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. If any of the following events occur, our business, financial condition and operating results may be materially adversely
affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Relating to Our Business and
the Initial Business Combination
Our Public Shareholders voted on the Proposed
Business Combination on March 12, 2026, but if we do not consummate the Proposed Business Combination and pursue an alternative initial
business combination opportunity, our Public Shareholders may not be afforded an opportunity to vote on our initial business combination,
and even if we hold a vote, holders of our Founder Shares and Private Placement Units 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.
We held the EGM on March 12, 2026 to approve the
Proposed Business Combination; however, if we do not consummate the Proposed Business Combination and instead search for an alternate
initial business combination opportunity, we may choose not to hold a shareholder vote to approve our initial business combination if
such business combination would not require shareholder approval under applicable law or stock exchange listing requirement. Except for
as required by applicable law or stock exchange requirement, the decision as to whether we will seek shareholder approval of a proposed
Business Combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise
require us to seek shareholder approval. Even if we seek shareholder approval of our initial business combination, the Sponsor will participate
in the vote on such approval. Accordingly, we may complete our initial business combination even if a majority of our Public Shareholders
do not approve of the Business Combination we complete.
Our Public Shareholders’ only opportunity
to affect the investment decision regarding a potential Business Combination may be limited to the exercise of their right to redeem their
Public Shares from us for cash.
At the time of investment in us, our Public Shareholders
were not provided with an opportunity to evaluate the specific merits or risks of our initial business combination. We held the EGM on
March 12, 2026 to approve the Proposed Business Combination, in connection with which our Public Shareholders were provided with an opportunity
to evaluate the specific merits or risks of the Proposed Business Combination and exercise the right to redeem their Public Shares for
cash; however, if we do not consummate the Proposed Business Combination and instead search for an alternate initial business combination
opportunity, since our board of directors may complete an initial business combination without seeking shareholder approval, Public Shareholders
may not have the right or opportunity to vote on the initial business combination, unless we seek such shareholder vote. Accordingly,
their only opportunity to affect the investment decision regarding our initial business combination may be limited to exercising their
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.
We sought shareholder approval of the Proposed
Business Combination at the EGM held on March 12, 2026, at which the Sponsor voted in favor of the Business Combination. If we do not
consummate the Proposed Business Combination and instead pursue an alternative initial business combination opportunity and seek shareholder
approval thereof, the Sponsor has agreed to vote in favor of such business combination, regardless of how our Public Shareholders vote.
As of December 31, 2025, the Sponsor owned 25.9%
of our issued and outstanding ordinary shares. The Sponsor and management team may from time to time purchase Class A Ordinary Shares
prior to our initial business combination. The Articles provide that, if we seek shareholder approval of an initial business combination,
such initial business combination requires an ordinary resolution which is the affirmative vote (in person (including virtually) or by
proxy) of holders of a majority of the outstanding Ordinary Shares that are entitled to vote and are voted. As a result, in connection
with the EGM held on March 12, 2026, and if we do not consummate the Proposed Business Combination and instead pursue an alternative initial
business combination opportunity, the extraordinary general meeting to approve the alternative initial business combination opportunity,
in addition to the Sponsor’s Founder Shares and Private Placement Units, we did not and would not need any of the 25,000,000 Public Shares
outstanding to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming
that only the holders of 11,252,779 ordinary shares, representing a quorum under the Articles, are voted).
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The ability of our Public Shareholders to
redeem their Public Shares for cash may make our financial condition unattractive to potential business combination targets, which may
make it difficult for us to enter into an initial business combination with a target.
We expect to consummate the Proposed Business
Combination with Merlin as we have received the requisite shareholder vote. The Proposed Business Combination does not have a minimum
cash condition. However, in the unlikely scenario that we do not consummate the Proposed Business Combination and instead pursue an alternative
initial business combination opportunity, 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. If too many public shareholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Consequently,
if accepting all properly submitted redemption requests would not allow us to satisfy a closing condition as described above, we would
not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective
targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our Public Shareholders to
exercise redemption rights with respect to a large number of our Public Shares and the amount of deferred underwriting compensation may
not allow us to complete the most desirable Business Combination or optimize our capital structure.
