General
We
are a blank check company incorporated as a Cayman Islands exempted company on November 10, 2020. We were formed for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one
or more businesses or entities, which we refer to throughout this Annual Report on Form 10-K as our initial business combination. We
have not selected any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions,
directly or indirectly, with any potential business combination target regarding entering into a business combination with us.
While
we may pursue an acquisition opportunity in any business industry or sector, we intend to capitalize on the ability of our management
team to identify, acquire and manage a business in the Commerce Enablement, Supply Chain, Logistics and related Technology Infrastructure
sectors. The ideal target is a business that can benefit from our accomplished track record of founding, operating, investing, acquiring
and transforming businesses in the Consumer, Retail, Wholesale, Distribution, Logistics and Services sectors. We intend to focus our
search on business combination targets with an aggregate enterprise value in excess of $1 billion. We believe our management team is
well suited to identify opportunities that have the potential to generate attractive risk-adjusted returns for our shareholders.
Initial
Public Offering
On
February 5, 2021, we consummated an initial public offering (the “IPO” or the “Initial Public Offering”)) of
30,475,000 units (the “Units”), at an offering price of $10.00 per Unit and a private placement with the Original Sponsor
of 8,750,000 private placement warrants at a price of $1.00 per warrant (the “Private Placement”). The net proceeds from
the IPO together with certain of the proceeds from the Private Placement, $304,750,000 in the aggregate (the “Offering Proceeds”),
were placed in a trust account established for the benefit of the Company’s public shareholders and the underwriters of the IPO
with Continental Stock Transfer & Trust Company acting as trustee. Except with respect to interest earned on the Offering Proceeds
held in the trust account that may be released to the Company to pay its income taxes, if any, the Company’s amended and restated
memorandum and articles of association provide that the Offering Proceeds will not be released from the trust account (1) to the Company,
until the completion of its initial business combination, or (2) to its public shareholders, until the earliest of (a) the completion
of the its initial business combination, and then only in connection with those Class A ordinary shares that such shareholders properly
elected to redeem, (b) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Company’s
amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to
provide holders of its Class A ordinary shares the right to have their shares redeemed in connection with the Company’s initial
business combination or to redeem 100% of its public shares if the Company does not complete its initial business combination within
24 months (or 30 months, subject to six one-month extensions) from the closing of the IPO or (B) with respect to any other provision
relating to the rights of holders of its Class A ordinary shares, and (c) the redemption of the public shares if the Company has not
consummated its business combination within 24 months (or 30 months, subject to six one-month extensions) from the closing of the IPO,
subject to applicable law.
Simultaneous
with the consummation of the IPO and the issuance and sale of the Units, we consummated the private placement of 8,750,000 Private Placement
Warrants at a price of $1.00 per Private Placement Warrant, generating total proceeds of $8,750,000 (the “Private Placement”).
The Private Placement Warrants, which were purchased by the Original Sponsor, are substantially similar to the Public Warrants, except
that if held by the Sponsor or its permitted transferees, they (i) may be exercised for cash or on a cashless basis, (ii) subject to
certain exceptions, are not subject to being called for redemption and (iii) subject to certain limited exceptions, will be subject to
transfer restrictions until 30 days following the consummation of the Company’s initial business combination. 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
the Company and exercisable by holders on the same basis as the Public Warrants. The Private Placement Warrants have been issued pursuant
to, and are governed by the Warrant Agreement.
Sponsor
Purchase Agreement
On
December 28, 2022 (the “Effective Date”), we entered into a purchase agreement with the Original Sponsor, and VKSS Capital,
LLC, a Delaware corporation (the “New Sponsor” or “Sponsor”), pursuant to which the New Sponsor, or an entity
designated by the New Sponsor, will purchase from the Original Sponsor 7,618,750 Class B ordinary shares, par value $0.0001 per share
and 8,750,000 Private Placement Warrants, each of which is exercisable to purchase one Class A ordinary share, par value $0.0001 per
share, for an aggregate purchase price of $1.00 payable at the time we effect the initial Business Combination. Upon the closing of the
initial Business Combination, New Sponsor shall also convey 2,000,000 Class B ordinary shares to the equityholders of the Original Sponsor,
as of the Effective Date, pro rata based on the equityholders’ underlying interest in our Class B ordinary shares as of the Effective
Date.
Charter
Amendment
At
the February 3, 2023 Shareholders Meeting, our shareholders approved an amendment to the Amended and Restated Memorandum and Articles
of Association of the Company (the “Charter Amendment”), and the Company subsequently filed the Amendment to the Amended
and Restated Articles of Association with the Cayman Islands authorities. The Charter Amendment allows the Company to extend the date
by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination involving the Company and one or more businesses, which we refer to as a “business combination,” (ii)
cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class
A ordinary shares included as part of the units sold in the Company’s initial public offering that was consummated on February
5, 2021, which we refer to as the “IPO,” from February 5, 2023 (the “Termination Date”) to August 5, 2023, by
electing to extend the date to consummate a business combination on a monthly basis for up to six times by an additional one month each
time after the Termination Date, until August 5, 2023 or a total of up to six months after the Termination Date, unless the closing of
the Company’s initial business combination shall have occurred, which we refer to as the “Extension,” and such later
date, the “Extended Date,” provided that (i) the Sponsor (or its affiliates or permitted designees) will deposit into the
Trust Account the lesser of (x) $300,000 or (y) $0.06 per share for each public share that is not redeemed in connection with the Extraordinary
General Meeting for each such one-month extension until August 5, 2023 unless the closing of the Company’s initial business combination
shall have occurred (the “Extension Payment”) in exchange for a non-interest bearing, unsecured promissory note payable upon
consummation of a business combination and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall
have been complied with. In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the
Shareholders Meeting, holders of 22,848,122 of the Company’s Class A ordinary shares (the “Public Shares”) exercised
their right to redeem those shares for cash at an approximate price of $10.18 per share, for an aggregate of approximately $232.5 million.
Following the payment of the redemptions, the Trust Account has a balance of approximately $77.6 million before the Extension Payment.
Business
Combination Agreement
On
March 3, 2023, we entered into Business Combination Agreement by and among Kernel, AIRO Group, Inc., a Delaware corporation and a wholly-owned
subsidiary of Kernel (“ParentCo”), Kernel Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo
(“Kernel Merger Sub”), AIRO Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo (“AIRO
Merger Sub”), VKSS Capital, LLC, a Delaware limited liability company (the “ParentCo Representative”) and also in the
capacity as Kernel’s Sponsor (“Sponsor”), Dr. Chirinjeev Kathuria, in the capacity as the representative for the company
stockholders (the “Seller Representative”), and AIRO Group Holdings, Inc., a Delaware corporation (“AIRO Group Holdings”
or the “Company”) (as may be amended and/or restated from time to time, the “Business Combination Agreement”),
pursuant to which, among other things, Kernel will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted
company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”).
In
connection with the Domestication, each Class B ordinary share, par value $0.0001 per share, of Kernel (the “Class B Ordinary Shares”)
shall convert into a share of Class B common stock, par value $0.0001 per share, of Kernel and each Class A ordinary share, par value
$0.0001 per share, of Kernel (the “Class A Ordinary Shares”) shall convert into a share of Class A common stock, par value
$0.0001 per share, of Kernel. Further, each share of Class B common stock of Kernel and each share of Class A common stock of Kernel
that is then issued and outstanding shall convert automatically, on a one-for-one basis, into one share of Kernel common stock (the “Kernel
Common Stock”).
Following
the domestication, the parties will effect the merger of Kernel Merger Sub with and into Kernel, with Kernel continuing as the surviving
entity as a wholly owned subsidiary of ParentCo (the “First Merger”). Immediately following the First Merger, AIRO Merger
Sub will merge with and into the Company, with the Company continuing as the surviving entity as a wholly owned subsidiary of ParentCo
(the “Second Merger” and the other transactions contemplated by the Business Combination Agreement, together, the “Transaction”).
Merger
Consideration
As
consideration for the Second Merger, the holders of AIRO Group Holdings’ securities collectively shall be entitled to receive from
ParentCo, in the aggregate, a number of shares of ParentCo common stock with an aggregate value equal to (the “AIRO Merger Consideration”)
(a) $770,000,000 minus (b) the amount, if any, by which the net working capital is less than negative $500,000, plus (c) the amount,
if any, by which the net working capital exceeds $500,000 (but not less than zero), minus (d) the amount, if any, by which the closing
net debt exceeds the target net debt of $75,000,000, by more than $500,000 (but not less than zero), plus (e) the amount, if any, by
which the target net debt of $75,000,000 exceeds closing net debt, minus (f) the amount, if any, by which the company transaction expenses
exceed the target company transaction expenses of $14,000,000 (but not less than zero). In addition, holders of AIRO Group Holdings’
securities shall also be entitled to receive from ParentCo, in the aggregate, an additional shares of ParentCo common stock with an aggregate
value of up to $330,000,000 in the event that for any full 12-month period (each an “Earnout Period”) commencing on or after
the Closing Date (the “Earnout Start Date”) and ending on or before the last day of the thirteenth full calendar quarter
following the Closing Date (the “Earnout End Date”, and the period between the Earnout Start Date and the Earnout End Date,
the “Earnout Eligibility Period”) ParentCo’s revenue is (i) greater than or equal to $42,600,000 for the first time
during the Earnout Eligibility Period, (ii) greater than or equal to $141,400,000 for the first time during the Earnout Eligibility Period,
and (iii) greater than or equal to $358,900,000 for the first time during the Earnout Eligibility Period, then ParentCo shall issue to
each of the stockholders of AIRO Group Holdings such stockholder’s pro rata share of Earnout Shares with a value equal to $66,000,000
and the Sponsor shall be issued Earnout Shares with a value equal to $6,600,000. In the event that ParentCo’s EBITDA for any Earnout
Period is (i) greater than or equal to $(19,300,000) for the first time during the Earnout Eligibility Period, (ii) greater than or equal
to $4,000,000 for the first time during the Earnout Eligibility Period and (iii) greater than or equal to $98,600,000 for the first time
during the Earnout Eligibility Period, then ParentCo shall issue to each of the stockholders of AIRO Group Holding such stockholder’s
pro rata share of Earnout Shares with a value equal to $44,000,000 and the Sponsor shall be issued Earnout Shares with a value equal
to $4,400,000.
