ITEM
1. BUSINESS
Arowana
Inc. (the “Company” or “we”) is a blank check company formed on October 1, 2014 to acquire, through a
merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar
business combination, one or more businesses or entities. The Company’s efforts in identifying a prospective target businesses
are not limited to a particular industry or geographic region of the world although the Company is currently focusing on target
businesses located in the Asia Pacific region (with a particular emphasis on South East Asia and Australia) operating in the energy
(including solar and alternative energy) industry, or target businesses in such industry operating outside of those geographic
locations which the Company believes would benefit from expanding their operations to such locations.
On
May 6, 2015, we closed our initial public offering of 7,200,000 units with each unit consisting of one ordinary share, par value
$.0001 per share (“Ordinary Share”), one right (“Right”) to receive one-tenth (1/10) of one Ordinary Share
upon consummation of an initial business combination and one redeemable warrant (“Warrant”) entitling the holder to
purchase one-half of one Ordinary Share at a price of $12.50 per full share commencing on the later of our completion of an initial
business combination or April 30, 2016. Simultaneous with the consummation of the initial public offering, we consummated the
private placement of 455,000 private Units (“Private Units”) at a price of $10.00 per Private Unit, generating total
proceeds of $4,550,000. The Private Units were purchased by the Company’s shareholders prior to the initial public offering
(the “initial shareholders”) and their affiliates and designees.
On
May 12, 2015, we consummated the sale of an additional 1,080,000 units subject to the underwriters’ over-allotment option
(“Overallotment”). The Offering and the Overallotment are collectively referred to as the “Offering.”
Simultaneously with the consummation of the Overallotment, we consummated a private placement of an additional 54,000 Private
Units to our initial shareholders and/or their affiliates generating gross proceeds of $540,000.
Competitive
Advantages
We
believe our competitive strengths to be the following:
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares in the target business for our shares or for
a combination of shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target
businesses might find this method a more certain and cost effective method to becoming a public company than the typical initial
public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public
reporting efforts that will likely not be present to the same extent in connection with a business combination with us. Furthermore,
once the business combination is consummated, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering as well as general market conditions that
could prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital
and an additional means of providing management incentives consistent with stockholders’ interests than it would have as
a privately-held company. It can offer further benefits by augmenting a company’s profile among potential new customers
and vendors and aid in attracting talented employees.
While
we believe that our status as a public company will make us an attractive business partner, some potential target businesses may
view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination
with a more established entity or with a private company.
Financial
Position
We
offer a target business a variety of options such as providing the owners of a target business with shares in a public company
and a public means to sell such shares, providing cash for stock, and providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to
use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its
needs and desires.
Management
Operating and Investing Experience
We
believe that our executive officers possess the experience, skills and contacts necessary to source, evaluate, and execute an
attractive business combination.
Kevin
Chin, our Chairman and Chief Executive Officer, is the founder of Arowana & Co. which comprises Arowana Partners Group, Arowana
Capital and Arowana International. Over his 20 year career, Mr. Chin has held a number of strategic and operational leadership
roles and was also previously with Lowy Family Group, J.P. Morgan in Sydney and New York, Ord Minnett, PriceWaterhouseCoopers
and Deloitte. Mr. Chin has significant experience in strategic and operational management, private equity, leveraged buyouts of
public companies, mergers and acquisitions and capital raisings.
Gary
Hui, our Chief Financial and Investment Officer, was formerly a Managing Director of Indus Capital Partners, LLC, a hedge fund
founded by former Soros Fund Management Partners. Mr. Hui has 20 years of experience in commercial enterprise, spanning the disciplines
of accounting, mergers and acquisitions, equity capital markets and alternative investments.
We
intend to leverage the contacts and relationships of our executive officers, as well as those of our other directors, to source,
evaluate and execute business combination opportunities.
Effecting
a Business Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time.
We intend to utilize cash derived from the proceeds of the Offering and the private placement of Private Units, our share capital,
debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of the Offering
and the private placement of Private Units are intended to be applied generally toward effecting a business combination, the proceeds
are not otherwise being designated for any more specific purposes. A business combination may involve the acquisition of, or merger
with, a company which does not need substantial additional capital but which desires to establish a public trading market for
its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include
time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the
alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early
stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business,
we will probably have the ability, as a result of our limited resources, to effect only a single business combination.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the
financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses they think we may be interested in on
an unsolicited basis, since many of these sources will have read the prospectus from our Offering and know what types of businesses
we are targeting. Our officers and directors, as well as their respective affiliates, may also bring to our attention target business
candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. We may determine to engage the services of professional firms
or other individuals that specialize in business acquisitions on a formal basis in which event we may pay a finder’s fee,
consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.
In no event, however, will any of our existing officers, directors, special advisors or initial shareholders, or any entity with
which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services
they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction). If we
decide to enter into a business combination with a target business that is affiliated with our officers, directors or initial
shareholders, we will do so only if we have obtained an opinion from an independent investment banking firm, or another independent
entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, that the business combination
is fair to our unaffiliated shareholders from a financial point of view.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to the limitations that a target business have a fair market value of at least 80% of the balance in the trust account (excluding
taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial
business combination, as described below in more detail, our management will have virtually unrestricted flexibility in identifying
and selecting a prospective target business. We have not established any other specific attributes or criteria (financial or otherwise)
for prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors,
including one or more of the following:
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financial
condition and results of operation;
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growth
potential;
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experience
and skill of management and availability of additional personnel;
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capital
requirements;
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competitive
position;
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barriers
to entry;
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stage
of development of its products, processes or services;
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degree
of current or potential market acceptance of the products, processes or services;
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proprietary
features and degree of intellectual property or other protection for its products, processes or services;
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regulatory
environment of the industry; and
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costs
associated with effecting the business combination.