At the time we entered into the Business Combination Agreement with
Merlin, we did not know how many shareholders would exercise their redemption rights, and therefore structured the transaction based on
our expectations as to the number of shares that would be submitted for redemption. As of the date of this Annual Report, in connection
with the EGM held on March 12, 2026, Public Shareholders holding 22,550,551 Public Shares, representing approximately 90.3% of the outstanding
Public Shares, exercised their redemption rights with respect to the Proposed Business Combination. If we do not consummate the Proposed
Business Combination and instead enter into an agreement for an alternate initial business combination opportunity, we will not know how
many shareholders may exercise their redemption rights with respect to such alternate transaction, and therefore will need to structure
such transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination
agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, as the Proposed Business Combination does, we will need to reserve a portion of the cash in the Trust Account to meet
such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we
initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange
for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness
at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the
Class B 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, though the Sponsor has agreed to waive its anti-dilution
rights under the Articles in connection with the Proposed Business Combination. The above considerations may limit our ability to complete
the most desirable business combination available to us or optimize our capital structure. As a result, our obligations to redeem Public
Shares for which redemption is requested and to pay the deferred underwriting commissions may not allow us to complete the most desirable
business combination or optimize our capital structure.
In addition, raising additional third-party financing
may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would
increase to the extent that the anti-dilution provisions of the Class B Ordinary Shares result 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 business combination.
The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure and may result in substantial dilution from your purchase of our Class A Ordinary Shares. The effect of this dilution will be
greater for our Public Shareholders than holders of our Founder Shares. The amount of the deferred underwriting compensation payable to
the underwriter will not be adjusted for any shares that are redeemed in connection with an initial business combination, which may further
dilute your investment. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will
not be reduced by the deferred underwriting compensation and after such redemptions, the per-share value of shares held by non-redeeming shareholders
will reflect our obligation to pay the deferred underwriting compensation. We may not be able to generate sufficient value from the completion
of our initial business combination in order to overcome the dilutive impact of these and other factors, and, accordingly, you may incur
a net loss on your investment.
The ability of our Public Shareholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
The Proposed Business Combination has received
requisite shareholder approval and is expected to be consummated on March 16, 2026. If we do not consummate the Proposed Business Combination
and instead pursue an alternative initial business combination opportunity, and such alternative initial business combination agreement
requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that such initial business combination would be unsuccessful is increased. If such initial business combination
is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account until we liquidate the Trust Account. If
you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may
trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your
investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate or you are able
to sell your shares in the open market.
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The requirement that we complete our initial
business combination within the completion window 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.
We are required to enter into an initial business
combination within the completion window. If we do not consummate the Proposed Business Combination and instead seek an alternate initial
business combination opportunity, 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 the completion window. 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 length of
time it may take us to complete our diligence and negotiate a business combination may reduce the amount of time available for us to ultimately
complete an initial business combination should such diligence or negotiations not lead to a consummated initial business combination.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by events that are
outside of our control, such as increased geopolitical unrest, pandemic outbreaks and volatility in the debt and equity markets.
In the event we do not consummate the Proposed
Business Combination and instead pursue an alternative initial business combination opportunity, our ability to find a potential target
business and the business of any potential business with which we may consummate such alternative business combination could be materially
and adversely affected by events that are outside of our control. For example, geopolitical unrest (such as the ongoing military conflict
between Russia and Ukraine and the military conflict in the Middle East), including war, terrorist activity and acts of civil or international
hostility are increasing. In particular, although the length, impact and outcome of the ongoing military conflict in Ukraine and the recent
armed conflict in the Middle East is highly unpredictable, these conflicts could lead to significant market and other disruptions, including
significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions,
political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.
Similarly other events outside of our control,
including natural disasters, climate-related events pandemic or health crises (such as the COVID-19 pandemic) may arise from time to time,
any such events may cause significant volatility and declines in the global markets, disproportionate impacts to certain industries or
sectors, disruptions to commerce (including to economic activity, travel and supply chain), loss of life and property damage, and may
adversely affect the global economy or capital markets, and the business of any potential target business with which we may consummate
a business combination and could 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 these and other events, including as a result of increased
market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable or at all.