Conditions
to the Consummation of the Merger
The
Business Combination Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless
waived): (i) approval of the shareholders of Kernel and AIRO Group Holdings of the Transaction and the other matters requiring shareholder
approval; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) receipt of
specified third party consents; (iv) no law or order preventing the Transaction; (v) the Registration Statement having been declared
effective by the SEC; (vi) no material uncured breach by the other party; (vii) no occurrence of a Material Adverse Effect with respect
to the other party; (viii) the satisfaction of the $5,000,001 minimum net tangible asset test by Kernel; (ix) approval from Nasdaq for
the listing of the shares of ParentCo’s common to be issued in connection with the Transaction; and (x) reconstitution of the Post-Closing
Board as contemplated under the Business Combination Agreement.
In
addition, unless waived by AIRO Group Holdings, the obligations of AIRO Group Holdings to consummate the Transaction are subject to the
satisfaction of the following additional Closing conditions, in addition to the delivery by Kernel of the Related Agreements (as defined
and described in greater detail below), customary certificates and other Closing deliverables: (i) the representations and warranties
of Kernel being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to customary exceptions,
including materiality qualifiers); (ii) Kernel having performed in all material respects its obligations and complied in all material
respects with its covenants and agreements under the Business Combination Agreement required to be performed or complied with by it on
or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to Kernel since the date of the Business
Combination Agreement which is continuing and uncured; (iv) the replacement of the Replacement Warrants and Replacement Options; (v)
at the Closing, Kernel having $50,000,000 in Unencumbered Cash, including funds remaining in the trust account (after giving effect to
the completion and payment of any redemptions and any Transaction Expenses) and the proceeds of the PIPE/Convertible Note Investment,
fifty percent (50%) of any net cash proceeds of any capital investment raise and/or convertible debt raise conducted by the Company during
the period beginning on the effective date of the Business Combination and ending on the Closing Date, and any net cash proceeds of any
executed agreements regarding a capital investment raise and/or convertible debt raise conducted by Kernel or ParentCo in which such
cash proceeds are required to be paid to ParentCo during the thirty (30) day period beginning on the Closing Date.
Finally,
unless waived by Kernel, the obligations of Kernel to consummate the Transaction are subject to the satisfaction of the following additional
Closing conditions, in addition to the delivery by Kernel of the Related Agreements (as defined and described in greater detail below),
customary certificates and other Closing deliverables: (i) the representations and warranties of AIRO Group Holdings being true and correct
as of the date of the Business Combination Agreement and as of the Closing (subject to customary exceptions, including materiality qualifiers);
(ii) AIRO Group Holdings having performed in all material respects their respective obligations and complied in all material respects
with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with by
them on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to AIRO Group Holdings and its
subsidiaries on a consolidated basis since the date of the Business Combination Agreement which is continuing and uncured; (iv) delivery
of AIRO’s 2022 Audited Financials within 60 days of the Business Combination Agreement’s signing; (v) the completion of Kernel’s
legal due diligence of AIRO Group Holdings and its subsidiaries to Kernel’s reasonable satisfaction; (vi) the replacement of the
Replacement Warrants and Replacement Options; and (vii) the aggregate amount of all Indebtedness of the Target Companies due earlier
than 180 days after the Closing (less Company cash at Closing) is less than Fifty Million U.S. Dollars ($50,000,000).
Our
Management Team
Our
management team consists of experienced deal makers, entrepreneurs, executives and investors, with deep experience driving growth by
optimizing operations, building brand resonance and improving technology systems. Collectively the team possesses a wide-ranging set
of competencies, with exceptional financial acumen and an extensive track record of growth and value creation. The team is led by Suren
Ajjarapu, who serves as CEO of TRxADE HEALTH, INC., an online marketplace for health traded on Nasdaq under the symbol “MEDS”
as well as a director of Oceantech Acquisition I Corp., traded on Nasdaq under the symbol “OTECU”. Mr. Ajjarapu has over
25 years of specific experience in growing novel technology-based companies, raising capital, mergers and acquisitions and building superior
management teams.
Suren
Ajjarapu, Chief Executive Officer and Chairman
Suren
Ajjarapu has served as Chairman of the Board, Chief Executive Officer and Secretary of Trxade Group, Inc., (NASDAQ: MEDS) a Delaware
corporation, and its predecessor company since July 2010 and is a director of Oceantech Acquisition I Corp., traded on Nasdaq under the
symbol “OTECU.” Beginning in 2021, Mr. Ajjarapu served as Chief Executive Officer and Chairman of Aesther Healthcare Acquisition
Corp., a special purpose acquisition company that consummated its initial business combination in February 2023. Mr. Ajjarapu is currently
serving as a director of the merged company, Ocean Biomedical Inc. (NASDAQ: OCEA) (f.k.a Aesther Healthcare Acquisition Corp.). In addition, Mr. Ajjarapu is currently serving as the Chief Executive Officer,
Chairman and Director of OceanTech Acquisition I Corp (NASDAQ: OTEC). Since
March 2018, Mr. Ajjarapu has served as Executive Chairman of the Board of Kano Energy Corp., a company involved in the development of
renewable natural gas sites in the United States. Mr. Ajjarapu was a Founder and served as Chief Executive Officer and Chairman of the
Board of Sansur Renewable Energy, Inc., a company involved in developing wind power sites in the Midwest of the United States, from March
2009 to December 2012. Mr. Ajjarapu was also a Founder, President and Director of Aemetis, Inc., a biofuels company (NASDAQ: AMTX), and
a Founder, Chairman and Chief Executive Officer of International Biofuels, a subsidiary of Aemetis, Inc., from January 2006 to March
2009. Mr. Ajjarapu was Co-Founder, Chief Operations Officer, and Director of Global Information Technology, Inc., an IT outsourcing and
systems design company, headquartered in Tampa, Florida with major operations in India. Mr. Ajjarapu graduated from South Dakota State
University with a M.S. in Environmental Engineering, and from the University of South Florida with an M.B.A., specializing in International
Finance and Management. Mr. Ajjarapu is also a graduate of the Venture Capital and Private Equity program at Harvard University.
Howard
Doss, Chief Financial Officer and Director
Howard
Doss is a seasoned chief financial officer and accountant. From 2021He served as Chief Financial Officer of Aesther Healthcare Acquisition
Corp., a special purpose acquisition company until it consummated its initial business combination in February 2023.. He has also served
as chief financial officer of TRxADE HEALTH, INC., an online marketplace for health traded on Nasdaq under the symbol “MEDS.”
Mr. Doss has served in a variety of capacities with accounting and investment firms. He joined the staff of Seidman & Seidman (BDO
Seidman, Dallas) in 1977 and, in 1980, he joined the investment firm Van Kampen Investments, opening the firm’s southeast office
in Tampa, Florida in 1982. He remained with the firm until 1996 when he joined Franklin Templeton to develop corporate retirement plan
distribution. After working for the Principal Financial Group office in Tampa, Florida, Mr. Doss was City Executive for U.S. Trust in
Sarasota, Florida, responsible for high net worth individuals. He retired from that position in 2009. He served as CFO and Director for
Sansur Renewable Energy an alternative energy development company, from 2010 to 2012. Mr. Doss has also served as President of STARadio
Corp. since 2005. Mr. Doss is a member of the America Institute of CPA’s. He is a graduate of Illinois Wesleyan University.
Our
executive officers are supported by seasoned group of independent directors composed of executives and entrepreneurs with a unique combination
of experiences in wholesale and retail, logistics and distribution, brands and technology development, and business transformation, which
includes Michael Peterson, Donald Fell, Venkatesh Srinivasan and Siva Saravanan, with Mr. Ajjarapu and Mr. Doss also serving as members
of our board of directors.
Michael
Peterson, Director
Michael
Peterson commenced serving as President, Chief Executive Officer and as a member of the Board of Directors of Lafayette Energy Corp.
in April 2022. Beginning in September 2021 Mr. Peterson served as a member of the Board of Directors, Audit Committee (Chair), Compensation
Committee and Nominating and Corporate Governance Committee of Aesther Healthcare Acquisition Corp. (Nasdaq:AEHA), a special purpose
acquisition company, that consummated its initial business combination in February 2023. Mr. Peterson is currently serving as a director
of the merged company, Ocean Biomedical Inc. (NASDAQ: OCEA) (f.k.a Aesther Healthcare Acquisition Corp.). In addition, Mr. Peterson is currently serving as a Director of OceanTech
Acquisition I Corp (NASDAQ: OTEC). Mr. Peterson has served as
the president of Nevo Motors, Inc. since December 2020, which was established to commercialize a range extender generator technology
for the heavy-duty electric vehicle market but is currently non-operational. Since May 2022, Mr. Peterson has served as a member of the
Board of Directors and as the Chairperson of the Audit Committee of Trio Petroleum Corp., an oil and gas exploration and development
company which is in the process of going public, since February 2021, Mr. Peterson has served on the board of directors and as the Chairman
of the Audit Committee of Indonesia Energy Corporation Limited (NYSE American: INDO). Mr. Peterson previously served as the president
of the Taipei Taiwan Mission of The Church of Jesus Christ of Latter-day Saints, in Taipei, Taiwan from June 2018 to June 2021. Mr. Peterson
served as an independent member of the Board of Directors of TRxADE HEALTH, Inc. (formerly Trxade Group, Inc.) from August 2016 to May
2021 (Nasdaq:MEDS). Mr. Peterson served as the Chief Executive Officer of PEDEVCO Corp. (NYSE American:PED), a public company engaged
primarily in the acquisition, exploration, development and production of oil and natural gas shale plays in the US from May 2016 to May
2018. Mr. Peterson served as Chief Financial Officer of PEDEVCO between July 2012 and May 2016, and as Executive Vice President of Pacific
Energy Development (PEDEVCO’s predecessor) from July 2012 to October 2014, and as PEDEVCO’s President from October 2014 to
May 2018. Mr. Peterson joined Pacific Energy Development as its Executive Vice President in September 2011, assumed the additional office
of Chief Financial Officer in June 2012, and served as a member of its board of directors from July 2012 to September 2013. Mr. Peterson
formerly served as Interim President and CEO (from June 2009 to December 2011) and as director (from May 2008 to December 2011) of Pacific
Energy Development, as a director (from May 2006 to July 2012) of Aemetis, Inc. (formerly AE Biofuels Inc.), a Cupertino, California-based
global advanced biofuels and renewable commodity chemicals company (NASDAQ:AMTX), and as Chairman and Chief Executive Officer of Nevo
Energy, Inc. (NEVE) (formerly Solargen Energy, Inc.), a Cupertino, California-based developer of utility-scale solar farms which he helped
form in December 2008 (from December 2008 to July 2012). From 2005 to 2006, Mr. Peterson served as a managing partner of American Institutional
Partners, a venture investment fund based in Salt Lake City. From 2000 to 2004, he served as a First Vice President at Merrill Lynch,
where he helped establish a new private client services division to work exclusively with high-net-worth investors. From September 1989
to January 2000, Mr. Peterson was employed by Goldman Sachs & Co. in a variety of positions and roles, including as a Vice President.
