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, the prospectus associated with our Initial Public Offering
and the registration statement of which such prospectus forms a part, before making a decision to invest in our securities, before making
a decision to invest in our units. 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
Business Operations and Searching for and Consummating a Business Combination
We have no operating history and no revenues, and you have no basis
on which to evaluate our ability to achieve our business objective.
We
have no operating results. To date, our only activities have been related to our formation and the IPO and the search and evaluation
of potential targets in contemplation of a business combination. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
If we fail to complete our initial business combination, we will never generate any operating revenues.
Our independent registered public accounting firm’s report
contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
As
of December 31, 2021, we had $507,921 in cash held outside of the trust account and working capital of $375,253. Further, we have incurred
and expect to continue to incur significant costs in pursuit of our finance and acquisition plans. The Company’s business plan
is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2021 are
not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company’s ability to continue
as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We
cannot assure you that we will consummate an initial business combination or that we will have sufficient cash available to allow us
to complete our initial business combination.
We identified a material weakness in our internal control
over financial reporting as of September 30, 2021 and as of March 31, 2021. If we are unable to develop and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
The
Company reported a material weakness in its Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2021, as management identified
a material weakness in our internal control over financial reporting related to the Company’s accounting and reporting of complex
financial instruments, including application of ASC 480-10-S99-3A to its accounting classification of public shares. As a result of this
material weakness, our management has concluded that our disclosure controls and procedures were not effective as of September 30, 2021.
We have taken a number of measures to remediate the material weaknesses described herein. However, if we are unable to remediate our
material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial
information in a timely and reliable manner and we may incorrectly report financial information. Likewise, if our financial statements
are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares
are listed, the SEC or other regulatory authorities. The existence of material weaknesses in internal control over financial reporting
could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our shares.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls. Even if we are successful in strengthening
our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or
errors or to facilitate the fair presentation of our financial statements.
The Company also reported a material weakness in its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2021 as management determined our internal control over financial reporting did not result
in the proper accounting for complex financial instruments, in that the classification of the private placement warrants we issued in
January 2021 were recorded as equity and not liabilities.
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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 and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable
financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may
be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such
newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could
result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance
with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements,
investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures
we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
The requirement that
we complete our initial business combination within 15 months from the closing of the Initial Public Offering (or 18 months from the closing
of the Initial Public Offering if we have extended the period of time to consummate an initial business combination as described herein)
may give potential target businesses leverage over us in negotiating our initial business combination and may limit the amount of time
we have to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to consummate our initial business combination on terms that would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning our initial business combination will be aware that we must
consummate our initial business combination within 15 months from the closing of the Initial Public Offering (or up to 18 months from
the closing of the Initial Public Offering if we have further extended the period of time to consummate an initial business combination
as described herein). Consequently, such target businesses may obtain leverage over us in negotiating our initial 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.
We may not be able
to consummate our initial business combination within the required time period, 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
must complete our initial business combination within 15 months from the closing of the Initial Public Offering (or up to 18 months from
the closing of the Initial Public Offering if we have further extended the period of time to consummate an initial business combination
as described herein). We may not be able to find a suitable target business and consummate our initial business combination within such
time period. 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 are unable to consummate our initial business combination
within the required time period, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute
the aggregate amount then on deposit in the trust account (net of taxes payable, and less up to $50,000 of interest to pay liquidation
expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of
our affairs, as further described herein. This redemption of public shareholders from the trust account shall be effected as required
by function of our memorandum and articles of association and prior to any voluntary winding up.
Our public shareholders
will not be entitled to vote or redeem their shares in connection with either of our potential three-month extensions.
If
we are not able to consummate our initial business combination within 15 months, we may, by resolution of our board if requested by our
Sponsors, extend the period of time to consummate a business combination by an additional three months, as long as our Sponsors or their
affiliates or designees, prior to the deadline, deposits into the trust account $1,035,000 ($0.075 per unit,) on or prior to the date
of the deadline, for the three-month extension. Our public shareholders will not be entitled to vote or redeem their shares in connection
with any such extension. As a result, we may conduct such an extension even though a majority of our public shareholders do not support
such an extension and will not be able to redeem their shares in connection therewith. This feature is different than the traditional
special purpose acquisition company structure, in which any extension of the company’s period to complete a business combination
requires a vote of the company’s shareholders and shareholders have the right to redeem their public shares in connection with such
vote.
