmental technologies
and services for the power and industrial markets, in November 2018. B. Riley Financial has minority ownership in Babcock &
Wilcox.
Mr. Young has 30 years of operational,
executive and board experience primarily within the communications and finance industry. Mr. Young served as President and Chief
Executive Officer at Lightbridge Communications Corporation (“LCC”), a provider of technical services for wireless
operators, from 2008 to September 2016. Prior to joining LCC, he spent over 16 years in senior executive positions with multiple
corporations, including Southwestern Bell Corporation, AT&T and Cingular Wireless.
Mr. Young has served as a
member of the board of directors of Orion Energy Systems, Inc. (Nasdaq: OESX) since 2017, Sonim Technologies, bebe stores, inc.
and Liberty Tax, Inc. since 2018. Mr. Young is a former member of the board of Globalstar, Inc. (NYSE: GSAT), Imagine Communications,
B. Riley Financial (Nasdaq: RILY), Standard Diversified Opportunities, Inc. and Proxim Wireless Corp. Mr. Young is well-qualified
to serve on our board of directors due to his experience in the financial services industry.
Daniel Shribman, our Chief Financial Officer and
Director, has served as President of B. Riley Principal Investments, since September 2018, when such role was first created, and
brings 11 years of experience in both public and private equity to the company. Prior to joining B. Riley Principal Investments,
Mr. Shribman was a Portfolio Manager at Anchorage Capital Group, a special situation asset manager with over $15 billion in assets
under management, from 2010 to 2018. During Mr. Shribman’s tenure at Anchorage, he led investments in dozens of public and
private opportunities across the general industrials, transportation, automotive, aerospace, gaming, hospitality and real estate
industries. These investments ranged from public equities and bonds to deeply distressed securities, par bank debt, minority owned
private equity, and majority owned private equity. Mr. Shribman worked in close collaboration with management teams and boards
to maximize shareholder value in the form of both operational turnarounds, capital markets financings and communication and capital
deployment initiatives. Prior to Anchorage, Mr. Shribman worked at Tinicum Capital Partners, a private equity firm, and in the
restructuring advisory group at Lazard Freres. Mr. Shribman holds an MA in Economics and History from Dartmouth. Mr. Shribman
is well-qualified to serve on our board of directors due to his experience in the financial services industry.
Patrick J. Bartels, Jr.,
our Director Nominee, serves as the Managing Member of Redan Advisors LLC (“Redan”). Prior to joining Redan, Mr. Bartels
held the position of Managing Principal at Monarch Alternative Capital LP, a private investment firm that focuses primarily on
distressed companies (“Monarch”) from 2002-2018. Prior to joining Monarch, Mr. Bartels was a high-yield investments
analyst at Invesco Ltd. He began his career at PricewaterhouseCoopers LLP.
Mr. Bartels contributes to the mix of experience
and qualifications the board of directors seeks to maintain primarily through executive management oversight, finance and capital
markets, human resources and compensation, and strategic planning experiences. Mr. Bartels’ other board experience includes
Arch Coal Inc. (“Arch”), serving on its audit, nominating/governance and compensation committees. Mr. Bartels has
20 years of experience and holds the Chartered Financial Analyst designation.
We believe Mr. Bartels is well-qualified
to serve on our board of directors due to his extensive experience in finance and his experience as a director of Arch.
James L. Kempner, our Director
Nominee, is President of LSH Partners. Prior to joining LSH Partners, Mr. Kempner was President of Loeb Partners Corporation from
2014 to 2016.
Mr. Kempner began his career at Lazard,
in 1983 and was named a General Partner in 1993. Mr. Kempner was involved in banking and capital markets transactions and managed
Lazard’s Corporate Finance department from 1995-1998 and founded Lazard’s Logistics and Transportation group in 2000.
His most recent role was as Senior Advisor in Lazard’s general industrials banking group, with emphasis on companies in
the Transportation and Logistics industries. Mr. Kempner also served on the Underwriting and Private Placement Committees of Lazard.
Outside of the Logistics and Transportation
Industry, Mr. Kempner has advised numerous other publicly-traded companies on their initial public offerings and other capital
raises.
Mr. Kempner is an Advisory Board Member
and on the Finance Committee of Mount Sinai Health Systems, a Board Member of NuLabel Technologies, a Board Member of FallLine
Group, and an Advisor to the Board of Synexis Biodefense Systems. Mr. Kempner is a Trustee of the James Loring Johnson 1944 Trust
and a Trustee for an American artist and sculptor. Mr. Kempner received a B.A. from Yale University and an M.B.A. from Harvard
Business School.
We believe Mr. Kempner is well-qualified
to serve on our board of directors due to his extensive experience in banking and capital markets.
Timothy M. Presutti, our Director Nominee,
is the managing partner and chief investment officer of Woody Creek Capital Partners, a private investment firm he founded in
2007, which specializes in private credit and special situation investing. In addition, Mr. Presutti has been a senior advisor
to the Bosarge Family Office based in Houston, Texas since 2015. Mr. Presutti brings nearly 24 years of finance experience,
spanning investing, portfolio management, trading and capital markets. He co-founded Broadbill Investment Partners in 2011,
an investment management firm, where he oversaw all capital raising for two funds and a co-investment platform, was a member of
its investment committee and has been its senior advisor since 2019. Mr. Presutti started his career at Bankers Trust, which
was acquired by Deutsche Bank, where he served as managing director and head of high yield trading from 2005 to 2007 and as a
managing director in high yield sales from 2000 to 2005. Mr. Presutti is an MBA candidate at The Ross School at the University
of Michigan and holds a BS from Niagara University. He is active as a member of the investment committee of the Aspen Community
Foundation as well as a member of YPO-WPO Aspen Chapter.
We believe Mr. Presutti is well-qualified to serve on our board of directors due to his extensive experience
in banking and capital markets.
Bryant R. Riley, our Director
Nominee, is Chairman and Co-Chief Executive Officer of B. Riley Financial Inc. (NASDAQ: RILY), which we refer to elsewhere in
this prospectus as B. Riley Financial, a publicly traded company which, through its subsidiaries, provides financial and business
advisory services. In addition, Mr. Riley serves as CEO of B. Riley Capital Management, LLC, an SEC Registered Investment Advisor
and a wholly-owned subsidiary of B. Riley Financial. Since July 2017, Mr. Riley has served as Co-Chief Executive Officer of B.
Riley FBR, Inc. (formerly FBR Capital Markets & Co., LLC).
Mr. Riley has served as a member of the
board of directors of Liberty Tax, Inc. since September 2018. Previously, Mr. Riley held board positions at Alliance Semiconductor
Corporation, Aldila Inc., Cadiz Inc., Carreker Corporation, DDI Corp., Integrated Silicon Solution, Inc., Celeritek, Inc., Kitty
Hawk Inc., Mossimo Inc., National Holdings Corporation, SI Technologies, Inc., Silicon Storage Technologies, Strasbaugh, STR Holdings,
Inc., Trans World Entertainment and Transmeta Corp.
Prior to founding B. Riley & Co. in
1997, Mr. Riley held a variety of positions in the brokerage industry, primarily as an institutional salesman and trader. From
October 1993 to January 1997 Mr. Riley was a co-head of Equity at Dabney-Resnick, Inc., a Los Angeles-based brokerage firm. From
1991 to 1993 he was a co-founder of Huberman-Riley, a Texas-based brokerage firm.
Mr. Riley holds a Bachelor of Science in
Finance from Lehigh University.
We believe Mr. Riley is well-qualified
to serve on our board of directors due to his extensive experience in finance, on public boards and his position with our sponsor.
Robert Suss, our Director Nominee, has been
the joint chief executive officer of UK Agricultural Finance Ltd, a company that provides underwriting to local farming communities
in the United Kingdom, since 2017. There, Mr. Suss assembled the board of directors and developed the strategic direction of the
company in relation to hiring, policy formation and risk management. Mr. Suss is also the Chair of EG Capital Advisors’
Advisory Board, a position that he has held since 2017. Mr. Suss has been a member of the board of directors of TPG Pace Holdings
Corp., a special purpose acquisition company, since 2017, where he is a member of its audit committee and nominating and corporate
governance committee. Mr. Suss was previously a director and audit committee member of Pace Holdings Corp. from 2015 to 2016,
a special purpose acquisition company. Mr. Suss was employed by Goldman Sachs International from 1997 to 2015. His latest position
at Goldman Sachs was managing director and head of private wealth management. Mr. Suss is also a trustee to Lumos, J.K. Rowling’s
charitable organization whose goal is to reduce the number of children being raised in institutions. Mr. Suss is also the trustee
of The Royal Academy Development Trust, a charity formed to promote participation in the arts. Mr. Suss has a BA, with honors,
in Economics and Management from the University of Leeds.
We believe Mr. Suss is well-qualified to serve on our board of directors due to his extensive banking
experience and experience on the boards of directors of other companies, including with special purpose acquisition companies,
where he reviewed and assessed target companies.
Number and Terms of Office of Officers and Directors
We will have seven directors upon completion of this offering.
Our board of directors will be divided into two classes with only one class of directors being elected in each year and each class
(except for those directors appointed prior to our first annual meeting of stockholders) serving a two-year term. In accordance
with NYSE corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal
year end following our listing on NYSE. The term of office of the first class of directors, consisting of Messrs. Young, Suss and Presutti, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting
of Messrs. Riley, Shribman, Kempner and Bartels, will expire at the second annual meeting of stockholders.
Our officers are appointed by the board of directors and serve
at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to
appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist
of a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer,
Assistant Secretaries and such other offices as may be determined by the board of directors.
Director Independence
The rules of the NYSE require that a majority of our board
of directors be independent within one year of our initial public offering. An “independent director” is defined generally
as a person who, in the opinion of the company’s board of directors, has no material relationship with the listed company
(either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). Upon the
effectiveness of the registration statement of which this prospectus forms a part, we expect to have two “independent directors”
as defined in the NYSE rules and applicable SEC rules prior to completion of this offering. Our board of directors has determined
that Messrs. Bartels, Kempner, Presutti and Suss are “independent directors” as defined in the NYSE listing standards
and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors
are present.
Officer and Director Compensation
None of our officers has received any cash compensation
for services rendered to us. Commencing on the date of this prospectus, we have agreed to pay an affiliate of our sponsor a total
of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our initial
business combination or our liquidation, we will cease paying these monthly fees. We will reimburse our directors for reasonable
out-of-pocket expenses incurred in connection with fulfilling their roles as directors. In addition, 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. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors,
or our or their affiliates. Any such payments prior to an initial business combination will be made using funds held outside the
trust account. Other than quarterly audit committee review of such payments, we do not expect to have any additional controls
in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred
in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements,
no compensation of any kind, including finder’s and consulting fees, will be paid by us to our sponsor, executive officers
and directors, or any of their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors
or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of
these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation
materials furnished to our stockholders in connection with a proposed initial business combination. We have not established any
limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely
the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of
the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid
to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee
constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of
our management team maintain their positions with us after the consummation of our initial business combination, although it is
possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after
our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions
with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that
the ability of our management to remain with us after the consummation of our initial business combination will be a determining
factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers
and directors that provide for benefits upon termination of employment.
Committees of the Board of Directors
Upon the effective date of the registration statement of which
this prospectus forms a part, our board of directors will have three standing committees: an audit committee, a compensation committee
and a nominating and corporate governance committee. Both our audit committee and our compensation committee will be composed solely
of independent directors. Subject to phase-in rules, the rules of NYSE and Rule 10A-3 of the Exchange Act require that the audit
committee of a listed company be comprised solely of independent directors, and the rules of NYSE require that the compensation
committee and the nominating and corporate governance committee of a listed company be comprised solely of independent directors.
Each committee will operate under a charter that will be approved by our board and will have the composition and responsibilities
described below. The charter of each committee will be available on our website following the closing of this offering.
Audit Committee
Upon the effectiveness of the registration statement of
which this prospectus forms a part, we will establish an audit committee of the board of directors. Messrs. Bartels, Kempner and Suss will serve as members of our audit committee, and Mr. Bartels will chair the audit committee. All members
of our audit committee are independent of and unaffiliated with our sponsor and our underwriters.
Each member of the audit committee is financially literate
and our board of directors has determined that Mr. Kempner qualifies as an “audit committee financial expert” as defined
in applicable SEC rules and has accounting or related financial management expertise.
We will adopt an audit committee charter, which will detail
the principal functions of the audit committee, including:
■
assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory
requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit
function and independent auditors; the appointment, compensation, retention, replacement, and oversight of the work of the independent
auditors and any other independent registered public accounting firm engaged by us;
■
pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public
accounting firm engaged by us, and establishing pre-approval policies and procedures; reviewing and discussing with the independent
auditors all relationships the auditors have with us in order to evaluate their continued independence;
■ setting
clear policies for audit partner rotation in compliance with applicable laws and regulations; obtaining and reviewing a report,
at least annually, from the independent auditors describing (1) the independent auditor’s internal quality-control procedures
and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by
any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more
independent audits carried out by the firm and any steps taken to deal with such issues;
■
meeting to review and discuss our annual audited financial statements and quarterly financial statements with management
and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis
of Financial Condition and Results of Operations”; reviewing and approving any related party transaction required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
■
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance
matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that
raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards
or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation Committee
Upon the effectiveness of the registration statement of
which this prospectus forms a part, we will establish a compensation committee of the board of directors. Messrs. Kempner, Presutti
and Suss will serve as members of our compensation committee. Mr. Presutti will chair the compensation committee.
We will adopt a compensation committee charter, which will detail
the principal functions of the compensation committee, including:
| ■ | reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation
evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving
the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
| ■ | reviewing
and making recommendations to our board of directors with respect to the compensation, and any incentive compensation and equity
based plans that are subject to board approval of all of our other officers; |
| ■ | reviewing
our executive compensation policies and plans; |
| ■ | implementing
and administering our incentive compensation equity-based remuneration plans; |
| ■ | assisting
management in complying with our proxy statement and annual report disclosure requirements; |
| ■ | approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
| ■ | producing
a report on executive compensation to be included in our annual proxy statement; and |
| ■ | reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Notwithstanding the foregoing, as indicated above, other than
the payment to an affiliate of our sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial
and administrative support and reimbursement of expenses, no compensation of any kind, including finders, consulting or other similar
fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or
for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely
that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the
review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
The charter will also provide that the compensation committee
may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser
and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before
engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee
will consider the independence of each such adviser, including the factors required by NYSE and the SEC.
Nominating and Corporate Governance Committee
Upon the effectiveness of the registration statement of
which this prospectus forms a part, we will establish a nominating and corporate governance committee of the board of directors.
The initial members of our nominating and corporate governance will be Messrs. Bartels, Kempner and Presutti. Mr. Bartels will
serve as chair of the nominating and corporate governance committee.
We will adopt a nominating and corporate governance committee
charter, which will detail the purpose and responsibilities of the nominating and corporate governance committee, including:
• identifying, screening and reviewing individuals
qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates
for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;
• developing and recommending to the board of directors
and overseeing implementation of our corporate governance guidelines;
• coordinating and overseeing the annual self-evaluation
of the board of directors, its committees, individual directors and management in the governance of the company; and
• reviewing on a regular basis our overall corporate
governance and recommending improvements as and when necessary.
The charter will also provide that the nominating and corporate
governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to
identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms.
We have not formally established any specific, minimum qualifications
that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for
director, the board of directors considers educational background, diversity of professional experience, knowledge of our business,
integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates
for nomination to our board of directors.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or in the past year has
served, as a member of the compensation committee of any entity that has one or more officers serving on our board of directors.
Code of Business Conduct and Ethics
Prior to the consummation of this offering, we will have adopted
a Code of Business Conduct and Ethics applicable to our directors, officers and employees. We will file a copy of our Code of Business
Conduct and Ethics as an exhibit to the registration statement of which this prospectus is a part. You will be able to review this
document by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Business
Conduct and Ethics and the charters of the committees of our board of directors will be provided without charge upon request from
us. See the section of this prospectus entitled “Where You Can Find Additional Information.” If we make any amendments
to our Code of Business Conduct and Ethics other than technical, administrative or other non-substantive amendments, or grant any
waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics applicable to our principal
executive officer, principal financial officer principal accounting officer or controller or persons performing similar functions
requiring disclosure under applicable SEC or NYSE rules, we will disclose the nature of such amendment or waiver on our website.
The information included on our website is not incorporated by reference into this Form S-1 or in any other report or document
we file with the SEC, and any references to our website are intended to be inactive textual references only.
Conflicts of Interest
B. Riley Financial manages several investment vehicles. Funds
and separate accounts managed by B. Riley Financial or its affiliates may compete with us for business combination opportunities.