Changes in international trade policies,
tariffs and treaties affecting imports and exports may have a material adverse effect on our search for an initial business combination
target if we do not complete the Proposed Business Combination, our ability to complete the Proposed Business Combination or another initial
business combination, and/or our business, financial condition and results of operations following completion of the Proposed Business
Combination or another initial business combination.
There have recently been significant changes to
international trade policies and tariffs affecting imports and exports. The U.S. has implemented a range of new tariffs and increases
to existing tariffs, and, in response to the tariffs announced by the U.S., other countries have imposed new or increased tariffs on certain
exports from the United States. There is currently significant uncertainty about the future relationship between the United States and
other countries with respect to trade policies, government regulations and tariffs. We cannot predict whether, and to what extent, current
tariffs will continue or trade policies will change in the future. Any significant increases in tariffs on goods or materials or other
changes in trade policy, or the perception that such changes could occur, could negatively affect our search for a target business if
we do not complete the Proposed Business Combination and/or our ability to complete the Proposed Business Combination or another initial
business combination. For example, if we pursue a target company which sources or manufactures material components outside of the U.S.,
these changes could materially impact such target company’s business and financial performance. Similarly, if we pursue a target
company which exports products outside of the U.S., retaliatory tariff and trade measures imposed by other countries could affect such
target’s ability to export products and therefore adversely affect its sales. We may not be able to adequately address the risks
presented by these tariffs or other potential trade policy changes. As a result, if we do not complete the Proposed Business Combination,
we may deem it costly, impractical or risky to complete an initial business combination with a particular target or with a target in a
particular industry or from a particular country. Consequently, the pool of potential target companies may be reduced, which could impair
our ability to identify a suitable target and to complete an initial business combination. The business prospects of Merlin or another
target company could change even after we enter into a business combination agreement, as a result of tariffs or the threat of tariffs
that may have a material impact on Merlin’s or such other target’s business. Accordingly, changes in trade and tariff policies
could prevent or make it difficult or more expensive for us to complete the Proposed Business Combination or another initial business
combination. Tariffs and threats of tariffs and other potential trade policy changes could also lead to material adverse effects on New
Merlin or another post-business combination company.
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If we do not complete the Proposed Business
Combination, we may not be able to consummate our initial business combination within the completion window, 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 have entered into a Business Combination Agreement
with Merlin, and our shareholders approved the Proposed Business Combination at the EGM held on March 12, 2026. However, in the unlikely
scenario we do not complete the Proposed Business Combination and seek an alternative initial business combination opportunity, we may
not be able to find a suitable target business and complete our initial business combination within the completion window. Our ability
to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt
markets and the other risks described herein. If we have not completed our initial business combination within such time period, we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter (and subject to lawfully available funds therefor), redeem the Public Shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (which
interest shall be net of 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no
redemption rights or liquidating distributions with respect to our rights, which will expire worthless if we fail to complete our initial
business combination within the completion window.
We may decide not to extend the term we
have to consummate our initial business combination, in which case we would redeem our Public Shares, and the Public Rights may be worthless.
We have until November 4, 2026 or until such earlier
liquidation date as our board of directors may approve, to consummate our initial business combination. If we anticipate that we may be
unable to consummate our initial business combination within such period, we may seek shareholder approval to amend our Articles to extend
the date by which we must consummate our initial business combination. However, we may decide not to seek to extend the date by which
we must consummate our initial business combination. If we do not seek to extend the date by which we must consummate our initial business
combination, and we are unable to consummate our initial business combination within the applicable time period, we will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter
(and subject to lawfully available funds therefor), redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (which interest shall be
net of taxes payable, interest released to us for working capital purposes 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate
and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements
of other applicable law. In such event, the Rights may be worthless.
If we seek shareholder approval of our initial
business combination, our Sponsor, directors, executive officers, and their affiliates may elect to purchase Public Shares or Public Rights
from Public Shareholders, which may influence a vote on a proposed business combination and reduce the public “float” of our
Class A Ordinary Shares or Rights.