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We
believe such factors will be important in evaluating prospective target businesses, regardless of the location or industry in
which such target business operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter
into a business combination with a target business that does not meet these criteria and guidelines.
Any
evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors
as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business
objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other
information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated
third parties we may engage.
The
time and costs required to select and evaluate a target business and to structure and complete the business combination cannot
presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce
the amount of capital available to otherwise complete a business combination.
Fair
Market Value of Target Business
Pursuant
to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account (excluding taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target
business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a
business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however,
structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other
reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act of 1940, as amended. Even if the post-transaction
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-transaction company, depending on valuations ascribed to the target and us
in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of
new shares in exchange for all of the outstanding capital 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-transaction company, only 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. In order to consummate such an acquisition, we may issue a significant amount of our debt
or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt
or equity securities. The fair market value of the target will be determined by our board of directors based upon one or more
standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value).
If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain
an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation
opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will
not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board
of directors independently determines that the target business complies with the 80% threshold.
Lack
of Business Diversification
Our
business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at
the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating
businesses at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating
a business combination with only a single entity, our lack of diversification may:
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subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to a business combination, and
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result
in our dependency upon the performance of a single operating business or the development or market acceptance of a single
or limited number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses 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 acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Limited
Ability to Evaluate the Target Business’ Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition,
we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination
cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior
management or advisory positions with us following a business combination, it is unlikely that they will devote their full time
efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after
the consummation of a business combination 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 them to receive compensation in the form of cash payments and/or our securities for services they would render
to the company after the consummation of the business combination. Additionally, our officers and directors may not have significant
experience or knowledge relating to the operations of the particular target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do
recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek shareholder approval of our initial business combination
at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether
they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit
in the trust account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell their public shares
to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not
to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account.
If we determine to engage in a tender offer, such tender offer will be structured so that each shareholder may tender any or all
of his, her or its public shares rather than some pro rata portion of his, her or its shares. 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 based on a variety of factors such as the timing of the transaction, whether the terms of the transaction
would otherwise require us to seek shareholder approval or whether we were deemed to be a foreign private issuer (which would
require us to conduct a tender offer rather than seeking shareholder approval under SEC rules). Unlike other blank check companies
which require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related
conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required
by law, we will have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to
Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer
documents with the SEC which will contain substantially the same financial and other information about the initial business combination
as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible
assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding
ordinary shares voted are voted in favor of the business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under
the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any
type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon
consummation of such initial business combination, our net tangible asset threshold may limit our ability to consummate such initial
business combination (as we may be required to have a lesser number of shares converted or sold to us) and may force us to seek
third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate
such initial business combination and we may not be able to locate another suitable target within the applicable time period,
if at all. Public shareholders may therefore have to wait until November 6, 2016 in order to be able to receive a pro rata share
of the trust account.
Our
initial shareholders and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any
proposed business combination, (2) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed
initial business combination and (3) not sell any ordinary shares in any tender in connection with a proposed initial business
combination. As a result, if we sought shareholder approval of a proposed transaction, we would need only 2,850,501 (or approximately
34.4%) of the 8,280,000 public shares sold in our initial public offering to be voted in favor of the transaction in order to
have such transaction approved.
None
of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units or ordinary
shares from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed business
combination and a significant number of shareholders vote, or indicate an intention to vote, against such proposed business combination,
our officers, directors, initial shareholders or their affiliates could make such purchases in the open market or in private transactions
in order to influence the vote. Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates
will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which
are rules designed to stop potential manipulation of a company’s stock.
Conversion/Tender
Rights
At
any meeting called to approve an initial business combination, public shareholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then
on deposit in the trust account, less any taxes then due but not yet paid. In such event, the conversion rights will be effected
under our amended and restated memorandum and articles of association and Cayman Islands law as repurchases. A holder will always
have the ability to vote against a proposed business combination and not seek conversion of his shares.
Notwithstanding
the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights
with respect to 20% or more of the ordinary shares sold in our initial public offering. Accordingly, all shares in excess of 20%
of the shares sold in our initial public offering held by a holder will not be converted to cash. We believe this restriction
will prevent shareholders from accumulating large blocks of shares before the vote held to approve a proposed business combination
and attempt to use the conversion right as a means to force us or our management to purchase their shares at a significant premium
to the then current market price. By limiting a shareholder’s ability to convert no more than 20% of the ordinary shares
sold in our initial public offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt
to block a transaction which is favored by our other public shareholders.
Alternatively,
if we engage in a tender offer, each public shareholder will be provided the opportunity to sell his public shares to us in such
tender offer. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this
is the minimum amount of time we would need to provide holders to determine whether they want to sell their public shares to us
in the tender offer or remain an investor in our company.
Our
initial shareholders will not have conversion rights with respect to any ordinary shares owned by them, directly or indirectly,
whether acquired prior to our initial public offering or purchased by them in our initial public offering or in the aftermarket.
