ITEM 1A. RISK FACTORS.
An investment in our securities involves a high degree of risk.
You should consider carefully all of the risks described below, together with the other information contained in this Annual Report on
Form 10-K before making a decision to invest in our securities. If any of the following events occur, our business, financial condition
and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you
could lose all or part of your investment. The risks set forth below do not include specific risks relating to our proposed business combination
with MoonLake, or the risks inherent in MoonLake’s business, which are included in the Definitive Proxy Statement which we filed
with the SEC on January 20, 2022. The risks presented below assumes that we will not consummate the proposed business combination with
MoonLake, and that we will seek to find an alternative target with which to consummate an initial business combination.
8
RISKS RELATING TO RESTATEMENT OF OUR PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
We identified a material weakness in our internal control over financial
reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition
accurately and in a timely manner.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management also
evaluates the effectiveness of our internal controls and we will disclose any changes and material weaknesses identified through such
evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.
As described elsewhere in this Form 10-K, we have
identified a material weakness in our internal control over financial reporting related to the accounting classification of the Public
Shares issued as part of the units sold in our Initial Public Offering on October 22, 2020. Historically, a portion of the Public Shares
was classified as permanent equity to maintain shareholders’ equity greater than $5 million on the basis that we will not redeem
its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in our amended and restated
memorandum and articles of association. Pursuant to such re-evaluation, management has determined that the Public Shares include certain
provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible assets redemption
limitation contained in our amended and restated memorandum and articles of association. In addition, in connection with the change in
presentation for the Public Shares, management determined it should restate its earnings per share calculation to allocate income and
losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome,
in which case, both classes of shares share pro rata in the income and losses of the Company. Management concluded that the control deficiency
that resulted in the incorrect classification of temporary and permanent equity constituted a material weakness as of December 31, 2020
and September 30, 2021. This material weakness resulted in a material misstatement of our temporary and permanent equity, additional paid-in
capital, accumulated deficit, and earnings (loss) per share and related financial disclosures in the (i) audited balance sheet as of October 22,
2020, (ii) audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020, (iii)
unaudited interim financial statements included in the Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2021; (iv) unaudited interim financial statements included in the Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2021; and (v) unaudited interim financial statements included in the Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2021. See Note 2 to the notes to the financial statements included herein.
We have implemented a remediation plan, described
under Item 9A, Controls and Procedures, to remediate the material weakness surrounding our historical presentation of our complex financial
instruments but can give no assurance that the measures we have taken will prevent any future material weaknesses or deficiencies in internal
control over financial reporting. Even though we have strengthened our controls and procedures, in the future those controls and procedures
may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
In addition, any such failures could result in litigation or regulatory action by the SEC or other regulatory authorities, loss of investor
confidence, delisting of Helix’s securities, and harm to Helix’s reputation and financial condition, or diversion of financial
and management resources from the operation of Helix’s business.
We may face litigation and other risks as a result of the material
weakness in our internal control over financial reporting.
Following the re-evaluation of accounting guidance,
our management and our audit committee concluded that it was appropriate to restate our previously issued audited financial statements
as of December 31, 2020 and for the year ended December 31, 2020. As part of the restatement, we identified a material weakness in our
internal controls over financial reporting.
As a result of such material weakness, the restatement
related to the accounting for complex financial instruments, and other matters raised or that may in the future be raised by the SEC,
we face potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws,
contractual claims or other claims arising from the Restatement and material weakness in our internal control over financial reporting.
As of the date of this annual report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that
such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material
adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.
9
RISKS RELATING TO OUR SEARCH FOR, AND CONSUMMATION
OF OR INABILITY TO CONSUMMATE, A BUSINESS COMBINATION
Our public shareholders may not be afforded an opportunity to vote
on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such vote,
which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.
While we intend to seek shareholder approval of
the proposed Business Combination with MoonLake, we may choose not to hold a shareholder vote to approve our initial business combination
unless the business combination would require shareholder approval under applicable law or Nasdaq requirements. In such case, the decision
as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to
us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the
transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Even if we seek shareholder
approval, as we intend to do in connection with the proposed Business Combination with MoonLake, the holders of our founder shares will
participate in the vote on such approval. Accordingly, we may complete our initial business combination even if holders of a majority
of our ordinary shares do not approve of the business combination we complete.
If we seek shareholder approval of our initial business combination,
our initial shareholders and management team have agreed to vote in favor of such initial business combination, regardless of how our
public shareholders vote.