On March 12, 2026, we held an EGM for our shareholders
to vote on the Proposed Business Combination. All proposals were approved by the requisite vote of the shareholders, and we expect to
consummate the Proposed Business Combination on March 16, 2026. Prior to the EGM, none of the Sponsor, our directors, officers or affiliates
purchased additional securities on the open market. In the unlikely scenario we do not consummate the Proposed Business Combination and
instead pursue an alternative initial business combination opportunity, at any time prior to the extraordinary general meeting held to
approve an initial business combination, if we seek shareholder approval of our initial business combination and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, the Sponsor or our directors, managers, officers,
advisors and their affiliates may purchase Public Shares or Public Rights in privately negotiated transactions or in the open market,
or take other actions to incentivize non-redemption, although they are under no obligation to do so. There is no limit on the number of
Public Shares or Public Rights that such persons may purchase in such transactions, subject to compliance with applicable law and Nasdaq
rules. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase
Public Shares or Public Rights in such transactions. Such purchases may include a contractual acknowledgment that such shareholder, although
still the record holder of our securities, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. In the event that the Sponsor or our directors, managers, officers, advisors and 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.
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The purpose of any such transactions could be
to (1) increase the likelihood of obtaining the shareholder approval of the proposed business combination, (2) reduce the amount of redemptions,
or (3) reduce the number of Public Rights outstanding. Any such purchases of our securities may result in the completion of the proposed
business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public
“float” of our securities may be reduced and the number of beneficial holders of our securities may be reduced, which may
make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
The Sponsor or our directors, managers, officers,
advisors and their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent
such purchasers are subject to such reporting requirements. Additionally, in the event the Sponsor, the Company’s or the target’s
directors, managers, officers, advisors and their affiliates were to purchase Public Shares or Public Rights, such purchases would be
structured in compliance with the requirements of Rule 14e-5 under the Exchange Act including, in pertinent part, through adherence to
the following:
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
have become aware (whether in connection with the Proposed Business Combination or, if we do not consummate the Proposed Business Combination,
any alternative initial business combination opportunity) 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.
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You will not be entitled to protections
normally afforded to investors of other blank check companies subject to Rule 419 of the Securities Act.
Since the net proceeds of the IPO and the sale
of the Private Placement Units are intended to be used to complete one or more initial business combinations with a target business or
businesses, we may be deemed to be a “blank check” company under the United States securities laws. We have entered into the
Business Combination Agreement with Merlin as our proposed initial business combination; however, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or
protections of those rules. Among other things, this means we will have a longer period of time to complete our initial business combinations
than do companies subject to Rule 419. Moreover, if the IPO 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 or in connection
with our completion of an initial business combination.
We sought shareholder approval of the Proposed
Business Combination at the EGM held on March 12, 2026 and did not conduct redemptions pursuant to the tender offer rules; if we do not
consummate the Proposed Business Combination and instead pursue an alternative initial business combination opportunity and seek shareholder
approval thereof and do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders
are deemed to hold in excess of 15% of our Class A Ordinary Shares, you will lose the ability to redeem all such shares in excess of 15%
of our Class A Ordinary Shares.
We sought shareholder approval of the Proposed
Business Combination at the EGM held on March 12, 2026 and did not conduct redemptions in connection with the Proposed Business Combination
pursuant to the tender offer rules; if we do not consummate the Proposed Business Combination and instead pursue an alternative initial
business combination opportunity and seek shareholder approval thereof and do not conduct redemptions in connection with such alternative
initial business combination pursuant to the tender offer rules, our Articles 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 15% of the
shares sold in the IPO, which we refer to as the “Excess Shares”, without our prior consent. However, we would not
be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination
and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you
will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a
result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell
your shares in open market transactions, potentially at a loss.
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.
We have entered into a Business Combination Agreement
with Merlin, and the shareholders approved the Proposed Business Combination at the EGM held on March 12, 2026. However, if we do not
complete the Proposed Business Combination and seek an alternative initial business combination opportunity, 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 we could potentially
acquire with the net proceeds of the IPO and the sale of the Private Placement Units if the Proposed Business Combination does not close,
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,
and our Rights will expire worthless.
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If the net proceeds of the IPO and simultaneous
private placement not being held in the Trust Account are insufficient to allow us to operate until the completion of the Business Combination,
we will depend on loans from the Sponsor or management team to complete the Business Combination.