Mr. Peterson received his MBA at the Marriott School of Management and a BS in statistics/computer science from Brigham Young University.
Donald
Fell, Director
Donald
Fell brings along a wealth of experience in the field of economics and business to the Company. Mr. Fell served as an independent director
of Aesther Healthcare Acquisition Corp., a special purpose acquisition company, from 2021 until it consummated its initial business combination
in February 2023. Mr. Fell has served as an independent director of TRxADE HEALTH, INC since January 2014, as well as a director of Trxade
Nevada since December 2013. He is presently Professor and Institute Director for the Davis, California-based Foundation for Teaching
Economics and adjunct professor of economics for the University of Colorado, Colorado Springs. In addition, Mr. Fell is currently serving as a Director of OceanTech Acquisition
I Corp (NASDAQ: OTEC). Mr. Fell held positions with the University
of South Florida as a member of the Executive MBA faculty, Director of Executive and Professional Education and Senior Fellow of the
Public Policy Institute from 1995 to 2012. Mr. Fell was also a visiting professor at the University of LaRochelle, France, and an adjunct
professor of economics at both Illinois State University and The Ohio State University. Mr. Fell holds undergraduate and graduate degrees
in economics from Indiana State University and is all but dissertation (ABD) in economics from Illinois State University. Through his
work with the Foundation for Teaching Economics and the University of Colorado, Colorado Springs he has overseen graduate institutes
on economic policy and environmental economics in 44 states, throughout Canada, the Islands and Eastern Europe.
Venkatesh
Srinivasan, Director
Venkatesh
Srinivasan has a tremendous amount of experience in the pharmaceutical industry and currently serves as President of Micro Labs USA
and previously served as President of Rising Pharma, USA and as President and CEO of Ascend Laboratories, USA where he grew the
business, building a new team and strengthening processes and systems. Mr. Srinivasan is currently serving as a Director of
OceanTech Acquisition I Corp (NASDAQ: OTEC). In addition, Mr. Srinivasan served as a Director at Pfizer India. Mr. Srinivasan served
as an independent director of Aesther Healthcare Acquisition Corp., a special purpose acquisition company, from 2021 until it
consummated its initial business combination in February 2023.
Siva
Saravanan, Director
Siva
Saravanan has more than 20 years of experience steering digital strategies and technology solutions for businesses. Mr. Saravanan is
the Chief Digital Officer at Wavestone US, helping Fortune 1000 business and technology leaders accelerate digital transformation. Prior
to joining Wavestone US, Siva was Chief Information Officer and SVP of Business Operations at Reviver, an exciting IoT start-up that
creates connected digital license plates to enable true autonomous driving. He designed customer digital experiences, unified commerce,
supply chain, field service operations and the digital agenda for Reviver. Siva was also VP for IT Digital Transformation and Program
Delivery at Aristocrat Technologies. While at Aristocrat Technologies, he led the transformation of business systems for a leading high-tech
gaming manufacturer. Siva spent many years at Verifone as a Senior Director supporting technology operations in 40+ countries and also
taking on delivery responsibilities. At VeriFone, he built a world-class global integrated supply chain network for agility and efficiency.
Mr. Saravanan holds a M.S. in Systems Engineering from Tennessee State University and B.S in Mechanical Engineering from Annamalai University
in Chidambaram, India. He is also on the Advisory Board of NishTech Inc., a digital commerce company and the Advisory Council of George
Washington University School of Business Digital Program. Siva is a member of Forbes Technology Council contributing regularly. In addition, Mr. Saravan is currently serving as a Director of OceanTech
Acquisition I Corp (NASDAQ: OTEC). Mr. Saravanan
served as an independent director of Aesther Healthcare Acquisition Corp., a special purpose acquisition company. from 2021 until it
consummated its initial business combination in February 2023.
Our
Approach
While
we are not limited to a particular industry or geographic region, our business strategy is to identify and complete our initial business
combination with a company that complements the experiences and skills of our management team members and can benefit from their operational
expertise. As such, we have a particular interest in profitable and growing businesses that can leverage technology to serve customers
in a novel and transformational manner.
We
expect that relationships cultivated from our management team’s years working in technology innovation, consumer, supply chain
and logistics entrepreneurship, business operation in relevant industries, and their significant transaction experience will facilitate
potential opportunities for us. Our management team and board of directors are leveraging extensive networks of key business contacts,
forged over decades of experience, to convey the parameters of our search for a target company and subsequent business combination and
are sourcing, reviewing and pursuing potential opportunities. We leverage relationships cultivated from years of transaction experience
with management teams of public and private companies, investment bankers, attorneys and accountants to provide potential opportunities
for us.
Once
identified, we will seek to work with a potential acquisition candidate to ensure significant liquidity needed for growth, to attract
top tier management talent where such talent may complement an existing management team, and to execute a proprietary, value-creating
business plan to help the company continue to progress into the next phase of its life cycle. Our management team and board of directors
have demonstrated success sourcing, identifying and executing key investments and acquisitions, as well as operating industry-leading
companies. Collectively, our management team along with our board of directors has extensive experience in:
|
● |
operating
companies in the public and private markets, defining corporate strategy, and hiring and retaining talent; |
|
● |
executing
on growth plans, both organically and through strategic acquisitions; |
|
● |
sourcing,
structuring and acquiring operating companies; |
|
● |
founding
technology and consumer product startups, ultimately negotiating exits at attractive valuations to produce favorable returns for
investors and employees; |
|
● |
accessing
public and private capital markets to optimize capital structure, including financing businesses and helping companies transition
ownership structures; |
|
● |
fostering
relationships with sellers, capital providers and experienced target management teams; |
|
● |
investing
in well-known growth and technology businesses; and |
|
● |
overseeing
governance of public companies, with our management team and board of directors having served in key roles on numerous public company
boards. |
We
believe that our management team is well positioned to identify relevant business combination opportunities with a compelling industry
backdrop, and to facilitate transformational growth for the target. Our objective is to generate attractive returns for shareholders
and enhance value through improving operational performance of the acquired company.
We
favor opportunities with certain industry characteristics, including stable long-term growth trends, industry fragmentation with consolidation
opportunities, and underutilization of technology. Key business characteristics include:
|
● |
predictable
and recurring revenues; |
|
● |
attractive
market positioning and competitive advantages; |
|
● |
strong
operating margins and dependable cash flows; |
|
● |
opportunities
for operational improvement; and |
|
● |
scalable
business models. |
Our
management team and board of directors are pursuing an acquisition across a variety of business-to-business (“B2B”), consumer
and technology adjacent industries, including, without limiting its scope, businesses that focus on commerce enablement, supply chain,
logistics and related technology infrastructure. We evaluate a broad array of targets that each could provide a curated suite of next-generation
technological enhancements in their business. For example, we may identify a business with existing platforms and capabilities that provide
a better alternative to the archaic technology currently supporting supply chains, logistics and distribution networks in select industries,
including food service, grocery and specialty, among others. We believe that our focus presents a differentiated investment opportunity
compared to other similar vehicles in the market.
We
believe our management team’s backgrounds, relationships and contacts across multiple industries provide us with the ability to
source and identify outstanding opportunities. Companies focused on Commerce Enablement, Supply Chain, Logistics and related Technology
Infrastructure represent the nexus of what we seek in a target. The ideal partner company is a business that can benefit from our management
team’s accomplished track record of founding, operating, investing, acquiring and transforming businesses using technology in the
following sectors:
|
● |
consumer; |
|
● |
B2B
/ business-to-business-to-consumer (“B2B2C”); |
|
● |
retail
& wholesale |
|
● |
distribution
/ logistics and services sectors. |
The
aggregation of these skills contain several attractive qualities for investors including: on-trend solutions that address evolving market
dynamics; greater customer loyalty driven by the necessity for enhanced capabilities; defensive positioning given stable, in-demand services;
and pricing power driven by premium offerings and competitive advantage.
We
believe that our structure and our management team’s deep experience as operators, investors and entrepreneurs position us as an
attractive partner in a potential business combination.
