Cycurion, Inc. 10-K

ITEM 1. BUSINESS Introduction Western Acquisition Ventures Corp. (the “Company,” “WAV,” “us,” “we,” or “our”) is a Delaware corporation that incorporated on April 28, 2021 as a blank check company for the purpose of effecting our initial business combination. We seek to leverage our expertise, investing and operating experience, and broad network of relationships to source and evaluate potential transactions that will create value for our stakeholders. We may pursue our initial business combination in any business or industry, but we hope to find a target business in an industry overlapping with that of our management team and board of directors in order to provide a competitive advantage. We seek to acquire one or more businesses with an aggregate enterprise value in excess of $500 million, determined in the sole discretion of our officers and directors according to reasonably acceptable valuation standards and methodologies, although a target entity with a smaller or larger enterprise value may be considered. Our Initial Public Offering (“IPO”) sold 11,500,000 units for $10.00 per unit pursuant to a Registration Statement on Form S-1 (File No. 333-260384) filed on October 20, 2021, as amended, which the U.S. Securities and Exchange Commission (the “Commission” or “SEC”) declared effective on January 11, 2022 (the “Registration Statement”). Each unit consisted of one share of common stock, par value $0.0001, and one warrant, which we refer to throughout this Form 10-K as “warrants” or the “public warrants.” As of the date of this Annual Report, we have not yet issued a press release announcing that the holders of our units issued in the IPO may elect to separately trade the public warrants or shares of common stock, par value $0.0001 per share, because our underwriter has not yet authorized such trading of shares and warrants apart from the units to begin prior to April 11, 2022. We thus expect to issue a press release with a Current Report on Form 8-K on or about April 11, 2022 announcing that the shares and the public warrants included in the units may commence separate trading without the need for approval from our underwriter. Each warrant entitles the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as described in the prospectus relating to our IPO. Each warrant will become exercisable on the later of one year after the January 14, 2022 closing of the IPO or 30 days after the consummation of our initial business combination, and will expire five years after the completion of our initial business combination, or earlier upon redemption. We will provide the holders of our outstanding shares of common stock that were sold as part of the units in the IPO with the opportunity to redeem their shares of common stock upon the consummation 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, including interest (net of taxes payable and up to $100,000 of interest to pay dissolution costs and expenses if needed), divided by the number of then-outstanding shares of common stock that were sold as part of the units in this offering, which we refer to as our “public shares.” Our sponsor is Western Acquisition Ventures Sponsor LLC (“Sponsor”), and A.G.P./Alliance Global Partners (“A.G.P.”) was the sole book-running manager and representatives of the underwriters in our IPO. Together our Sponsor and A.G.P own an aggregate of 2,875,000 shares of our common stock. We will have up to 12 months from the January 14, 2022 closing of the IPO to consummate an initial business combination, and so the last day prior to any extension to consummate an initial business combination will be January 13, 2023. We may, however, extend the time we have to consummate an initial business combination up to two times, each by 3 months (for a total of 18 months from the January 14, 2022 closing), and so the last day following all extensions to consummate an initial business combination will be July 13, 2023. Any such extension would be made by a resolution of the board following our Sponsor’s request for such an extension. Either our Sponsor or its affiliate or designee and must provide advance notice of at least 5 days’ prior to the applicable business combination deadline. Each extension will require our Sponsor to cause a $1,150,000 ($0.10 per share) deposit to be made into the trust on or prior to the applicable deadline. Public stockholders will not be entitled to vote or redeem their shares in connection with extensions. If we fail to complete our initial business combination by an applicable deadline without extension, we will distribute to our public stockholders the aggregate amount then on deposit in the trust account on a pro rata basis. The amount held in the trust account as of March 21, 2022 was $116,061,360.52. A distribution for failure to complete out initial business combination by an applicable deadline will occur as a result of a redemption of the public stockholders’ shares, and we will thereafter cease all operations except for winding up of our affairs. This will cause our warrants to expire and become worthless. Simultaneously with the closing of the IPO, the Company also completed a private sale of 376,000 units (the “Private Placement Units”) to the Sponsor for $10.00 per Private Placement Unit. This generated gross proceeds to the Company of $3,760,000. The Private Placement Units are identical to the Units in the IPO, except as otherwise disclosed in the Registration Statement. No underwriting discounts or commissions were paid with respect to such sale. The Private Placement Units were issued pursuant to the exemption from registration for transactions not involving any public offering under Section 4(a)(2) of the Securities Act of 1933, as amended. Our SEC filings, including reports, proxy and information statements, and other information regarding the Company are