As of December 31, 2025, we had $703,596 held
outside of the Trust Account and a working capital deficit of $2,416,322. While we believe that the funds available to us outside of the
Trust Account will be sufficient to allow us to operate until at least the completion of the Proposed Business Combination on March 16,
2026, or, if we do not consummate the Proposed Business Combination, until the end of the completion window, we cannot assure you that
our estimate is accurate. None of the 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 the Closing. Up to $1,500,000 of any loans may be convertible into Private Placement Units at a price of $10.00 per Private
Placement Unit at the option of the lender. Prior to the closing of the Proposed Business Combination, we do not expect to seek loans
from parties other than the Sponsor or an affiliate of the 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 the 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. The Public Rights may expire worthless.
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 seek to have all vendors, service providers, prospective target
businesses and other entities with which we do business execute agreements waiving any right, title, interest or claim of any kind in
or to any monies held in the Trust Account for the benefit of the 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 advisable and in the best interests of the Company under the
circumstances. WithumSmith+Brown PC, our independent registered public accounting firm, and the underwriters of the IPO will not execute
agreements with the Company waiving such claims to the monies held in the Trust Account.
Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public Shares, if we are unable to
complete the Proposed Business Combination or another initial business combination within the prescribed timeframe, or upon the exercise
of a redemption right in connection with the Proposed Business Combination or another 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 redemptions
of the Public Shares. 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, the 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 (except for our
independent auditors), 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 Public 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 IPO against certain liabilities, including liabilities under the Securities Act. However, we have not asked
the Sponsor to reserve for such indemnification obligations, nor has it independently verified whether the Sponsor has sufficient funds
to satisfy its indemnity obligations. Therefore, we cannot assure you that the 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 the Proposed Business Combination
or another 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 the Proposed Business Combination or another 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.
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Our directors may decide not to enforce
the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution
to the Public Shareholders.
In the event that the proceeds in the Trust Account
are reduced below the lesser of: (i) $10.00 per Public Share; and (ii) the actual amount per Public Share held in the Trust Account as
of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets,
in each case less taxes payable, and the 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 the Sponsor
to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf
against the Sponsor to enforce the Sponsor’s 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.
We may not have sufficient funds to satisfy
indemnification claims of our Sponsor, directors and officers.
We have agreed to indemnify our Sponsor, officers
and directors to the fullest extent permitted by law, including for any liability incurred in their capacities as such, except through
their own actual fraud, willful default or willful neglect. However, our Sponsor, officers and directors have agreed to waive any right,
title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any
reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds
outside of the Trust Account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and
directors may discourage shareholders from bringing a lawsuit against our Sponsor, officers or directors for breach of their fiduciary
duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors,
even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment
may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to
these indemnification provisions.
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.
In the unlikely scenario we do not consummate
the Proposed Business Combination and instead pursue an alternative initial business combination opportunity, if, before distributing
the proceeds in the Trust Account to the Public Shareholders, the Company files a bankruptcy or insolvency petition or an involuntary
bankruptcy or insolvency petition is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to
applicable bankruptcy law, and may be included in the Company’s 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.
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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 us or our creditors, thereby exposing the members of the
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, the board of directors may be viewed
as having breached its fiduciary duty to us or 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.
Our shareholders may be held liable for
claims by third parties against the Company to the extent of distributions received by them upon redemption of their shares.
We do not expect to enter into an insolvent liquidation
given that the Proposed Business Combination has received requisite shareholder approval and is expected to be consummated on March 16,
2026; however, in the unlikely scenario we do not consummate the Proposed Business Combination and instead pursue an alternative initial
business combination opportunity, the following risks may apply. If, in such alternative scenario, we are forced to enter into an insolvent
liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it were proved that immediately following
the date on which the distribution was made, the Company was unable to pay its 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 the
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 it for these reasons. The Company and our directors and officers who knowingly and willfully
authorized or permitted any distribution to be paid out of the our share premium account while it was unable to pay its debts as they
fall due in the ordinary course of business would be guilty of an offense and may be liable to a fine of $18,293 and to imprisonment for
five years in the Cayman Islands.
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 the Proposed Business Combination or another initial business combination or force us to
abandon our efforts to complete an 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
In addition, we may have imposed upon us burdensome
requirements, including:
● registration as an investment company with the SEC;
● adoption of a specific form of corporate structure; and
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash
items) on an unconsolidated basis. Our business is to identify and complete an initial business combination, such as the Proposed Business
Combination. 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.