Our
Acquisition Criteria
As
we go through the evaluation process for target companies, we use the following to identify opportunities while remaining open to expanding
the criteria set forth. While we use the criteria and guidelines below for evaluation purposes, we may decide to enter into a business
combination with a target company that does not meet these criteria. Our specific areas of focus are:
We
look to acquire a target business that we believe demonstrates the following characteristics:
|
● |
scaled
company with an enterprise value in excess of $1.0 billion that is prepared to operate as a public company from the perspective of
senior management and relevant business metrics; |
|
● |
healthy,
growing platform for equity investors, with an established business model, seasoned management team and sustainable competitive advantages; |
|
● |
qualified
leadership team that is open to mentorship, with a demonstrated track record of driving organic revenue growth and margin improvement; |
|
● |
well-incentivized
management team that is aligned in an effort to create significant shareholder value; |
|
● |
fundamentally
sound business, but underperforming its full potential and can benefit from applications and use of modern technology and tools,
which can be leveraged in novel and transformative ways; |
|
● |
amenable
to enhanced financial performance through organic initiatives and/or inorganic growth opportunities that we identify in our analysis
and due diligence; |
|
● |
operates
in overlooked, underserved markets that present unrecognized value or other characteristics that we believe are not receiving appropriate
credit in respective marketplaces; |
|
● |
a
company that will benefit from our management team’s knowledge of industry dynamics, proven collection of operational strategies
and tools, access to capital and relationships with key players in target industries and ability to rapidly scale businesses; |
|
● |
attractive
valuation relative to its existing financial metrics, and relative to public comparable companies, with potential for further significant
operational improvement presenting an attractive potential return for shareholders; and |
|
● |
will
benefit from being publicly traded and having access to the public capital markets, enhancing its ability to pursue accretive acquisitions,
high-return capital projects, and/or strengthen its balance sheet. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
team may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not
meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder
communications related to our initial business combination, which, as discussed in this Annual Report on Form 10-K, would be in the form
of proxy solicitation materials or tender offer documents that we would file with the SEC.
Potential
Conflicts of Interest
In
evaluating a prospective target business, we conduct a thorough due diligence review which encompasses, among other things, meetings
with incumbent management and key employees, document reviews and inspection of facilities, as well as a review of financial, operational,
legal and other information which will be made available to us. We also utilize our management team’s operational and capital planning
experience.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers, or directors.
In the event we seek to complete our initial business combination with a company that is affiliated with our Sponsor or any of our Sponsor,
officers, or directors, we, or a committee of independent 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
from a financial point of view. We are not required to obtain such an opinion in any other context.
Members
of our management team and board of directors directly or indirectly, own our founder shares, ordinary shares and/or private placement
warrants, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were
to be included by a target business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to another entity pursuant to which such officer, director or Advisor is or will be required to present a business combination opportunity
to such entity. 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 business combination opportunity to such other entity, subject to their fiduciary duties under
Cayman Islands law.
In
addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours
or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such
companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However,
we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Initial
Business Combination
So
long as our securities are listed on Nasdaq, our initial business combination must occur with one or more target businesses that together
have an aggregate fair market value of at least 80% of the net assets held in the trust account (excluding the deferred underwriting
commissions and taxes payable on the interest earned on the trust account) at the time of signing a definitive agreement in connection
with our initial business combination. If our board of directors is not able to independently determine the fair market value of the
target business or businesses, we will obtain an opinion from an independent investment banking firm or an independent valuation or appraisal
firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board will not be able to make an independent
determination of the fair market value of a target business or businesses, 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 of the target business
meets the 80% of net assets threshold, 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 shareholders. However,
if required under applicable law, any proxy statement that we deliver to shareholders 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-business combination company in which our public shareholders
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-business combination 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 shareholders or for other reasons,
but we will only complete such business combination if the post-business combination 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-business
combination company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the 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. 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 shareholders 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-business combination company, the portion of
such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business
combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target
businesses. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the
prior consent of our sponsor. If our securities are not then listed on Nasdaq for whatever reason, we would no longer be required to
meet the foregoing 80% of net asset test.
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.
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.
Corporate
Information
Our
executive offices are located at 515 Madison Avenue, 8th Floor - Suite 8078, New York, New York 10022, and our telephone number is (646) 908-2659. We maintain
a corporate website at www.kernelcap.com.
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”
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 shareholder approval
of any golden parachute payments not previously approved.
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
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are 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” have the meaning associated
with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares
held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed
fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30.
An
investment in our securities involves a high degree of risk. You should carefully consider all of the risks described below, together
with the other information contained in this Report, before making a decision to invest in our securities. 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.
Risks
Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination
We
are a recently incorporated 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 recently incorporated exempted company, incorporated under the laws of the Cayman Islands with no operating results. Because we
lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial
business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target
business concerning a 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.
Past
performance by our management team or their respective affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance is presented for informational purposes only. Any past experience or performance of our management team and their
respective affiliates is not a guarantee of either (i) our ability to successfully identify and execute a transaction or (ii) success
with respect to any business combination that we may consummate. You should not rely on the historical record of our management team
or their respective affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to,
generate going forward. Our management has no experience in operating special purpose acquisition companies.
Our
shareholders 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 shareholders do not support such a combination.
We
may choose not to hold a shareholder vote before we complete our initial business combination if the business combination would not require
shareholder approval under applicable law or stock exchange listing requirement. For instance, if we were seeking to acquire a target
business where the consideration we were paying in the transaction was all cash, we would typically not be required to seek shareholder
approval to complete such a transaction. Except for as required by applicable law or stock exchange listing requirement, the decision
as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders 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 shareholder approval. Accordingly, we may complete
our initial business combination even if holders of a majority of our issued and outstanding ordinary shares do not approve of the business
combination we complete.
Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your
right to redeem your shares from us for cash.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target
businesses. Since our board of directors may complete a business combination without seeking shareholder approval, public shareholders
may not have the right or opportunity to vote on the business combination, unless we seek such shareholder approval. Accordingly, your
only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
shareholders in which we describe our initial business combination.
If
we seek shareholder approval of our initial business combination, our sponsor and members of our management team have agreed to vote
in favor of such initial business combination, regardless of how our public shareholders vote.
Our
Sponsor owned, on an as-converted basis, 20% of our outstanding ordinary shares immediately following the completion of our initial public
offering. Our Sponsor and members of our management team also may from time to time purchase Class A ordinary shares prior to our initial
business combination. Our amended and restated memorandum and articles of association provide that, if we seek shareholder approval,
we will complete our initial business combination only a majority of the ordinary shares, represented in person or by proxy and entitled
to vote thereon, voted at a shareholder meeting are voted in favor of the business combination. As a result, in addition to our Sponsor’s
founder shares, we would need 9,937,501, or 37.5% (assuming all issued and outstanding shares are voted and the over-allotment option
is not exercised), or 1,656,251, or 6.25% (assuming only the minimum number of shares representing a quorum are voted and the over-allotment
option is not exercised), of the 26,500,000 public shares sold in our initial public offering to be voted in favor of an initial business
combination in order to have our initial business combination approved. Accordingly, if we seek shareholder approval of our initial business
combination, the agreement by our Sponsor and each member of our management team to vote in favor of our initial business combination
will increase the likelihood that we will receive the requisite shareholder approval for such initial business combination.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate
your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public shareholders 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 Class A ordinary shares that such shareholder properly elected
to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with
a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of
our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months (or
30 months, subject to six one-month extensions) from the closing of our initial public offering or (B) with respect to any other provision
relating to the rights of holders of our Class A ordinary shares, and (iii) the redemption of our public shares if we have not consummated
an initial business within 24 months (or 30 months, subject to six one-month extensions) from the closing of our initial public offering,
subject to applicable law and as further described herein. Public shareholders who redeem their Class A ordinary shares in connection
with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust account upon
the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination
within 24 months (or 30 months, subject to six one-month extensions) from the closing of our initial public offering, with respect to
such Class A ordinary shares so redeemed. In no other circumstances will a public shareholder 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
ability of our public shareholders 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 a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public shareholders 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 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 (so that we
do not then become subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption
requests would cause our net tangible assets to be less than $5,000,001 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 a business combination
transaction with us.
The
ability of our public shareholders 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 shareholders 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 a large number of shares are submitted for redemption, we may need to restructure the transaction to reserve a greater
portion of the cash in the trust account or arrange for additional third-party financing. Raising additional third-party financing may
involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit
our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the
deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with
an initial business combination.
The
per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred
underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire
deferred underwriting commissions.
The
ability of our public shareholders 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 shares.
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 funds in the trust
account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the
open market; however, at such time our shares may trade at a discount to the pro rata amount per share in 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 shares in the open market.
The
requirement that we consummate an initial business combination within 24 months (or 30 months, subject to six one-month extensions) after
the closing of our initial public offering may give potential target businesses leverage over us in negotiating a business combination
and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular 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 shareholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate
an initial business combination within 24 months (or 30 months, subject to six one-month extensions) from the closing of our initial
public offering. Consequently, such target business may obtain leverage over us in negotiating a 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 time frame 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.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak
of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health
and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community
in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.”
The COVID-19 outbreak has and a significant outbreak of other infectious diseases could result in a widespread health crisis that could
adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate
a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if
continued concerns relating to COVID-19 continues to restrict travel, limit the ability to have meetings with potential investors or
the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely
manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly
uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to
contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue
for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which
we ultimately consummate a business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity in third-party financing
being unavailable on terms acceptable to us or at all.
We
may not be able to consummate an initial business combination within 24 months (or 30 months, subject to six one-month extensions) after
the closing of our initial public offering, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate.
We
may not be able to find a suitable target business and consummate an initial business combination within 24 months (or 30 months, subject
to six one-month extensions) after the closing of our initial public offering. 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.
For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak
on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result
of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at
all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not consummated an initial
business combination within such applicable 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 taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as
shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law. Our amended and restated memorandum and articles of association provide that, if we wind up for
any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect
to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to
applicable Cayman Islands law. In either such case, our public shareholders may receive only $10.00 per public share, or less than $10.00
per public share, on the redemption of their shares, and our warrants will expire worthless. 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 shareholders may
be less than $10.00 per public share” and other risk factors herein.
If
we seek shareholder approval of our initial business combination, our Sponsor, executive officers, directors and their affiliates may
elect to purchase public shares or warrants, which may influence a vote on a proposed business combination and reduce the public “float”
of our Class A ordinary shares or public warrants.
If
we seek shareholder 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, executive officers, directors or their affiliates may purchase public shares
or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation to do so. 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 public shares or warrants in such transactions.
In
the event that our Sponsor, executive officers, directors or their affiliates purchase shares in privately negotiated transactions from
public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke
their prior elections to redeem their shares.
The
purpose of any such transaction could be to (1) vote in favor of the business combination and thereby increase the likelihood of obtaining
shareholder approval of the business combination, (2) reduce the number of public warrants outstanding or vote such warrants on any matters
submitted to the warrant holders for approval in connection with our initial business combination or (3) 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. 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 Class A ordinary shares or public 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. 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.