If these funds or separate accounts decide to pursue any such opportunity, we may be precluded from procuring such opportunities.
In addition, investment ideas generated within B. Riley Financial may be suitable for both us and for a current or future B. Riley
Financial fund or separate account and may be directed to such investment vehicle rather than to us. Neither B. Riley Financial
nor members of our management team who are also employed by B. Riley Financial have any obligation to present us with any opportunity
for a potential business combination of which they become aware, unless presented to such member solely in his or her capacity
as an officer of the company. B. Riley Financial and our management may have similar obligations to future investment vehicles
or third parties.
We may, at our option, pursue an Affiliated Joint Acquisition
opportunity with any such fund or other investment vehicle, but such parties would co-invest only if permitted by applicable regulatory
and other legal limitations and to the extent considered appropriate. Such entity may co-invest with us in the target business
at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination
by making a specified future issuance to any such fund or vehicle.
B. Riley Financial and each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of
our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to
present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of B. Riley
Financial and our officers or directors will not materially affect our ability to complete our initial business combination. We
may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which B. Riley Financial or an officer
or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time
of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making
a specified future issuance to any such entity.
Members of our management team do not have any obligation
to present us with any opportunity for a potential business combination of which they become aware, unless presented to such member
solely in his or her capacity as a director or officer of the company. Our amended and restated certificate of incorporation will
provide 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. The determination
of whether an opportunity has been expressly offered to a director of officer solely in his or her capacity as a director or officer
of our company will made based on express statements by the person offering the opportunity, and if a director or officer is unsure
of whether an opportunity was offered in such capacity, he or she shall seek guidance on such determination from the audit committee
of our board of directors.
Our sponsor and each of our officers have agreed not
to participate in the formation of, or become a sponsor or officer of, any other special purpose acquisition company
conducting a public offering pursuant to the Securities Act or with a class of securities registered under the
Exchange Act until we have entered into a definitive agreement regarding our initial business
combination or we have failed to complete our initial business combination within 24 months after the closing of this
offering. Potential investors should also be aware of the following other potential conflicts of interest:
| ■ | None
of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of
interest in allocating his or her time among various business activities. |
| ■ | In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may
have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| ■ | Our
initial stockholders have agreed to waive their redemption rights with respect to any
founder shares, private placement shares and any public shares held by them in connection
with the consummation of our initial business combination. Additionally, our initial
stockholders have agreed to waive their redemption rights with respect to any founder
shares held by them if we fail to consummate our initial business combination within
24 months after the closing of this offering. If we do not complete our initial business
combination within such applicable time period, the proceeds of the sale of the private
placement units held in the trust account will be used to fund the redemption of our
public shares, and the underlying securities will expire worthless. With certain limited
exceptions, the founder shares will not be transferable, assignable by our sponsor until
the earlier of: (A) one year after the completion of our initial business combination
or (B) subsequent to our initial business combination, (x) if the last sale price of
our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after our initial
business combination, or (y) the date on which we complete a liquidation, merger, capital
stock exchange, reorganization or other similar transaction that results in all of our
stockholders having the right to exchange their shares of common stock for cash, securities
or other property. With certain limited exceptions, the private placement units, the
private placement shares, the private placement warrants and the Class A common stock
underlying such warrants, will not be transferable, assignable or saleable by our sponsor
or its permitted transferees until 30 days after the completion of our initial business
combination. Since our sponsor and officers and directors may directly or indirectly
own common stock and warrants following this offering, our officers and directors may
have a conflict of interest in determining whether a particular target business is an
appropriate business with which to effectuate our initial business combination. |
| ■ | Our
officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect
to our initial business combination. |
| ■ | Our
sponsor, officers or directors may have a conflict of interest with respect to evaluating
a business combination and financing arrangements as we may obtain loans from our sponsor
or an affiliate of our sponsor or any of our officers or directors to finance transaction
costs in connection with an intended initial business combination. Up to $1,500,000 of
such working capital loans may be convertible into private placement-equivalent units
at a price of $10.00 per unit at the option of the lender. Such units would be identical
to the private placement units, including as to exercise price, exercisability and exercise
period of the underlying warrants. |
The conflicts described above may not be resolved in our favor.
In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present business opportunities to a corporation if:
| ■ | the
corporation could financially undertake the opportunity; |
| ■ | the
opportunity is within the corporation’s line of business; and |
| ■ | it
would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business affiliations,
our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed
criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation will provide 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. The determination of whether an opportunity has been
expressly offered to a director of officer solely in his or her capacity as a director or officer of our company will made based
on express statements by the person offering the opportunity, and if a director or officer is unsure of whether an opportunity
was offered in such capacity, he or she shall seek guidance on such determination from the audit committee of our board of directors.
Below is a table summarizing the entities to which our executive
officers, directors and director nominees currently have fiduciary duties or contractual obligations:
| INDIVIDUAL |
|
ENTITY |
|
ENTITY’S BUSINESS |
|
AFFILIATION |
| Kenneth Young |
|
B. Riley Financial, Inc. |
|
Financial Services |
|
President |
| |
|
B. Riley Principal Investments, LLC |
|
Financial Services |
|
CEO |
| |
|
magicJack VocalTec |
|
Telecommunications |
|
CEO |
| |
|
United Online |
|
Telecommunications |
|
CEO |
| |
|
Babcock & Wilcox |
|
Energy |
|
CEO |
| |
|
Orion Energy Systems, Inc. |
|
Telecommunications |
|
Director |
| |
|
Sonim Technologies |
|
Telecommunications |
|
Director |
| |
|
bebe stores, inc. |
|
Consumer Products |
|
Director |
| |
|
Liberty Tax, Inc. |
|
Tax Preparation |
|
Director |
| Daniel Shribman |
|
B. Riley Principal Investments, LLC |
|
Financial Services |
|
President |
| Patrick J. Bartels, Jr. |
|
Redan Advisors LLC |
|
Financial Services |
|
Managing Member |
| |
|
Arch Coal, Inc. |
|
Energy (Mining) |
|
Director |
| |
|
Vanguard Natural Resources, Inc. |
|
Energy |
|
Director |
| James L. Kempner |
|
LSH Partners |
|
Financial Services |
|
President |
| |
|
Mount Sinai Health Systems |
|
Healthcare |
|
Advisory Board Member |
| |
|
NuLabel Technologies |
|
Manufacturing |
|
Director |
| |
|
FallLine Group |
|
Financial Services |
|
Director |
| |
|
Synexis Biodefense Systems |
|
Healthcare |
|
Advisor to the Board |
| Timothy M. Presutti |
|
Broadbill Partners |
|
Financial Services |
|
Minority Owner/Managing Director |
| |
|
Woody Creek Cap Partners LLC |
|
Financial Services |
|
Sole Owner/Managing Director |
| |
|
Woody Creek Cap Management LLC |
|
Financial Services |
|
Sole Owner/Managing Director |
| |
|
Wocap II GP, LLC |
|
Financial Services |
|
Sole Owner/Managing Director |
| |
|
Aspen Community Foundation |
|
Nonprofit |
|
Member of Investment Committee |
| |
|
Bosarge Family Office |
|
Financial Services |
|
Senior Advisor |
| Bryant R. Riley |
|
B. Riley Financial Inc. |
|
Financial Services |
|
Chairman and Co-Chief Executive Officer |
| |
|
B. Riley Capital Management, LLC |
|
Financial Services |
|
Chief Executive Officer |
| Robert Suss |
|
TPG Pace Holdings |
|
Blank Check |
|
Director |
| |
|
EG Capital Advisors |
|
Financial Services |
|
Chair of Advisory Board |
| |
|
UK Agricultural Finance Ltd |
|
Financial Services |
|
Joint CEO |
Accordingly, if any of the above executive officers, directors
or director nominees becomes aware of a business combination opportunity which is suitable for any of the above entities to which
he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.
We are not prohibited from pursuing an initial business combination
with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business
combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm, or from a valuation or appraisal firm that regularly prepares fairness opinions, that such an initial business combination
is fair to our company from a financial point of view.
In the event that we submit our initial business combination
to our public stockholders for a vote, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote
any founder shares and private placement shares held by them and any public shares purchased during or after the offering
(including in open market and privately negotiated transactions) in favor of our initial business combination.
Limitation on Liability and Indemnification of Officers and
Directors
Our amended and restated certificate of incorporation will provide
that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or
may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors
will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors,
unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal
benefit from their actions as directors.
We will enter into agreements with our officers and directors
to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate
of incorporation. Our bylaws also will permit us to secure insurance on behalf of any officer, director or employee for any liability
arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy
of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense,
settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and
directors.
These provisions may discourage stockholders from bringing a
lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood
of derivative litigation against 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 officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the directors’ and officers’
liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
PRINCIPAL
STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our common stock included
in the units offered by this prospectus, and assuming no purchase of units in this offering, by:
| ■ | each
person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
| ■ | each
of our executive officers, directors and director nominees that beneficially owns shares of our common stock; and |
| ■ | all
our executive officers, directors and director nominees as a group. |
Unless otherwise indicated, we believe that all persons named
in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following
table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within
60 days of the date of this prospectus.
In connection with our initial formation in 2012, a wholly-owned
subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our outstanding equity. On November 19,
2018, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning
3,593,750 founder shares. We expect that all of our equity will be contributed to our sponsor prior to effectiveness of this registration
statement. On March 12, 2019, 20,000 founder shares were transferred to each of Patrick J. Bartels, Jr., James L. Kempner, Timothy
M. Presutti and Robert Suss, our independent director nominees, at their par value. In addition, our sponsor has committed, pursuant
to a written agreement, to purchase an aggregate of 425,000 private placement units for a purchase price of $10.00 per unit in
a private placement that will occur simultaneously with the closing of this offering (assuming the underwriters do not exercise
their over-allotment option). The following table presents the number of shares and percentage of our common stock owned by our
initial stockholders before and after this offering. The post-offering numbers and percentages presented assume that the underwriters
do not exercise their over-allotment option, that our initial stockholders forfeit 468,750 founder shares on a pro rata basis,
and that there are 16,050,000 shares of our common stock, consisting of (i) 12,500,000 shares of our Class A common stock, (ii)
3,125,000 shares of our Class B common stock, and (iii) 425,000 shares of our Class A common stock underlying the private
placement units, issued and outstanding after this offering.
| |
|
Before
Offering |
|
After
Offering |
Name
and Address of Beneficial
Owner(1) |
|
Number
of
Shares
Beneficially
Owned(2) |
|
Approximate
Percentage
of
Outstanding
Common
Stock |
|
Number
of
Shares
Beneficially
Owned(2) |
|
Approximate
Percentage
of
Outstanding
Common
Stock |
| Great American Group, LLC |
|
3,513,750
|
|
97.77
|
% |
|
3,045,000
|
|
18.97
|
% |
| Patrick J. Bartels, Jr. |
|
20,000
|
|
*
|
|
|
20,000
|
|
*
|
|
| James L. Kempner |
|
20,000 |
|
* |
|
|
20,000 |
|
*
|
|
| Timothy M. Presutti |
|
20,000 |
|
* |
|
|
20,000 |
|
*
|
|
| Robert Suss |
|
20,000 |
|
* |
|
|
20,000 |
|
*
|
|
| All
executive officers, directors and director nominees as a group |
|
80,000
|
|
2.23 |
% |
|
80,000
|
|
* |
|
* Less than 1%
(1) Unless otherwise
noted, the business address of each of the following entities or individuals is c/o B. Riley Principal Merger Corp., 299 Park
Avenue, 21st Floor, New York, New York, 10171.
(2) Interests shown consist solely of founder shares, classified as shares of Class B common stock. Such shares are convertible
into shares of Class A common stock on a one-for-one basis, subject to adjustment, as described in the section of this prospectus
entitled “Description of Securities."
Immediately after this offering, our initial stockholders
will beneficially own founder shares and private placement shares representing 22.1% of the then-issued and outstanding
shares of our common stock (assuming they do not purchase any units in this offering). Neither our sponsor nor any of our officers
or directors have expressed an intention to purchase any units in this offering. If we increase or decrease the size of the offering,
we will effect a stock dividend or a share contribution back to capital, or other appropriate mechanism, as applicable, with respect
to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership
of our initial stockholders at 20.0% of the issued and outstanding shares of our common stock upon the consummation of this offering excluding the private placement shares underlying the private placement units.
Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring
approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation
and approval of significant corporate transactions, including approval of our initial business combination.
Prior to this offering, an affiliate of our sponsor entered into a forward purchase agreement with us which provides for the purchase
by it (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of $25,000,000 in a private placement
to close concurrently with the closing of our initial business combination. The obligations under the forward purchase agreement
do not depend on whether any Class A common stock is redeemed by our public stockholders.
The holders of the founder shares and private placement
shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem
any shares in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender
offer.
Our sponsor and our executive officers and directors are deemed
to be our “promoters” as such term is defined under the federal securities laws.
Restrictions on Transfers of Founder Shares and Private
Placement Units
The founder shares, private placement units, private placement
shares, private placement warrants and any shares of Class A common stock issued upon conversion or exercise thereof are each
subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our sponsor,
officers and directors. Those lock-up provisions provide that such securities are not transferable or salable (i) in the case
of the founder shares, until the earlier of (A) one year after the completion of our initial business combination or (B)
subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on
which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all
of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, and (ii)
in the case of the private placement units, the private placement warrants and any shares of Class A common stock issued upon
conversion or exercise thereof until 30 days after the completion of our initial business combination, except in each case (a)
to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor,
or any affiliates of our sponsor, (b) in the case of an individual, by gift to a member of one of the members of the individual’s
immediate family or to a trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate
of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution
upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private
sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation
of an initial business combination at prices no greater than the price at which the securities were originally purchased; (f)
in the event of our liquidation prior to the completion of our initial business combination; (g) by virtue of the laws of Delaware
or our sponsor’s limited liability company agreement upon dissolution of our sponsor; or (h) in the event of our liquidation,
merger, capital stock exchange, reorganization or other similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other property subsequent to our completion of our initial
business combination; provided, however, that in the case of clauses (a) through (e) or (g) these permitted transferees must enter
into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter
agreements and by the same agreements entered into by our sponsor with respect to such securities (including provisions relating
to voting, the trust account and liquidation distributions described elsewhere in this prospectus). In addition, the private placement
units and the shares and warrants underlying those units may not be sold transferred, assigned, pledged, or hypothecated, or 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 of which
this prospectus forms a part or commencement of sales of the public offering, except to any underwriter and selected dealer participating
in the offering and their bona fide officers or partners, provided that all securities so transferred remain subject to the lockup
restriction above for the remainder of the time period.
Registration Rights
The holders of the forward purchase units (and underlying
securities), founder shares, private placement units, private placement shares, private placement warrants, shares of Class A
common stock underlying the private placement warrants, and securities that may be issued upon conversion of working capital loans
will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration
rights agreement to be signed prior to or on the effective date of this offering. These holders will be entitled to make up to
three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act.
In addition, these holders will have “piggy-back” registration rights to include their securities in other registration
statements filed by us. Notwithstanding the foregoing, our sponsor may not exercise its demand and “piggyback” registration
rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus
forms a part and may not exercise its demand rights on more than one occasion.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In connection with our initial formation in 2012, a wholly-owned
subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our outstanding equity. On November 19,
2018, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning
3,593,750 founder shares. We expect that all of our equity will be contributed to our sponsor prior to effectiveness of this registration
statement. The number of founder shares outstanding was determined based on the expectation that the founder shares would represent
20% of the outstanding shares after this offering. If we increase or decrease the size of the offering we will effect a stock
dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common
stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial stockholders
at 20.0% of the issued and outstanding shares of our common stock upon the consummation of this offering. On March 12, 2019, 20,000
founder shares were transferred to each of Patrick J. Bartels, Jr., James L. Kempner, Timothy M. Presutti and Robert Suss, our
independent director nominees, at their par value. Up to 468,750 founder shares are subject to forfeiture by our sponsor depending
on the extent to which the underwriters’ over-allotment option is exercised. The founder shares (including the Class A common
stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the
holder.