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Our Sponsors may decide
not to extend the term we have to consummate our initial business combination, in which case we would cease all operations except for
the purpose of winding up and we would redeem our public shares and liquidate, and the warrants will be worthless.
We
have until 15 months from the closing of the Initial Public Offering to consummate our initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 15 months, we may, by resolution of our board if requested
by our Sponsors, extend the period of time to consummate a business combination once more, by an additional three months (for a total
of up to 18 months to complete a business combination), subject to the Sponsors depositing additional funds into the trust account. Our
shareholders will not be entitled to vote or redeem their shares in connection with any such extension. However, our shareholders will
be entitled to vote and redeem their shares in connection with a shareholder meeting held to approve an initial business combination or
in a tender offer undertaken in connection with an initial business combination if we propose such a business combination during any three-month
extension period. In order for the time available for us to consummate our initial business combination to be extended, our Sponsors or
their affiliates or designees must deposit into the trust account $1,035,000 ($0.075 per unit) for the three month extension. Any such
deposits will be in the form of non-interest-bearing loans to us. If we complete our initial business combination, we will, at the option
of our Sponsors, repay such loaned amounts or redeem a portion or all of the total loan amount into warrants at a price of $0.75 per warrant,
which warrants will be identical to the private warrants. If we do not complete a business combination, we will repay such loans only
from funds held outside of the trust account. Our Sponsors and their affiliates or designees are not obligated to fund the trust account
to extend the time for us to complete our initial business combination. If we are unable to consummate our initial business combination
within the applicable time period, we will liquidate as described herein. In such event, the warrants will be worthless.
If we are unable to
consummate our initial business combination within 15 months of the closing of the Initial Public Offering (or up to 18 months if the
time to consummate an initial business combination has been extended as described above), our public shareholders may be forced to wait
beyond such period of time before redemption from our trust account.
If
we are unable to consummate our initial business combination within 15 months from the closing of the Initial Public Offering (or up to
18 months if the time to consummate an initial business combination has been further extended as described above), we will, as promptly
as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account
(net of taxes payable, and less up to $50,000 of interest to pay liquidation expenses), pro rata to our public shareholders by way of
redemption and cease all operations except for the purposes of winding up of our affairs by way of a voluntary liquidation, as further
described herein. Any redemption of public shareholders from the trust account shall be effected as required by our memorandum and articles
of association prior to our commencing any voluntary liquidation. If we are required to liquidate prior to distributing the aggregate
amount then on deposit in the trust account (net of taxes payable, and less up to $50,000 of interest to pay liquidation expenses) pro
rata to our public shareholders, then such winding up, liquidation and distribution must comply with the applicable provisions of the
Companies Act. In that case, investors may be forced to wait beyond 15 months (or up to 18 months if we extend the period of time to consummate
an initial business combination as described above) 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. Except as otherwise described herein, we have
no obligation to return funds to investors prior to the date of any redemption required as a result of our failure to consummate our initial
business combination within the period described above or our liquidation, unless we consummate our initial business combination prior
thereto and only then in cases where investors have sought to redeem their ordinary shares. Only upon any such redemption of public shares
as we are required to effect 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 public shareholders
may not be afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination
even though a majority of our public shareholders do not support such a combination.
If
we do not decide to hold a shareholder vote in conjunction with our initial business combination for business or other legal reasons,
we will conduct redemptions pursuant to the tender offer rules of the SEC and our memorandum and articles of association. Nasdaq rules
currently allow us to engage in a tender offer in lieu of a general meeting, provided that we were not seeking to issue more than 20%
of our issued and outstanding shares to a target business as consideration in any business combination. Furthermore, shareholder approval
would not be required pursuant to the Companies Act if our initial business combination were structured as a purchase of assets, a purchase
of stock, shares or other equity securities of the target not involving a merger with us, or a merger of the target into a subsidiary
of our company, or if we otherwise entered into contractual arrangements with a target to obtain control of such company. Accordingly,
we may consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination.
Your only opportunity
to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your
shares from us for cash.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more
target businesses. Because our board of directors may consummate our initial business combination without seeking shareholder approval,
public shareholders may not have the right or opportunity to vote on the business combination. Accordingly, your only opportunity to affect
the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period
of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we
describe our initial business combination.