If
a shareholder 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 shareholder fails to receive our proxy solicitation or tender offer materials,
as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or
tender offer materials, 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 redeem or tender public shares. In the event that
a shareholder fails to comply with these procedures, its shares may not be redeemed.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination. In addition, because there are more special purpose acquisition
companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive
fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals
could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions or increases in the
cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase the
cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result
in our inability to consummate an initial business combination on terms favorable to our investors altogether.
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 have not consummated our initial business combination within the required time period, our public
shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust
account 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, domestic and international, 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 local 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 our initial public offering and the sale of the private placement warrants,
our ability to compete with respect to the acquisition of certain target businesses that are sizable 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, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our initial
business combination in conjunction with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce
the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage
in successfully negotiating a business combination. If we have not consummated our initial business combination within the required time
period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless. 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 shareholders may be less than $10.00 per public
share” and other risk factors herein.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are
insufficient to allow us to operate for the 24 months (or 30 months, subject to six one-month extensions) following the closing of our
initial public offering, it could limit the amount available to fund our search for a target business or businesses and our ability to
complete our initial business combination, and we will depend on loans from our Sponsor, its affiliates or members of our management
team to fund our search and to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, only approximately $1,225,000 was available
to us initially outside the trust account to fund our working capital requirements. We believe that the funds available to us outside
of the trust account, together with funds available from loans from our Sponsor, its affiliates or members of our management team will
be sufficient to allow us to operate for at least the 24 months (or 30 months, subject to six one-month extensions) following the closing
of our initial public offering; however, we cannot assure you that our estimate is accurate, and our Sponsor, its affiliates or members
of our management team are under no obligation to advance funds to us in such circumstances. Of the funds available to us, we expect
to use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could
also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed
to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable
to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention
to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business.
In
the event that our offering expenses exceed our estimate of $1,400,000, we may fund such excess with funds not to be held in the trust
account. In such case, unless funded by the proceeds of loans available from our Sponsor, its affiliates or members of our management
team 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 $1,400,000, the amount of funds we intend to be held outside the trust
account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase
or decrease. If we are required to seek additional capital, we would need to borrow funds from our Sponsor, its affiliates, members of
our management team or other third parties to operate or may be forced to liquidate. Neither our Sponsor, members of our management team
nor their affiliates is under any obligation to us in such circumstances. Any such advances may 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 loans may
be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The
warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination, we do not
expect to seek loans from parties other than our Sponsor, its affiliates or members of our management team 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 have not consummated our initial business combination within the required time period 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 shareholders may only receive
an estimated $10.00 per public share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
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 shareholders may be less than $10.00 per public share” and other risk factors herein.
We
may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which
could delay or prevent us from achieving our desired results.
We
may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements.
While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements,
the business combination may not be as successful as we anticipate.
To
the extent we complete our initial business combination with a large complex business or entity with a complex operating structure, we
may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent
us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business
and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business
combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated,
we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and
leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business.
Such combination may not be as successful as a combination with a smaller, less complex organization.
Our
shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
If
we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment
if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall
due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders.
Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad
faith, thereby exposing themselves and our company to claims, by paying public shareholders 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. We and our directors and
officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were
unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a fine
of $18,292.68 and imprisonment for five years in the Cayman Islands.
We
may not hold an annual meeting of shareholders until after the consummation of our initial business combination.
In
accordance with the Nasdaq 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 Nasdaq. There is no requirement under the Companies Act for us to hold annual or shareholder
meetings to elect directors. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity
to elect directors and to discuss company affairs with management. Our board of directors is divided into three 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 shareholders) serving a three-year term.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination target is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will
endeavor to evaluate the risks inherent in any particular business combination target, 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 our initial public offering than a direct investment, if an opportunity were available, in a business
combination target. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this report regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result,
our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any holders who choose
to retain their securities following the business combination could suffer a reduction in the value of their securities. Such holders
are unlikely to have a remedy for such reduction in value.
Unlike
some other similarly structured blank check companies, our Sponsor will receive additional Class A ordinary shares if we issue shares
to consummate an initial business combination.
The
founder shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion
will not have any redemption rights or be entitled to liquidating distributions from the trust account if we fail to consummate an initial
business combination) at the time of our initial business combination or earlier at the option of the holders thereof at a ratio such
that the number of Class A ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted
basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of our initial public offering,
plus (ii) the total number of Class A ordinary shares 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 Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares
issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to
our Sponsor, any of its affiliates or any members of our management team upon conversion of working capital loans. In no event will the
Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one. This is different than some other similarly
structured blank check companies in which the initial shareholders will only be issued an aggregate of 20% of the total number of shares
to be outstanding prior to the initial business combination.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
our initial business combination with which a substantial majority of our shareholders do not agree.
Our
amended and restated memorandum and articles of association does 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 (so that we
do not then become subject to the SEC’s “penny stock” rules). As a result, we may be able to complete our initial business
combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares
or, if we seek shareholder 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 or their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class
A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms
of the proposed business combination exceeds the aggregate amount of cash available to us, we will not complete the business combination
or redeem any shares, all Class A ordinary shares 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 memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete
our initial business combination that our shareholders may not support.
In
order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business
combination, increased redemption thresholds, 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 memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman
Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a shareholder meeting
of the company, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely
with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to
the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition, our amended and restated
memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares
for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance
or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with
our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within
24 months (or 30 months, subject to six one-month extensions) from the closing of our initial public offering or (B) with respect to
any other provision relating to the rights of holders of our Class A ordinary shares. To the extent any of such amendments would be deemed
to fundamentally change the nature of any of the securities offered through our initial public offering, we would register, or seek an
exemption from registration for, the affected securities.
Our
Sponsor controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially
in a manner that you do not support.
Our
Sponsor owns, on an as-converted basis, 20% of our issued and outstanding ordinary shares. Accordingly, it may exert a substantial influence
on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated
memorandum and articles of association. If our Sponsor purchases any additional Class A ordinary shares in the aftermarket or in privately
negotiated transactions, this would increase its control. Neither our Sponsor nor, to our knowledge, any of our officers or directors,
have any current intention to purchase additional securities, other than as disclosed in this report. Factors that would be considered
in making such additional purchases would include consideration of the current trading price of our Class A ordinary shares. In addition,
our board of directors, whose members were elected by our Sponsor, is and will be divided into three classes, each of which will generally
serve for a term of three years with only one class of directors being elected in each year. We may not hold an annual meeting of shareholders
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 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 Sponsor, because of its ownership
position, will control the outcome, as only holders of our Class B ordinary shares will have the right to vote on the election of directors
and to remove directors prior to our initial business combination. Accordingly, our Sponsor will continue to exert control at least until
the completion of our initial business combination. In addition, we have agreed not to enter into a definitive agreement regarding an
initial business combination without the prior consent of our Sponsor.
After
our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and
all of our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or
their other legal rights.
It
is possible that after our initial business combination, a majority of our directors and officers will reside outside of the United States
and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible,
for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers
or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers
under United States laws.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an
initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company
under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 following the completion
of our initial public offering and the sale of the private placement warrants will filed 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 our initial public offering were subject to Rule 419, that rule would prohibit the release
of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in
connection with our completion of an initial business combination.
Subsequent
to our 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 the price of our
securities, 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 identify
all material issues with 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
post-combination debt financing. Accordingly, any holders who choose to retain their securities following the business combination could
suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
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 shareholders may be less than $10.00 per public 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 (except our independent registered public accounting firm), 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 shareholders, such parties may not execute such agreements, or even if they execute
such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver,
in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If
any third-party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform
an analysis of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver
if management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we have not consummated an initial business combination within 24 months (or 30 months, subject to six one-month
extensions) from the closing of our initial public offering, 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 ten years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less
than the $10.00 per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement,
our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a transaction agreement, reduce the amounts 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
public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax
obligations, provided that such liability will not apply to any claims by a third-party or prospective target business that executed
a waiver of any and all rights to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that
an executed waiver is deemed to be unenforceable against a third-party, our sponsor will not be responsible to the extent of any liability
for such third-party claims.
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 we 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. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than
$10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser
amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
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 shareholders.
In
the event that the proceeds in the trust account are reduced 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 public share
due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations,
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 our independent directors choose not to enforce these indemnification obligations,
the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 per public
share.
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board
of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors
and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by shareholders 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 shareholders. 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 shareholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public shareholders, 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
shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public shareholders, 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 shareholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation may be reduced.
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 sector, except that we are not, under our amended and restated memorandum and articles
of association, be permitted to effectuate our initial business combination solely 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 holders who choose to retain their securities following the business
combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction
in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders 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 shareholder approval of the transaction is required by applicable law
or stock exchange listing requirements, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult
for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and
guidelines. If we have not consummated our initial business combination within the required time period, our public shareholders may
receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless.
We
are not required to obtain an opinion from an independent accounting or investment banking 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 shareholders 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 another independent entity that commonly renders valuation opinions that the price we are paying is fair to
our shareholders from a financial point of view. If no opinion is obtained, our shareholders 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 proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after our initial
public offering, which may include acting as financial advisor in connection with an initial business combination or as placement agent
in connection with a related financing transaction. Our underwriters are entitled to receive deferred commissions that will released
from the trust only on a completion of an initial business combination. These financial incentives may cause them to have potential conflicts
of interest in rendering any such additional services to us after our initial public offering, including, for example, in connection
with the sourcing and consummation of an initial business combination.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after our initial
public offering, including, for example, identifying potential targets, providing financial advisory services, acting as a placement
agent in a private offering or arranging debt financing. We may pay such underwriter or its affiliate fair and reasonable fees or other
compensation 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 or their respective affiliates and no fees or other compensation for such services will be paid to any of
the underwriters or their respective affiliates prior to the date that is 60 days from the date of this report, unless FINRA determines
that such payment would not be deemed underwriters’ compensation in connection with our initial public offering. The underwriters
are also entitled to receive deferred commissions that are conditioned on the completion of an initial business combination. The fact
that the underwriters’ or their respective affiliates’ financial interests tied to the consummation of a business combination
transaction may give rise to potential conflicts of interest in providing any such additional services to us, including potential conflicts
of interest in connection with the sourcing and consummation of an initial business combination.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we have not consummated our initial business combination within the required time period,
our public shareholders may receive only approximately $10.00 per public share, or less 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 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 have not consummated our initial business combination within the required time period, our public
shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust
account and our warrants will expire worthless.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
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, 2022. 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 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
business 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 acquisition.