available at http://www.sec.gov. They are also available on our website at https://www.westernacquisitionventures.com. General Our objectives are to generate attractive returns for stockholders and enhance value. We plan to do that by (1) completing our initial business combination with a high-quality merger target at an attractive valuation on favorable terms for our stockholders, and (2) enhancing performance through our team’s experience, expertise, and network. We expect to favor potential target companies with compelling long-term growth prospects that benefit from strong secular tailwinds and are in a highly fragmented market, ripe for consolidation opportunities. Our target should possess certain business characteristics such as a leading market position, significant recurring revenue, a diversified customer base, opportunity for operational improvement, and a healthy margin profile with attractive free cash flow characteristics. 1 As we consider specific sectors of focus, we are guided by three key factors. The first is our significant industry and operational expertise. Second is the long-term impact of the COVID-19 pandemic as an accelerant of business practices and industry changes. Finally, we plan on targeting merger candidates where conditions allow us to sufficiently influence the outcome to produce attractive economic rewards for our stockholders and stakeholders. Our target sectors may include, but are not limited to infrastructure and environmental services; health, wellness and food sustainability; financial technology and financial services; enterprise software and SaaS; and leisure and hospitality. Our selection process leverages our network of varied industry. Our network draws from investment banking, private equity, venture capital, credit funds, lenders, public and private company management teams, restructuring advisers, attorneys and accountants. We believe our network should provide us with a number of high-quality initial business combination opportunities. We are deploying a proactive, thematic sourcing strategy to focus on companies where we believe the combination of our operating experience, relationships, capital and capital markets expertise can be catalysts to change a target company and can help accelerate the target’s growth and performance. Our Management Team Our Chief Executive Officer Stephen Christoffersen and our Chief Financial Officer William (Bill) Lischak collectively have over fifty years of industry and investment experience. Together with our board of directors, our team has combined decades of experience in growing and developing private and public companies across a range of sectors and industries. The team consists of Messrs. Christoffersen and Lischak, along with Ade Okunubi, Ali Jahangiri, Robin L. Smith, and Adam K. Stern as directors. We believe that the strong operating, industry and investment background of our management and directors, combined with their entrepreneurial expertise, will help the company to identify a valuable acquisition target that can thrive as a public company. Stephen Christoffersen , CFA , 37, is our Chief Executive Officer and a Director. In addition to his role as CEO, he is the managing member of Range Ventures LLC, an opportunistic investment company focusing on public equities and private credit. From 2018 to 2021, Mr. Christoffersen worked for KushCo Holdings Inc (OTCQX: KSHB) and during his time as CFO, he led a business turnaround which included right-sizing headcount and operational footprint while focusing sales on the leading multi-state operators. This resulted in company profitability for the first time in three years and led to a merger with Greenlane Holdings (NASDAQ: GNLN), which was announced March 2021. Additionally, Mr. Christoffersen spearheaded KushCo’s strategic investments, including its investment in XS Financial, Inc. (CSE: XSF), where Mr. Christoffersen currently serves on the Board as a member of the Investment and Audit committee since May 2019. Prior to joining KushCo, between January 2017 and November 2018 Mr. Christoffersen served as Vice President of Investment Strategy for Comerica Asset Management Inc. (NYSE: CMA), where he managed $500 million and oversaw asset allocation and investments. Mr. Christoffersen has also been active in several volunteering and philanthropic initiatives, including serving as a math and science tutor with the Save a Child Foundation at the YMCA Boys and Girls Club. He was also an Executive Sponsor for Project Mission Green, an initiative of The Weldon Project that advocates on behalf of currently or formerly incarcerated cannabis offenders who were sentenced to prison for nonviolent cannabis offenses. Mr. Christoffersen received his Chartered Financial Analyst designation in 2015 and holds a Bachelor of Science degree in Finance from the University of Nevada, Las Vegas. William Lischak, CPA, MST , 64, is our Chief Financial Officer and a Director. He is a senior level financial executive with more than 20 years of experience in the media industry. His credentials include being a CPA and having earned a master’s degree in Taxation. Mr. Lischak has extensive M&A, corporate finance, accounting, tax, and strategic planning experience. He has developed a strong network of relationships with commercial and investment banks, law firms, accounting firms, and consulting firms, and is known as a dynamic team player strongly committed to working with colleagues to achieve transactional and operational goals. Mr. Lischak has been the Chief Executive Officer of RightsTrade, LLC since June 2020 and worked as a consultant to the company since April 2019. Concurrently, starting in February 2020, Mr. Lischak has acted as interim CFO for Johnson Management Group, a privately held television movie production company. From February 2017 to October 2018, Mr. Lischak served