If we seek shareholder
approval of our business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of shareholders are deemed to hold in excess of 20% of our ordinary shares, you will lose the ability to redeem all such shares in excess
of 20% of our ordinary shares.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder, individually or 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. Your inability to redeem more than an aggregate of 20% of the shares sold in
the Initial Public Offering will reduce your influence over our ability to consummate our initial business combination and you could suffer
a material loss on your investment in us if you sell such excess shares in open market transactions. As a result, you will continue to
hold that number of shares exceeding 20% and, in order to dispose of such shares, you would be required to sell your shares in open market
transaction, potentially at a loss.
Our initial shareholders
control a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in
a manner that you do not support.
Upon
closing of the Initial Public Offering and the private placement, our initial shareholders own 20% of our issued and outstanding ordinary
shares. Accordingly, they may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you
do not support, including amendments to our memorandum and articles of association. If our initial shareholders purchase any units in
the Initial Public Offering or if they purchase any additional ordinary shares in the aftermarket or in privately negotiated transactions,
this would increase their control.
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 our initial business combination with a target.
We
may enter into a transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. If too many public shareholders exercise their redemption rights, we may not be able to meet such closing
condition, and as a result, would not be able to proceed with such business combination. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon the consummation
of our initial business combination or any greater net tangible asset or cash requirement which may be contained in the agreement relating
to our initial business combination. Our memorandum and articles of association requires us to provide all of our public shareholders
with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 immediately prior
to or upon the consummation of our initial business combination, or such greater amount necessary to satisfy a closing condition as described
above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business
combination. Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our initial business combination
transaction with us.
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The ability of our
public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to consummate the most
desirable business combination or optimize our capital structure.
In
connection with the successful consummation of our initial business combination, we may redeem up to that number of ordinary shares that
would permit us to maintain net tangible assets of $5,000,001 immediately prior to or upon the consummation of our initial business combination.
If our initial business combination requires us to use substantially all of our cash to pay the purchase price, the redemption threshold
may be further limited. Alternatively, we may need to arrange third party financing to help fund our business combination in case a larger
percentage of shareholders exercise their redemption rights than we expect. If the acquisition involves the issuance of our shares as
consideration, we may be required to issue a higher percentage of our shares to the target or its shareholders to make up for the failure
to satisfy a minimum cash requirement. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring
indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available
to us.
The ability of our
public shareholders to exercise their redemption rights may not allow us to effectuate the most desirable business combination or optimize
our capital structure.
If
our initial business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know
how many public shareholders may exercise redemption rights, we may either need to reserve part of the trust account for possible payment
upon such redemption, or we may need to arrange third party financing to help fund our initial business combination. In the event that
the acquisition involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to
make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness
at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.
The requirement that
the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the
funds in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the execution
of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a
business combination with.
Pursuant
to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at
least 80% of the balance of the funds in the trust account (less any deferred underwriting commissions and taxes payable on interest earned)
at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number
of companies that we may complete an initial business combination with. If we are unable to locate a target business or businesses that
satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the
funds in the trust account.
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We may be unable to
consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case
public shareholders may have to remain shareholders of our company and wait until our redemption of the public shares to receive a pro
rata share of the trust account or attempt to sell their shares in the open market.
A
potential target may make it a closing condition to our initial business combination that we have a certain amount of cash in excess of
the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing.
If the number of our public shareholders electing to exercise their redemption rights has the effect of reducing the amount of money available
to us to consummate an initial business combination below such minimum amount required by the target business and we are not able to locate
an alternative source of funding, we will not be able to consummate such initial business combination and we may not be able to locate
another suitable target within the applicable time period, if at all. In that case, public shareholders may have to remain shareholders
of our company and wait the full 18 months (assuming we have extended the period of time to consummate an initial business combination
as described herein) in order to be able to receive a portion of the trust account, or attempt to sell their shares in the open market
prior to such time, in which case they may receive less than they would have in a liquidation of the trust account.