We
may also require public shareholders, whether they are a record holder or hold their shares in “street name,” to either
tender their certificates to our transfer agent at any time through the vote on the business combination or to deliver their shares
to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at
the holder’s option. Once the shares are converted by the beneficial holder, and effectively repurchased by us under Cayman
Island law, the transfer agent will then update our Register of Shareholders to reflect all conversions. The proxy solicitation
materials that we will furnish to shareholders in connection with the vote for any proposed business combination will indicate
whether we are requiring shareholders to satisfy such delivery requirements. Accordingly, a shareholder would have from the time
the shareholder received our proxy statement through the vote on the business combination to deliver his shares if he wishes to
seek to exercise his conversion rights. Under our amended and restated memorandum and articles of association, we are required
to provide at least 10 days’ advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder
would have to determine whether to exercise conversion rights.
There
is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the
DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not
to pass this cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders
seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless
of the timing of when such delivery must be effectuated. However, in the event we require shareholders seeking to exercise conversion
rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated
this may result in an increased cost to shareholders.
Any
request to convert or tender such shares once made, may be withdrawn at any time up to the vote on the proposed business combination
or expiration of the tender offer. Furthermore, if a holder of a public share delivered his certificate in connection with an
election of their conversion or tender and subsequently decides prior to the vote on the business combination or the expiration
of the tender offer not to elect to exercise such rights, he may simply request that the transfer agent return the certificate
(physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise
their conversion or tender rights would not be entitled to convert or tender their shares for the applicable pro rata share of
the trust account. In such case, we will promptly return any shares delivered by public holders.
Automatic
Liquidation of Trust Account if No Business Combination
If
we do not complete a business combination by November 6, 2016, it will trigger our automatic winding up, dissolution and liquidation
pursuant to the terms of our amended and restated memorandum and articles of association. As a result, this has the same effect
as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be required
from our shareholders to commence such a voluntary winding up, dissolution and liquidation.
The
amount in the trust account (less $828 representing the aggregate nominal par value of the shares of our public shareholders)
under the Companies Law will be treated as share premium which is distributable under the Cayman Companies Law provided that immediately
following the date on which the proposed distribution is proposed to be made, we are able to pay our debts as they fall due in
the ordinary course of business. If we are forced to liquidate the trust account, we anticipate that we would distribute to our
public shareholders the amount in the trust account calculated as of the date that is two days prior to the distribution date
(including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially
brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take
priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims
of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation.
Furthermore, while we will seek to have all vendors and service providers (which would include any third parties we engaged to
assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there
is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements
with us, they will not seek recourse against the trust account or that a court would conclude that such agreements are legally
enforceable.
Each
of our initial shareholders has agreed to waive its rights to participate in any liquidation of our trust account or other assets
with respect to the insider shares and private shares and to vote their insider shares and private shares in favor of any dissolution
and plan of distribution which we submit to a vote of shareholders. There will be no distribution from the trust account with
respect to our warrants, which will expire worthless.
If
we are unable to complete an initial business combination and expend all of the net proceeds of our initial public offering, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the initial per-share distribution from the trust account would be approximately $10.20.
The
proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would be prior to
the claims of our public shareholders. Although we will seek to have all vendors, including lenders for money borrowed, prospective
target businesses or other entities we engage 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, there is no guarantee that they will
execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the
trust account, including but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims,
as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with a claim against
our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims
to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage
such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused
to waive such claims. Examples of possible instances where we may engage a third party that refused 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 provider
of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives
available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed
that such third party’s engagement would be significantly more beneficial to us than any alternative. 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.
Kevin
Chin has agreed that, if we liquidate the trust account prior to the consummation of a business combination, he will be personally
liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered
or contracted for or products sold to us in excess of the net proceeds of our initial public offering not held in the trust account,
but only to the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only
if such parties have not executed a waiver agreement. However, we cannot assure you that he will be able to satisfy those obligations
if it is required to do so. Accordingly, the actual per-share distribution could be less than $10.20, plus interest, due to claims
of creditors. Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which
is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in
our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent
any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders at
least $10.20 per share.
Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability
to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent
to shareholders in connection with such business combination may delay the completion of a transaction;
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our
obligation to convert ordinary shares held by our public shareholders may reduce the resources available to us for a business
combination;
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Nasdaq
may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our
securities following a business combination;
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our
outstanding rights, warrants and unit purchase options, and the potential future dilution they represent;
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our
obligation to pay EarlyBirdCapital a $3,312,000 fee upon consummation of our initial business combination;
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our
obligation to either repay or issue additional securities upon conversion of up to $500,000 of working capital loans that
may be made to us by our initial shareholders, officers, directors or their affiliates;
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our
obligation to register the resale of the insider shares, as well as the Private Units (and underlying securities) and any
securities issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital
loans; and
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the
impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending
on developments involving us prior to the consummation of a business combination.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management
believes, however, that our status as a public entity and potential access to the United States public equity markets may give
us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business
with significant growth potential on favorable terms. Furthermore, the fact that we will not be required to pay our underwriters
any deferred compensation upon consummation of an initial business combination may give us a competitive advantage over other
similarly structured blank check companies.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Employees
We
have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend
to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for the business combination and the stage of the business combination
process the company is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time
investigating such target business and negotiating and processing the business combination (and consequently spend more time to
our affairs) than they would prior to locating a suitable target business. We presently expect each of our executive officers
to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full time
employees prior to the consummation of a business combination.