The
provisions of our amended and restated memorandum and articles of association that relate to the rights of holders of our Class A ordinary
shares (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the
approval of a special resolution which requires the approval of the holders of at least two-thirds of our ordinary shares who attend
and vote at a shareholder meeting of the company, 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 memorandum and articles of association to facilitate the completion
of an initial business combination that some of our shareholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those
which relate to the rights of a company’s shareholders, without approval by a certain percentage of the company’s shareholders.
In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company’s shareholders.
Our amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of
our Class A ordinary shares (including the requirement to deposit proceeds of our initial public offering and the private placement of
warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public
shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary
shares who attend and vote at a shareholder meeting of the company, and corresponding provisions of the trust agreement governing the
release of funds from our trust account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the
provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior
to our initial business combination may only be amended by a special resolution passed by not less than two-thirds of our ordinary shares
who attend and vote at our shareholder meeting which shall include the affirmative vote of a simple majority of our Class B ordinary
shares. Our Sponsor and its permitted transferees, if any, who collectively beneficially own, on an as-converted basis, 20% of our Class
A ordinary shares upon the closing of our initial public offering, will participate in any vote to amend our amended and restated memorandum
and articles of association 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 memorandum and articles of association which govern our pre-business combination
behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination with
which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles
of association.
Our
Sponsor, executive officers and directors have agreed, pursuant to agreements with us, that they will not propose any amendment to our
amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide
holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or
to redeem 100% of our public shares if we do not complete our initial business combination within 24 months (or 30 months, subject to
six one-month extensions) from the closing of our initial public offering or (B) with respect to any other provision relating to the
rights of holders of our Class A ordinary shares, unless we provide our public shareholders with the opportunity to redeem their Class
A ordinary shares 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 taxes,
if any, divided by the number of the then-outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, do not have the ability to pursue remedies against our Sponsor, executive officers or directors
for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative
action, subject to applicable law.
Our
letter agreement with our Sponsor, officers and directors may be amended without shareholder approval.
Our
letter agreement with our Sponsor, officers and directors contains provisions relating to transfer restrictions of our founder shares
and private placement warrants, indemnification of the trust account, waiver of redemption rights and participation in liquidating distributions
from the trust account. The letter agreement may be amended without shareholder approval (although releasing the parties from the restriction
not to transfer the founder shares for 180 days following the date of our final prospectus will require the prior written consent of
the representatives). While we do not expect our board to approve any amendment to the letter agreement prior to our initial business
combination, it may be possible that our board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve
one or more amendments to the letter agreement. Any such amendments to the letter agreement would not require approval from our shareholders
and may have an adverse effect on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination. If we have not consummated our initial business
combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less
in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient to
allow us to complete our initial business combination, because we have not yet selected any prospective target business we cannot ascertain
the capital requirements for any particular transaction. If the net proceeds of our initial public offering and the sale of the private
placement warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of the available
net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from shareholders who elect
redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection
with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination.
We cannot assure you that such financing will be available on acceptable terms, if at all. The current economic environment may make
it difficult for companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed
to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. If we have not consummated our initial business combination within
the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing
to complete our initial business combination, we may require such financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target
business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our
initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’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 holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
Such holders are unlikely to have a remedy for such reduction in value.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although
we have no commitments as of the date of this report to issue any notes or other debt securities, or to otherwise incur outstanding debt
following our initial public offering, we may choose to incur substantial debt to complete our initial business combination. We and our
officers 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:
|
● |
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 is payable on demand; |
|
● |
our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding; |
|
● |
our
inability to pay dividends on our Class A ordinary shares; |
|
● |
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 Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and 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;
and |
|
● |
limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private placement
warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This
lack of diversification may negatively impact our operations and profitability
The
net proceeds from our initial public offering and the sale of the private placement warrants provided us with up to $295,338,750 that
we may use to complete our initial business combination.
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.
Accordingly,
the prospects for our success may be:
|
● |
solely
dependent upon the performance of a single business, property or asset; or |
|
● |
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. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
(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 a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little
public information 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 a business combination with a company that is not
as profitable as we suspected, if at all.
Because
we must furnish our shareholders 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 a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or international financial reporting 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 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.
If
we have not consummated an initial business combination within 24 months (or 30 months, subject to six one-month extensions) from the
closing of our initial public offering, our public shareholders may be forced to wait beyond such 24 months (or 30 months, subject to
six one-month extensions) before redemption from our trust account.
If
we have not consummated an initial business combination within 24 months (or 30 months, subject to six one-month extensions) from the
closing of our initial public offering, the proceeds 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 taxes, if any (less up to $100,000 of interest to pay dissolution expenses),
will be used to fund the redemption of our public shares, as further described herein. Any redemption of public shareholders from the
trust account will be effected automatically by function of our amended and restated memorandum and articles of association prior to
any voluntary winding up. If we are required to wind up, liquidate the trust account and distribute such amount therein, pro rata, to
our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable
provisions of the Companies Act. In that case, investors may be forced to wait beyond 24 months (or 30 months, subject to six one-month
extensions) from the closing of our initial public offering before the redemption proceeds of our trust account become available to them,
and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to
investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or
amend certain provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have
sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions
if we do not complete our initial business combination and do not amend certain provisions of our amended and restated memorandum and
articles of association. Our amended and restated memorandum and articles of association provide that, if we wind up for any other reason
prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation
of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable Cayman
Islands law.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
|
● |
restrictions
on the nature of our investments; and |
|
● |
restrictions
on the issuance of securities, |
|
● |
each
of which may make it difficult for us to complete our initial business combination. |
|
● |
In
addition, we may have imposed upon us burdensome requirements, including: |
|
● |
registration
as an investment company with the SEC; |
|
● |
adoption
of a specific form of corporate structure; and |
|
● |
reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to. |
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 of securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete
a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses
or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive
investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held
in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these
instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. An investment in our securities 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 either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly
tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify
the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in
connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within 24 months (or 30 months, subject to six one-month extensions)from the closing of our initial public offering or (B) with respect
to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent our completing an initial business
combination within 24 months (or 30 months, subject to six one-month extensions) from the closing of our initial public offering, our
return of the funds held in the trust account to our public shareholders 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 a business combination. If we have not consummated our initial business combination
within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless.
We
have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely
affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose
any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Based
upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2021, because of a material
weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management
has concluded that our control around the interpretation and accounting for certain complex financial instruments was not effectively
designed or maintained. This material weakness resulted in the misstatement of the Company’s audited balance sheet as of February
5, 2021 and its interim financial statements and notes as reported in its SEC filings for the years ended December 31 2022 and 2021.
Any
failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely impact
our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements
are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed
on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares are listed,
the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal
controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the
trading price of our stock.
We
can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful
in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify
irregularities or errors or to facilitate the fair presentation of our financial statements.
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.”
If
we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include,
but not necessarily be limited to, suspending the pursuit of a Business Combination. We cannot provide any assurance that new financing
will be available to us on commercially acceptable terms, if at all. Further, our plans to raise capital and to consummate our initial
business combination may not be successful. We currently have a mandatory liquidation date of August 5, 2023 to complete a Business Combination.
Although we expect to complete a business combination on or prior to August 5, 2023, it is uncertain whether we will be able to do so.
These factors, among others, raise substantial doubt about our ability to continue as a going concern through our liquidation date. The
financial statements contained elsewhere in this Report do not include any adjustments that might result from our inability to consummate
a Business Combination or our inability to continue as a going concern.
Risks
Relating to our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per share redemption amount received by public shareholders may be less than $10.00 per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 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. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they
have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in
recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt
similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments
to our amended and restated memorandum and articles of association, our public shareholders are entitled to receive their pro-rata share
of the proceeds held in the trust account, plus any interest income, net of income taxes paid or payable (less, in the case we are unable
to complete our initial business combination, $100,000 of interest to pay dissolution expenses). Negative interest rates could reduce
the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00
per share.
If
we seek shareholder 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 shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose
the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If
we seek shareholder 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 memorandum and articles of association provide that a public
shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 15% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares,” without our prior consent.
However,
we would not be restricting our shareholders’ 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 15% and, in order to dispose of such shares, would be required
to sell your shares in open market transactions, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
units, Class A ordinary shares and warrants are listed on Nasdaq. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a
minimum amount in shareholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300
public holders).
Additionally,
our units will not be traded after completion of our initial business combination and, in connection with our initial business combination,
we will be required to demonstrate compliance with the Nasdaq’s initial listing requirements, which are more rigorous than the
Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance,
our share price would generally be required to be at least $4.00 per share and our shareholders’ equity would generally be required
to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders (with at least 50% of such round lot
holders holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
|
● |
a
limited availability of market quotations for our securities; |
|
● |
reduced
liquidity for our securities; |
|
● |
a
determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A
ordinary shares 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.” Our units, Class A ordinary shares and warrants
are listed on Nasdaq, and, as a result, qualify as covered securities under the statute. Although the states are preempted from regulating
the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud,
and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular
case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check
companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these
powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute, and we would be subject to regulation
in each state in which we offer our securities.
We
may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue Class A ordinary shares upon the conversion of the founder
shares 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 memorandum and articles of association. Any such issuances would dilute the interest of our shareholders
and likely present other risks.