as interim CFO at PIXOMONDO STUDIOS Gmbh & Company KG, a multi-national visual effects company. Working in conjunction with Houlihan Lokey, Inc., Mr. Lischak managed the company through the process of preparing for, seeking, securing and concluding a majority stake sale to private equity, which closed in July 2018. From 2016 through the present, Mr. Lischak has consulted with various media and entertainment businesses under his personal service company, William Lischak, Inc. From 2017 through the present, Mr. Lischak has served various media and entertainment businesses under his personal service company, William Lischak, Inc. 2 From 2007 to 2015, Mr. Lischak worked with OddLot Entertainment LLC, a film and television production company founded by Gigi Pritzker, where he established the company’s position as a prominent independent production company by securing, structuring and managing corporate joint ventures and complex multi-party project financing for award winning and commercially successful films such as Hell or High Water (nominated for a Best Picture Academy Award), Ender’s Game (at the time, the largest independent film ever made, with a budget of $115 million), and Drive (which won Best Director at the Cannes Film Festival). Additionally, Mr. Lischak was instrumental in the company’s expansion into television production with National Geographic’s Genius: Einstein mini-series (based upon the Walter Isaacson biography), produced in conjunction with Ron Howard’s Imagine Entertainment. Corporately, Mr. Lischak created a multi-picture production and distribution arrangement with Lions Gate Entertainment Corporation (NYSE: LGF); spearheaded a multi-picture production and distribution arrangement with STX Financing LLC (NYSE: ESGC) in conjunction with an equity investment by Ms. Pritzker’s family office and JPMorgan Chase Bank, N.A.; and created the joint venture international sales company, Sierra/Affinity (acquired by Entertainment One Ltd. and Hasbro, Inc.). Prior to joining Oddlot Entertainment LLC, Mr. Lischak worked with First Look Media, a multi-faceted production and distribution operation. Joining the company in 1988 as CFO, Mr. Lischak later assumed the roles of COO and President and was instrumental in the development and growth of the company, including its’ merger into a SPAC. In addition to the SPAC transaction, Mr. Lischak spearheaded multiple rounds of additional capital (pre and post public company status), various corporate acquisitions and established a multitude of debt financing arrangements including both lines of credit and project financing with financial institutions including JPMorgan Chase Bank, N.A (NYSE: JPM)., Comerica, Inc. (NYSE: CMA), Merrill Lynch Wealth Management and NatWest Group, among others. During Bill’s tenure annual revenues increased from $6 million to $125 million. Mr. Lischak graduated in 1979 from NYU’s Stern School of Business, where he also studied film at NYU’s Tisch School of the Arts. We believe that Mr. Lischak’s management and business experience make him well-suited to serve as a member of our board of directors. Ade Okunubi, MBA, CFA , 39, serves as an independent director who sits on our Nominating Committee and chairs our Audit Committee. Since November 2021 he has served as President of Industrial Battery Inc., an EV / Energy Transition Services firm. Mr. Okunubi is also a Private Equity investor in Industrial services businesses. Prior to acquiring Industrial Battery, between January 2017 and November 2021 Mr. Okunubi served as Chief Operating Officer of Techni-Tool Inc., a distributor of Aerospace and Defense cutting tools. He also served as an Investment Associate for Arcis Equity Partners, a leisure and hospitality focused private equity fund, from August 2014 to January 2017. Prior to working in private equity and in operation roles, Mr. Okunubi worked in the Mergers & Acquisitions group at Credit Suisse Group AG (NYSE: CS) and advised private equity firms and corporations on approximately $2.5 billion in transactions in the telecom, healthcare, retail and renewable energy sectors. Prior to Credit Suisse Group AG, Mr. Okunubi was a Merger Arbitrage and High Yield Credit Trader at Taconic Capital Advisors LP, a New York-based, event-driven hedge fund. Mr. Okunubi, a Queens, NY native, received an AB in Economics from Princeton University, and an MBA from the Harvard Business School. Mr. Okunubi is also a CFA Charter holder and member of the CFA Society of Dallas-Ft. Worth. We believe Mr. Okunubi is well qualified to serve as an independent member of our board of directors because of his management experience and his extensive financial experience as an investor. Ali Jahangiri , JD , 47, serves as an independent director who sits on our Compensation Committee and chairs our Nominating Committee. He founded Opportunity Zone Expo and Opportunity Zone Magazine in 2018 and has been with both since then. Mr. Jahangiri also founded Eb5investors and Uglobal in 2012, which serve the investment immigration industry as the industry trade publication and one of the largest international conference series. Mr. Jahangiri is also the CEO of Outclick Media, which among the other publishing sites also manages and operates colonoscopy.com and Hotelsmag.com, as well as a Registered Representative of Kingswood Capital Management, LP. Mr. Jahangiri began his career practicing corporate law at Stradling Yocca Carlson & Rauth, but shifted his focus to publishing, where he pioneered multiple digital portals in healthcare and law, which were acquired in 2009 and 2011, respectively. Mr. Jahangiri also serves on the Film Commission of California and board of overseers of Loyola Law School. Mr. Jahangiri received a bachelor’s degree from UC Irvine and a law degree from Loyola Law School. We believe Mr. Jahangiri is well qualified to serve as an independent member of our board of directors because of his extensive entrepreneurial experience. Robin L. Smith, MD, MBA , age 57, serves as an independent director who sits on our Audit Committee and chairs our Compensation Committee. She is a business leader, entrepreneur, medical doctor and philanthropist uniquely positioned to lead and assist public companies and health care systems to advance and be successful in the rapidly evolving health care industry. She is a trailblazer in the fields of regenerative medicine and predictive analytics and has focused on turnarounds, M&A and disruptive innovations driving interest and growth and Managing Partner of BRM Holdings since 2015. 