ITEM
1A. RISK FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully the material risks described below,
which we believe represent the material risks related to our business and our securities, together with the other information
contained in this Form 10-K, before making a decision to invest in our securities. This Form 10-K also contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking
statements as a result of specific factors, including the risks described below.
If
we are unable to consummate a business combination, our public shareholders may be forced to wait until November 6, 2016 before
receiving liquidation distributions.
We
have until November 6, 2016 to complete a business combination. We have no obligation to return funds to investors prior to such
date unless we consummate a business combination prior thereto and only then in cases where investors have sought to convert their
shares. Only after the expiration of this full time period will public shareholders be entitled to liquidation distributions if
we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such
date and to liquidate your investment, you may be forced to sell your securities potentially at a loss.
The
requirement that we complete an initial business combination by November 6, 2016 may give potential target businesses leverage
over us in negotiating a business transaction.
We
have until November 6, 2016 to complete an initial business combination. Any potential target business with which we enter into
negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain
leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular
target business, we may be unable to complete a business combination with any other target business. This risk will increase as
we get closer to the time limits referenced above.
Our independent registered public
accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue
as a “going concern.”
The
report of our independent registered public accountants on our financial statements includes an explanatory paragraph stating
that our ability to continue as a going concern is dependent on raising additional financing
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The financial statements do not include any adjustments that might result from our inability to
raise
additional financing
or our ability to continue as a going concern.
Moreover, there is no assurance that we will consummate our initial business combination. These factors raise substantial doubt
about our ability to continue as a going concern.
We
may issue ordinary or preferred shares or debt securities to complete a business combination, which would reduce the equity interest
of our shareholders and likely cause a change in control of our ownership.
We
may issue a substantial number of additional ordinary shares or preferred shares, or a combination of ordinary shares and preferred
shares, to complete a business combination. The issuance of additional ordinary shares or preferred shares:
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may
significantly reduce the equity interest of investors;
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may
subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to
our ordinary shares;
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may
cause a change in control if a substantial number of 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; and
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may
adversely affect prevailing market prices for our ordinary shares.
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Similarly,
if we issue debt securities, it could result in:
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default
and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding.
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The
funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside
of the trust account to fund our search for target businesses, to pay our tax obligations and to complete our initial business
combination.
As of February 29, 2016,
we had $10,092 available to us outside the trust account to fund our working capital requirements. We will depend on sufficient
interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to
identify one or more target businesses and to complete our initial business combination, as well as to pay any tax obligations
that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several years. Accordingly,
if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the funds held outside
of the trust account, we may not have sufficient funds available with which to structure, negotiate or close an initial business
combination. In such event, we may be forced to cease searching for a target business.
We
may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth
of the target business, which could compel us to restructure or abandon a particular business combination.
Since
we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction.
If the net proceeds of our initial public offering prove to be insufficient, either because of the size of the business combination,
the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash (or purchase
in any tender offer) a significant number of shares from dissenting shareholders, we will be required to seek additional financing.
Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable
when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon
that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business
combination, we may require additional 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 a business combination.
If
third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received
by shareholders may be less than $10.20.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors
and service providers we engage and prospective target businesses we negotiate with 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,
they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse
against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds
held in trust could be subject to claims which could take priority over those of our public shareholders. If we liquidate the
trust account before the completion of a business combination, Kevin Chin has agreed that he will be liable to ensure that the
proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are
owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement.
However, he may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation
may be less than $10.20, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if
we otherwise enter compulsory or court supervised liquidation, 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, we may not be able to return to our
public shareholders at least $10.20 per share.
Our
shareholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Our
amended and restated memorandum and articles of association provide that we will continue in existence only until November 6,
2016 unless we complete an initial business combination by such date.
As
such, our shareholders could potentially be liable for any claims to the extent of distributions received by them pursuant to
such process and any liability of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure
you that third parties, or us under the control of an official liquidator, will not seek to recover from our shareholders amounts
owed to them by us.
If
we are unable to consummate a transaction within the required time period, upon notice from us, the trustee of the trust account
will distribute the amount in our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment,
from funds not held in trust, our liabilities and obligations, although we cannot assure you that there will be sufficient funds
for such purpose. If there are insufficient funds held outside the trust account for such purpose, Kevin Chin has agreed that
he will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims
of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which
have not executed a waiver agreement.
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 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, and 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 to a fine of US$15,000 and to imprisonment for five years in the Cayman Islands.
Holders
of rights and warrants will not have redemption rights if we are unable to complete an initial business combination within the
required time period.
If
we are unable to complete an initial business combination within the required time period and we redeem the funds held in the
trust account, the rights and warrants will expire and holders will not receive any of such proceeds with respect to such rights
and warrants, respectively.
We
have no obligation to net cash settle the rights or warrants.
In
no event will we have any obligation to net cash settle the rights or warrants. Furthermore, there are no contractual penalties
for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Accordingly,
the rights and warrants may expire worthless.
We
may amend the terms of the rights in a way that may be adverse to holders with the approval by the holders of a majority of the
then outstanding rights.
Our
rights have been issued in registered form under a rights agreement between Continental Stock Transfer & Trust Company, as
rights agent, and us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision. The rights agreement requires the approval by the holders of a majority
of the then outstanding rights (including the rights underlying the Private Units) in order to make any change that adversely
affects the interests of the registered holders.