Our sponsor has agreed to purchase an aggregate of 425,000
units (or 462,500 units if the over-allotment option is exercised in full) at a price of $10.00 per unit, for an aggregate
purchase price of $4,250,000, or $4,625,000 if the over-allotment option is exercised in full. The private placement units
will be identical to the units sold in this offering except that the underlying private placement warrants, so long as they are
held by our sponsor or its permitted transferees, (i) will not be redeemable by us, (ii) may not (including the Class A common
stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the
holders until 30 days after the completion of our initial business combination, and pursuant to FINRA Rule 5110 may not be sold,
transferred, assigned, pledged, or hypothecated, or 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 of which this prospectus forms a part or commencement of sales of the public offering,
except to any underwriter or selected dealer participating in the offering and their bona fide officers or partners, provided
that all securities so transferred remain subject to the lockup restriction above for the remainder of the time period, (iii)
may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they
are held by our sponsor, will not be exercisable more than five years from the effective date of the registration statement of
which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i). The private placement units (including the private placement shares, private placement warrants and the shares of Class A common stock issuable upon exercise thereof)
may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
Prior to this offering, an affiliate of our sponsor entered into a forward purchase agreement with us
which provides for the purchase by it (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of
$25,000,000 in a private placement to close concurrently with the closing of our initial business combination. The obligations
under the forward purchase agreement do not depend on whether any Class A common stock is redeemed by our public stockholders. The forward purchase agreement includes registration rights with respect to the forward purchase
units.
As more fully discussed in the section of this prospectus entitled
“Management — Conflicts of Interest,” if any of our officers or directors becomes aware of an initial business
combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual
obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity
to such other entity. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that
may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity
to which B. Riley Financial or an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest
with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete
the initial business combination by making a specified future issuance to any such entity.
Commencing on the date of this prospectus, we have agreed to
pay our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon
completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Other than the foregoing, no compensation of any kind, including
any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our
sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection with any services rendered
in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is).
However, these individuals 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. Our audit committee
will review on a quarterly.
Commencing on the date of this prospectus, we have agreed to
pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative
support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Other than the foregoing, no compensation of any kind, including
any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our
sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection with any services rendered
in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is).
However, these individuals 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. Our audit committee
will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and
will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement
of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Prior to the closing of this offering, our sponsor has agreed
to loan us up to $300,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured
and are due at the earlier of December 31, 2019 or the closing of this offering. The loan will be repaid upon the closing of this
offering out of the estimated $750,000 of offering proceeds that has been allocated to the payment of offering expenses (other
than underwriting commissions). The value of our sponsor’s interest in this transaction corresponds to the principal amount
outstanding under any such loan.
In addition, in order to finance transaction costs in
connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our
officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business
combination, we would repay such loaned amounts. In the event that the initial 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 $1,500,000 of such working capital loans may be convertible into
private placement-equivalent units at a price of $10.00 per unit at the option of the lender. Such units would be identical
to the private placement units, including as to exercise price, exercisability and exercise period of the underlying warrants. The terms of such
working capital loans by our sponsor or its affiliates, or 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.
After our initial business combination, members of our management
team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being
fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable,
furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such
tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable,
as it will be up to the directors of the post-combination business to determine executive and director compensation.
We will enter into a registration rights agreement with
respect to the private placement units, the private placement shares, the private placement warrants, the securities issuable
upon conversion of working capital loans (if any) and the shares of Class A common stock issuable upon exercise of the foregoing
and upon conversion of the founder shares, which is described under the section of this prospectus entitled “Description
of Securities — Registration Rights.”
B. Riley is acting as book-running manager of the offering and
as representative of the underwriters. Subject to the terms and conditions of the underwriting agreement dated the date of this
prospectus, the underwriters have severally agreed to purchase on a firm commitment basis, and we have agreed to sell to the underwriters,
the following respective number of units set forth opposite the underwriter’s name at a public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus.
We will engage B. Riley as advisors in connection with our business
combination to assist us in arranging meetings with our stockholders to discuss the potential business combination and the target
business’ attributes, introduce us to potential investors that may be are interested in purchasing our securities, assist
us in obtaining stockholder approval for the business combination and assist us with the preparation of our press releases and
public filings in connection with the business combination. We will pay B. Riley for such services upon the consummation of our
initial business combination a cash fee in an amount equal to 3.5% of the gross proceeds of this offering (exclusive of any applicable
finders’ fees which might become payable) ($4,375,000 or up to $5,031,250 if the underwriters’ over-allotment option
is exercised in full). Pursuant to the terms of the business combination marketing agreement, no fee will be due if we do not complete
an initial business combination.
Related Party Policy
We have not yet adopted a formal policy for the review, approval
or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified
in accordance with any such policy.
Prior to the consummation of this offering, we will adopt a
code of business conduct and ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines
or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings
with the SEC. Under our code of business conduct and ethics, conflict of interest situations will include any financial transaction,
arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. A form of the code
of business conduct and ethics that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration
statement of which this prospectus is a part.
In addition, our audit committee, pursuant to a written
charter that we will adopt prior to the consummation of this offering, will be responsible for reviewing and approving related
party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the
audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction.
A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent
of all of the members of the audit committee will be required to approve a related party transaction. Any member of the audit
committee who is a related person with respect to a transaction under review will not be permitted to participate in the discussions
or approval or ratification of the transaction. A form of the audit committee charter that we plan to adopt prior to the consummation
of this offering is filed as an exhibit to the registration statement of which this prospectus is a part. We also require each
of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information
about related party transactions.
These procedures are intended to determine whether any such
related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize conflicts of interest, we have agreed not
to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors
unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or an
independent valuation or appraisal firm that regularly prepares fairness opinions that our initial business combination is fair
to our company from a financial point of view. Furthermore, no finder’s fees, reimbursements, consulting fee, monies in respect
of any payment of a loan or other compensation will be paid by us to our sponsor, officers or directors, or any affiliate of our
sponsor or officers, for services rendered to us prior to, or in connection with any services rendered in order to effectuate,
the consummation of our initial business combination (regardless of the type of transaction that it is). However, the following
payments will be made to our sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds
of this offering held in the trust account prior to the completion of our initial business combination:
| ■ | Repayment
of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses; |
| ■ | Payment
to an affiliate of our sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial and administrative
support; |
| ■ | Reimbursement
for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and |
| ■ | Repayment
of loans which may be made by our sponsor or an affiliate of our sponsor or certain of
our officers or directors to finance transaction costs in connection with an intended
initial business combination, the terms of which have not been determined nor have any
written agreements been executed with respect thereto. Up to $1,500,000 of such working
capital loans may be convertible into private placement-equivalent units at a price of
$10.00 per unit at the option of the lender. |
Our audit committee will review on a quarterly basis all payments
that were made to our sponsor, officers or directors, or our or their affiliates.
DESCRIPTION
OF SECURITIES
Pursuant to our amended and restated certificate of incorporation,
our authorized capital stock consists of 100,000,000 shares of Class A common stock, $0.0001 par value, 25,000,000 shares of Class
B common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description
summarizes the material terms of our capital stock. Because it is only a summary, it may not contain all the information that is
important to you.
Units
Public Units
Each unit has an offering price of $10.00 and consists
of one share of Class A common stock and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to
purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this
prospectus. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares of Class
A common stock. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly,
unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
We expect the Class A common stock and warrants comprising the
units will begin separate trading on the 52nd day following the date of this prospectus unless B. Riley informs us of its decision
to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued
a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence
separate trading, holders will have the option to continue to hold units or separate their units into the component securities.
Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common
stock and warrants.
In no event will the Class A common stock and warrants be traded
separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our
receipt of the gross proceeds at the closing of this offering. We will file a Current Report on Form 8-K which includes this audited
balance sheet upon the completion of this offering, which is anticipated to take place three business days after the date of this
prospectus. If the underwriters’ over-allotment option is exercised following the initial filing of such Current Report on
Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the
exercise of the underwriters’ over-allotment option.
Private Placement Units
The private placement units (including the private placement
shares, the private placement warrants and the shares of Class A common stock issuable upon exercise of such warrants) will not
be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other
limited exceptions as described under “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private
Placement Units,” to our officers and directors and other persons or entities affiliated with our sponsor) and they will
not be redeemable by us so long as they are held by members of our sponsor or its permitted transferees. In addition, because
our sponsor is an affiliate of B. Riley, the private placement units will be deemed to be compensation for B. Riley under FINRA
Rule 5110 and may not be sold, transferred, assigned, pledged, or hypothecated, or 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 of which this prospectus forms a part or commencement
of sales of the public offering, except to any underwriter or selected dealer participating in the offering and their bona fide
officers or partners, provided that all securities so transferred remain subject to the lockup restriction above for the remainder
of the time period. Otherwise, the private placement units are identical to the units sold in this offering except that the private
placement warrants, so long as they are held by our sponsor, the underwriters or their permitted transferees, (i) will not be
redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain
limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial business
combination, (iii) may be exercised by the holders on a cashless basis, and (iv) will be entitled to registration rights, as described
below under “— Redeemable Warrants — Private Placement Warrants.”
In order to finance transaction costs
in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers
and directors may, but are not obligated to, loan us funds as may be required. Up to $1,500,000 of such working capital loans
may be convertible into private placement-equivalent units at a price of $10.00 per unit at the option of the lender. Such units
would be identical to the private placement units, including as to exercise price, exercisability and exercise period of the underlying
warrants. The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors, if any, have
not been determined and no written agreements exist with respect to such loans.
In addition, holders of our private
placement units are entitled to certain registration rights. Notwithstanding the foregoing, our sponsor may not exercise its demand
and “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration
statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion.
Our sponsor has agreed not to transfer,
assign or sell any of the private placement units (including the private placement warrants and the Class A common stock issuable
upon exercise of any of the private placement warrants) until the date that is 30 days after the date we complete our initial
business combination, except that, among other limited exceptions as described under the section of this prospectus entitled “Principal
Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units” made to our officers and directors
and other persons or entities affiliated with our sponsor.
Common Stock
Upon the closing of this offering, 16,050,000 shares of
our common stock will be outstanding (assuming no exercise of the underwriters’ over-allotment option and the corresponding
forfeiture of 468,750 founder shares by our sponsor), consisting of:
| ■ | 12,500,000
shares of our Class A common stock underlying the units being offered in this offering; |
| ■ | 3,125,000
shares of Class B common stock held by our initial stockholders; and |
| ■ | 425,000
shares of Class A common stock underlying the private placement units. |
If we increase or decrease the size of the offering we will
effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to
our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of
our initial stockholders at 20.0% of the issued and outstanding shares of our common stock upon the consummation of this offering excluding
the private placement shares underlying the private placement units.
Common stockholders of record are entitled to one vote for each
share held on all matters to be voted on by stockholders. Holders of the Class A common stock and holders of the Class B common
stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Unless
specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL
or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required
to approve any such matter voted on by our stockholders. Our board of directors will be divided into two classes, each of which
will generally serve for a term of two years with only one class of directors being elected in each year. There is no cumulative
voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the
election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if
declared by the board of directors out of funds legally available therefor.
Because our amended and restated certificate of incorporation
authorizes the issuance of up to 100,000,000 shares of Class A common stock, if we were to enter into an initial business combination,
we may (depending on the terms of such an initial business combination) be required to increase the number of shares of Class A
common stock which we are authorized to issue at the same time as our stockholders vote on the initial business combination to
the extent we seek stockholder approval in connection with our initial business combination.
In accordance with NYSE corporate governance requirements, we
are not required to hold an annual meeting until no later than one year after our first full fiscal year end following our listing
on NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes
of electing directors in accordance with our bylaws, unless such election is made by written consent in lieu of such a meeting.
We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination,
and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to the consummation of our initial 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 will provide our stockholders with the opportunity to
redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the
consummation of our initial business combination including interest earned on the funds held in the trust account and not
previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares,
subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately
$10.00 per public share. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which
they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public
shares held by them in connection with the completion of our initial business combination. We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial
business combination either (i) in connection with a stockholder meeting called to approve the initial business combination
or (ii) by means of a tender offer. If we seek stockholder approval, we will complete our initial business combination only
if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A
quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of
the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to
vote at such meeting. If we conduct redemptions by means of a tender offer, the tender offer documents will contain substantially the same financial
and other information about the initial business combination and the redemption rights as required under the SEC's proxy rules.
If we seek stockholder approval, the
participation of our sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as
described in this prospectus), if any, could result in the approval of our initial business combination even if a majority of
our public stockholders vote, or indicate their intention to vote, against such business combination. For purposes of seeking
approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of
our initial business combination once a quorum is obtained. These quorum and voting thresholds, and the voting agreements of
our initial stockholders, may make it more likely that we will consummate our initial business combination.
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 will provide 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 redeeming its shares with respect to more than an aggregate of 20% of the shares of
common stock sold in this offering, 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. Our stockholders’
inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination,
and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally,
such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete the initial business
combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 20% and, in order to dispose
such shares would be required to sell their stock in open market transactions, potentially at a loss.
If we seek stockholder approval in connection with our initial
business combination, pursuant to the letter agreement our sponsor, officers and directors have agreed to vote their founder shares
and any public shares purchased during or after this offering (including in open market and privately negotiated transactions)
in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares, we would
need only 4,475,001, or 35.8%, of the 12,500,000 public shares sold in this offering to be voted in favor of an initial business
combination (assuming all outstanding shares are voted and the private placement shares to be issued to our sponsor are voted
in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment option is
not exercised). Additionally, each public stockholder may elect to redeem its public shares irrespective of whether they vote
for or against the proposed transaction (subject to the limitation described in the preceding paragraph).
Pursuant to our amended and restated certificate of incorporation,
if we are unable to complete our initial business combination within 24 months from the closing of this offering, we will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business
days thereafter subject to lawfully available funds therefor, 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. Our sponsor, officers and directors have entered into a letter
agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account
with respect to any founder shares or private placement shares held by them if we fail to complete our initial business combination
within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this
offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail
to complete our initial business combination within the prescribed time period.
In the event of a liquidation, dissolution or winding up of
the company after an initial business combination, our stockholders are entitled to share ratably in all assets remaining available
for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference
over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable
to the common stock, except that we will provide our stockholders with the opportunity to redeem their public shares for cash equal
to their pro rata share of the aggregate amount then on deposit in the trust account, upon the completion of our initial business
combination, subject to the limitations described herein.
Founder Shares
The founder shares are identical to the shares of Class
A common stock included in the units being sold in this offering, and holders of founder shares have the same stockholder rights
as public stockholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more
detail below, (ii) our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have
agreed (A) to waive their redemption rights with respect to any founder shares, private placement shares and any public shares
held by them in connection with the completion of our initial business combination, (B) to waive their redemption rights with
respect to their founder shares, private placement shares and public shares in connection with a stockholder vote to approve an
amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering
and (C) to waive their rights to liquidating distributions from the trust account with respect to any founder shares or private
placement shares held by them if we fail to complete our initial business combination within 24 months from the closing of this
offering, although they will be entitled to liquidating distributions from the trust account with respect to any public shares
they hold if we fail to complete our initial business combination within such time period, (iii) the founder shares are shares
of our Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial
business combination on a one-for-one basis, subject to adjustment
as described herein, and (iv) are entitled to registration rights. If we submit our initial business combination to our public
stockholders for a vote, our sponsor, officers and directors have agreed pursuant to the letter agreement to vote any founder
shares or private placement shares held by them and any public shares purchased during or after this offering (including in open
market and privately negotiated transactions) in favor of our initial business combination.
The shares of Class B common stock will automatically convert
into shares of Class A common stock at the time of our initial business combination on a one-for-one basis (subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided
herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in
connection with our initial business combination (including the shares, but not the warrants, underlying the forward purchase
units), the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless
the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any
such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares
of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common
stock outstanding after such conversion (after giving effect to any redemptions of Class A common stock by public stockholders),
including all shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued by the Company in connection with or in relation to the consummation of the initial
business combination (excluding any shares of Class A common stock or equity-linked securities exercisable for or convertible
into Class A common stock issued, or to be issued, to any seller in the initial business combination and any private placement
units issued to our sponsor upon conversion of working capital loans, provided that such conversion of founder shares will never
occur on a less than one-for-one basis). We cannot determine at this time whether a majority of the holders of our Class B common
stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment
due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination;
(ii) negotiation with Class A stockholders on structuring an initial business combination; or (iii) negotiation with parties providing
financing which would trigger the anti-dilution provisions of the Class B common stock. If such adjustment is not waived, the
issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership
of holders of our Class A common stock. If such adjustment is waived, the issuance would reduce the percentage ownership of holders
of both classes of our common stock. The term “equity-linked
securities” refers to any debt or equity securities that are convertible, exercisable or exchangeable for shares of Class
A common stock issues in a financing transaction in connection with our initial business combination, including but not limited
to a private placement of equity or debt. Securities could be “deemed issued” for purposes of the conversion rate
adjustment if such shares are issuable upon the conversion or exercise of convertible securities, warrants or similar securities.
With certain limited exceptions, the founder shares are not
transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our sponsor,
each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion of
our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class
A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business
combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar
transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities
or other property.
Preferred Stock
Our amended and restated certificate of incorporation will provide
that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized
to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights
and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will
be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting
power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors
to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control
of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently
intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred
stock are being issued or registered in this offering.