Our
amended and restated memorandum and articles of association authorize the issuance of up to 500,000,000 Class A ordinary shares, par
value $0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value
$0.0001 per share. There are 475,000,000 and 43,750,000 authorized but unissued Class A ordinary shares and Class B ordinary shares,
respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding
warrants or shares issuable upon conversion of the Class B ordinary shares, if any. The Class B ordinary shares will automatically convert
into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be
entitled to liquidating distributions from the trust account if we fail to consummate an initial business combination) at the time of
our initial business combination or earlier at the option of the holders thereof as described herein and in our amended and restated
memorandum and articles of association. Immediately after our initial public offering, there will be no preference shares issued and
outstanding.
We
may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares in
connection with our redeeming the warrants as described in “Description of Securities-Warrants-Public Shareholders’ Warrants”
or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination
as a result of the anti-dilution provisions as set forth herein. However, our amended and restated memorandum and articles of association
provide, among other things, that prior to or in connection with our initial business combination, we may not issue additional shares
that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination or
on any other proposal presented to shareholders prior to or in connection with the completion of an initial business combination. These
provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum
and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares:
|
● |
may
significantly dilute the equity interest of investors in our initial public offering, which dilution would increase if the anti-dilution
provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis
upon conversion of the Class B ordinary shares; |
|
● |
may
subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded
our Class A ordinary shares; |
|
● |
could
cause a change in control if a substantial number of Class A ordinary shares 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; |
|
● |
may
have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person
seeking to obtain control of us; |
|
● |
may
adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and |
|
● |
may
not result in adjustment to the exercise price of our warrants. |
Holders
of Class A ordinary shares will not be entitled to vote on any election of directors we hold prior to our initial business combination.
Prior
to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors. Holders
of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to our initial business
combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you
may not have any say in the management of our company prior to the consummation of an initial business combination.
We
are not registering the Class A ordinary shares 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 and potentially causing such warrants to expire worthless.
We
are not registering the Class A ordinary shares 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 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file
with the SEC a registration statement covering the issuance of such shares, and we will use our commercially reasonable efforts to cause
the same to become effective within 60 business days after the closing of our initial business combination and to maintain the effectiveness
of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed.
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, complete 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 in accordance with the above requirements, we will be required to permit holders to exercise
their warrants on a cashless basis, in which case, the number of Class A ordinary shares that you will receive upon cashless exercise
will be based on a formula subject to a maximum amount of shares equal to 0.361 Class A ordinary shares per warrant (subject to adjustment).
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
ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the
definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of
public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our
commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Exercising the warrants on a cashless basis could have the effect of reducing the potential “upside” of the holder’s
investment in our company because the warrant holder will hold a smaller number of Class A ordinary shares upon a cashless exercise of
the warrants they hold. 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 no exemption is 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 shall 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 Class A ordinary shares included in the units. There may be a circumstance
where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding
exemption does not exist for holders of the public warrants included as part of units sold in our initial public offering. In such an
instance, our Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise
their warrants and sell the ordinary shares underlying their warrants while holders of our public warrants would not be able to exercise
their warrants and sell the underlying ordinary shares. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying Class A ordinary shares for sale under all applicable state securities
laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public 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 our Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all
without your approval.
Our
warrants were 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 for the
purpose of (i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description
of the terms of the warrants and the warrant agreement set forth in the final prospectus related to our initial public offering, or defective
provision, (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the warrant
agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the
parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the
registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants
is required to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may
amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants
approve of such amendment and, solely with respect to any amendment to the terms of the private placement warrants or any provision of
the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants.
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, shorten the exercise period or decrease the number of Class A ordinary shares 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 the outstanding public warrants at any time after they become exercisable and prior to their expiration, at
a price of $0.01 per warrant, provided that the closing price of our Class A ordinary shares equals or exceeds $18.00 per share
(as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the
heading “Description of Securities-Warrants-Public Shareholders’ Warrants-Anti-Dilution Adjustments”) for any 20 trading
days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that
certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are
unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem
the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants
could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to
do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the
nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less
than the market value of your warrants.
In
addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that
the closing price of our Class A ordinary shares equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third
trading day prior to proper notice of such redemption and provided that certain other conditions are met, including that holders
will be able to exercise their warrants prior to redemption for a number of Class A ordinary shares determined based on the redemption
date and the fair market value of our Class A ordinary shares. The value received upon exercise of the warrants (1) may be less than
the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher
and (2) may not compensate the holders for the value of the warrants, including because the number of ordinary shares received is capped
at 0.361 Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None
of the private placement warrants are be redeemable by us as so long as they are held by our Sponsor or its permitted transferees.
Our
warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial
business combination.
We
issued warrants to purchase 14,375,000 of our Class A ordinary shares as part of the units sold in our initial public offering and, simultaneously
with the closing of our initial public offering and exercise of the underwriters’ over-allotment option, we issued in private placements
an aggregate of 8,750,000 private placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, subject
to adjustment. In addition, if the Sponsor, its affiliates or a member of our management team makes any working capital loans, it may
convert up to $1,500,000 of such loans into up to an additional 1,000,000 private placement warrants, at the price of $1.00 per warrant.
We may also issue Class A ordinary shares in connection with our redemption of our warrants.
To
the extent we issue ordinary shares for any reason, including to effectuate a business combination, the potential for the issuance of
a substantial number of additional Class A ordinary shares upon exercise of these warrants could make us a less attractive acquisition
vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares
and reduce the value of the Class A ordinary shares issued to complete the business combination. Therefore, our warrants may make it
more difficult to effectuate a business combination or increase the cost of acquiring the target business.
Because
each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units
of other blank check companies.
Each
unit contains one-half of one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants were issued upon separation
of the units, and only whole units trade. 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 the number of Class A ordinary shares to be issued to the
warrant holder. This is different from other offerings similar to ours whose units include one ordinary share and one whole warrant to
purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants
upon completion of a business combination since the warrants will be exercisable in the aggregate for one-half of the number of shares
compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger
partner for target businesses.
Nevertheless,
this unit structure may cause our units to be worth less than if a unit included a warrant to purchase one whole share.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if (i) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per ordinary share, (ii)
the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions),
and (iii) the Market Value is below $9.20 per share, then the exercise price of the warrants will be adjusted to be equal to 115% of
the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices described below under “Description
of Securities-Warrants-Public Shareholders’ Warrants-Redemption of warrants when the price per Class A ordinary share equals or
exceeds $18.00” and “-Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” will
be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per
share redemption trigger price described below under “Description of Securities-Warrants-Public Shareholders’ Warrants-Redemption
of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal
to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business
combination with a target business.
The
warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information
regarding such other security at this time.
In
certain situations, including if we are not the surviving entity in our initial business combination, the warrants may become exercisable
for a security other than the Class A ordinary shares. As a result, if the surviving company redeems your warrants for securities pursuant
to the warrant agreement, you may receive a security in a company of which you do not have information at this time. Pursuant to the
warrant agreement, the surviving company will be required to use commercially reasonable efforts to register the issuance of the security
underlying the warrants within twenty business days of the closing of an initial business combination.
Provisions
in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our
amended and restated memorandum and articles of association contains provisions that may discourage unsolicited takeover proposals that
shareholders may consider to be in their best interests. These provisions include a staggered board of directors, the ability of the
board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of
our initial business combination only holders of our Class B ordinary shares, which have been issued to our Sponsor, are entitled to
vote on the election of directors, which may make more difficult the removal of management and may discourage transactions that otherwise
could involve payment of a premium over prevailing market prices for our securities.
The
grant of registration rights to our Sponsor 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 ordinary shares.
Pursuant
to an agreement entered into on or prior to the closing of our initial public offering, our Sponsor and its permitted transferees can
demand that we register the resale of the Class A ordinary shares into which founder shares are convertible, the private placement warrants
and the Class A ordinary shares issuable upon exercise of the private placement warrants, and warrants that may be issued upon conversion
of working capital loans and the Class A ordinary shares issuable upon conversion of such warrants. The registration rights will be exercisable
with respect to the founder shares and the private placement warrants and the Class A ordinary shares issuable upon exercise of such
private placement 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 ordinary shares.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market price of our securities that is expected when the securities owned by
our Sponsor or its permitted transferees are registered for resale.
Risks
Relating to our Sponsor and Management Team
We
are dependent upon our executive officers and directors and their loss 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 officers and directors, at least until we have completed our initial business
combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs
and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential
business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on
the life of, any of our directors or executive officers.
The
unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
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, director or advisory positions following our initial business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after
our initial business combination, 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.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination,
and a particular business combination may be conditioned on the retention or resignation of such key personnel. 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 our company after the completion of our initial business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such
individuals may influence their motivation in identifying and selecting a target business. In addition, pursuant to an agreement entered
into on or prior to the closing of our initial public offering, our Sponsor, upon and following consummation of an initial business combination,
will be entitled to nominate three individuals for election to our board of directors, as long as the Sponsor holds any securities covered
by the registration and shareholder rights agreement.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business
combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
Our
executive 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
executive 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 a 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 executive officers
and directors is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive
officers and directors are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors
also serve as officers and board members for other entities. If our executive 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.
Our
officers and directors presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other
entities, including another blank check company, and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses
or entities. Our Sponsor, officers, and directors are, and may in the future become, affiliated with entities that are engaged in a similar
business. In addition, our Sponsor, officers, and directors may participate in the formation of, or become an officer or director of,
any other blank check company prior to completion of our initial business combination. As a result, our Sponsor, officers, or directors
could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check
company with which they may become involved. However, we do not believe that any potential conflicts would materially affect our ability
to complete our initial business combination.
Our
Sponsor, 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 memorandum and articles
of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer
shall have any duty, except to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same
of similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an
opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director of officer,
on the one hand, and us, on the other.
Our
executive 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, executive officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are
a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our Sponsor,
our directors or executive officers, although we do not intend to do so. Nor do we 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.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target
business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and
selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of
a particular business combination are appropriate and in our shareholders’ best interest. If this were the case, it would be a
breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals
for infringing on our shareholders’ rights. See the section entitled “Description of Securities-Certain Differences in Corporate
Law-Shareholders’ Suits” for further information on the ability to bring such claims. However, we might not ultimately be
successful in any claim we may make against them for such reason.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, executive officers, or directors which may raise potential conflicts of interest.