Our initial shareholders own, on an as-converted
basis, approximately 20% of our issued and outstanding ordinary shares. Pursuant to letter agreements with us, our sponsor, officers and
directors have agreed to vote their founder shares, Private Placement Shares, as well as any Public Shares purchased (including in open
market and privately negotiated transactions), in favor of our initial business combination.
Our initial shareholders and management team also
may from time to time purchase Class A ordinary shares prior to our initial business combination. Our amended and restated memorandum
and articles of association provides that, if we seek shareholder approval of an initial business combination, such initial business combination
will be approved if it is approved by an ordinary resolution under Cayman Islands law, which requires the affirmative vote of the holders
of the shares present in person or by proxy at a general meeting of the Company, including the founder shares. As a result, in addition
to our initial shareholders’ founder shares, we would need 4,312,501 or 37.5%, of the 11,500,000 Public Shares sold in the Initial
Public Offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming
all outstanding shares are voted and the Private Placement Shares issued to our sponsor are voted in favor of the transaction). Accordingly,
if we seek shareholder approval of our initial business combination, the agreement by our initial shareholders and management team to
vote in favor of our initial business combination will increase the likelihood that we will receive an ordinary resolution, being the
requisite shareholder approval for such initial business combination.
If we do not complete the proposed Business Combination with MoonLake
and instead pursue an alternate initial business combination, your only opportunity to effect your investment decision regarding a potential
business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us, you will
not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors
may complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity to
vote on the business combination, unless we seek such shareholder vote. Accordingly, if we do not seek shareholder approval, your only
opportunity to effect your investment decision regarding our initial business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
shareholders in which we describe our initial business combination.
10
The ability of our public shareholders to redeem their shares for
cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter
into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for
working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. For instance, the Business
Combination Agreement with MoonLake includes a closing condition that we have at least $150 million of cash available at the closing after
giving effect to redemptions, payment of transaction expenses, and the cash raised in the PIPE. If too many public shareholders exercise
their redemption rights, we may not be able to meet such closing condition and, as a result, would not be able to proceed with the business
combination unless the condition is waived by MoonLake. Furthermore, in no event will we redeem our Public Shares in an amount that would
cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly submitted redemption requests would
cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a condition as described above, we
would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public shareholders to exercise redemption rights
with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital
structure.
At the time we enter into an agreement for our
initial business combination, we will not, and at the time we entered into the Business Combination Agreement, we did not, know how many
shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to
the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion
of the cash in the Trust Account to pay the purchase price, like the Business Combination Agreement does, or requires us to have a minimum
amount of cash at closing, like the Business Combination Agreement, we may need to arrange for third party financing. In addition, if
a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction or arrange
for third party financing. Raising additional third-party financing may involve dilutive equity issuances, such as the PIPE, or the incurrence
of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision
of the Class B ordinary shares results in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of
the Class B ordinary shares at the time of our initial business combination. In addition, the amount of the deferred underwriting commissions
payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination.
The per share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred
underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire
deferred underwriting commissions. The above considerations may limit our ability to complete the most desirable business combination
available to us or optimize our capital structure.
The ability of our public shareholders to exercise redemption rights
with respect to a large number of our shares could increase the probability that our initial business combination, including the proposed
Business Combination with MoonLake, would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement requires
us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
like the Business Combination Agreement does, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate
the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such
time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate
or you are able to sell your shares in the open market.
11
The requirement that we complete our initial business combination
within 24 months after the closing of the Initial Public Offering may give potential target businesses leverage over us in negotiating
a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in
particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on
terms that would produce value for our shareholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months
from the closing of the Initial Public Offering. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable
to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that
we would have rejected upon a more comprehensive investigation.
The novel coronavirus, or COVID-19, pandemic, including the efforts
to mitigate its impact, has and may continue to have a material adverse effect on our search for a business combination, as well as any
target business with which we ultimately consummate a business combination.
The COVID-19 pandemic, including efforts to combat
it, has and may continue to adversely affect our search for a business combination. In addition, the outbreak of COVID-19 has resulted
in a widespread health crisis that has and may continue to adversely affect the economies and financial markets worldwide. As such, the
business of any potential target business with which we may consummate a business combination could be materially and adversely affected.
In response to the pandemic, public health authorities
and local, national and international governments have implemented measures that may directly or indirectly impact our ability to search
for and acquire any target business, including measures such as voluntary or mandatory quarantines, restrictions on travel and orders
to limit the activities of non-essential workforce personnel. We may be unable to complete a business combination if concerns relating
to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel,
vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner.