In 2024, the SEC provided guidance that the determination
of whether a SPAC, like us, is an “investment company” under the Investment Company Act is a facts and circumstances determination
requiring individualized analysis and depends on a variety of factors, including a SPAC’s duration, asset composition, business
purpose and activities. When applying these factors to us we do not believe that our principal activities will subject us to the Investment
Company Act. To this end, we were formed for the purpose of completing an initial business combination with one or more businesses or
entities, such as the Proposed Business Combination with Merlin. Since our inception, our business has been and will continue to be focused
on identifying and completing the Business Combination with Merlin, or another initial business combination. Further, we do not plan to
buy businesses or assets with a view to resale or profit from their resale and we do not plan to buy unrelated businesses or assets or
to be a passive investor. In addition, the proceeds held in the Trust Account were invested in United States “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
By restricting the investment of the proceeds in this manner, and by focusing our directors’ and officers’ time toward, and
operating our business for the purpose of, acquiring and growing businesses for the long term (rather than buying and selling businesses
in the manner of a merchant bank or private equity fund or investing in assets for the purpose of achieving investment returns on such
assets), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Further,
investing in our securities is not intended for persons who are seeking a return on investments in government securities or investment
securities. Instead, 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 the our Articles (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 the completion window
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 the completion window, our return of the funds held in the Trust Account to our
Public Shareholders as part of our redemption of the Public Shares subject to applicable law and our Articles. If we do not invest the
proceeds as described above, we may be deemed to be subject to the Investment Company Act.
If we were deemed to be an investment company
for purposes of the Investment Company Act, we would need to register as such under the Investment Company Act and compliance with these
additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete
the Business Combination or any other initial business combination. In the unlikely scenario we do not consummate the Proposed Business
Combination and instead pursue an alternative initial business combination opportunity, we may also be forced to abandon our efforts to
complete an initial business combination and instead be required to liquidate the Trust Account. In which case, our investors would not
be able to realize the potential benefits of owning shares in a successor operating business, including the potential appreciation in
the value of our securities following such a transaction, and our Rights would expire worthless. For illustrative purposes, in connection
with the liquidation of our Trust Account, our Public Shareholders may receive only approximately $10.49 per Public Share, which is based
on estimates as of December 31, 2025, or less in certain circumstances, and our Rights may expire and become worthless. Further, under
the subjective test of a “investment company” pursuant to Section 3(a)(1)(A) of the Investment Company Act, even if the funds
deposited in the Trust Account were invested in the assets discussed above, there is a risk that we could be deemed an investment company
and subject to the Investment Company Act based on the length of time such funds are invested in such assets.
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To mitigate the risk that we might be deemed
to be an investment company for purposes of the Investment Company Act, we may, at any time, instruct the trustee to liquidate the securities
held in the Trust Account and instead to hold the funds in the Trust Account in cash until the earlier of the consummation of our initial
business combination or our liquidation. As a result, following the liquidation of securities in the Trust Account, the interest earned
on the funds held in the Trust Account may be materially reduced, which would reduce the dollar amount our Public Shareholders would receive
upon any redemption or liquidation of the Company.
We expect to consummate the Proposed Business
Combination on March 16, 2026; however, in the unlikely scenario we do not consummate the Proposed Business Combination and instead pursue
an alternative initial business combination opportunity, the following risks relating to the Investment Company Act may apply. We have
been holding the funds in the Trust Account as cash or in U.S. government treasury obligations with a maturity of 185 days or less or
in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the
Investment Company Act. U.S. government treasury obligations are considered “securities” for purposes of the Investment Company
Act, while cash is not. As noted above, one of the factors the SEC identified as relevant to the determination of whether a SPAC which
holds securities could potentially be deemed an “investment company” under the Investment Company Act is the SPAC’s
duration. The longer that the funds in the Trust Account are held in short-term U.S. government treasury obligations or in money market
funds invested exclusively in such securities, the greater the risk that we may be deemed to be an unregistered investment company, in
which case we may be required to liquidate. To mitigate the risk of us being deemed to be an unregistered investment company (including
under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company
Act, we may, at any time, in such alternative scenario instruct Continental, the trustee with respect to the Trust Account, to liquidate
the U.S. government treasury obligations or money market funds held in the Trust Account and thereafter to hold all funds in the Trust
Account in cash until the earlier of consummation of the our initial business combination or liquidation of the Company. Following such
liquidation, the rate of interest we receive on the funds held in the Trust Account may be materially decreased. However, interest previously
earned on the funds held in the Trust Account still may be released to us to pay our taxes, if any, and certain other expenses as permitted.