Warrants
Public Stockholders’ Warrants
Each whole warrant entitles the registered holder to purchase
one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time
commencing on the later of 12 months from the closing of this offering or 30 days after the completion of our initial business
combination. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares of
Class A common stock. No fractional warrant will be issued upon separation of the units and only whole warrants will trade. Accordingly,
unless you purchase at least two units, you will not be able to receive or trade a whole warrant. The warrants will expire five
years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or
liquidation.
We will not be obligated to deliver any shares of Class A 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 Class A 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 and we will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class
A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws
of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding
sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant
and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the
event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant
will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
We are not registering the shares of Class A common stock issuable
upon exercise of the warrants at this time. However, 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 covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement
to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating
to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a
registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the
60th business day after the closing of our initial business combination, warrantholders may, until such time as there
is an effective registration statement and during any period when we will have failed to maintain an effective registration statement,
exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the
shares under applicable blue sky laws to the extent an exemption is not available.
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; |
| ■ | upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrantholder;
and |
| ■ | if,
and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period
ending three business days before we send the notice of redemption to the warrantholders. |
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 this offering.
We have established the last of the redemption criterion discussed
above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price.
If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrantholder will be entitled
to exercise its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the
$18.00 redemption trigger price (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
as well as the $11.50 warrant exercise price after the redemption notice is issued.
If we call the warrants for redemption as described above, our
management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis.”
In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will
consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders
of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes
advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of
shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common
stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) of the Class A common
stock over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the
average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the
date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the
notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received
upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this
manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe
this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business
combination. If we call our warrants for redemption and our management does not take advantage of this option, our sponsor and
its permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis
using the same formula described above that other warrantholders would have been required to use had all warrantholders been required
to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify us in writing in the event
it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that
after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s
actual knowledge, would beneficially own in excess of 4.9% or 9.8% (or such other amount as a holder may specify) of the shares
of Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of Class A common stock
is increased by a stock dividend payable in shares of Class A common stock, or by a split-up of shares of Class A common stock
or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of
Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares
of Class A common stock. A rights offering to holders of Class A common stock entitling holders to purchase shares of Class A common
stock at a price less than the fair market value will be deemed a stock dividend of a number of shares of Class A common stock
equal to the product of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable
under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock)
and (ii) one (1) minus the quotient of (x) the price per share of Class A common stock paid in such rights offering divided
by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for
Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration
received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means
the volume weighted average price of Class A common stock as reported during the ten (10) trading day period ending on the trading
day prior to the first date on which the shares of Class A common stock trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding
and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A common stock
on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible),
other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of
Class A common stock in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders
of Class A common stock in connection with a stockholder vote to amend our amended and restated certificate of incorporation to
modify the substance or timing of our obligation to redeem 100% of our Class A common stock if we do not complete our initial business
combination within 24 months from the closing of this offering or (e) in connection with the redemption of our public shares upon
our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately
after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid
on each share of Class A common stock in respect of such event.
If the number of outstanding shares of our Class A common stock
is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other
similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such
decrease in outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable
upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the
warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares
of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator
of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding
shares of Class A common stock (other than those described above or that solely affects the par value of such shares of Class A
common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation
or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our
outstanding shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets
or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of
the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified
in the warrants and in lieu of the shares of our Class A common stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or
transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to
such event. If less than 70% of the consideration receivable by the holders of Class A common stock in such a transaction is payable
in the form of Class A common stock in the successor entity that is listed for trading on a national securities exchange or is
quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event,
and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such
transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes value
(as defined in the warrant agreement) of the warrant. The purpose of such exercise price reduction is to provide additional value
to holders of the warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which
the holders of the warrants otherwise do not receive the full potential value of the warrants in order to determine and realize
the option value component of the warrant. This formula is to compensate the warrant holder for the loss of the option value portion
of the warrant due to the requirement that the warrant holder exercise the warrant within 30 days of the event. The Black-Scholes
model is an accepted pricing model for estimating fair market value where no quoted market price for an instrument is available.
The warrants will be issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant
agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description
of the terms and conditions applicable to the warrants. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, and that all other modifications or amendments will require the vote or written
consent of the holders of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to
the terms of the private placement warrants, a majority of the then outstanding private placement warrants.
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 warrantholders
do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants
and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants,
each holder will be entitled to one (1) 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 Class A common stock to be issued to the warrantholder.
Private Placement Warrants
The private placement warrants (including the shares issuable
upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial
business combination (except, among other limited exceptions as described under “Principal Stockholders — Restrictions
on Transfers of Founder Shares and Private Placement Warrants,” to our officers and directors and other persons or entities
affiliated with our sponsor) and they will not be redeemable by us so long as they are held by members of our sponsor or its permitted
transferees. Otherwise, the private placement warrants are identical to the warrants sold in this offering except that the private
placement warrants, so long as they are held by our sponsor or its permitted transferees, (i) will not be redeemable by us, (ii)
may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions,
be transferred, assigned or sold by the holders until 30 days after the completion of our initial business combination, (iii)
may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they
are held by our sponsor, will not be exercisable more than five years from the effective date of the registration statement of
which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i).
If holders of the private placement warrants elect to exercise
them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A
common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying
the warrants, multiplied by the excess of the “fair market value” (defined below) of the Class A common stock over
the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported
last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which
the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable
on a cashless basis so long as they are held by our sponsor or its permitted transferees is because it is not known at this time
whether they will be affiliated with us following an initial business combination. If they remain affiliated with us, their ability
to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders
from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted
to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information.
Accordingly, unlike public stockholders who could sell the shares of Class A common stock issuable upon exercise of the warrants
freely in the open market, the insiders could be significantly restricted from doing so. As a result, we believe that allowing
the holders to exercise such warrants on a cashless basis is appropriate.
Dividends
We have not paid any cash dividends on our common stock to date
and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends
in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial conditions subsequent
to completion of an initial business combination. The payment of any cash dividends subsequent to an initial business combination
will be within the discretion of our board of directors at such time. If we increase or decrease the size of the offering we will
effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to
our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our
initial stockholders at 20.0% of the issued and outstanding shares of our common stock upon the consummation of this offering.
Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to
in connection therewith.
Our Transfer Agent and Warrant Agent
The transfer agent for our common stock and warrant agent for
our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust
Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors, officers and employees
against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any
liability due to any gross negligence, willful misconduct or bad faith of the indemnified person or entity.
Our Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation will
contain certain requirements and restrictions relating to this offering that will apply to us until the completion of our initial
business combination. These provisions cannot be amended without the approval of the holders of 65% of our common stock. Our initial
stockholders, who will collectively beneficially own founder shares and private placement shares representing 22.1% of our common
stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote
to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose.
Specifically, our amended and restated certificate of incorporation provides, among other things, that:
| ■ | If
we are unable to complete our initial business combination within 24 months from the closing of this offering, we will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter subject to lawfully available funds therefor, redeem 100% of 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; |
| ■ | 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; |
| ■ | Although
we do not intend to enter into an initial business combination with a target business that is affiliated with our sponsor, our
directors or our officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm or an independent accounting firm
that such an initial business combination is fair to our company from a financial point of view; |
| ■ | If
a stockholder vote on our initial business combination is not required by law and we do not decide to hold a stockholder vote
for business or other legal reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the
Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain
substantially the same financial and other information about our initial business combination and the redemption rights as is
required under Regulation 14A of the Exchange Act; whether or not we maintain our registration under the our Exchange Act or our
listing on NYSE, we will provide our public stockholders with the opportunity to redeem their public shares by one of the two
methods listed above; |
| ■ | So
long as we obtain and maintain a listing for our securities on the NYSE, the NYSE rules require that we must not consummate an
initial business combination with one or more operating businesses or assets with a fair market value of at least 80% of the assets
held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the
amount of any deferred underwriting commissions) at the time of the agreement to enter into the initial business combination; |
| ■ | If
our stockholders approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months
from the closing of this offering, we will provide our public stockholders with the opportunity to redeem all or a portion of
their shares of Class A common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released
to us to pay our franchise and income taxes, divided by the number of then outstanding public shares; and |
| ■ | We
will not effectuate our initial business combination with another blank check company or a similar company with nominal operations. |
In addition, our amended and restated certificate of incorporation
will provide that under no circumstances 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.
Certain Anti-Takeover Provisions of Delaware Law and our
Amended and Restated Certificate of Incorporation and Bylaws
We will be subject to the provisions of Section 203 of the DGCL
regulating corporate takeovers upon completion of this offering. This statute prevents certain Delaware corporations, under certain
circumstances, from engaging in a “business combination” with:
| ■ | a
stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”); |
| ■ | an
affiliate of an interested stockholder; or |
| ■ | an
associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder. |
A “business combination” includes a merger or sale
of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
| ■ | our
board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date
of the transaction; |
| ■ | after
the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned
at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of
common stock; or |
| ■ | on
or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized
at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding
voting stock not owned by the interested stockholder. |
Our amended and restated certificate of incorporation will provide
that our board of directors will be classified into two classes of directors. As a result, in most circumstances, a person can
gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
Our authorized but unissued common stock and preferred stock
are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including
future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued
and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by
means of a proxy contest, tender offer, merger or otherwise.
Exclusive forum for certain lawsuits
Our amended
and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted
by applicable law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting
a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our certificate of incorporation
or our bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine (except as to any claim
(i) as to which the Court of Chancery 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), (ii) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery,
or (iii) for which the Court of Chancery does not have subject matter jurisdiction, including, without limitation, any claim arising
under the federal securities laws, as to which the federal district court for the District of Delaware will be the sole and exclusive
forum).
However, this
exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore,
this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations
thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision, and our stockholders will not
be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Although we
believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits
to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Special meeting of stockholders
Our bylaws provide that special meetings of our stockholders
may be called only by a majority vote of our board of directors, by our Chief Executive Officer or by our Chairman.
Advance notice requirements for stockholder proposals
and director nominations
Our bylaws provide that stockholders seeking to bring business
before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders,
must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be received by the
company secretary at our principal executive offices not later than the close of business on the 90th day nor earlier
than the opening of business on the 120th day prior to the anniversary date of the immediately preceding annual meeting
of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply
with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content of a stockholders’
meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from
making nominations for directors at our annual meeting of stockholders.
Action by written consent
Subsequent to the consummation of the offering, any action required
or permitted to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders
and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Classified Board of Directors
Our board of directors will initially be divided into two
classes, Class I and Class II, with members of each class serving staggered two-year terms. Our amended and restated certificate
of incorporation will provide that the authorized number of directors may be changed only by resolution of the board of directors.
Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for
cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of our capital
stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of
directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority
of our directors then in office.
Class B Common Stock Consent Right
For so long as any shares of Class B common stock remain outstanding,
we may not, without the prior vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding,
voting separately as a single class, amend, alter or repeal any provision our certificate of incorporation, whether by merger,
consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative,
participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at
any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if
a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B
common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting
at which all shares of Class B common stock were present and voted.
Securities Eligible for Future Sale
Immediately after the consummation of this offering (assuming
no exercise of the underwriters’ over-allotment option) we will have 16,050,000 (or 18,431,250 if the underwriters’
over-allotment option is exercised in full) shares of common stock outstanding. Of these shares, the 12,500,000 shares (or 14,375,000
if the underwriters’ over-allotment option is exercised in full) sold in this offering will be freely tradable without restriction
or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning
of Rule 144 under the Securities Act. All of the remaining 3,550,000 (or 4,056,250 if the underwriters’ over-allotment
option is exercised in full) shares are restricted securities under Rule 144, in that they were issued in private transactions
not involving a public offering, and the shares of Class B common stock and private placement units, and the securities underlying
the foregoing, are subject to transfer restrictions as set forth elsewhere in this prospectus. These restricted securities will
be entitled to registration rights as more fully described below under “— Registration Rights.”
Upon the closing of the sale of the
forward purchase units, the forward purchase units and all of the securities underlying the forward purchase units will be restricted
securities under Rule 144.
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted
shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that (i) such
person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale
and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have
filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were
required to file reports) preceding the sale.
Persons who have beneficially owned restricted shares of our
common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months
preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month
period only a number of securities that does not exceed the greater of:
| ■ | 1%
of the total number of shares of Class A common stock then outstanding, which will equal
129,250 shares immediately after this offering (or 148,375 if the underwriters exercise
their over-allotment option in full); or |
| ■ | the
average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale. |
Sales by our affiliates under Rule 144 are also limited by manner
of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144 by Shell Companies or
Former Shell Companies
Rule 144 is not available for the resale of securities initially
issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously
a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
| ■ | the
issuer of the securities that was formerly a shell company has ceased to be a shell company; |
| ■ | the
issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
| ■ | the
issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable, during the preceding
12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports
on Form 8-K; and |
| ■ | at
least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status
as an entity that is not a shell company. |
As a result, our initial stockholders will be able to sell
their founder shares and private placement units, and the securities underlying the foregoing, as applicable, pursuant to Rule
144 without registration one year after we have completed our initial business combination.
Registration Rights
The holders of the founder shares (and any shares of Class
A common stock issuable upon conversion of the founder shares), private placement units, private placement shares, private placement
warrants (and any shares of Class A common stock issuable upon the exercise of the private placement warrants), and securities
that may be issued upon conversion of working capital loans (and any securities that may be issued upon conversion of working
capital loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on
the effective date of this offering, requiring us to register such securities for resale (in the case of the founder shares, only
after conversion to our Class A common stock). The holders of the majority of these securities are entitled to make up to three
demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our completion of our initial business combination
and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration
rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares, on the earlier of
(A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x)
if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital
stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange
their shares of common stock for cash, securities or other property and (ii) in the case of the private placement units and the
securities underlying such units, 30 days after the completion of our initial business combination. We will bear the expenses
incurred in connection with the filing of any such registration statements. We will bear the expenses incurred in connection with
the filing of any such registration statements. Notwithstanding the foregoing, our sponsor may not exercise its demand and “piggyback”
registration rights after five and seven years, respectively, after the effective date of the registration statement of which
this prospectus forms a part and may not exercise its demand rights on more than one occasion. Pursuant to the forward purchase
agreement, the holder of forward purchase units has substantially similar registration rights.
Listing of Securities
We intend to apply to list our units, Class A common stock and
warrants on NYSE under the symbols “BRPM.U,” “BRPM” and “BRPM WS,” respectively. We expect
that our units will be listed on NYSE on or promptly after the effective date of the registration statement. Following the date
the shares of our Class A common stock and warrants are eligible to trade separately, we anticipate that the shares of our Class
A common stock and warrants will be listed separately and as a unit on NYSE. We cannot guarantee that our securities will be approved
for listing on NYSE.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain material U.S. federal
income tax consequences of the acquisition, ownership and disposition of our units, shares of Class A common stock and warrants,
which we refer to collectively as our securities. Because the components of a unit are separable at the option of the holder, the
holder of a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying Class A common
stock and one-half of one redeemable warrant components of the unit, as the case may be. As a result, the discussion below with
respect to actual holders of Class A common stock and warrants should also apply to holders of units (as the deemed owners of the
underlying Class A common stock and warrants that comprise the units). This discussion applies only to securities that are held
as capital assets for U.S. federal income tax purposes and is applicable only to holders who purchased units in this offering.
This discussion is a summary only and does not describe all
of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the
alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are
subject to special rules that apply to certain types of investors, including but not limited to:
| ■ | financial
institutions or financial services entities; |
| ■ | governments
or agencies or instrumentalities thereof; |
| ■ | regulated
investment companies; |
| ■ | real
estate investment trusts; |
| ■ | expatriates
or former long-term residents of the U.S.; |
| ■ | persons
that actually or constructively own five percent or more of our voting shares; |
| ■ | dealers
or traders subject to a mark-to-market method of accounting with respect to the securities; |
| ■ | persons
holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction; |
| ■ | U.S.
holders (as defined below) whose functional currency is not the U.S. dollar; |
| ■ | partnerships
or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and |
If you are a partnership for U.S. federal income tax purposes,
the U.S. federal income tax treatment of your partners will generally depend on the status of the partners and your activities.
This discussion is based on the Internal Revenue Code of 1986,
as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury
regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent
to the date of this prospectus may affect the tax consequences described herein. This discussion does not address any aspect of
state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).
We have not sought, and will not seek, a ruling from the IRS
as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination
may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court
decisions will not adversely affect the accuracy of the statements in this discussion. You are urged to consult your tax advisor
with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising
under the laws of any state, local or foreign jurisdiction.