In addition, countries or supranational organizations
in our target markets may develop and implement legislation that makes it more difficult or impossible for entities outside such countries
or target markets to acquire or otherwise invest in companies or businesses deemed essential or otherwise vital. The extent to which the
COVID-19 pandemic impacts our search for and ability to consummate a business combination will depend on future developments, which are
highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic
and the actions to contain it or treat its impact. If the disruptions posed by COVID-19 pandemic continue for an extended period of time
and result in protectionist sentiments and legislation in our target markets, our ability to consummate a business combination, or the
operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected. In addition,
our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing, which may be impacted by the
COVID-19 pandemic.
We may not be able to complete our initial business combination
within 24 months after the closing of the Initial Public Offering, in which case we would cease all operations except for the purpose
of winding up and we would redeem our Public Shares and liquidate.
We may not be able to find a suitable target business
and complete our initial business combination within 24 months after the closing of the Initial Public Offering. Our ability to complete
our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and
the other risks described herein. For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the
extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business
combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable
on terms acceptable to us or at all. Furthermore, we may be unable to complete a business combination if continued concerns relating to
COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate a transaction in a timely manner. Additionally, the outbreak of COVID-19
may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within such time period,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest earned on the funds held in the Trust Account (less taxes payable and up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public
shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate
and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors
and in all cases subject to the other requirements of applicable law.
12
If we seek shareholder approval of our initial business combination,
as we expect to do in connection with the proposed Business Combination with MoonLake, our sponsor, initial shareholders, directors, officers,
advisors and their affiliates may elect to purchase shares from public shareholders, which may influence a vote on a proposed business
combination and reduce the public “float” of our Class A ordinary shares.
If we seek shareholder approval of our initial
business combination, as we expect to do in connection with the proposed Business Combination with MoonLake, and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or
their affiliates may purchase shares or equity-linked securities in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination, although they are under no obligation to do so. There is no limit
on the number of shares our initial shareholders, directors, officers, advisors or their affiliates may purchase in such transactions,
subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in
such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will
be used to purchase shares or equity-linked securities in such transactions. Such purchases may include a contractual acknowledgment that
such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to
exercise its redemption rights.
In the event that our sponsor, directors, officers,
advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to
exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares.
The purpose of any such purchases could be to vote such shares in favor of the Business Combination with MoonLake, or an alternate business
combination if we do not complete the Business Combination with MoonLake, and thereby increase the likelihood of obtaining shareholder
approval of the business combination or to satisfy a closing condition in an agreement that requires us to have a minimum net worth or
a certain amount of cash at the closing of our initial business combination (as the Business Combination Agreement does), where it appears
that such requirement would otherwise not be met. Any such purchases may result in the completion of our initial business combination
that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act
to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made, the public
“float” of our Class A ordinary shares and the number of beneficial holders of our Class A ordinary shares may be reduced,
possibly making it difficult to obtain or maintain the quotation, listing or trading of our Class A ordinary shares on a national securities
exchange.
If a shareholder fails to receive notice of our offer to redeem
our Public Shares in connection with our initial business combination, or fails to comply with the procedures for submitting or tendering
its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender offer
rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these
rules, if a shareholder fails to receive our proxy materials or tender offer documents, as applicable, such shareholder may not become
aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish
to holders of our Public Shares in connection with our initial business combination will describe the various procedures that must be
complied with in order to validly tender or submit Public Shares for redemption. For example, we intend to require our public shareholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at
the holder’s option, either deliver their share certificates to our transfer agent, or to deliver their shares to our transfer agent
electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials,
this date may be up to two business days prior to the scheduled vote on the proposal to approve the initial business combination. In addition,
if we conduct redemptions in connection with a shareholder vote, we intend to require a public shareholder seeking redemption of its Public
Shares to also submit a written request for redemption to our transfer agent two business days prior to the scheduled vote in which the
name of the beneficial owner of such shares is included. In the event that a shareholder fails to comply with these or any other procedures
disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.
13
You are not entitled to protections normally afforded to investors
of many other blank check companies.