The requirement that
we maintain a minimum net worth or retain a certain amount of cash could increase the probability that our business combination would
be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If,
pursuant to the terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain amount
of cash in trust in order to consummate the business combination and regardless of whether we proceed with redemptions under the tender
or proxy rules, the probability that our business combination would be unsuccessful is increased. If our business combination is unsuccessful,
you would not receive your pro rata portion of the trust account until we liquidate. 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 our trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in
connection with our redemption until we liquidate or you are able to sell your shares in the open market.
We intend to offer
each public shareholder the option to vote in favor of the proposed business combination and still seek redemption of such shareholders’
shares.
In
connection with any general meeting held to approve an initial business combination, we will offer each public shareholder (but not our
initial shareholders, officers or directors) the right to have his, her or its ordinary shares redeemed for cash (subject to the limitations
described elsewhere in Annual Report on Form 10-K, the prospectus associated with our Initial Public Offering and the registration statement
of which such prospectus forms a part) regardless of whether such shareholder votes for or against such proposed business combination
or does not vote at all. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001
immediately prior to or upon such consummation and a majority of the issued and outstanding ordinary shares voted are voted in favor of
the business combination. This is different than other similarly structured blank check companies where shareholders are offered the right
to redeem their shares only when they vote for or against a proposed business combination. This threshold and the ability to seek redemption
while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.
We will require public
shareholders who wish to redeem their ordinary shares in connection with a proposed business combination to comply with specific requirements
for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their
rights.
We
will require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent or to deliver their shares to the transfer agent
electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option,
prior to the expiration date set forth in the tender offer documents mailed to such holders, or in the event we distribute proxy materials,
up to two business days prior to the vote on the proposal to approve the business combination. In order to obtain a physical share certificate,
a shareholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our
understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However,
because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain
a physical share certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may
not be the case. Under our memorandum and articles of association, we are required to provide at least 10 days advance notice of any general
meeting, which would be the minimum amount of time a shareholder would have to determine whether to exercise redemption rights. Accordingly,
if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to redeem may be unable to meet
the deadline for exercising their redemption rights and thus may be unable to redeem their shares. In the event that a shareholder fails
to comply with the various procedures that must be complied with in order to validly tender or redeem public shares, its shares may not
be redeemed.
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Additionally,
despite our compliance with the proxy rules or tender offer rules, as applicable, shareholders may not become aware of the opportunity
to redeem their shares.
Redeeming shareholders
may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.
We
will require public shareholders who wish to redeem their ordinary shares in connection with any proposed business combination to comply
with the delivery requirements discussed above for redemption. If such proposed business combination is not consummated, we will promptly
return such certificates to the tendering public shareholders. Accordingly, investors who attempted to redeem their shares in such a circumstance
will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price
for our ordinary shares may decline during this time and you may not be able to sell your securities when you wish to, even while other
shareholders that did not seek redemption may be able to sell their securities.
Because of our structure,
other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We
expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including
private equity groups, venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these
entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. Therefore, our ability to compete in acquiring certain sizable target
businesses may be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing
the acquisition of certain target businesses. Furthermore, seeking shareholder approval of our initial business combination may delay
the consummation of a transaction. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial
business combination.
If we seek shareholder
approval of our business combination, our Sponsors, directors, officers and their affiliates may elect to purchase shares from shareholders,
in which case they may influence a vote in favor of a proposed business combination that you do not support.
If
we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our Sponsors, directors, officers or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the consummation of our initial business combination. Such a purchase
would include a contractual acknowledgement 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 Sponsors, directors, officers 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 such purchases would be to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2)
satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at
the closing of the business combination, where it appears that such requirement would otherwise not be met. This may result in the consummation
of an initial business combination that may not otherwise have been possible.
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Purchases of ordinary
shares in the open market or in privately negotiated transactions by our Sponsors, directors, officers or their affiliates may make it
difficult for us to maintain the listing of our ordinary shares on a national securities exchange following the consummation of an initial
business combination.
If
our Sponsors, directors, officers or their affiliates purchase ordinary shares in the open market or in privately negotiated transactions,
the public “float” of our ordinary shares and the number of beneficial holders of our securities would both be reduced, possibly
making it difficult to maintain the listing or trading of our securities on a national securities exchange following consummation of
the business combination.