As a result, any decision to liquidate the securities held in the Trust Account and thereafter to hold all funds in the Trust Account
in cash would reduce the dollar amount our Public Shareholders would receive upon any redemption or liquidation of the Company.
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, including the Proposed Business Combination.
We are subject to rules and regulations by various
national, regional and local governing bodies, including, for example, the SEC, and to new and evolving regulatory measures under applicable
law. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly and our efforts to
comply with such new and evolving laws and regulations have resulted in and are likely to continue to result in, increased general and
administrative expenses and a diversion of management time and attention. In addition, these changes could have a material adverse effect
on our business, investments and results of operations.
Moreover, because these laws, regulations and
standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
For example, on January 24, 2024, the SEC issued final rules and guidance relating to SPACs, like us, regarding, among other things, disclosure
in SEC filings in connection with initial business combination transactions; the financial statement requirements applicable to transactions
involving shell companies; the use of projections in SEC filings in connection with proposed business combination transaction; and the
potential liability of certain participants in proposed business combination transactions. This evolution may result in continuing uncertainty
regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. A failure
to comply with applicable laws or regulations and any subsequent changes, as interpreted and applied, could have a material adverse effect
on our business, including our ability to negotiate and complete our initial business combination.
We did not hold an annual general meeting
prior to the EGM held on March 12, 2026 to approve the Proposed Business Combination, and if we do not consummate the Proposed Business
Combination and instead pursue an alternative initial business combination opportunity, we may not hold an annual general meeting until
after the consummation of such alternative initial business combination, which could delay the opportunity for our shareholders to appoint
directors.
We held the EGM on March 12, 2026, at which Public
Shareholders were afforded the opportunity to vote on the Proposed Business Combination but were not afforded the opportunity to appoint
directors or discuss general company affairs with management at an annual general meeting. In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing
on Nasdaq. There is no requirement under the Companies Act for us to hold annual or 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 or removal of directors
or continuing the company in a jurisdiction outside the Cayman Islands until after the consummation of our initial business combination.
30
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’ operations should we not complete
the Proposed Business Combination with Merlin and instead pursue an alternative initial business combination opportunity.
Although we have entered into the Business Combination
Agreement with Merlin as our proposed initial business combination, and the shareholders approved the Proposed Business Combination at
the EGM held on March 12, 2026, in the unlikely scenario that we do not consummate the Proposed Business Combination and instead pursue
an alternative initial business combination opportunity, our efforts to identify such a prospective alternative initial business combination
target would not be limited to a particular industry, sector or geographic region. While we may pursue such an alternative initial business
combination opportunity in any industry or sector, we would intend to capitalize on the ability of our management team to identify and
acquire a business or businesses that can benefit from our management team’s established global relationships and operating experience.
Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully
in a number of sectors, including the healthcare or healthcare-related industries sector. Our Articles prohibits us from effectuating
a business combination solely with another blank check company or similar company with nominal operations.
If the Proposed Business Combination is not consummated
and we instead pursue an alternative initial business combination opportunity, there may be limited basis to evaluate the possible merits
or risks of any particular target business’ operations, results of operations, cash flows, liquidity, financial condition or prospects.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with
which we combine. For example, if the Proposed Business Combination does not close, we may 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. In recent years, a number of target businesses have underperformed financially
post-business combination. There are no assurances that the target business with which we consummate our initial business combination
will perform as anticipated. Although our officers and directors have and will endeavor to evaluate the risks inherent in a particular
target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have
adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in
our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in
a business combination target. Accordingly, any shareholders who choose to remain shareholders following the initial 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 initial business combination contained an actionable material misstatement or
material omission.
We may seek business combination opportunities
in industries or sectors that may be outside of our management’s areas of expertise.
If the Proposed Business Combination does not
close, we may 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