Since the net proceeds of the Initial Public Offering
and the sale of the Private Placement Shares are intended to be used to complete an initial business combination with a target business
that has not been selected, we may be deemed to be a “blank check” company under the U.S. securities laws. However, because
we have net tangible assets in excess of $5,000,000 upon the completion of the Initial Public Offering and the sale of the Private Placement
Shares and have filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules
promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits
or protections of those rules. Among other things, this means our shares will be immediately tradable and we will have a longer period
of time to complete the proposed Business Combination with MoonLake or another initial business combination than do companies subject
to Rule 419. Moreover, if the Initial Public Offering had been subject to Rule 419, that rule would prohibit the release of any interest
earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with
our completion of an initial business combination.
If we seek shareholder approval of our initial business combination,
as we expect to do in connection with the proposed Business Combination with MoonLake, and we do not conduct redemptions pursuant to the
tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 20% of our Class A ordinary shares,
you will lose the ability to redeem all such shares in excess of 20% of our Class A ordinary shares.
If we seek shareholder approval of our initial
business combination, as we expect to do in connection with the proposed Business Combination with MoonLake, and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles
of association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such
shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from
seeking redemption rights with respect to more than an aggregate of 20% of the shares sold in the Initial Public Offering without our
prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting our shareholders’ ability
to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess
Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on
your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number
of shares exceeding 20% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
Because of our limited resources and the significant competition
for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable
to complete our initial business combination, our public shareholders may receive only their pro rata portion of the funds in the Trust
Account that are available for distribution to public shareholders.
If we are unable to complete our business combination
with MoonLake, we expect to encounter competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge than
we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
there are numerous target businesses, including MoonLake, that we could potentially acquire with the net proceeds of the Initial Public
Offering and the sale of the Private Placement Shares, our ability to compete with respect to the acquisition of certain target businesses
that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our Public Shares the right
to redeem their shares for cash at the time of our initial business combination in conjunction with a shareholder vote or via a tender
offer. Target companies will be aware that this may reduce the resources available to us for our initial business combination. Any of
these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete
our initial business combination, our public shareholders may receive only their pro rata portion of the funds in the Trust Account that
are available for distribution to public shareholders.
14
If the net proceeds of the Initial Public Offering and the sale
of the Private Placement Shares not being held in the Trust Account are insufficient to allow us to operate for at least the next 24 months,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination,
and we will depend on loans from our sponsor or management team to fund our search and to complete our initial business combination.
We believe that the funds available to us outside
of the Trust Account will be sufficient to allow us to operate until at least October 22, 2022; however, we cannot assure you that our
estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to
assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around
for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed
business combination, although we do not have any current intention to do so and we have not done so in connection with the proposed Business
Combination with MoonLake. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional capital,
we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither
our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial
business combination. Up to $1,500,000 of such loans may be convertible into Private Placement Shares of the post-business combination
entity at a price of $10.00 per share at the option of the lender. Prior to the completion of our initial business combination, we do
not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be
willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. If we are unable
to complete our initial business combination within the required time period because we do not have sufficient funds available to us,
we will be forced to cease operations and liquidate the Trust Account. Consequently, our public shareholders may only receive an estimated
$10.00 per share, or possibly less, on our redemption of our Public Shares.
If third parties bring claims against us, the proceeds held in the
Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share.
Our placing of funds in the Trust Account may not
protect those funds from third party claims against us. Although we will seek to have all vendors, service providers, prospective target
businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any
kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements,
or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited
to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust
Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management
will consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party
if management believes that such third party’s engagement would be in the best interests of the Company under the circumstances.
WithumSmith+Brown, PC, our independent registered public accounting firm, and the underwriters of the Initial Public Offering did not
execute agreements with us waiving such claims to the monies held in the Trust Account.
15
Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable to
complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with
our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be
brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public shareholders
could be less than the $10.00 per Public Share initially held in the Trust Account, due to claims of such creditors. Pursuant to the
letter agreement entered into in connection with the Initial Public Offering, our sponsor has agreed that it will be liable to us if
and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which
we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce
the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in
the value of the trust assets, less taxes payable; provided that such liability will not apply to any claims by a third party
or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such
waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against
certain liabilities, including liabilities under the Securities Act. MoonLake has executed a waiver of any and all rights to the monies
in the Trust Account. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets
are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result,
if any such claims were successfully made against the Trust Account, the funds available for our initial business combination and redemptions
could be reduced to less than $10.00 per Public Share. In such event, we may not be able to complete our initial business combination,
and you would receive such lesser amount per share in connection with any redemption of your Public Shares. None of our officers or directors
will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification obligations
of our sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public shareholders.