If
we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants,
public holders will only be able to exercise such warrants on a “cashless basis” which would result in a fewer number
of shares being issued to the holder had such holder exercised the warrants for cash.
If
we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the public warrant
at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis”
provided that an exemption from registration is available. As a result, the number of ordinary shares that a holder will receive
upon exercise of its public warrants will be fewer than it would have been had such holder exercised its warrant for cash. Further,
if an exemption from registration is not available, holders would not be able to exercise their warrants on a cashless basis and
would only be able to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable
upon exercise of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to
meet these conditions and to maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise
of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable
to do so, the potential “upside” of the holder’s investment in our company may be reduced or the warrants may
expire worthless. Notwithstanding the foregoing, the warrants included in the Private Units, or “private warrants,”
may be exercisable for unregistered ordinary shares for cash even if the prospectus relating to the ordinary shares issuable upon
exercise of the warrants is not current and effective.
An
investor will only be able to exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or
qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No
public warrants will be exercisable for cash and we will not be obligated to issue ordinary shares unless the ordinary shares
issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of
residence of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed
on a national securities exchange, which would provide an exemption from registration in every state. However, we cannot assure
you of this fact. If the ordinary shares issuable upon exercise of the warrants are not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the
warrants may be limited and they may expire worthless if they cannot be sold.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders
to receive fewer ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise
their warrants for cash.
If
we call our public warrants for redemption after the redemption criteria have been satisfied, our management will have the option
to require any holder that wishes to exercise his warrant (including any warrants held by our initial shareholders or their permitted
transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants
on a cashless basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had
such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s
investment in our company.
We
may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of
the then outstanding warrants.
Our
warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders
of a majority of the then outstanding warrants (including the private warrants) in order to make any change that adversely affects
the interests of the registered holders.
Since
we have not yet selected a particular industry or target business with which to complete a business combination, we are unable
to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
While
we are currently focusing our search for target businesses on specific locations and industries as described herein, we are not
limited to those locations or industries and may consummate a business combination with a company in any location or industry
we choose. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry
in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business
combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent
in the business operations of those entities. If we complete a business combination with an entity in an industry characterized
by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will
endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors.
The
requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least
80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business
combination may limit the type and number of companies that we may complete such a business combination with.
Pursuant
to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal
to at least 80% of the balance of the funds in the trust account
(
excluding
t
axes payable on the income earned on
the trust account)
at the time of the execution of a definitive agreement for our initial business combination. This restriction
may limit the type and number of companies that with which may complete a business combination. If we are unable to locate a target
business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to
receive your pro rata portion of the funds in the trust account.
If
Nasdaq delists our securities from quotation on its exchange, we would not be required to complete a business combination with
a target business or businesses meeting specific fair market value requirements.
If
Nasdaq delists our securities from quotation on its exchange, we would not be required to satisfy the fair market value requirement
described above and could complete a business combination with a target business having a fair market value substantially below
80% of the balance in the trust account.
Our
ability to successfully effect a 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 a business combination. While we intend to closely scrutinize any individuals
we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our
ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our
success depends on the continued service of our key personnel, at least until we have consummated our initial business combination.
We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none
of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any
of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.
The
role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel
may remain with the target business in senior management or advisory positions following a 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 a 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 public company which could cause us to have to expend
time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead
to various regulatory issues which may adversely affect our operations.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
Although
we are currently focusing our search on specific target locations as described herein, we may consummate a business combination
with a target business in any geographic location or industry we choose. We cannot assure you that our officers and directors
will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an
informed decision regarding a business combination. If we become aware of a potential business combination outside of the geographic
location or industry where our officers and directors have their most experience, our management may determine to retain consultants
and advisors with experience in such industries to assist in the evaluation of such business combination and in our determination
of whether or not to proceed with such a business combination. However, our management is not required to engage such consultants
and advisors in any situation. If they do not engage any consultants or advisors to assist them in the evaluation of a particular
target business or business combination, our management may not properly analyze the risks attendant with such target business
or business combination. As a result, we may enter into a business combination that is not in our shareholders’ best interests.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following a 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 will be able to remain with the company after the consummation of a business combination only if they are able to
negotiate employment or consulting agreements or other appropriate arrangements 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 the company after
the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business.
Our
officers and directors will allocate their time to other businesses thereby potentially limiting the amount of time they devote
to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination.
Our
officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when
allocating their time between our operations and their other commitments. We presently expect each of our employees to devote
such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full time employees
prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other
business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’
other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to
devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. We
cannot assure you these conflicts will be resolved in our favor.
Our
officers and directors have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts of interest
in determining to which entity a particular business opportunity should be presented.
Our
officers and directors have pre-existing fiduciary and contractual obligations to other companies, including companies that are
engaged in business activities similar to those intended to be conducted by us. Accordingly, they may participate in transactions
and have obligations that may be in conflict or competition with our consummation of our initial business combination. As a result,
a potential target business may be presented by our management team to another entity prior to its presentation to us and we may
not be afforded the opportunity to engage in a transaction with such target business.
Our
officers’ and directors’ personal and financial interests may influence their motivation in determining whether a
particular target business is appropriate for a business combination.