3 She has extensive experience serving on the boards of directors and board committees, including audit, nominating and governance, compensation and science and technology committees of multiple public companies. She currently serves on the boards of directors of Celularity Inc (NASDAQ: CELU), a Celgene spin-out focused on cancer and regenerative medicine, as well as private companies including Spiritus Therapeutics, which she cofounded in 2017, and Vcinity Inc, since April 2020. Dr. Smith also served on the board of Sorrento Therapeutics (NASDAQ: SRNE) from December 2019 through November 15, 2021, ServiceSource International, Inc. (NASDAQ: SREV) from February 2020 – May 2020, Seelos Therapeutics (NASDAQ: SEEL) from February 2019 – May 2020, and Rockwell Medical (NASDAQ: RMTI) from June 2016 – November 2019. She was chairman of the board of directors of MYnd Analytics, Inc. (NASDAQ: MYND now EMMA and Telemynd) from August 2015 – July 2019. She was also on the boards of ProLung Inc from February 2017 – July 2018, BioXcel Corp from Aug 2015- June 2017, and Signal Genetics (NASDAQ: SGNL) from July 2014 – February 2016. From 2006 until 2015, Dr. Smith was chairman and chief executive officer of the Neostem (NASDAQ: NBS), where she pioneered the company’s innovative business model combining proprietary cell therapy development with successful contract development and manufacturing organization, which was sold to Hitachi at 8x the price it had been acquired. During her 9 years of tenure, the company won an array of industry awards and received business recognition including a first-place ranking in the tri-state area (two years in a row), and eleventh place nationally, on Deloitte’s Technology Fast 500, and Frost & Sullivan’s North American Cell Therapeutics Technology Innovation Leadership Award. Dr. Smith co-authored “Cells Are the New Cure” (2017) and “The Healing Cell: How the Greatest Revolution in Medical History Is Changing Your Life” (2013). She was appointed as clinical associate professor, Department of Medicine at the Rutgers New Jersey Medical School in 2017. She has also been widely recognized for her leadership in health care and as a female entrepreneur. Most recently, Dr. Smith received the Regenerative Medicine Foundation (RMF) 2019 Stem Cell and Regenerative Medicine Action Award for International Diplomacy in 2019 and the 2018 HEALinc Future Health Humanitarian Award, the Business Intelligence Group’s Woman of the Year Award in 2018 and the 2018 Gold Stevie® Award for Woman of the Year – Government or Non-Profit. In April 2016, Pope Francis conferred Dr. Smith as Dame Commander with Star of The Pontifical Equestrian Order of Saint Sylvester Pope and Martyr. In May 2017, she was awarded the Lifetime Achievement in Healthcare and Science Award by The National Museum of Catholic Art and Library. Dr. Smith is also active in many nonprofit organizations. She is the founder, president and chairman of the board of the Cura Foundation and Stem for Life since 2007. She is also vice president and director of the Science and Faith (STOQ) Foundation at the Vatican. Dr. Smith is a member of the board of trustees of Sanford Health, the board of overseers of the New York University Langone Medical Center in New York, a board member of the Alliance for Cell Therapy Now and OPA Health and is active in the NFL Alumni Association’s Regenerative Medicine and Cell Therapy initiative. Dr. Smith previously served on the Sanford Health’s International Board, the board of trustees of the New York University Langone Medical Center, was chairman of the board of directors of the New York University Hospital for Joint Diseases and served on the board of the Alliance for Regenerative Medicine (ARM) Foundation. She received her B.A. degree from Yale University and her M.D. degree from the Yale School of Medicine. Dr. Smith holds an M.B.A. degree from the Wharton School of Business and completed the Stanford University Directors Program. In 2019, Dr. Smith received an honorary Doctor of Science degree from Thomas Jefferson Medical College. Adam K. Stern , 58, serves as an independent director and sits on our Audit Committee. He currently serves as the CEO of SternAegis Ventures and has been the Head of Private Equity Banking at Aegis Capital Corp. since 2012. Prior to SternAegis, from 1997 to 2012, he was Senior Managing Director at Spencer Trask Ventures, Inc., where he managed the structured finance group focusing primarily on technology and life science companies. From 1989 to 1997, Mr. Stern was at Josephthal & Co., Inc., Members of the New York Stock Exchange, where he served as Head of Private Equity and Managing Director. He has been a FINRA licensed securities broker since 1987 and a Registered General Securities Principal since 1991. Mr. Stern has been a founding investor in numerous private and public companies and currently serves as a Director of DarioHealth Corp. (Nasdaq: DRIO) since March 2020, Organovo Holdings Inc., (Nasdaq: ONVO) since July 2020, and privately held Aerami Therapeutics, Inc. since 2014. Adam previously served on the board of directors for Matinas BioPharma Holdings, Inc. (NYSE: MTNB) from 2012-2020, and