In the event that the proceeds in the Trust Account
are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per Public Share held in the Trust Account as of
the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets, in
each case less taxes payable, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor
to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf
against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment and subject to their fiduciary duties may choose not to do so in any particular instance if, for example, the cost
of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors
determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations,
the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.00 per share.
16
If, after we distribute the proceeds in the Trust Account to our
public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against
us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our board of directors
may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and
us to claims of punitive damages.
If, after we distribute the proceeds in the Trust
Account to our public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is
filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or
insolvency court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may be viewed
as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of
punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust Account to our
public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share
amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust
Account to our public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is
filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To
the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation may be reduced.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make
it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including:
● restrictions on the nature of our investments; and
● restrictions on the issuance of securities,
● registration as an investment company;
● adoption of a specific form of corporate structure; and
In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate
the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit
from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
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We do not believe that our anticipated principal
activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be invested in
U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest
only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other
securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring
and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity
fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our securities
are not intended for persons who are seeking a return on investments in government securities or investment securities. The Trust Account
is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination;
(ii) the redemption of any Public Shares properly submitted in connection with a shareholder vote to amend our amended and restated memorandum
and articles of association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within 24 months from
the closing of the Initial Public Offering or (B) with respect to any other material provisions relating to shareholders’ rights
or pre-initial business combination activity; or (iii) absent an initial business combination within 24 months from the closing of the
Initial Public Offering, our return of the funds held in the Trust Account to our public shareholders as part of our redemption of the
Public Shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If
we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete
our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the Trust Account that
are available for distribution to public shareholders.
Changes in laws or regulations, or a failure to comply with any
laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination,
and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations
and their interpretation and application may also change from time to time and those changes could have a material adverse effect on
our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted
and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our proposed Business
Combination with MoonLake or another initial business combination, and results of operations.
If we are unable to consummate our initial business combination
within 24 months from the closing of the Initial Public Offering, our public shareholders may be forced to wait beyond such to 24 months
before redemption from our Trust Account.
If we are unable to consummate our initial business
combination within 24 months from the closing of the Initial Public Offering, the proceeds then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account (less taxes payable and up to $100,000 of interest to pay dissolution expenses),
will be used to fund the redemption of our Public Shares, as further described herein. Any redemption of public shareholders from the
Trust Account will be effected automatically by function of our amended and restated memorandum and articles of association prior to
any voluntary winding up. If we are required to wind-up, liquidate the Trust Account and distribute such amount therein, pro rata, to
our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable
provisions of the Companies Law (2020 Revision) of the Cayman Islands as the same may be amended from time to time (“Companies
Law”). In that case, investors may be forced to wait beyond 24 months from the closing of the Initial Public Offering before the
redemption proceeds of our Trust Account become available to them, and they receive the return of their pro rata portion of the proceeds
from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless
we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their Class
A ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable
to complete our initial business combination.
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Our shareholders may be held liable for claims by third parties
against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation,
any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date
on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result,
a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having
breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company
to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that
claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or
permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the
ordinary course of business would be guilty of an offence and may be liable to a fine of $18,293 and to imprisonment for five years in
the Cayman Islands.
We may not hold an annual general meeting until after the consummation
of our initial business combination, which could delay the opportunity for our shareholders to appoint directors.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual general meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. There is no requirement under the Companies Law for us to hold annual or extraordinary general meetings to appoint
directors. Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to appoint directors and
to discuss company affairs with management. Our board of directors is divided into three classes with only one class of directors being
appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year
term. In addition, as holders of our Class A ordinary shares, our public shareholders will not have the right to vote on the appointment
of directors until after the consummation of our initial business combination.
If we do not complete the proposed Business Combination with MoonLake,
when we look for an alternate business combination target, we will not be limited to evaluating a target business in a particular industry
sector, and you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may pursue an initial business combination opportunity
in any industry or sector, except that our amended and restated memorandum and articles of association prohibits us from effectuating
a business combination with another blank check company or similar company with nominal operations. We intend to complete the proposed
Business Combination with MoonLake, and accordingly we may be affected by numerous risks inherent in MoonLake’s business operations
and industry, which are set forth in detail in the Definitive Proxy Statement. If we do not complete the proposed Business Combination
with MoonLake, we may be affected by numerous risks relating to the target with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, and have done so in connection with the proposed Business Combination with MoonLake,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time
to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce
the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our Class A ordinary
shares will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in MoonLake
or another business combination target. Accordingly, any shareholders who choose to remain shareholders following the business combination
could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value
unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or
other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation
or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material
omission.