In
light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses
or entities affiliated with our Sponsor, executive officers, or directors. Our directors also serve as officers and board members for
other entities, including, without limitation, those described under “management-Conflicts of Interest.” Our sponsor, officers
and directors may Sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking
an initial business combination. 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 substantive discussions concerning a business combination with any such entity
or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue
such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination as set forth
in “Proposed Business-Effecting Our Initial Business Combination-Evaluation of a Target Business and Structuring of Our Initial
Business Combination” and such transaction was approved by a majority of our independent and disinterested directors. Despite our
agreement to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or
international businesses affiliated with our Sponsor, executive officers, or directors potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public shareholders as they would be absent
any conflicts of interest.
Our
management may not be able to maintain control of a target business after our initial business combination. Upon the loss of control
of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
We
may structure our initial business combination so that the post-business combination company in which our public shareholders 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-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target business sufficient for 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-business combination company owns
50% or more of the voting securities of the target, our shareholders 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.
For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary 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% interest in the
target. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior
to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction. In addition,
other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of
the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able
to maintain control of the target business.
Since
our Sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not completed
(other than with respect to public shares they may have acquired during or may acquire after our initial public offering), a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On
November 19, 2020, our Original Sponsor paid $25,000 to cover certain expenses on our behalf in consideration of 5,750,000 Class B ordinary
shares, par value $0.0001. In January 2021, we effected a 1 for 1.2 forward stock split of the founder shares that increased the number
of outstanding founder shares from 5,750,000 to 7,618,750 shares and our Original Sponsor transferred an aggregate of 75,000 founder
shares to our independent director nominees and an aggregate of 50,000 founder shares to our Former Advisors. Prior to the initial investment
in the company of $25,000 by the Original Sponsor, the company had no assets, tangible or intangible. The per share price of the founder
shares was determined by dividing the amount contributed to the company by the number of founder shares issued. The founder shares will
be worthless if we do not complete an initial business combination. In addition, our sponsor has committed, pursuant to a written agreement,
to purchase an aggregate of 8,750,000, each exercisable to purchase one Class A ordinary share at $11.50 per share, subject to adjustment,
at a price of $1.00 per warrant ($8,750,000 in the aggregate), in a private placement that closed simultaneously with the closing of
our initial public offering. If we do not consummate an initial business within 24 months (or 30 months, subject to six one-month extensions)
from the closing of our initial public offering, the private placement warrants will expire worthless. The personal and financial interests
of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing
an initial business combination and influencing the operation of the business following the initial business combination. This risk may
become more acute as the 24-month anniversary of the closing of our initial public offering nears, which is the deadline for our consummation
of an initial business combination.
Certain
of our officers and directors have or will have direct and indirect economic interests in us and/or our Sponsor after the consummation
of our initial public offering and such interests may potentially conflict with those of our public shareholders as we evaluate and decide
whether to recommend a potential business combination to our public shareholders.
Certain
of our officers and directors may own membership interests in our Sponsor and indirect interests in our Class B ordinary shares and private
placement warrants which may result in interests that differ from the economic interests of the investors in our initial public offering,
which includes making a determination of whether a particular target business is an appropriate business with which to effectuate our
initial business combination. There may be a potential conflict of interest between our officers and directors that hold membership interests
in our Sponsor and our public shareholders that may not be resolved in favor of our public shareholders.
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 (except to the extent they are entitled to funds from the trust account due to their ownership
of public shares). 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 shareholders 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 shareholders. Furthermore, a shareholder’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.
General
Risk Factors
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.
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 are 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
warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results
and thus may have an adverse effect on the market price of our securities.
On
April 12, 2021, the staff of the SEC (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting
and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Staff
Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants
may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. As a result of the SEC
Staff Statement, we reevaluated the accounting treatment of our 15,237,500 Public Warrants and 8,750,000 Private Placement Warrants,
and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported
in earnings.
As
a result, included on our condensed balance sheet as of September 30, 2021 contained elsewhere in this Quarterly Report are derivative
liabilities related to embedded features contained within our warrants. ASC 815, Derivatives and Hedging, provides for the remeasurement
of the fair value of such derivatives at each balance sheet date, with a resulting noncash gain or loss related to the change in the
fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial
statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring
fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the
amount of such gains or losses could be material. The impact of changes in fair value on earnings may have an adverse effect on the market
price of our securities.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting 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 shareholder approval of any
golden parachute payments not previously approved. As a result, our shareholders 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 ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less
attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would
be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares
held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed
fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30. To the extent
we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies
difficult or impossible.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New
York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which
could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New
York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of
the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District
Court for the Southern District of New York (“foreign action”) in the name of any holder of our warrants, such holder shall
be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection
with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service
of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement
inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs
associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition
and results of operations and result in a diversion of the time and resources of our management and board of directors.
Because
we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to
protect your rights through the U.S. federal courts may be limited.
We
are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service
of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts
against our directors or officers.
Our
corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (as the same may
be supplemented or amended from time to time) and the common law of the Cayman Islands. We are also subject to the federal securities
laws of the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman
Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands
as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the
Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different
from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands
has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed
and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders
derivative action in a Federal court of the United States.
We
have been advised by Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against
us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United
States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the
civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those
provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments
obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court
of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon
the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign
judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in
respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the
grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy
of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court
may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken
by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States
company.
An
investment in us may result in uncertain or adverse U.S. federal income tax consequences.
An
investment in us may result in uncertain U.S. federal income tax consequences. For instance, because there are no authorities that directly
address instruments similar to the units we issued in our initial public offering, the allocation an investor makes with respect to the
purchase price of a unit between the Class A ordinary shares and the one-half of a warrant to purchase one Class A ordinary share included
in each unit could be challenged by the IRS or courts. Furthermore, the U.S. federal income tax consequences of a cashless exercise of
warrants included in the units we issued in our initial public offering is unclear under current law. Finally, it is unclear whether
the redemption rights with respect to our ordinary shares suspend the running of a U.S. Holder’s) holding period for purposes of
determining whether any gain or loss realized by such holder on the sale or exchange of Class A ordinary shares is long-term capital
gain or loss and for determining whether any dividend we pay would be considered “qualified dividends” for U.S. federal income
tax purposes. Prospective investors are urged to consult their tax advisors with respect to these and other tax consequences when purchasing,
holding or disposing of our securities.
Since
only holders of our founder shares will have the right to vote on the election of directors, upon the listing of our shares on Nasdaq,
Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq rules and, as a result, we may qualify
for exemptions from certain corporate governance requirements.
After
completion of our initial public offering, only holders of our founder shares will have the right to vote on the election of directors.
As a result, Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq corporate governance standards.
Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group
or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements,
including the requirements that:
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we
have a board that includes a majority of “independent directors,” as defined under the rules of Nasdaq; |
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we
have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing
the committee’s purpose and responsibilities; and |
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we
have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities. |
We
do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of Nasdaq, subject to applicable
phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections
afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
We
may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences
to U.S. investors.
If
we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our Class A ordinary
shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting
requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception
and the timing of our initial business combination. Depending on the particular circumstances the application of the start-up exception
may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there
can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC
status for any taxable year, however, will not be determinable until after the end of such taxable year. Moreover, if we determine we
are a PFIC for any taxable year, upon written request, we will endeavor to provide to a U.S. Holder such information as the Internal
Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to
make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required
information, and such election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their
tax advisors regarding the possible application of the PFIC rules with respect to their particular circumstances.
We
may reincorporate in another jurisdiction in connection with our initial business combination and such reincorporation may result in
taxes imposed on shareholders or warrant holders.
We
may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Act, reincorporate
in the jurisdiction in which the target company or business is located or in another jurisdiction. This may require a shareholder or
warrant holder to recognize taxable income in the jurisdiction in which the shareholder or warrant holder is a tax resident (or in which
its members are resident if it is a tax transparent entity). We do not intend to make any cash distributions to shareholders or warrant
holders to pay such taxes. Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership
of us after the reincorporation.
Risks
Associated with Acquiring and Operating a Business in Foreign Countries
If
we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may
face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect
such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
we pursue a target a company with operations or opportunities outside of the United States for our initial business combination, we would
be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing
our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our initial business combination with such a company, 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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costs
and difficulties inherent in managing cross-border business operations; |
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rules
and regulations regarding currency redemption; |
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complex
corporate withholding taxes on individuals; |
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laws
governing the manner in which future business combinations may be effected; |
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exchange
listing and/or delisting requirements; |
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tariffs
and trade barriers; |
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regulations
related to customs and import/export matters; |
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local
or regional economic policies and market conditions; |
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unexpected
changes in regulatory requirements; |
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States; |
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currency
fluctuations and exchange controls; |
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challenges
in collecting accounts receivable; |
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cultural
and language differences; |
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employment
regulations; |
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underdeveloped
or unpredictable legal or regulatory systems; |
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protection
of intellectual property; |
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social
unrest, crime, strikes, riots and civil disturbances; |
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regime
changes and political upheaval; |
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terrorist
attacks, natural disasters and wars; and |
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deterioration
of political relations with the United States. |
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business
combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our business, financial
condition and results of operations.
If
our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, our management may resign from their positions as officers or directors of the company and the management
of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar
with United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time
and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues
which may adversely affect our operations.
After
our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue
may be derived from our operations in any such country. Accordingly, our results of operations and prospects will be subject, to a significant
extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which
we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be
sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and
if we effect our initial business combination, the ability of that target business to become profitable.
Exchange
rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In
the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar equivalent
of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value
of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions.
Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business
or, following consummation of our initial business combination, our financial condition and results of operations. Additionally, if a
currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a target
business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We
may reincorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction may
govern some or all of our future material agreements and we may not be able to enforce our legal rights.
In
connection with our initial business combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another
jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The
system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as
in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss
of business, business opportunities or capital.
We
are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased
both our costs and the risk of non-compliance.
We
are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection
of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable
law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased
general and administrative expenses and a diversion of management time and attention from seeking a business combination target.
Moreover,
because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time
as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs
necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations
and any subsequent changes, we may be subject to penalty and our business may be harmed.