Personal Holding Company Status
We could be subject to a second level of U.S. federal income
tax on a portion of our income if we are determined to be a personal holding company, or PHC, for U.S. federal income tax purposes.
A U.S. corporation generally will be classified as a PHC for U.S. federal income tax purposes in a given taxable year if
(i) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency
and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds and charitable
trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation
by value and (ii) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income
tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties,
annuities and, under certain circumstances, rents).
At least 60% of our adjusted ordinary gross income may consist
of PHC income, depending on the date and size of our initial business combination. In addition, depending on the concentration
of our stock in the hands of individuals, including the members of our sponsor and certain tax-exempt organizations, pension funds
and charitable trusts, more than 50% of our stock may be owned or deemed owned (pursuant to the constructive ownership rules) by
such persons during the last half of a taxable year. Thus, no assurance can be given that we will not be a PHC following this offering
or in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently
20%, on our undistributed PHC income, which generally includes our taxable income, subject to certain adjustments.
Allocation of Purchase Price and Characterization of a Unit
No statutory, administrative or judicial authority directly
addresses the treatment of a unit or instruments similar to a unit for U.S. federal income tax purposes and, therefore, that treatment
is not entirely clear. The acquisition of a unit should be treated for U.S. federal income tax purposes as the acquisition of one
share of our Class A common stock and one-half of one warrant to acquire one share of our Class A common stock. For U.S. federal
income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between the one share
of Class A common stock and the one-half of one warrant based on the relative fair market value of each at the time of issuance.
Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant
facts and circumstances. Therefore, we strongly urge each investor to consult his or her tax adviser regarding the determination
of value for these purposes. The price allocated to each share of Class A common stock and the one-half of one warrant should be
the stockholder’s tax basis in such share or warrant, as the case may be. Any disposition of a unit should be treated for
U.S. federal income tax purposes as a disposition of the share of Class A common stock and one-half of one warrant comprising the
unit, and the amount realized on the disposition should be allocated between the Class A common stock and the one-half of one warrant
based on their respective relative fair market values (as determined by each such unit holder on all the relevant facts and circumstances)
at the time of disposition. The separation of shares of Class A common stock and warrants comprising units should not be a taxable
event for U.S. federal income tax purposes.
The foregoing treatment of the shares of Class A common stock
and warrants and a holder’s purchase price allocation are not binding on the Internal Revenue Service (“IRS”)
or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance can
be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly,
each prospective investor is urged to consult its own tax advisors regarding the tax consequences of an investment in a unit (including
alternative characterizations of a unit). The balance of this discussion assumes that the characterization of the units described
above is respected for U.S. federal income tax purposes.
U.S. Holders
This section applies to you if you are a “U.S. holder.”
A U.S. holder is a beneficial owner of our units, shares of Class A common stock or warrants who or that is, for U.S. federal income
tax purposes:
| ■ | an
individual who is a citizen or resident of the United States; |
| ■ | a
corporation (or other entity taxable as a corporation) organized in or under the laws of the United States, any state thereof
or the District of Columbia; or |
| ■ | an
estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
| ■ | a
trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust
and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii)
it has a valid election in effect under Treasury Regulations to be treated as a U.S. person. |
Taxation of Distributions. If we pay distributions
in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. holders of shares
of our Class A common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions
in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and
reduce (but not below zero) the U.S. holder’s adjusted tax basis in our Class A common stock. Any remaining excess will be
treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under “U.S.
Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants”
below.
Dividends we pay to a U.S. holder that is a taxable corporation
generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions
(including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations),
and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder may constitute “qualified
dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. It is unclear whether
the redemption rights with respect to the Class A common stock described in this prospectus may prevent a U.S. holder from satisfying
the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified
dividend income, as the case may be. If the holding period requirements are not satisfied, then a corporation may not be able to
qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate
holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies
to qualified dividend income.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition
of Class A Common Stock and Warrants. Upon a sale or other taxable disposition of our Class A common stock or warrants
which, in general, would include a redemption of Class A common stock or warrants that is treated as a sale of such securities
as described below, and including as a result of a dissolution and liquidation in the event we do not consummate an initial business
combination within the required time period, a U.S. holder generally will recognize capital gain or loss in an amount equal to
the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Class A common stock or warrants.
Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the
Class A common stock or warrants so disposed of exceeds one year. It is unclear, however, whether the redemption rights with respect
to the Class A common stock described in this prospectus may suspend the running of the applicable holding period for this purpose.
If the running of the holding period for the Class A common stock is suspended, then non-corporate U.S. holders may not be able
to satisfy the one-year holding period requirement for long-term capital gain treatment, in which case any gain on a sale or taxable
disposition of the shares or warrants would be subject to short-term capital gain treatment and would be taxed at regular ordinary
income tax rates. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates.
The deductibility of capital losses is subject to limitations.
Generally, the amount of gain or loss recognized by a U.S. holder
is an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received
in such disposition (or, if the Class A common stock or warrants are held as part of units at the time of the disposition, the
portion of the amount realized on such disposition that is allocated to the Class A common stock or the warrants based upon the
then fair market values of the Class A common stock and the warrants included in the units) and (ii) the U.S. holder’s adjusted
tax basis in its Class A common stock or warrants so disposed of. A U.S. holder’s adjusted tax basis in its Class A common
stock or warrants generally will equal the U.S. holder’s acquisition cost (that is, as discussed above, the portion of the
purchase price of a unit allocated to a share of Class A common stock or one-half of one warrant or, as discussed below, the U.S.
holder’s initial basis for Class A common stock received upon exercise of warrants) less, in the case of a share of Class
A common stock, any prior distributions treated as a return of capital.
Redemption of Class A Common Stock. In the event
that a U.S. holder’s Class A common stock is redeemed pursuant to the redemption provisions described in this prospectus
under the section of this prospectus entitled “Description of Securities — Common Stock” or if we purchase a
U.S. holder’s Class A common stock in an open market transaction, the treatment of the transaction for U.S. federal income
tax purposes will depend on whether the redemption qualifies as a sale of the Class A common stock under Section 302 of the Code.
If the redemption qualifies as a sale of common stock, the U.S. holder will be treated as described under “U.S. Holders —
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” above. If the redemption
does not qualify as a sale of common stock, the U.S. holder will be treated as receiving a corporate distribution with the tax
consequences described above under “U.S. Holders — Taxation of Distributions”. Whether a redemption qualifies
for sale treatment will depend largely on the total number of shares of our stock treated as held by the U.S. holder (including
any stock constructively owned by the U.S. holder as a result of owning warrants) relative to all of our shares outstanding both
before and after the redemption. The redemption of Class A common stock generally will be treated as a sale of the Class A common
stock (rather than as a corporate distribution) if the redemption (i) is “substantially disproportionate” with respect
to the U.S. holder, (ii) results in a “complete termination” of the U.S. holder’s interest in us or (iii) is
“not essentially equivalent to a dividend” with respect to the U.S. holder. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied,
a U.S. holder takes into account not only stock actually owned by the U.S. holder, but also shares of our stock that are constructively
owned by it. A U.S. holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals
and entities in which the U.S. holder has an interest or that have an interest in such U.S. holder, as well as any stock the U.S.
holder has a right to acquire by exercise of an option, which would generally include Class A common stock which could be acquired
pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding
voting stock actually and constructively owned by the U.S. holder immediately following the redemption of Class A common stock
must, among other requirements, be less than 80% of the percentage of our outstanding voting stock actually and constructively
owned by the U.S. holder immediately before the redemption. There will be a complete termination of a U.S. holder’s interest
if either (i) all of the shares of our stock actually and constructively owned by the U.S. holder are redeemed or (ii) all of the
shares of our stock actually owned by the U.S. holder are redeemed and the U.S. holder is eligible to waive, and effectively waives
in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. holder does not constructively
own any other shares of our stock. The redemption of the Class A common stock will not be essentially equivalent to a dividend
if a U.S. holder’s conversion results in a “meaningful reduction” of the U.S. holder’s proportionate interest
in us. Whether the redemption will result in a meaningful reduction in a U.S. holder’s proportionate interest in us will
depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction
in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate
affairs may constitute such a “meaningful reduction.” A U.S. holder should consult with its own tax advisors as to
the tax consequences of a redemption.
If none of the foregoing tests is satisfied, then the redemption
will be treated as a corporate distribution and the tax effects will be as described under “U.S. Holders — Taxation
of Distributions,” above. After the application of those rules, any remaining tax basis of the U.S. holder in the redeemed
Class A common stock will be added to the U.S. holder’s adjusted tax basis in its remaining stock, or, if it has none, to
the U.S. holder’s adjusted tax basis in its warrants or possibly in other stock constructively owned by it.
Exercise or Lapse of a Warrant. Except as discussed
below with respect to the cashless exercise of a warrant, a U.S. holder generally will not recognize taxable gain or loss on the
acquisition of common stock upon exercise of a warrant for cash. The U.S. holder’s tax basis in the share of our Class A
common stock received upon exercise of the warrant generally will be an amount equal to the sum of the U.S. holder’s initial
investment in the warrant (i.e., the portion of the U.S. holder’s purchase price for units that is allocated to the warrant,
as described above under “— General Treatment of Units”) and the exercise price. It is unclear whether the U.S.
holder’s holding period for the Class A common stock received upon exercise of the warrants will begin on the date following
the date of exercise or on the date of exercise of the warrants; in either case, the holding period will not include the period
during which the U.S. holder held the warrants. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize
a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are
not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a gain realization event
or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a
U.S. holder’s basis in the Class A common stock received would equal the holder’s basis in the warrants exercised therefor.
If the cashless exercise were treated as not being a gain realization event, it is unclear whether a U.S. holder’s holding
period in the Class A common stock would be treated as commencing on the date following the date of exercise or on the date of
exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the
warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include
the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise could be treated
in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. holder could be deemed to have surrendered
warrants equal to the number of shares of Class A common stock having a value equal to the exercise price for the total number
of warrants to be exercised. The U.S. holder would recognize capital gain or loss in an amount equal to the difference between
the fair market value of the Class A common stock received in respect of the warrants deemed surrendered and the U.S. holder’s
tax basis in the warrants deemed surrendered. In this case, a U.S. holder’s tax basis in the Class A common stock received
would equal the sum of the fair market value of the Class A common stock received in respect of the warrants deemed surrendered
and the U.S. holder’s tax basis in the warrants exercised. It is unclear whether a U.S. holder’s holding period for
the Class A common stock would commence on the date following the date of exercise or on the date of exercise of the warrant; in
either case, the holding period would not include the period during which the U.S. holder held the warrant.
Due to the absence of authority on the U.S. federal income tax
treatment of a cashless exercise, including when a U.S. holder’s holding period would commence with respect to the Class
A common stock received, there can be no assurance which, if any, of the alternative tax consequences and holding periods described
above would be adopted by the IRS or a court of law. Accordingly, U.S. holders should consult their tax advisors regarding the
tax consequences of a cashless exercise.
Possible Constructive Distributions. The terms of
each warrant provide for an adjustment to the number of shares of common stock for which the warrant may be exercised or to the
exercise price of the warrant in certain events, as discussed in the section of this prospectus entitled “Description of
Securities — Redeemable Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of
preventing dilution generally is not taxable. The U.S. holders of the warrants would, however, be treated as receiving a constructive
distribution from us if, for example, the adjustment to the number of such shares or to such exercise price increases the warrantholders’
proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of common stock
that would be obtained upon exercise or through a decrease in the exercise price of the warrant) as a result of a distribution
of cash or other property, such as other securities, to the holders of shares of our common stock, or as a result of the issuance
of a stock dividend to holders of shares of our common stock, in each case which is taxable to the U.S. holders of such shares
as described under “U.S. Holders — Taxation of Distributions” above. Such constructive distribution would be
subject to tax as described under that section in the same manner as if the U.S. holders of the warrants received a cash distribution
from us equal to the fair market value of such increased interest.
Information Reporting and Backup Withholding. In
general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds of the sale or other
disposition of our units, shares of Class A common stock and warrants, unless the U.S. holder is an exempt recipient. Backup withholding
may apply to such payments if the U.S. holder fails to provide a taxpayer identification number, a certification of exempt status
or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Any amounts withheld under the backup withholding rules will
be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information
is timely furnished to the IRS.
Non-U.S. Holders
This section applies to you if you are a “Non-U.S. holder.”
As used herein, the term “Non-U.S. holder” means a beneficial owner of our units, Class A common stock or warrants
who or that is for U.S. federal income tax purposes:
| ■ | a
non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates); |
| ■ | a
foreign corporation or |
| ■ | an
estate or trust that is not a U.S. holder; |
but generally does not include an individual who is present
in the U.S. for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax
advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
Taxation of Distributions. In general, any distributions
we make to a Non-U.S. holder of shares of our Class A common stock, to the extent paid out of our current or accumulated earnings
and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes
and, provided such dividends are not effectively connected with the Non-U.S. holder’s conduct of a trade or business within
the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S.
holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification
of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). Any distribution not constituting a dividend
will be treated first as reducing (but not below zero) the Non-U.S. holder’s adjusted tax basis in its shares of our Class
A common stock and, to the extent such distribution exceeds the Non-U.S. holder’s adjusted tax basis, as gain realized from
the sale or other disposition of the Class A common stock, which will be treated as described under “Non-U.S. Holders —
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below. In addition, if
we determine that we are likely to be classified as a “U.S. real property holding corporation” (see “Non-U.S.
Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below),
we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
The withholding tax does not apply to dividends paid to a Non-U.S.
holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. holder’s conduct
of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income
tax as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S.
corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed
at a rate of 30% (or a lower treaty rate).
Exercise of a Warrant. The U.S. federal income tax
treatment of a Non-U.S. holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. holder, generally will
correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. holder, as described under
“U.S. holders — Exercise or Lapse of a Warrant” above, although to the extent a cashless exercise results in
a taxable exchange, the consequences would be similar to those described below in “Non-U.S. Holders — Gain on Sale,
Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Gain on Sale, Taxable Exchange or Other Taxable Disposition
of Class A Common Stock and Warrants. A Non-U.S. holder generally will not be subject to U.S. federal income or withholding
tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A common stock, which would
include a dissolution and liquidation in the event we do not complete an initial business combination within 24 months from the
closing of this offering, or warrants (including an expiration or redemption of our warrants), in each case without regard to whether
those securities were held as part of a unit, unless:
| ■ | the
gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under
certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S.
holder); or |
| ■ | we
are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during
the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held our Class A
common stock, and, in the case where shares of our Class A common stock are regularly traded on an established securities market,
the Non-U.S. holder has owned, directly or constructively, more than 5% of our Class A common stock at any time within the shorter
of the five-year period preceding the disposition or such Non-U.S. holder’s holding period for the shares of our Class A
common stock. There can be no assurance that our Class A common stock will be treated as regularly traded on an established securities
market for this purpose. |
Unless an applicable treaty provides otherwise, gain described
in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S.
holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that is a foreign corporation
may also be subject to an additional “branch profits tax” at a 30% rate (or lower treaty rate).
If the second bullet point above applies to a Non-U.S. holder,
gain recognized by such holder on the sale, exchange or other disposition of our Class A common stock or warrants will be subject
to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock or warrants from
such holder may be required to withhold U.S. federal income tax at a rate of 15% of the amount realized upon such disposition.
We cannot determine whether we will be a U.S. real property holding corporation in the future until we complete an initial business
combination. We will be classified as a U.S. real property holding corporation if the fair market value of our “U.S. real
property interests” equals or exceeds 50 percent of the sum of the fair market value of our worldwide real property interests
plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes.
Redemption of Class A Common Stock. The characterization
for U.S. federal income tax purposes of the redemption of a Non-U.S. holder’s Class A common stock pursuant to the redemption
provisions described in the section of this prospectus entitled “Description of Securities — Common Stock” generally
will correspond to the U.S. federal income tax characterization of such a redemption of a U.S. holder’s Class A common stock,
as described under “U.S. Holders — Redemption of Class A Common Stock” above, and the consequences of the redemption
to the Non-U.S. holder will be as described above under “Non-U.S. holders — Taxation of Distributions” and “Non-U.S.
Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants,” as applicable.
Information Reporting and Backup Withholding. Information
returns will be filed with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of
our units, shares of Class A common stock and warrants. A Non-U.S. holder may have to comply with certification procedures to establish
that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification
procedures required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary
to avoid the backup withholding as well. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed
as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that
the required information is timely furnished to the IRS.