Because we are not
limited to any particular business or specific geographic location or any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
We
may pursue acquisition opportunities in any geographic region and in any business industry or sector. Except for the limitations that
a target business have a fair market value of at least 80% of the value of the trust account (less any deferred underwriting commissions
and taxes payable on interest earned) and that we are not permitted to effectuate our initial business combination with another blank
check company or similar company with nominal operations, we will have virtually unrestricted flexibility in identifying and selecting
a prospective acquisition candidate. While we have signed of a letter of intent for a potential business combination with Scilex, your
basis to evaluate the possible merits or risks of Scilex’s business’s operations, results of operations, cash flows, liquidity,
financial condition or prospects may be limited. Because we have not yet identified or approached any other specific target business
with respect to our initial business combination, there is no basis to evaluate the possible merits or risks of any other particular
target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we
consummate our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine.
For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may
be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our
officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not 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. An investment in our units may not ultimately prove to be more favorable to investors than a direct investment, if such
opportunity were available, in an acquisition target.
We are not required
to obtain an opinion from an independent investment banking firm or another independent entity, and consequently, an independent source
may not confirm that the price we are paying for the business is fair to our company (or shareholders) from a financial point of view.
Unless
we consummate our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions that the price we are paying is fair to
our company (or 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. Our
board of directors will have significant discretion in choosing the standard used to establish the fair market value of the target acquisition.
Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial
business combination.
A provision of our
warrant agreement may make it more difficult for us to consummate an initial business combination.
If:
(iii) the Market Value is below $9.20 per share,
then the exercise price
of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per
share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly
Issued Price. Potential targets may seek a SPAC that does not have warrants that contain this provision, which may make it more difficult
for us to consummate an initial business combination with a target business.
15
Our warrants may
have an adverse effect on the market price of our ordinary shares and make it more difficult to effectuate our initial business combination.
We
issued warrants to purchase 6,900,000 ordinary shares in the units sold in our Initial Public Offering and private warrants to purchase
6,840,000 ordinary shares in the private placement, in each case, at a price of $11.50 per share. In addition, our initial shareholders,
officers and directors or their affiliates may, but are not obligated to, make certain loans to us, up to $1,500,000 of which may be
redeemed upon consummation of our initial business combination into additional private warrants at a price of $0.75 per warrant (which,
for example, would result in the holders being issued warrants to purchase an aggregate of 2,000,000 ordinary shares). The $1,035,000
non-interest-bearing loan from Sponsor to duly effect the 3-month extension to the period to complete our initial business combination
may further be converted, at the option of Sponsor, into private warrants at a price of $0.75 per private warrant, as may up to one further
$1,035,000 non-interest-bearing loan from Sponsor if a further 3-month extension is to be duly effected. To the extent we issue ordinary
shares to effectuate a business transaction, the potential for the issuance of a substantial number of additional ordinary shares upon
exercise of these warrants could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase
the number of issued and outstanding ordinary shares and reduce the value of the ordinary shares issued to complete the business transaction.
Therefore, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target
business.
We may issue additional
ordinary or preferred shares to complete our initial business combination or under an employee incentive plan upon or after consummation
of our initial business combination, which would dilute the interest of our shareholders and likely present other risks.
Our
memorandum and articles of association authorize the issuance of 200,000,000 ordinary shares and 1,000,000 preferred shares. We may issue
a substantial number of additional ordinary or preferred shares to complete our initial business combination or under an employee incentive
plan upon or after consummation of our initial business combination. Although no such issuance of ordinary or preferred shares will affect
the per share amount available for redemption from the trust account, the issuance of additional ordinary or preferred shares:
We may issue notes
or other debt securities, or otherwise incur substantial debt, to complete our initial business combination, which may adversely affect
our financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although
we have no commitments as of the date of Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete initial business combination. Furthermore, we may issue a substantial number
of additional ordinary or preferred shares to complete our initial business combination or under an employee incentive plan upon or after
consummation of our initial business combination. We and our officers and directors have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust
account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
16
● our inability to pay dividends on our ordinary shares;
We may only be able to complete one business combination with the
proceeds of the Initial Public Offering, and the sale of the private warrants, which will cause us to be solely dependent on a single
business, which may have a limited number of products or services. This lack of diversification may negatively impact our operations
and profitability.
The
net proceeds from the Initial Public Offering, the sale of the private warrants and the deposit of funds to extend the time to consummate
an initial business combination provided us with approximately $140,415,000 that we may use to complete our initial business combination
(including deferred underwriting commissions being held in the trust account).