HydroFarm Holdings, Inc. (Nasdaq: HYFM) from 2018-2020. Mr. Stern graduated from the University of South Florida in 1987. We believe Mr. Stern is well qualified to serve as an independent member of our board of directors because of his experience as a board member of numerous public companies, as well as his deep financial experience as an investor. The past performance of the members of our management team and board of directors or their affiliates is not a guarantee that we will be able to identify a suitable candidate for our initial business combination or of success with respect to any initial business combination we may consummate. You should not rely on the historical record of the performance of our management team or any of its affiliates’ performance as indicative of our future performance. Acquisition Strategy For background on our acquisition strategy, see the information above under the heading “General.” Our acquisition strategy is guided by three key factors. The first is our significant industry and operational expertise. Second is the long-term impact of the COVID-19 pandemic as an accelerant of business practices and industry changes. Finally, we plan on targeting merger candidates where conditions allow us to sufficiently influence the outcome to produce attractive economic rewards for our stockholders and stakeholders. Our target sectors may include, but are not limited to infrastructure and environmental services, health, wellness and food sustainability, financial technology and financial services, enterprise software and SaaS, and leisure and hospitality. 4 Our selection process leverages our network of varied industry, investment banker, private equity and venture capital, credit fund, and lending community relationships, as well as our relationships with management teams of public and private companies, restructuring advisers, attorneys and accountants, which we believe should provide us with a number of high-quality initial business combination opportunities. We are deploying a proactive, thematic sourcing strategy to focus on companies where we believe the combination of our operating experience, relationships, capital and capital markets expertise can be catalysts to change a target company and can help accelerate the target’s growth and performance. Our management team and board of directors has experience in: • sourcing, structuring, acquiring and selling businesses; • operating companies, implementing and executing change-driven strategies, and identifying, monitoring and recruiting industry-leading talent; • fostering relationships with sellers, capital providers and target management teams; • negotiating transactions favorable to investors; • executing transactions in multiple geographies and under varying economic and financial market conditions; • improving the strategic, operational, organizational and financial effectiveness of companies; • accessing capital markets, including financing businesses, and managing or assisting companies transitioning from private to public ownership; • acquiring and integrating companies; and • developing and growing companies, both organically and inorganically and expanding the product range and geographic footprint of a number of target businesses. We have engaged in an extensive research effort to identify a large number of potential targets and have initiated discussions with initial business combination targets. Our effort is focused on creating proprietary transaction opportunities. We believe personal relationships built over time are critical, not just in generating transaction opportunities, but also in consummating an initial business combination. In evaluating a prospective target business, we are conducting, or expect to conduct, a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information made available to us. We are not prohibited from pursuing our initial business combination with a company that is affiliated with our Sponsor, officers, or directors. In the event we seek to complete our initial business combination with a business that is affiliated with our Sponsor, officers, or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, that such initial business combination is fair to our company financially. Our initial stockholders, officers, and directors directly or indirectly own our securities following the closing on January 14, 2022, and accordingly, they 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 initial 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. 5 Investment Criteria and Industry Opportunity We are using the following investment criteria to screen for and evaluate target businesses although we may pursue opportunities outside of this scope. • Small/Mid-cap Business: We seek to acquire one or more businesses with an aggregate enterprise value in excess of $500 million, determined in the sole discretion of our management team according to reasonably acceptable valuation standards and methodologies, although a target entity with a smaller or larger enterprise value may be considered. Although we have no commitment as of the date of this Form 10-K, we expect to issue a substantial number of additional shares of common stock or shares of preferred stock, or a combination thereof, to complete an initial business combination. • Public Company Ready: We seek to acquire a company that is well-positioned to be a public company in terms of scale and size, and a company that public equity market investors will understand and value. We intend to avoid companies that have significant deficiencies in financial reporting or general public company readiness. • Generates Stable Free Cash-Flow and/or Annual Recurring Revenue: We seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow. We also believe that certain business models such as SaaS businesses, financial technology or enterprise