Our
officers and directors have waived their right to convert their insider shares, private shares or any other ordinary shares, or
to receive distributions with respect to their insider shares or private shares upon our liquidation if we are unable to consummate
our initial business combination. Accordingly, these securities will be worthless if we do not consummate our initial business
combination. Their private rights, private warrants and any other rights or warrants they acquire will also be worthless if we
do not consummate an initial business combination. In addition, our officers and directors may loan funds to us after our initial
public offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which
would only be repaid if we complete an initial business combination. 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 might have a claim against such individuals. However, we might not ultimately be
successful in any claim we may make against them for such reason.
Nasdaq
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are listed on Nasdaq, a national securities exchange. However, we cannot assure you that our securities will continue
to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business
combination, it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements
as opposed to its more lenient continued listing requirements. 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, we could face significant material adverse consequences, including:
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limited availability of market quotations for our securities;
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reduced
liquidity with respect to our securities;
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a
determination that our ordinary shares are “penny stock” which will require brokers trading in our ordinary shares
to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market
for our ordinary shares;
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limited amount of news and analyst coverage for our company; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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We
may only be able to complete one business combination with the proceeds of our initial public offering, which will cause us to
be solely dependent on a single business which may have a limited number of products or services.
We
may only be able to complete one business combination with the proceeds of our initial public offering. By consummating a 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:
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solely
dependent upon the performance of a single business, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination.
Alternatively,
if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need
for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business
combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple
business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent
assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable
to adequately address these risks, it could negatively impact our profitability and results of operations.
The
ability of our public shareholders to exercise their conversion rights or sell their public shares to us in a tender offer may
not allow us to effectuate the most desirable business combination or optimize our capital structure.
If
our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know
how many shareholders may exercise conversion rights or seek to sell their public shares to us in a tender offer, we may either
need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third party financing
to help fund our business transaction. In the event that the business combination involves the issuance of our shares as consideration,
we may be required to issue a higher percentage of our shares to make up for a shortfall in funds. Raising additional funds to
cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may
limit our ability to effectuate the most attractive business combination available to us.
We
may be unable to consummate a business combination if a target business requires that we have cash in excess of the minimum amount
we are required to have at closing and public shareholders may have to remain shareholders of our company and wait until our liquidation
to receive a pro rata share of the trust account or attempt to sell their shares in the open market.
A
potential target may make it a closing condition to our business combination that we have a certain amount of cash in excess of
the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of
closing. If the number of our shareholders electing to exercise their conversion rights has the effect of reducing the amount
of money available to us to consummate a business combination below such minimum amount required by the target business and we
are not able to locate an alternative source of funding, we will not be able to consummate such business combination and we may
not be able to locate another suitable target within the applicable time period, if at all. In that case, public shareholders
may have to remain shareholders of our company and wait the full 18 months in order to be able to receive a pro rata portion of
the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less
than a pro rata share of the trust account for their shares.
In
connection with any meeting held to approve an initial business combination, we will offer each public shareholder the option
to vote in favor of a proposed business combination and still seek conversion of his, her or its shares, which may make it more
likely that we will consummate a business combination.
In
connection with any meeting held to approve an initial business combination, we will offer each public shareholder (other than
our initial shareholders subject to certain exceptions) the right to have his, her or its ordinary shares converted to cash (subject
to the limitations described elsewhere herein) regardless of whether such shareholder votes for or against such proposed business
combination. Furthermore, we will consummate our initial business combination only if we have net tangible assets of at least
$5,000,001 upon such consummation and a majority of the outstanding shares voted are voted in favor of the business combination.
Accordingly, public shareholders owning shares sold in our initial public offering may exercise their conversion rights and we
could still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor
of the proposed business combination. This is different than other similarly structured blank check companies where shareholders
are offered the right to convert their shares only when they vote against a proposed business combination. This is also different
than other similarly structured blank check companies where there is a specific number of shares sold in the offering which must
not exercise conversion rights for the company to complete a business combination. This threshold and the ability to seek conversion
while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business
combination.
In
connection with any meeting held to approve an initial business combination, public shareholders, together with any affiliates
of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking
conversion rights with respect to more than 20% of the shares sold in our initial public offering.
In
connection with any meeting held to approve an initial business combination, we will offer each public shareholder (other than
our initial shareholders) the right to have his, her, or its ordinary shares converted into cash. Notwithstanding the foregoing,
a public shareholder, together with any of its affiliates or any other person with whom it is acting in concert or as a “group”
will be restricted from seeking conversion rights with respect to more than 20% of the shares sold in our initial public offering.
Accordingly, if you hold more than 20% of the shares sold in our initial public offering and a proposed business combination is
approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold
such shares following the business combination over 20% or sell them in the open market. We cannot assure you that the value of
such shares will appreciate over time following a business combination or that the market price of our ordinary shares will exceed
the per-share conversion price.
In
connection with any shareholder meeting called to approve a proposed initial business combination, we may require shareholders
who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion
that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In connection with any
shareholder meeting called to approve a proposed initial business combination, each public shareholder (other than our initial
shareholders will have the right, regardless of whether it is voting for or against such proposed business combination, to demand
that we convert its shares into a share of the trust account. Such conversion will be effectuated under Cayman Islands law as
a repurchase of the shares, with the repurchase price to be paid being the applicable pro-rata portion of the monies held in the
trust account. We may require public shareholders who wish to convert their shares in connection with a proposed business combination
to either tender their certificates to our transfer agent at any time prior to the vote taken at the shareholder meeting relating
to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical share certificate, a shareholder’s broker and/or
clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that shareholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not
have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical
share certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not
be the case. Accordingly, if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish
to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.