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis.
By consummating our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of
risks or offsetting of losses, unlike other entities, which may have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
17
We may attempt to
simultaneously consummate business combinations with multiple prospective targets, which may hinder our ability to consummate our initial
business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete the initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
Resources could be
wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and
acquire or merge with another business.
We
anticipate that the investigation of each specific target business, including without limitation Scilex, and the negotiation, drafting,
and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention
and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the
costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating
to Scilex or any other specific target business, we may fail to consummate our initial business combination for any number of reasons
including those beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially
adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial
business combination, our public shareholders may only receive $10.175 per share or potentially less than $10.175 per share on our redemption,
and our warrants will expire worthless.
We may be unable
to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business,
which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business
combination, our public shareholders may only receive $10.175 per share or potentially less than $10.175 per share on our redemption,
and the warrants will expire worthless.
Although
we believe that the net proceeds of the Initial Public Offering and the sale of the private warrants, together with interest earned on
the trust account proceeds available to us, will be sufficient to allow us to consummate our initial business combination, because we
have not yet finalized the merger agreement for our contemplated initial business combination with Scilex nor identified any other prospective
target business, we cannot ascertain the capital requirements for any particular transaction at this time. If the net proceeds of the
Initial Public Offering and the sale of the private warrants, together with available interest from the trust account proceeds, prove
to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search
of a target business, the obligation to repurchase for cash a significant number of shares from shareholders who elect redemption in
connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial
business combination, we may be required to seek additional financing or to abandon the proposed business combination. Financing may
not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate
our initial business combination, we would be compelled to either restructure the transaction or abandon that particular initial business
combination and seek an alternative target business candidate. If we are unable to complete our initial business combination, our public
shareholders may only receive $10.175 per share or potentially less than $10.175 per share on our redemption, and the warrants will expire
worthless. In addition, even if we do not need additional financing to consummate our initial business combination, we may require such
financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to
provide any financing to us in connection with or after our initial business combination.
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Because we must furnish
our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business
combination with some prospective target businesses.
The
United States federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These
financial statements must be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or International Financial Reporting Standard as issued by the International Accounting Standards Board,
or IFRS, and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire
because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy
rules and consummate our initial business combination within our up-to-18-month time frame.
Our search for a
business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely
affected by the coronavirus (COVID-19) pandemic.
The
COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide,
and the business of any potential target business with which we consummate a business combination may have been materially and adversely
affected or may be so affected in the future. 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. The extent to which COVID-19
impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, our ability
to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination,
may be materially adversely affected.
As the number of special purpose acquisition
companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate
an initial business combination.
In
recent years and particularly since the fourth quarter of 2020, the number of special purpose acquisition companies that have been formed
has increased substantially. Many potential targets for special purpose acquisition companies have already entered into an initial business
combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as
well as many such companies currently in registration. As a result, at times, fewer attractive targets may be available, and it may require
more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable
to our investors altogether.
19
Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In
recent years, the market for directors and officers liability insurance for special purpose acquisition companies has changed. The premiums
charged for such policies have generally increased and the terms of such policies have generally become less favorable. There can be
no assurance that these trends will not continue.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable
terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the
post-business combination’s ability to attract and retain qualified officers and directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential
liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order
to protect our directors and officers, the post-business combination entity will likely need to purchase additional insurance with
respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for
the post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination
on terms favorable to our investors.
Risks Relating to the Post-Business Combination
Company
We may seek investment
opportunities outside of our management’s area of expertise and our management may not be able to adequately ascertain or assess
all significant risks associated with the target company.
There
is no limitation on the industry or business sector we may consider when contemplating our initial business combination. We may therefore
be presented with a business combination candidate in an industry unfamiliar to our management team but determine that such candidate
offers an attractive investment opportunity for our company. In the event we elect to pursue an investment outside of our management’s
expertise, our management’s experience may not be directly applicable to the target business or their evaluation of its operations.
We may seek investment
opportunities with a financially unstable business or in its early stages of development.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. These risks include volatile revenues
or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not 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.
Although we identified
general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we
enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although
we have identified specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we consummate 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 our initial 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 the rules
of Nasdaq, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us to attain