FATCA Withholding Taxes. Provisions commonly referred
to as “FATCA” impose withholding of 30% on payments of dividends (including constructive dividends) on our Class A
common stock or warrants, and, beginning in 2019, sales or other disposition proceeds from our units, shares of Class A common
stock and warrants to “foreign financial institutions” (which is broadly defined for this purpose and in general includes
investment vehicles) and certain other Non-U.S. entities unless various U.S. information reporting and due diligence requirements
(generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied by, or an
exemption applies to, the payee (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). Foreign
financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA
may be subject to different rules. Under certain circumstances, a Non-U.S. holder might be eligible for refunds or credits of such
withholding taxes, and a Non-U.S. holder might be required to file a U.S. federal income tax return to claim such refunds or credits.
Prospective investors should consult their tax advisers regarding the effects of FATCA on their investment in our securities.
UNDERWRITING
(CONFLICTS OF INTEReST)
B. Riley is acting as book-running manager of the offering and
as representative of the underwriters named below. Subject to the terms and conditions of the underwriting agreement dated the
date of this prospectus, the underwriters named below, through their representative B. Riley, have severally agreed to purchase
on a firm commitment basis, and we have agreed to sell to the underwriters, the following respective number of units set forth
opposite the underwriter’s name at a public offering price less the underwriting discounts and commissions set forth on the
cover page of this prospectus.
| | |
Number
of Units | |
| Underwriters | |
| | |
| B. Riley FBR, Inc. | |
| | |
| Total | |
| 12,500,000 | |
The underwriting agreement provides that the obligations of
the underwriters to purchase the units included in this offering are subject to all applicable laws and regulations and certain
conditions precedent such as the receipt by the underwriters of officers’ certificates and legal opinions and approval of
certain legal matters by their counsel. The underwriters are obligated to purchase all of the units (other than those covered by
the over-allotment option described below) if they purchase any of the units. If an underwriter defaults, the underwriting agreement
provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be
terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in
respect of those liabilities.
The underwriters have advised us that, following the pricing
of this offering, they currently intend to make a market in our units as permitted by applicable laws and regulations. However,
the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without
notice in their sole discretion. Accordingly, no assurance can be given as to the liquidity of the trading market for our units,
that you will be able to sell any of our units held by you at a particular time or that the prices that you receive when you sell
will be favorable.
Units sold by the underwriters to the public will initially
be offered at the initial public offering price set forth on the cover of this prospectus. Upon the execution of the underwriting
agreement, the underwriters will be obligated to purchase the units at the prices and upon the terms stated therein, and, as a
result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms after completion
of the initial public offering. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject
orders in whole or in part. B. Riley has advised us that the underwriters do not intend to make sales to discretionary accounts.
If the underwriters sell more units than the total number set
forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus,
to purchase up to 1,875,000 additional units at the public offering price less the underwriting discount. The underwriters may
exercise this option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent
the option is exercised, each underwriter must purchase a number of additional units approximately proportionate to that underwriters’
initial purchase commitment. Any units issued or sold under the option will be issued and sold on the same terms and conditions
as the other units that are the subject of this offering.
We, our sponsor and our officers and directors have agreed
that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of B.
Riley, offer, sell, contract to sell, grant any option to sell (including any short sale), pledge, transfer, establish an open
“put equivalent position” within the meaning of Rule 16a-l(h) under the Exchange Act, as amended, or otherwise dispose
of, directly or indirectly, any of our units, warrants, shares of common stock or any other securities convertible into, or exercisable,
or exchangeable for, shares of our common stock currently or hereafter owned either of record or beneficially, or publicly announce
an intention to do any of the foregoing. B. Riley in its sole discretion may release any of the securities subject to these lock-up
agreements at any time without notice. Our sponsor, officers and directors are also subject to separate transfer restrictions
on their founder shares and private placement units pursuant to the letter agreement as described herein.
Because our sponsor is an affiliate of B. Riley, the 425,000
private placement units (or 462,500 units if the over-allotment option is exercised in full) will be deemed to be compensation
for B. Riley under FINRA Rule 5110. Likewise, the 2,500,000 units to be acquired by an affiliate of our sponsor pursuant to a
forward purchase agreement in a private placement to close concurrently with the closing of our initial business combination and
the private units that may be issued as repayment of the $1,500,000 working capital loan by our sponsor will also be deemed to
be compensation attributable to B. Riley under FINRA Rule 5110. Each of the private placement units, the units acquired pursuant
to the forward purchase agreement and the private units that may be issued upon conversion of the loan, as well as the shares
and warrants underlying those units, may not be sold, transferred, assigned, pledged, or hypothecated, or 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 of which this prospectus
forms a part or commencement of sales of the public offering, except to any underwriter or selected dealer participating in the
offering and their bona fide officers or partners, provided that all securities so transferred remain subject to the lockup restriction
above for the remainder of the time period.
Our initial stockholders have agreed not to transfer, assign
or sell any of their founder shares until the earlier to occur of (A) one year after the completion of our initial business
combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y)
the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that
results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property
(except with respect to permitted transferees as described herein under the section of this prospectus entitled “Principal
Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”). The private placement units,
the private placement shares, and private placement warrants (including the Class A common stock issuable upon exercise of the
private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial
business combination (except with respect to permitted transferees as described herein under the section of this prospectus entitled
“Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”).
Prior to this offering, there has been no public market for
our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the
underwriters. Among the factors considered in determining the initial public offering price were the history and prospects of companies
whose principal business is the acquisition of other companies, prior offerings of those companies, our management, our capital
structure, and currently prevailing general conditions in the equity securities markets, including current market valuations of
publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the units,
Class A common stock or warrants will sell in the public market after this offering will not be lower than the initial public offering
price or that an active trading market in our units, Class A common stock or warrants will develop and continue after this offering.
We intend to apply to list our units on NYSE under the symbol
“BRPM.U.” We cannot guarantee that our securities will be approved for listing on NYSE. We expect that our units will
be listed on NYSE on or promptly after the date of this prospectus. We expect that our Class A common stock and warrants will be
listed under the symbols “BRPM” and “BRPM WS,” respectively, once the Class A common stock and warrants
begin separate trading.
The following table shows the underwriting discounts and commissions
that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and
full exercise of the underwriters’ over-allotment option.
| | |
Payable by B. Riley Principal
Merger Corp. | |
| | |
No Exercise | | |
Full Exercise | |
| Per Unit(1) | |
$ | 0.20 | | |
$ | 0.20 | |
| Total(1) | |
$ | 2,500,000 | | |
$ | 2,875,000 | |
Business Combination Marketing Agreement
We will engage B. Riley as advisors in connection with our business
combination to assist us in arranging meetings with our stockholders to discuss the potential business combination and the target
business’ attributes, introduce us to potential investors that may be are interested in purchasing our securities, assist
us in obtaining stockholder approval for the business combination and assist us with the preparation of our press releases and
public filings in connection with the business combination. We will pay B. Riley for such services upon the consummation of our
initial business combination a cash fee in an amount equal to 3.5% of the gross proceeds of this offering (exclusive of any applicable
finders’ fees which might become payable) ($4,375,000 or up to $5,031,250 if the underwriters’ over-allotment option
is exercised in full). Pursuant to the terms of the business combination marketing agreement, no fee will be due if we do not complete
an initial business combination.
In connection with the offering, the underwriters may purchase
and sell units in the open market. The underwriters have advised us that, in accordance with Regulation M under the Securities
Exchange Act of 1934, as amended, they may engage in short sale transactions, purchases to cover short positions, which may include
purchases pursuant to the over-allotment option, stabilizing transactions, syndicate covering transactions or the imposition of
penalty bids in connection with this offering. These activities may have the effect of stabilizing or maintaining the market price
of our units at a level above that which might otherwise prevail in the open market.
| ■ | Short
sales involve secondary market sales by the underwriters of a greater number of units than it is required to purchase in the offering. |
| ■ | “Covered”
short sales are sales of units in an amount up to the number of units represented by the underwriters’ over-allotment option. |
| ■ | “Naked”
short sales are sales of units in an amount in excess of the number of units represented by the underwriters’ over-allotment
option. |
| ■ | Covering
transactions involve purchases of units either pursuant to the over-allotment option or in the open market after the distribution
has been completed in order to cover short positions. |
| ■ | To
close a naked short position, the underwriters must purchase units in the open market after the distribution has been completed.
A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the
price of the units in the open market after pricing that could adversely affect investors who purchase in the offering. |
| ■ | To
close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed
or must exercise the over-allotment option. In determining the source of units to close the covered short position, the underwriters
will consider, among other things, the price of units available for purchase in the open market as compared to the price at which
they may purchase units through the over-allotment option. |
| ■ | Stabilizing
transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum. |
Purchases to cover short positions and stabilizing purchases,
as well as other purchases by the underwriters for their own account, may have the effect of preventing or retarding a decline
in the market price of the units. They may also cause the price of the units to be higher than the price that would otherwise exist
in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter
market or otherwise. Neither we, nor any of the underwriters make any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of our Class A common stock. The underwriters are not
obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.
We estimate that our portion of the total expenses of this offering
payable by us will be $750,000, excluding underwriting discounts and commissions. We have agreed to reimburse the underwriters
for all expenses and fees related to the review by FINRA, which will not exceed $75,000, and the expenses of investigations and
background checks of our principals of $25,000 in the aggregate.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make
because of any of those liabilities.
We are not under any contractual obligation to engage any of
the underwriters to provide any services for us after this offering, and have no present intent to do so. However, any of the underwriters
may introduce us to potential target businesses or assist us in raising additional capital in the future. If any of the underwriters
provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that
time in an arm’s length negotiation; provided that no agreement will be entered into with any of the underwriters and no
fees for such services will be paid to any of the underwriters prior to the date that is 90 days from the date of this prospectus,
unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with this offering
and we may pay the underwriters of this offering or any entity with which they are affiliated a finder’s fee or other compensation
for services rendered to us in connection with the completion of an initial business combination.
Electronic Distribution
A prospectus in electronic format may be made available by e-mail
or on the web sites or through online services maintained by one or more of the underwriters or their affiliates. In those cases,
prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with
us to allocate a specific number of common shares for sale to online brokerage account holders. Any such allocation for online
distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic
format, the information on the underwriters’ web sites and any information contained in any other web site maintained by
any of the underwriters is not part of this prospectus, has not been approved and/or endorsed by us or the underwriters and should
not be relied upon by investors.
Other Activities and Relationships
The underwriters and their respective affiliates are full service
financial institutions engaged in various activities, which may include securities trading, commercial and investment banking,
financial advisory, investment management, investment research, principal investment, hedging. financing and brokerage activities.
Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform,
various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.
In addition, in the ordinary course of their various business
activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt
and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account
and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such
investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and
their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect
of such securities or financial instruments and may at any time hold, or recommend to clients that they acquire, long and/or short
positions in such securities and instruments.
Selling Restrictions
Other than in the United States, no action has been taken by
us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where
action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly,
nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities
be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable
rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves
about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction
in which such an offer or a solicitation is unlawful.
Conflicts of Interest
We and our sponsor are controlled by B. Riley. As a result,
B. Riley is deemed to have a “conflict of interest” within the meaning of Rule 5121 of FINRA. Accordingly, this offering
is being made in compliance with the applicable requirements of Rule 5121. Rule 5121 requires that a “qualified independent
underwriter,” as defined in Rule 5121, participate in the preparation of the registration statement and prospectus and exercise
the usual standards of due diligence with respect thereto.
Chardan Capital Markets, LLC has agreed to act as a “qualified
independent underwriter” for this offering. Chardan Capital Markets, LLC will receive $100,000 for acting as a qualified
independent underwriter. We have agreed to indemnify Chardan Capital Markets, LLC against certain liabilities incurred in connection
with acting as a “qualified independent underwriter,” including liabilities under the Securities Act. In addition,
no underwriter with a conflict of interest will confirm sales to any account over which it exercises discretionary authority without
the specific prior written approval of the account holder.
Notice to Prospective Investors in Canada
(A) Resale Restrictions
The distribution of units in Canada is being made only in the
provinces of Ontario, Quebec, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare
and file a prospectus with the securities regulatory authorities in each province where trades of these securities are made. Any
resale of the units in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction,
and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the securities.
(B) Representations of Canadian Purchasers
By purchasing units in Canada and accepting delivery of a purchase
confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:
| ■ | the
purchaser is entitled under applicable provincial securities laws to purchase the units without the benefit of a prospectus qualified
under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106 –
Prospectus Exemptions, |
| ■ | the
purchaser is a “permitted client” as defined in National Instrument 31-103 – Registration Requirements, Exemptions
and Ongoing Registrant Obligations, |
| ■ | where
required by law, the purchaser is purchasing as principal and not as agent, and |
| ■ | the
purchaser has reviewed the text above under Resale Restrictions. |
(C) Conflicts of Interest
Canadian purchasers are hereby notified that the underwriters
are relying on the exemption set out in section 3A.3 or 3A.4, if applicable, of National Instrument 33-105 — Underwriting
Conflicts from having to provide certain conflict of interest disclosure in this document.
(D) Statutory Rights of Action
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or damages if the offering memorandum (including any amendment thereto)
such as this document contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser
within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser of
these securities in Canada should refer to any applicable provisions of the securities legislation of the purchaser’s province
or territory for particulars of these rights or consult with a legal advisor.
(E) Enforcement of Legal Rights
All of our directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process
within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located
outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce
a judgment obtained in Canadian courts against us or those persons outside of Canada.
(F) Taxation and Eligibility for Investment
Canadian purchasers of units should consult their own legal
and tax advisors with respect to the tax consequences of an investment in the units in their particular circumstances and about
the eligibility of the units for investment by the purchaser under relevant Canadian legislation.
Notice to Prospective Investors in Australia
This prospectus is not a disclosure document for the purposes
of Australia’s Corporations Act 2001 (Cth) of Australia, or Corporations Act, has not been lodged with the Australian
Securities & Investments Commission and is only directed to the categories of exempt persons set out below. Accordingly, if
you receive this prospectus in Australia:
A. You confirm and warrant that you are either:
| ■ | a
“sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act; |
| ■ | a
“sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s
certificate to the Company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related
regulations before the offer has been made; |
| ■ | a
person associated with the Company under Section 708(12) of the Corporations Act; or |
| ■ | a
“professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act. |
To the extent that you are unable to confirm or warrant that
you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made
to you under this prospectus is void and incapable of acceptance.
B. You warrant
and agree that you will not offer any of the securities issued to you pursuant to this prospectus for resale in Australia within
12 months of those securities being issued unless any such resale offer is exempt from the requirement to issue a disclosure document
under section 708 of the Corporations Act.
Notice to Prospective Investors in the European Economic
Area
In relation to each member state of the European Economic Area
which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer to the public of any units
which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that
an offer to the public in that Relevant Member State of any units may be made at any time under the following exemptions under
the Prospectus Directive, if they have been implemented in that Relevant Member State:
| (a) | to any legal entity which is a “qualified investor”
as defined in the Prospectus Directive; |
| (b) | to fewer than 100 or, if the Relevant Member State has
implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors
as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of
the underwriters or the underwriters nominated by us for any such offer; or |
| (c) | in any other circumstances falling within Article 3(2)
of the Prospectus Directive, provided that no such offer of units shall require us or any of the underwriters to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer
units to the public” in relation to the units in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the units to be offered so as to enable an investor to decide to
purchase or subscribe to the units, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments
thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant
implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Notice to Prospective Investors in Hong Kong
No securities have been offered or sold, and no securities may
be offered or sold, in Hong Kong, by means of any document, other than to persons whose ordinary business is to buy or sell shares
or debentures, whether as principal or agent; or to “professional investors” as defined in the Securities and Futures
Ordinance (Cap. 571) of Hong Kong (“SFO”) and any rules made under that Ordinance; or in other circumstances which
do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong (“CO”)
or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO. No document, invitation or
advertisement relating to the securities has been issued or may be issued or may be in the possession of any person for the purpose
of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed
or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to securities
which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as
defined in the SFO and any rules made under that Ordinance.
This prospectus has not been registered with the Registrar of
Companies in Hong Kong. Accordingly, this prospectus may not be issued, circulated or distributed in Hong Kong, and the securities
may not be offered for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required,
and is deemed by the acquisition of the securities, to confirm that he is aware of the restriction on offers of the securities
described in this prospectus and the relevant offering documents and that he is not acquiring, and has not been offered any securities
in circumstances that contravene any such restrictions.
Notice to Prospective Investors in Israel
This document does not constitute a prospectus under the Israeli
Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved by the Israel Securities Authority. In
Israel, this prospectus is being distributed only to, and is directed only at, and any offer of the units is directed only at,
(i) a limited number of persons in accordance with the Israeli Securities Law and (ii) investors listed in the first addendum,
or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance
companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital
funds, entities with equity in excess of NIS 50 million and “qualified individuals,” each as defined in the Addendum
(as it may be amended from time to time), collectively referred to as qualified investors (in each case, purchasing for their own
account or, where permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified
investors are required to submit written confirmation that they fall within the scope of the Addendum, are aware of the meaning
of same and agree to it.