Investors
may not have sufficient time to comply with the delivery requirements for conversion.
Pursuant
to our memorandum and articles of association, we are required to give a minimum of only ten days’ notice for each general
meeting. As a result, if we require public shareholders who wish to convert their public shares into the right to receive a pro
rata portion of the funds in the trust account to comply with specific delivery requirements for conversion, holders may not have
sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors may be forced to retain
our securities when they otherwise would not want to.
If
we require public shareholders who wish to convert their ordinary shares to comply with the delivery requirements for conversion,
such converting shareholders may be unable to sell their securities when they wish to in the event that the proposed business
combination is not approved.
If
we require public shareholders who wish to convert their ordinary shares to comply with specific delivery requirements for conversion
described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering
public shareholders. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell
their securities after the failed acquisition until we have returned their securities to them. The market price for our shares
may decline during this time and you may not be able to sell your securities when you wish to, even while other shareholders that
did not seek conversion may be able to sell their securities.
Because
of our limited resources and structure, other companies may have a competitive advantage and we may not be able to consummate
an attractive business combination.
We
expect to encounter intense competition from entities other than blank check companies having a business objective similar to
ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these
entities are well established and have extensive experience in identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources
will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential
target businesses that we could acquire with the net proceeds of our initial public offering, our ability to compete in acquiring
certain sizable target businesses 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, seeking shareholder approval of a business
combination may delay the consummation of a transaction. Additionally, our outstanding rights, warrants and unit purchase options,
and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing
may place us at a competitive disadvantage in successfully negotiating a business combination.
Our
initial shareholders control a substantial interest in us and thus may influence certain actions requiring a shareholder vote.
Our
initial shareholders collectively own approximately 23.8% of our issued and outstanding ordinary shares. In connection with any
vote for a proposed business combination, all of our initial shareholders, as well as all of our officers and directors, have
agreed to vote the ordinary shares owned by them immediately before our initial public offering as well as any ordinary shares
acquired in our initial public offering or in the aftermarket in favor of such proposed business combination.
Our
board of directors 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. There is no requirement under the Companies Law for us to hold annual
or general meetings or elect directors. Accordingly, shareholders would not have the right to such a meeting or election of directors,
unless the holders of not less than 10% in par value capital of our company requests such a meeting. As a result, it is unlikely
that there will be an annual meeting of shareholders to elect new directors prior to the consummation of a business combination,
in which case all of the current directors will continue in office until at least the consummation of the business combination.
Accordingly, you may not be able to exercise your voting rights for up to 18 months. If there is an annual meeting, as a consequence
of our “staggered” board of directors, only a minority of the board of directors will be considered for election and
our initial shareholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly,
our initial shareholders will continue to exert control at least until the consummation of a business combination.
Our
outstanding rights, warrants and unit purchase options may have an adverse effect on the market price of our ordinary shares and
make it more difficult to effect a business combination.
We
have outstanding rights, warrants and unit purchase options that may result in the issuance of additional securities. Additionally,
to the extent we issue ordinary shares to effect a business combination, the potential for the issuance of a substantial number
of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target
business. Such securities, when exercised, will increase the number of issued and outstanding ordinary shares and reduce the value
of the shares issued to complete the business combination. Accordingly, our warrants and unit purchase options may make it more
difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale,
or even the possibility of sale, of the shares underlying the warrants and unit purchase options could have an adverse effect
on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants and options
are exercised, you may experience dilution to your holdings.
We
may redeem the warrants at a time that is not beneficial to public investors.
We
may call the public warrants for redemption at any time after the redemption criteria described elsewhere have been satisfied.
If we call the public warrants for redemption, public shareholders may be forced to accept a nominal redemption price or sell
or exercise the warrants when they may not wish to do so.
If
our shareholders exercise their registration rights with respect to their securities, it may have an adverse effect on the market
price of our ordinary shares and the existence of these rights may make it more difficult to effect a business combination.
Our
initial shareholders are entitled to make a demand that we register the resale of their insider shares at any time commencing
three months prior to the date on which their shares may be released from escrow. Additionally, the purchasers of the Private
Units and our initial shareholders, officers and directors are entitled to demand that we register the resale of the Private Units
(and the underlying ordinary shares and warrants) and any securities our initial shareholders, officers, directors or their affiliates
may be issued in payment of working capital loans made to us at any time after we consummate a business combination. The presence
of these additional securities trading in the public market may have an adverse effect on the market price of our securities.
In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost
of acquiring the target business, as the shareholders of the target business may be discouraged from entering into a business
combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights
may have on the trading market for our ordinary shares.
EarlyBirdCapital
may have a conflict of interest in rendering services to us in connection with our initial business combination.
We
have engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a
cash fee of $3,312,000 for such services upon the consummation of our initial business combination. This financial interest may
result in EarlyBirdCapital having a conflict of interest when providing the services to us in connection with an initial business
combination.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete a business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under
the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could
be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will
subject us to the Investment Company Act of 1940. To this end, the proceeds held in trust may be invested by the trustee only
in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting
the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United
States treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for
the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940.