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We may seek business combination opportunities in industries or
sectors that may be outside of our management’s areas of expertise.
We will consider a business combination outside
of our management’s areas of expertise if a business combination candidate is presented to us and we determine that such candidate
offers an attractive business combination opportunity for our company. Although our management will endeavor to evaluate the risks inherent
in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our Class A ordinary shares will not ultimately prove to be less favorable
to investors in the Initial Public Offering than a direct investment, if an opportunity were available, in a business combination candidate.
In the event we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in the Initial Public Offering
prospectus regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we
elect to acquire. As a result, our management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly,
any shareholders who choose to remain shareholders following our initial business combination could suffer a reduction in the value of
their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines that
we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target
that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination
may not have attributes entirely consistent with our general criteria and guidelines, which could adversely affect the shareholder support
for the combination.
Although we have identified general criteria and
guidelines for evaluating prospective target businesses, it is possible that MoonLake or another target business with which we enter
into our initial business combination will not have some or all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target
that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which
may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval
for business or other reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if
the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination,
our public shareholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution
to public shareholders.
Although we obtained a fairness opinion in connection with the
proposed Business Combination with MoonLake, we are not required to obtain an opinion from an independent investment banking firm or
from a valuation or appraisal firm in connection with an alternate transaction, and consequently, you may have no assurance from an independent
source that the price we are paying for the business is fair to our shareholders from a financial point of view.
We obtained a fairness opinion in connection with
the proposed Business Combination with MoonLake, a copy of which is filed as an annex to the Definitive Proxy Statement. If we do not
complete the Business Combination with MoonLake and instead pursue an alternate target, then, unless we complete our initial business
combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target business
or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment
banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our shareholders
from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
20
We will issue additional Class A ordinary shares to complete the
proposed Business Combination with MoonLake, or if we complete an alternate initial business combination in lieu of the proposed Business
Combination, we may issue additional Class A ordinary shares or preferred shares to complete such alternate initial business combination,
and we may issue such shares under an employee incentive plan after completion of our initial business combination. We may also issue
Class A ordinary shares upon the conversion of the founder shares at a ratio greater than one-to-one at the time of such alternate initial
business combination as a result of the anti-dilution provisions contained therein. Any such issuances would dilute the interest of our
shareholders and likely present other risks.
Our amended and restated memorandum and articles
of association authorizes the issuance of up to 500,000,000 Class A ordinary shares, par value $0.0001 per share, 50,000,000 Class B
ordinary shares, par value $0.0001 per share, and 5,000,000 preferred shares, par value $0.0001 per share. As of the date of this Form
10-K, there are 488,070,000 and 47,125,000 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively,
available for issuance which amount does not take into account shares issuable upon conversion of the Class B ordinary shares. The Class
B ordinary shares are automatically convertible into Class A ordinary shares concurrently with or immediately following the consummation
of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our amended
and restated memorandum and articles of association, including in certain circumstances in which we issue Class A ordinary shares or
equity-linked securities related to our initial business combination. Such anti-dilution adjustments were waived in connection with the
proposed Business Combination. As of the date of this Form 10-K, there are no preferred shares issued and outstanding.
We will issue a substantial number of additional
Class A ordinary shares and Class C ordinary shares to complete the proposed Business Combination with MoonLake, or if we complete an
alternate initial business combination we may issue additional ordinary shares or preferred shares to complete such alternate initial
business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class
A ordinary shares upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business
combination as a result of the anti-dilution provisions as set forth therein in connection with such alternate initial business combination.
However, our amended and restated memorandum and articles of association provide, among other things, that prior to our initial business
combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the Trust Account or
(ii) vote on any initial business combination. These provisions of our amended and restated memorandum and articles of association, like
all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance
of additional ordinary or preferred shares:
● may adversely affect prevailing market prices for our Class A ordinary shares.
Unlike some other similarly structured special purpose acquisition
companies, our initial shareholders will receive additional Class A ordinary shares if we issue certain shares to consummate an initial
business combination.
The founder shares will automatically convert
into Class A ordinary shares concurrently with or immediately following the consummation of our initial business combination on a one-for-one
basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject
to further adjustment to prevent dilution (which anti-dilution adjustment provisions have been waived by the holders of founder shares