Notice to Prospective Investors in Japan
The offering has not been and will not be registered under the
Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948 of Japan, as amended), or FIEL, and the Initial Purchaser will
not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term
as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan),
or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except
pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable
laws, regulations and ministerial guidelines of Japan.
Notice to Prospective Investors in Singapore
This prospectus has not been and will not be lodged or registered
as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may
the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly,
to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter
289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section
275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance
with the conditions of, any other applicable provision of the SFA.
Where the units are subscribed or purchased under Section 275
of the SFA by a relevant person which is:
| (a) | a corporation (which is not an accredited investor (as
defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is
owned by one or more individuals, each of whom is an accredited investor; or |
| (b) | a trust (where the trustee is not an accredited investor)
whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities
(as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described)
in that trust shall not be transferred within six months after that corporation or that trust has acquired the notes pursuant
to an offer made under Section 275 of the SFA except: |
| (i) | to an institutional investor or to a relevant person
defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B)
of the SFA; |
| (ii) | where no consideration is or will be given for the transfer; |
| (iii) | where the transfer is by operation of law; |
| (iv) | as specified in Section 276(7) of the SFA; or |
| (v) | as specified in Regulation 32 of the Securities and Futures
(Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. |
Notice to Prospective Investors in Switzerland
The units may not be publicly offered in Switzerland and will
not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland.
This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art.
1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing
Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor
any other offering or marketing material relating to the units or the offering may be publicly distributed or otherwise made publicly
available in Switzerland.
Neither this prospectus nor any other offering or marketing
material relating to the offering, the Company or the units have been or will be filed with or approved by any Swiss regulatory
authority. In particular, this prospectus will not be filed with, and the offer of securities will not be supervised by, the Swiss
Financial Market Supervisory Authority FINMA, and the offer of securities has not been and will not be authorized under the Swiss
Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in
collective investment schemes under the CISA does not extend to acquirers of units.
Notice to Prospective Investors in the United Kingdom
This prospectus is only being distributed to, and is only directed
at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive
that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the “Order”) and/or (ii) high net worth entities falling within Article 49(2)(a)
to (d) of the Order and other persons to whom it may lawfully be communicated (each such person being referred to as a “relevant
person”).
This prospectus and its contents are confidential and should
not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.
LEGAL
MATTERS
Winston & Strawn LLP, New York, New York, is acting as counsel
in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the
securities offered in this prospectus. Ellenoff Grossman & Schole LLP, New York, New York, advised the underwriters in connection
with the offering of the securities.
EXPERTS
The financial statements of B. Riley Principal Merger Corp.
for the fiscal years ending December 31, 2018 and 2017 included in this Prospectus have been audited by Marcum LLP, independent
registered public accounting firm, as set forth in their report, thereon (which contains an explanatory paragraph relating to
substantial doubt about the ability of B. Riley Principal Merger Corp. to continue as a going concern as described in Note 1 to
the financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given upon such
firm as experts in auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form
S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain
all of the information included in the registration statement. For further information about us and our securities, you should
refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference
in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include
a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached to
the registration statement for copies of the actual contract, agreement or other document.
Upon completion of this offering, we will be subject to the
information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other
information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s
website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at
100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of the documents at prescribed rates
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INDEX
TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholder and Board of Directors
of
B. Riley Principal Merger Corp.
Opinion on the Financial Statements
We have audited the
accompanying balance sheets of B. Riley Principal Merger Corp. (the “Company”) as of December 31, 2018 and 2017,
and the related statements of operations, changes in stockholder’s deficit and cash flows for each of the two years in the
period ended December 31, 2018 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, 2018 and 2017, and the results of its operations and cash flows for each of the two years in the period ended
December 31, 2018, in conformity with accounting principles generally accepted in the United States
of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements,
its business plan is dependent on the completion of a financing and the Company’s cash and working capital as of December
31, 2018 are not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date the financial statements are issued. Management’s
plans in regard to these matters are also described in Note 1 and 3. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
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 audits.
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 audits in accordance with
the standards of the PCAOB. Those
standards require that we plan and perform the audits 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 audits 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 audits 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 audits 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 audits provide a
reasonable basis for our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2018.
New York, NY
March 1, 2019
B.
RILEY PRINCIPAL MERGER CORP.
BALANCE SHEETS
| | |
December 31, | | |
December 31, | |
| | |
2018 | | |
2017 | |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 49,658 | | |
$ | — | |
| Total current assets | |
| | | |
| | |
| Deferred offering costs | |
| 162,500 | | |
| — | |
| Total assets | |
$ | 212,158 | | |
$ | — | |
| Liabilities and Stockholder’s Deficit | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 162,500 | | |
$ | — | |
| Payable to related parties | |
| 8,279 | | |
| 7,479 | |
| Note payable - related party | |
| 50,000 | | |
| — | |
| Total liabilities | |
| 220,779 | | |
| 7,479 | |
| | |
| | | |
| | |
| Stockholder’s deficit: | |
| | | |
| | |
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued
and outstanding | |
| — | | |
| — | |
| Class A Common stock, $0.0001 par value; 100,000,000 shares authorized;
none issued and outstanding | |
| — | | |
| — | |
| Class B Common stock, $0.0001 par value; 25,000,000 shares authorized;
3,593,750(1) issued and outstanding | |
| 359 | | |
| 359 | |
| Additional paid-in capital | |
| — | | |
| — | |
| Accumulated deficit | |
| (8,980 | ) | |
| (7,838 | ) |
| Total stockholder’s deficit | |
| (8,621 | ) | |
| (7,479 | ) |
| Total liabilities and stockholder’s deficit | |
$ | 212,158 | | |
$ | — | |
(1) Includes an aggregate
of 468,750 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in
full (Note 3).
The accompanying notes are an integral part of these
financial statements.
B.
RILEY PRINCIPAL MERGER CORP.
STATEMENTS OF OPERATIONS
| | |
Year Ended
December 31, | |
| | |
| | |
| |
| | |
2018 | | |
2017 | |
| | |
| | | |
| | |
| Selling, general and administrative expenses | |
$ | 342 | | |
$ | — | |
| Loss before income taxes | |
| (342 | ) | |
| — | |
| Provision for income taxes | |
| 800 | | |
| (800 | ) |
| Net loss | |
$ | (1,142 | ) | |
$ | (800 | ) |
| | |
| | | |
| | |
| Basic and diluted income per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| | |
| | | |
| | |
| Weighted average basic and diluted shares outstanding(1) | |
| 3,125,000 | | |
| 3,125,000 | |
(1) Excludes an aggregate of 468,750 shares that are subject
to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (Note 3).
The accompanying
notes are an integral part of these financial statements.
B.
RILEY PRINCIPAL MERGER CORP.
STATEMENT OF
CHANGES IN STOCKHOLDER’S DEFICIT
| | |
| | |
| | |
Additional | | |
| | |
Total | |
| | |
Class B Common Stock | | |
Paid-in | | |
Accumulated | | |
Stockholder’s | |
| | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
| Balance, January 1, 2017(1) | |
| 3,593,750 | | |
$ | 359 | | |
$ | — | | |
$ | (7,038 | ) | |
$ | (6,679 | ) |
| Net loss for the year ended
December 31, 2017 | |
| — | | |
| — | | |
| — | | |
| (800 | ) | |
| (800 | ) |
| Balance, December 31, 2017 | |
| 3,593,750 | | |
$ | 359 | | |
$ | — | | |
$ | (7,838 | ) | |
$ | (7,479 | ) |
| Net loss for the year ended
December 31, 2018 | |
| — | | |
| — | | |
| — | | |
| (1,142 | ) | |
| (1,142 | ) |
| Balance, December 31, 2018 | |
| 3,593,750 | | |
$ | 359 | | |
$ | — | | |
$ | (8,980 | ) | |
$ | (8,621 | ) |
(1) Includes an aggregate of 468,750 shares that are subject
to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (Note 3).
The accompanying notes are an integral part
of these financial statements.
B.
RILEY PRINCIPAL MERGER CORP.
STATEMENTS OF CASH FLOWS
| | |
Year Ended | |
| | |
December 31, | |
| | |
2018 | | |
2017 | |
| Cash flows from operating activities: | |
| | | |
| | |
| Net loss | |
$ | (1,142 | ) | |
$ | (800 | ) |
| Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
| Increase in Payable to Related Party | |
| 800 | | |
| 800 | |
| Net cash used in operating activities | |
| (342 | ) | |
| — | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from note payable - related party | |
| 50,000 | | |
| — | |
| Net cash provided by financing activities | |
| 50,000 | | |
| — | |
| Increase in cash | |
| 49,658 | | |
| — | |
| Cash, beginning of year | |
| — | | |
| — | |
| Cash, end of period | |
$ | 49,658 | | |
$ | — | |
| | |
| | | |
| | |
| Supplemental disclosures: | |
| | | |
| | |
| Interest paid | |
$ | — | | |
$ | — | |
| Taxes paid | |
| 800 | | |
$ | 800 | |
| | |
| | | |
| | |
| Non-cash investing and financing Activities: | |
| | | |
| | |
| Deferred offering costs included in accounts payable | |
| 162,500 | | |
$ | — | |
The accompanying
notes are an integral part of these financial statements.
B. RILEY PRINCIPAL MERGER CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF
ORGANIZATION AND BUSINESS OPERATIONS
Organization and General
B.
Riley Principal Merger Corp. (the “Company”), a blank check corporation, was incorporated as a Delaware
corporation on October 30, 2018. The Company is an emerging growth company, as defined in Section 2(a) of the Securities
Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). On November 14, 2018, GA International Services Corp. (“GA International”), a
California corporation, owned by Great American Group, LLC (“Great American”), a wholly owned subsidiary of B.
Riley Financial, Inc. (“B. Riley Financial”), merged into the Company. GA International operated as GA
International Services, LLC, a former California limited liability company, from the date of its incorporation on October 9,
2012 through November 5, 2018, the date it was converted from a limited liability company to a California corporation. All of the membership interests in GA International Services, LLC were issued to Great American in 2012. 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 (a “Initial
Business Combination”).
At
December 31, 2018, the Company had not commenced any operations. All activity of the Company includes the activity of GA International
as if GA International, which was owned by the Company from inception and activity related to the proposed initial public offering
(the “Proposed Offering”) described below. The Company will not generate any operating revenues until after completion
of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income
on cash and cash equivalents from the proceeds derived from the Proposed Offering described below. The Company has selected December 31st as
its fiscal year end.
Sponsor and Proposed Financing
B. Riley Principal
Sponsor Co, LLC (the “Sponsor”), a Delaware limited liability company, was incorporated October 11, 2018 as a wholly
owned indirect subsidiary of B. Riley Financial. On November 16, 2018, the Sponsor has agreed to loan the Company up to $300,000
(see note 4) to support the Company’s initial formation and operations.
The
Company’s ability to commence meaningful operations and finance its Initial Business Combination is contingent
upon obtaining adequate financial resources through the proposed $125,000,000 ($143,750,000 if the
underwriters’ over-allotment is exercised in full) initial public offering of Units (as defined below) (Note 3).
Upon the closing of the Proposed Offering and the Private Placement, $125,000,000 (or $143,750,000 if the underwriters’
over-allotment option is exercised in full — Note 3) will be held in a trust account (the “Trust
Account”) (discussed below).
The Trust Account
The
proceeds to be held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of 180 days
or less or in money market funds registered under the Investment Company Act and compliant with Rule 2a-7 thereof that
maintain a stable net asset value of $1.00. Unless and until the Company completes the Initial Business Combination, it may
pay its expenses only from the net proceeds of the Proposed Offering held outside the Trust Account, which will be
approximately $1,000,000 in working capital after the payment of approximately $750,000 in expenses relating to the proposed
Offering, and any loans or additional investments from the Sponsor, members of the Company’s management team or any of
their respective affiliates or other third parties.
Except
with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its
taxes, the proceeds from the Proposed Offering may not be released from the Trust Account until the earliest of:
(i) the completion of the Initial Business Combination; (ii) the redemption of any public shares properly tendered
in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to
modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if it does not complete
the Initial Business Combination within 24 months from the closing of the Proposed Offering; or (iii) the redemption of
all of the Company’s public shares if the Company is unable to complete the Initial Business Combination within 24
months from the closing of the Proposed Offering (at which such time up to $100,000 of interest shall be available to the Company to pay dissolution expenses), subject to applicable law. The proceeds deposited in the Trust Account
could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the
Company’s public stockholders.
Initial Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Offering,
although substantially all of the net proceeds of the Proposed Offering and the Private Placement are intended to be generally
applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more businesses
or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any
deferred underwriting discount). There is no assurance that the Company will be able to successfully effect an Initial Business
Combination.
The
Company, after signing a definitive agreement for an Initial Business Combination, will provide its public stockholders’
with the opportunity to redeem all or a portion of their shares upon the completion of the Initial Business Combination, either
(i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender
offer. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets, after
payment of deferred underwriting commissions, to be less than $5,000,001. In such case, the Company would not proceed with the
redemption of its public shares and the related Initial Business Combination, and instead may search for an alternate Initial Business
Combination.
If
the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination,
a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination,
including interest but less taxes payable. As a result, such shares of Class A common stock will be recorded at redemption
amount and classified as temporary equity upon the completion of the Proposed Offering, in accordance with the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities
from Equity.”
Pursuant
to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business
Combination within 24 months from the closing of the Proposed Offering, the Company will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but no 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 but less taxes payable (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 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.
The
Sponsor and the Company’s officers and directors will enter into a letter agreement with the Company, pursuant to which
they will agree to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and
Private Placement Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within
24 months of the closing of the Proposed Offering. However, if the Sponsor or any of the Company’s directors or officers
acquires shares of Class A common stock in or after the Proposed Offering, they will be entitled to liquidating distributions
from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the
prescribed time period.
In
the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the
Company’s remaining stockholders are entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the
common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund
provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to
redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust
Account, under the circumstances, and, subject to the limitations, described herein.
Going Concern Considerations
At
December 31, 2018, the Company had cash and cash equivalents of $49,658 and a note payable to the Sponsor in the amount of $50,000.
Further, the Company expects to continue to incur significant costs in pursuit of its financing and acquisition plans. This condition
raises substantial doubt about the Company’s ability to continue as a going concern. Management plans to address this uncertainty
through the Proposed Offering as discussed in Note 3. There is no assurance that the Company’s plans to raise capital or
to consummate an Initial Business Combination will be successful or successful within the required time period. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The
financial statements of the Company are presented in conformity with accounting principles generally accepted in
the United States of America (“GAAP”).
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. 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 statement 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.
Net Loss Per Common Share
The
Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss
per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period,
excluding shares of common stock subject to forfeiture. Net loss per common share is computed by dividing net gain/(loss)
applicable to common stockholders by the weighted average number of common shares outstanding during the period, plus, to the
extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock
method. At December 31, 2018 and 2017, the Company did not have any dilutive securities and other contracts that could,
potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury
stock method. As a result, diluted loss per common share is the same as basic loss per common share for the periods. In
connection with the Company’s merger with GA International on November 14, 2018, the Company completed a stock split 1
to 3,593,750 shares of Class B common stock on November 19, 2018. The financial statements have been retroactively adjusted to
reflect the stock split for all periods presented.
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 Depository Insurance 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.
Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to
their short term nature.
Use of Estimates
The
preparation of 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. Actual results could differ
from those estimates.
Deferred Offering Costs
The
Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses
of Offering.” Deferred offering costs of $162,500 as of December 31, 2018 consist principally of costs incurred in connection
with preparation for the Proposed Offering. These costs, together with the underwriter discount, will be charged to capital upon
completion of the Proposed Offering or charged to operations if the Proposed Offering is not completed.
Income Taxes
The
Company is included in the consolidated tax return of B. Riley Financial the parent (the “Parent”). The Company
calculates the provision for income taxes by using a “separate return” method. Under this method the Company is
assumed to file a separate return with the tax authority, thereby reporting its taxable income or loss and paying the applicable
tax to, or receiving the appropriate refund from, the Parent. The Company’s current provision is the amount of tax payable
or refundable on the basis of a hypothetical, current year, separate return.
Any
difference between the tax provision (or benefit) allocated to the Company under the separate return method and payments to be
made to (or received from) the Parent for tax expense are treated as either dividends or capital contribution. Accordingly,
the amount by which the Company’s tax liability under the separate return method exceeds the amount of tax liability ultimately
settled as a result of using incremental expenses of the Parent is periodically settled as a capital contribution from the Parent
to the Company.