If
we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain
restrictions that may make it more difficult for us to complete a business combination, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities.
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In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
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Compliance
with these additional regulatory burdens would require additional expense for which we have not allotted.
We
may not seek an opinion from an unaffiliated third party as to the fair market value of the target business we acquire or that
the price we are paying for the business is fair to our shareholders from a financial point of view.
We
are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value
in excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on
its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying
is fair to our shareholders from a financial point of view unless the target is affiliated with our officers, directors, initial
shareholders or their affiliates. If no opinions are obtained, our shareholders will be relying on the judgment of our board of
directors, whose collective experience in business evaluations for blank check companies like ours is not significant. Furthermore,
our directors may have a conflict of interest in analyzing the transaction due to their personal and financial interests.
We
may acquire a target business that is affiliated with our officers, directors, initial shareholders or their affiliates.
While
we do not currently intend to pursue an initial business combination with a company that is affiliated with our officers, directors,
initial shareholders or their affiliates, we are not prohibited from pursuing such a transaction, nor are we prohibited from consummating
a business combination where any of our officers, directors, initial shareholders or their affiliates acquire a minority interest
in the target business alongside our acquisition, provided in each case we obtain an opinion from an unaffiliated third party
indicating that the price we are paying is fair to our shareholders from a financial point of view. These affiliations could cause
our officers or directors to have a conflict of interest in analyzing such transactions due to their personal and financial interests.
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. In addition, certain of our directors and officers
are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are
located outside the United States. 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 will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the
same may be supplemented or amended from time to time) or the common law of the Cayman Islands. 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 not as clearly established
as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands
has a less developed body of securities laws as compared to the United States, and certain states, such as Delaware, 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 our 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 recognise 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, and 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. There is recent Privy Council authority (which is binding on the Cayman Islands Court)
in the context of a reorganisation plan approved by the New York Bankruptcy Court which suggests that due to the universal nature
of bankruptcy/insolvency proceedings, foreign money judgments obtained in foreign bankruptcy/insolvency proceedings may be enforced
without applying the principles outlined above. However, a more recent English Supreme Court authority (which is highly persuasive
but not binding on the Cayman Islands Court), has expressly rejected that approach in the context of a default judgment obtained
in an adversary proceeding brought in the New York Bankruptcy Court by the receivers of the bankruptcy debtor against a third
party, and which would not have been enforceable upon the application of the traditional common law principles summarised above
and held that foreign money judgments obtained in bankruptcy/insolvency proceedings should be enforced by applying the principles
set out above, and not by the simple exercise of the Courts’ discretion. Those cases have now been considered by the Cayman
Islands Court. The Cayman Islands Court was not asked to consider the specific question of whether a judgment of a bankruptcy
court in an adversary proceeding would be enforceable in the Cayman Islands, but it did endorse the need for active assistance
of overseas bankruptcy proceedings. We understand that the Cayman Islands Court’s decision in that case has been appealed
and it remains the case that the law regarding the enforcement of bankruptcy/insolvency related judgments is still in a state
of uncertainty.
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.
We
intend to effect a business combination with a company located outside of the United States and if we do, we would be subject
to a variety of additional risks that may negatively impact our business operations and financial results.
If
we consummate a business combination with a target business located outside of the United States, we would be subject to any special
considerations or risks associated with companies operating in the target business’ governing jurisdiction, including any
of the following:
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rules
and regulations or currency redemption or corporate withholding taxes on individuals;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles;
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inflation;
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economic
policies and market conditions;
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unexpected
changes in regulatory requirements;
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challenges
in managing and staffing international operations;
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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;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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protection
of intellectual property; and
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employment
regulations.
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We
cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations
might suffer.
If
we effect a business combination with a company located outside of the United States, the laws applicable to such company will
likely govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a business combination with a company located outside of the United States, the laws of the country in which such company
operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business
will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. 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. Additionally, if we acquire a company located outside of the United States,
it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors
might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their
legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.
Because
we must furnish our shareholders with financial statements of the target business prepared in accordance with U.S. GAAP or IFRS
or reconciled to U.S. GAAP, we may not be able to complete an 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. 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 promulgated 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.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and
costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require
us to have such system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our
internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any
inability to provide reliable financial reports could harm our business. A target may also not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding the adequacy of internal controls. The development of the internal controls of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of
adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail
to meet our reporting obligations. Inferior 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 securities.
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our securities less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company”
for up to five years. However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or
the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal
quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging
growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley
Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the
adoption of new or revised accounting standards that have different effective dates for public and private companies until those
standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with public
company effective dates. We cannot predict if investors will find our shares less attractive because we may rely on these provisions.
If some investors find our shares less attractive as a result, there may be a less active trading market for our shares and our
share price 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, will not adopt the new or revised
standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial
statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted
out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.
Target
businesses in the energy (including solar and alternative energy) industry are subject to special considerations and risks.
Business
combinations with companies with operations in the energy (including solar and alternative energy) industry entail special considerations
and risks. If we are successful in completing a business combination with a target business with operations in the energy industry,
we will be subject to, and possibly adversely affected by, the following risks:
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increased
competition;
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adherence
to existing or newly promulgated government regulations;
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fluctuations
in energy prices;
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creation
of new and alternative energy sources
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protection
of intellectual property;
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litigation,
including product liability and intellectual property infringement litigation; and
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changes
in technology.
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