software businesses have sustainable annual recurring revenue and are platforms that can be used to create attractively valued public companies. • Would Benefit Distinctly from our Capabilities: We seek to acquire a business where we can tangibly improve the operations and create long-term value for our stockholders. In particular, we believe our experience in operating and improving public companies, as well as serving on public company boards, would be a value-add to the management teams and boards of potential target companies. • Is Sourced Through our Proprietary Channels: We believe the strength of our network will allow us to source differentiated targets, and even in competitive situations, we believe we would be able to leverage our proprietary relationships and/or insights into potential targets that will create competitive advantages for us. • Has a Dedicated and Proven Management Team: We seek to acquire a business with a professional management team whose interests are aligned with those of our investors. Where necessary, we may also look to complement and enhance the capabilities of the target business’s management team by recruiting additional talent through our network of contacts. 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 on other considerations, factors and criteria that our management deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC. Effecting a Business Combination Sources of Target Businesses 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. If we do, we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. 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 a finder’s fee 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 they are affiliated, be paid any finder’s fee, consulting fee or other compensation by the company prior to, or for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction). We cannot currently ascertain how much time or cost will be involved to select and evaluate a target business and to structure and complete our initial business combination. Any costs incurred with respect to identifying or evaluating a prospective target business with which we don’t pursue an initial business combination will result in losses and will reduce the funds we can use to complete an initial business combination with another target. We will not pay any finder’s or consulting fees to members of our management team, or any of their respective affiliates, for services rendered to or in connection with our initial business combination. Selection of a Target Business, Structuring of a Business Combination, and Fair Market Value of Target or Business Nasdaq rules require the aggregate fair market value of our initial business combinations to be least 80% of the value held in the trust account (excluding the fee payable to A.G.P. upon an initial business combination as described in “Conflicts of Interest” and taxes payable on the interest earned on the trust account) at the time we sign a definitive agreement for our initial business combination. Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to determine independently the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors. 6 We anticipate structuring our initial business combination so that our current shareholders will own shares of the resulting company, which will own or acquire between 50% and 100% of the equity interests or assets of the target business or businesses. The resulting company is expected to not be required to register as an investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”), or the Investment Company Act rules and regulations. 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 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, shares or other equity interests 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 issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. 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 target businesses and we will treat the target businesses together as our initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. 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 thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information that will be made available to us. Competition There is intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or institutions), other blank check companies and other entities competing for the types of businesses we intend to acquire, including affiliates of our Sponsor. Many of these individuals and entities are well established and have extensive experience in identifying and effecting 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 from the IPO 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 common stock that 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 our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire and become worthless. In certain circumstances, our public stockholders may receive less than $10.10 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 $10.10 per share ” and other risk factors herein. Management Operating and Investment Experience For information about our management, see the section above under “Our Management Team.” Emerging Growth Company Status and Other Information We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or 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.” Some of these exemptions include, but are 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. 7 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 closing on January 14, 2022, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31, 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” shall have the meaning associated with it in the JOBS Act. Employees We currently have two executive 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 do not intend to have any full time employees prior to the consummation of our initial business combination.