The Company complies with
the accounting and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts,
based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement 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. As of December 31, 2018 and 2017,
there were no unrecognized tax benefits and no amounts accrued for interest and penalties. 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 may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These
potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions
and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of
unrecognized tax benefits will materially change over the next twelve months.
On December 22, 2017, the Tax Cut and Jobs Act (the “Tax Act”) was enacted into law resulting in a reduction in
the federal corporate income tax rate from 35% to 21% for years beginning in 2018. The enactment of the Tax Act also requires
companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive
effects of changes in tax laws in the period in which the new legislation is enacted. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company was at the time of the law
change organized as a limited liability company (“LLC”) that had elected to be treated as a single member LLC
under the Internal Revenue Code. As such, income, losses, and other tax attributes were primarily passed through to the sole
owner. The Company upon conversation to a C-Corporation became subject to the new rates and requirements for corporations
under the Tax Act.
The
provision for income taxes was deemed to be immaterial.
Unrecognized
Tax Benefits
The
Company recognizes tax positions in the financial statements only when it is more likely than not that the position will be sustained
on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this
standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability
is established for differences between positions taken in a tax return and amounts recognized in the financial statements. There
were no unrecognized tax benefits as of December 31, 2018 and 2017. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. No amounts were accrued for interest expense and penalties related
to income tax matters as of December 31, 2018 and 2017. The Company is subject to income tax examinations by major taxing
authorities since inception.
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 3 — PUBLIC
OFFERING
Pursuant
to the Proposed Offering, the Company intends to offer for sale 12,500,000 Units at an offering price of $10.00 per Unit.
The Sponsor will subscribe to purchase an aggregate of 425,000 Units (or 462,500 Units if the underwriters’
over-allotment option is exercised in full — see below) at a price of $10.00 per Private Placement Unit in a private
placement that will close simultaneously with the Proposed Offering.
Each
Unit consists of one share of the Company’s Class A common stock, $0.0001 par value, and one-half of one redeemable
warrant, with each whole warrant exercisable for one share of Class A common stock (each, a “Warrant” and, collectively,
the “Warrants”). One Warrant entitles the holder thereof to purchase one whole share of Class A 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 Initial
Business Combination and 12 months from the closing of the Proposed Offering and will expire at 5:00 p.m., New York City time,
five years after the completion of the Initial Business Combination or earlier upon redemption or liquidation. Once the Warrants
become exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01 per Warrant upon
a minimum of 30 days’ prior written notice of redemption, if and only if the last reported sale price of the Company’s
Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the
third trading day prior to the date on which the Company sent the notice of redemption to the Warrant holders.
The
Company has also granted the underwriters a 45-day option to purchase on a pro rata basis up to 1,875,000 additional Units
at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to
cover any over-allotments of Units.
The
Company expects to pay underwriting commissions equal to 2.0% of the gross proceeds of the Proposed Offering at the time of the
Proposed Offering.
Business Combination Marketing Agreement
The Company will engage B. Riley FBR, Inc. as advisors in connection
with its Initial Business Combination to assist it in arranging meetings with its stockholders to discuss a potential business
combination and the target business’ attributes, introduce it to potential investors that may be interested in purchasing
its securities, assist it in obtaining stockholder approval for its Initial Business Combination and assist it with the preparation
of press releases and public filings in connection with the Initial Business Combination. The Company will pay B. Riley FBR, Inc.
for such services upon the consummation of the Initial Business Combination a cash fee in an amount equal to 3.5% of the gross
proceeds of the Proposed Offering (exclusive of any applicable finders’ fees which might become payable) ($4,375,000 or up
to $5,031,250 if the underwriters’ over-allotment option is exercised in full). Pursuant to the terms of the business combination
marketing agreement, no fee will be due if the Company does not complete an Initial Business Combination.
NOTE 4 — RELATED PARTY
TRANSACTIONS
Founder
Shares
In
November 2018, upon the completion of the merger of GA International Services Corp. and the Company, 3,593,750 shares of Class B
common stock (the “Founder Shares”) were issued to Great American in exchange for all of the common stock of GA International
Services Corp. The financial statements reflect the issuance of these shares retroactively for all periods presented. As used
herein, unless the context otherwise requires, Founder Shares shall be deemed to include the shares of Class A common stock
issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units being
sold in the Proposed Offering, the Founder Shares automatically convert into shares of Class A common stock at the time of
the Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below, and the
holders of the Founder Shares, as described in more detail below, have agreed to certain restrictions and will have certain registration
rights with respect thereto. Up to 468,750 Founder Shares are subject to forfeiture depending on the extent to which the underwriters’
over-allotment option is exercised. The number of Founder Shares issued was determined based on the expectation that the Founder
Shares would represent 20% of the outstanding shares of common stock upon completion of the Proposed Offering. If the Company
increases or decreases the size of the Proposed Offering, the Company will effect a stock dividend or share contribution back
to capital, as applicable, with respect to its Class B Common Stock immediately prior to the consummation of the Proposed Offering
in such amount as to maintain the Founder Share ownership of the Company’s stockholders prior to the Proposed Offering at
20.0% of the Company’s issued and outstanding common stock upon the consummation of the Proposed Offering.
The Company’s initial stockholders,
officers and directors have agreed, not to transfer, assign or sell any Founder Shares held by them until the earlier to occur
of: (i) one year after the completion of the Initial Business Combination, (ii) the last sale price of Class A common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and
the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business
Combination, or (iii) the date following the completion of the Initial Business Combination on which the Company completes
a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the public stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Administrative
Fees
Commencing on the date of the prospectus, the Company will agree to pay an affiliate of our sponsor a total of $10,000 a month
for office space, utilities and secretarial and administrative support. Upon completion of our Initial Business Combination or
our liquidation, we will cease paying these monthly fees.
Registration
Rights
The
holders of Founder Shares, Private Placement Units, Private Placement Shares, Private Placement Warrants and units that may be
issued upon conversion of working capital loans, if any, will have registration rights to require the Company to register the
resale of any of its securities held by them (in the case of the Founder Shares, only after conversion of such shares to shares
of Class A common stock) pursuant to a registration rights agreement to be signed on or before the effective date of the
Proposed Offering. These holders will also be entitled to certain piggyback registration rights. However, the registration rights
agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred
in connection with the filing of any such registration statements. The holder of Forward Purchase Units has substantially similar
registration rights.
Note Payable — Related Party
The
Company has a note payable to Sponsor which allows the Company to borrow up to $300,000 without interest to be used for a portion
of the expenses of this offering. The notes payable is payable on the earlier of: (i) December 31, 2019 or (ii) the date on which
the Company consummates an initial public offering of its securities. As of December 31, 2018, the note payable due to related
party was $50,000.
Payable to Related Party
The
Company also had amounts payable to Great American of $8,279 and $7,479 at December 31, 2018, and 2017, respectively. These
amounts primarily reflect expenses relating to income taxes and formation expenses that were paid on behalf of the Company by
Great American.
Forward Purchase Agreement
The Company will agree to enter into a Forward Purchase Agreement with an affiliate of the Sponsor, pursuant to which the affiliate
of the Sponsor will agree to purchase, or have its designees purchase, an agreggate of 2,500,000 units, at a price of $10.00 per unit, or $25,000,000 in the aggregate, in a private
placement to close concurrently with the initial business combination. The obligations under the Forward Purchase Agreement do
not depend on whether any public stockholders redeem their Class A common stock and provide the Company with a minimum funding
level for the Initial Business Combination. The Forward Purchase Agreement includes registration rights with respect to the Forward
Purchase Units.
NOTE 5 —
STOCKHOLDER’S EQUITY
Common
Stock
The
authorized common stock of the Company includes up to 100,000,000 shares of Class A common stock and 25,000,000 shares
of Class B common stock. If the Company enters into an Initial Business Combination, it may (depending on the terms of
such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the
Company is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combination
to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holders of the
Company’s common stock are entitled to one vote for each share of common stock. In connection with the Company’s
merger with GA International on November 14, 2018, the Company completed a stock split 1 to 3,593,750 shares of Class B
common stock on November 19, 2018. The financial statements have been retroactively adjusted to reflect the stock split for all periods
presented. At December 31, 2018 and 2017, there were 3,593,750 shares of Class B common stock issued and outstanding (up
to 468,750 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment
option is exercised) and no shares of Class A common stock issued and outstanding.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock 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, 2018 and 2017, there were no
shares of preferred stock issued or outstanding.
12,500,000
Units
B. Riley
Principal Merger Corp.
PRELIMINARY
PROSPECTUS
,
2019
B. Riley
FBR, Inc.
Until ,
2019 (25 days after the date of this prospectus), all dealers that buy, sell or trade our Class A common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to
deliver a prospectus when acting as underwriters and with respect to its unsold allotments or subscriptions.
You should rely only on the information contained in this
prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making
an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information
contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
No dealer, salesperson or any other person is authorized
to give any information or make any representations in connection with this offering other than those contained in this prospectus
and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this
prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the
offer or solicitation is not authorized or is unlawful.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the
offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
| SEC expenses | |
$ | 17,422.50 | |
| FINRA expenses | |
| 22,062.50 | |
| Accounting fees and expenses | |
| 50,000 | |
| Printing and engraving expenses | |
| 45,000 | |
| Travel and road show expenses | |
| 25,000 | |
| Directors & officers liability insurance premiums(1) | |
| 100,000 | |
| Legal fees and expenses | |
| 250,000 | |
| NYSE listing and filing fees | |
| 85,000 | |
| Miscellaneous | |
| 155,515 | |
| Total | |
$ | 750,000 | |
| (1) | This amount represents the approximate amount of annual
director and officer liability insurance premiums the registrant anticipates paying following the completion of its initial public
offering and until it completes an initial business combination. |
Item 14. Indemnification of Directors and officers.
Our amended and restated certificate of incorporation will provide
that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted
by Section 145 of the Delaware General Corporation Law (“DGCL”). Section 145 of the Delaware General Corporation Law
concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees
and agents; insurance.
| (a) | A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the person’s conduct was unlawful. |
| (b) | A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’
fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper. |
| (c) | To the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses
(including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. |
| (d) | Any indemnification under subsections (a) and (b) of
this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination
that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the
person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall
be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors,
or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. |
| (e) | Expenses (including attorneys’ fees) incurred by
an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled
to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by
former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation
deems appropriate. |
| (f) | The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while
holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of
incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act
or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification
or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes
such elimination or impairment after such action or omission has occurred. |
| (g) | A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity,
or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person
against such liability under this section. |
| (h) | For purposes of this section, references to “the
corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued. |
| (i) | For purposes of this section, references to “other
enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed
on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation”
shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of
the corporation” as referred to in this section. |
| (j) | The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. |
| (k) | The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under
any by law, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine
a corporation’s obligation to advance expenses (including attorneys’ fees). |
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise,
we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
In accordance with Section 102(b)(7) of the DGCL, our amended
and restated certificate of incorporation, will provide that no director shall be personally liable to us or any of our stockholders
for monetary damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption
from liability is not permitted under the DGCL. The effect of this provision of our amended and restated certificate of incorporation
is to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to recover
monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from negligent
or grossly negligent behavior, except, as restricted by Section 102(b)(7) of the DGCL. However, this provision does not limit or
eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the
event of a breach of a director’s duty of care.
If the DGCL is amended to authorize corporate action further
eliminating or limiting the liability of directors, then, in accordance with our amended and restated certificate of incorporation,
the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the
DGCL, as so amended. Any repeal or amendment of provisions of our amended and restated certificate of incorporation limiting or
eliminating the liability of directors, whether by our stockholders or by changes in law, or the adoption of any other provisions
inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change
in law permits us to further limit or eliminate the liability of directors on a retroactive basis.
Our amended and restated certificate of incorporation will also
provide that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers
and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors,
officers, employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit
plan, in connection with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative,
against all expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes
and penalties and amounts paid in settlement) reasonably incurred or suffered by any such person in connection with any such proceeding.
Notwithstanding the foregoing, a person eligible for indemnification
pursuant to our amended and restated certificate of incorporation will be indemnified by us in connection with a proceeding initiated
by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to indemnification.
The right to indemnification which will be conferred by our
amended and restated certificate of incorporation is a contract right that includes the right to be paid by us the expenses incurred
in defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however,
that if the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer
or director of our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director,
to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses
under our amended and restated certificate of incorporation or otherwise.
The rights to indemnification and advancement of expenses will
not be deemed exclusive of any other rights which any person covered by our amended and restated certificate of incorporation may
have or hereafter acquire under law, our amended and restated certificate of incorporation, our bylaws, an agreement, vote of stockholders
or disinterested directors, or otherwise.
Any repeal or amendment of provisions of our amended and restated
certificate of incorporation affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption
of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent
such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any
way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent
provision with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
Our amended and restated certificate of incorporation will also permit us, to the extent and in the manner authorized or permitted
by law, to indemnify and to advance expenses to persons other that those specifically covered by our amended and restated certificate
of incorporation.
Our bylaws, which we intend to adopt immediately prior to the
closing of this offering, include the provisions relating to advancement of expenses and indemnification rights consistent with
those which will be set forth in our amended and restated certificate of incorporation. In addition, our bylaws provide for a right
of indemnity to bring a suit in the event a claim for indemnification or advancement of expenses is not paid in full by us within
a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense, to protect us and/or
any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against any expense, liability
or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Any repeal or amendment of provisions of our bylaws affecting
indemnification rights, whether by our board of directors, stockholders or by changes in applicable law, or the adoption of any
other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such
amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way
diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior to
such repeal or amendment or adoption of such inconsistent provision.
We will enter into indemnification agreements with each of our
officers and directors a form of which is to be filed as an exhibit to this Registration Statement. These agreements will require
us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason
of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Pursuant to the Underwriting Agreement to be filed as Exhibit
1.1 to this Registration Statement, we have agreed to indemnify the underwriters and the underwriters have agreed to indemnify
us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under
the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
In connection with our initial formation in 2012, a wholly-owned
subsidiary of B. Riley Financial which is the parent of our sponsor was issued all of our outstanding equity. On November 19,
2018, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning
3,593,750 founder shares. We expect that all of our equity will be contributed to our sponsor subsequent to the closing of this
offering. The number of founder shares outstanding was determined based on the expectation that the founder shares would represent
20% of the outstanding shares of common stock upon completion of this offering (not including the shares of Class A common stock
underlying the private placement units). On March 12, 2019, 20,000 founder shares were transferred to each of Patrick J. Bartels,
Jr., James L. Kempner, Timothy M. Presutti and Robert Suss, our independent director nominees, at their par value.
In addition, our sponsor has agreed to purchase an aggregate
of 425,000 private placement units (or 462,500 private placement units if the over-allotment option is exercised in full) at a
price of $10.00 per unit, for an aggregate purchase price of $4,250,000, or $4,625,000 if the over-allotment option is exercised
in full). This purchase will take place on a private placement basis simultaneously with the completion of our initial public
offering. This issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities
Act.
Prior to this offering, an affiliate of our sponsor entered into a forward purchase agreement with us
which provides for the purchase by it (or its designees) of an aggregate of 2,500,000 units for an aggregate purchase price of
$25,000,000 in a private placement to close concurrently with the closing of our initial business combination. The obligations
under the forward purchase agreement do not depend on whether any Class A common stock is redeemed by our public stockholders.
No underwriting discounts or commissions were paid with respect
to such sales.
Item 16. Exhibits and Financial Statement Schedules.
Item 17. Undertakings.
| (a) | The undersigned registrant hereby undertakes to provide
to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each purchaser. |
| (b) | Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such
issue. |
| (c) | The undersigned registrant hereby undertakes that: |
| (1) | For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
| (2) | For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. |
| (3) | For the purpose of determining liability under the Securities
Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use. |
| (4) | For the purpose of determining liability of a registrant
under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes
that in a primary offering of securities of an undersigned registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating
to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 14th day of March, 2019.
| |
B. RILEY PRINCIPAL MERGER CORP. |
| |
|
|
| |
By: |
/s/ Kenneth Young |
| |
|
Kenneth Young |
| |
|
Chief Executive Officer and Director |
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Kenneth Young and Daniel Shribman his true and lawful attorney-in-fact, with full
power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all
amendments including post-effective amendments to this registration statement and any and all registration statements filed pursuant
to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the SEC, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each
acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
| Name |
|
Position |
|
Date |
| |
|
|
|
|
| /s/ Kenneth Young |
|
Chief Executive Officer and Director |
|
March 14, 2019 |
| Kenneth Young |
|
(principal executive officer) |
|
|
| |
|
|
|
|
| /s/ Daniel
Shribman |
|
Chief Financial Officer and Director |
|
March 14, 2019 |
| Daniel Shribman |
|
(principal financial and accounting officer)
|
|
|
