UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number: 001-39669
BULL HORN HOLDINGS CORP.
(Exact name of registrant as specified in its
charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (305)671-3341
Securities registered pursuant to Section 12(b)
of the Act:
Ordinary Shares, par value $0.0001 per share BHSE The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definition of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
The aggregate market value of the units outstanding,
other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the units
on June 30, 2021, as reported on The Nasdaq Capital Market was $74,025,000.
As of April 8, 2022, there were 9,375,000
ordinary shares, par value $0.0001 per share, of the registrant issued and outstanding.
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business 1
Item 1A. Risk Factors 14
Item 1B. Unresolved Staff Comments 16
Item 2. Properties 16
Item 3. Legal Proceedings 16
Item 4. Mine Safety Disclosures 16
PART II
Item 6. Reserved 17
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 20
Item 8. Financial Statements and Supplementary Data 20
Item 9A. Controls and Procedure 20
Item 9B. Other Information 21
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 21
PART III
Item 10. Directors, Executive Officers and Corporate Governance 22
Item 11. Executive Compensation 25
Item 14. Principal Accountant Fees and Services 27
PART IV
Item 15. Exhibit and Financial Statement Schedules 28
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report, including, without
limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
includes forward-looking statements within the meaning of Section 27A of the Securities Act (as defined below) and Section 21E
of the Exchange Act (as defined below). These forward-looking statements can be identified by the use of forward-looking terminology,
including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,”
“plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,”
or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that
actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating
to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current
or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due
to various factors, including, but not limited to:
● our ability to complete our initial business combination;
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● our financial performance.
The forward-looking statements
contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects
on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited
to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities laws.
ii
Certain Terms Used In This Report
Unless otherwise stated in
this Annual Report on Form 10-K, references to:
● “board of directors” or “board” are to the board of directors of the Company;
● “BVI” refer to the British Virgin Islands;
● “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
● “FINRA” are to the Financial Industry Regulatory Authority;
● “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;
● “management” or “management team” refer to our officers and directors;
iii
● “ordinary shares” refer to the ordinary shares of no par value in the company;
● “PCAOB” are to the Public Company Accounting Oversight Board (United States);
● “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002;
● “SEC” are to the U.S. Securities and Exchange Commission;
● “Securities Act” are to the Securities Act of 1933, as amended;
iv
PART I
Item 1. Business.
Overview
We are a blank check company
formed for the purpose of effecting an initial business combination. Since our initial public offering, we have focused our search for
an initial business combination on businesses that may provide significant opportunities for attractive investor returns.
On November 3, 2020, we consummated
our initial public offering of 7,500,000 units (the “units”). Each unit consists of one ordinary share of our company,
and one redeemable warrant of our company, with each whole warrant entitling the holder thereof to purchase one-half of one ordinary share
for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating gross proceeds to our company of $75,000,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 3,750,000 private warrants to our sponsor and the underwriters
of the initial public offering at a purchase price of $1.00 per private warrant, generating gross proceeds of $3,750,000. Effective December
10, 2020, by agreement between our sponsor and the underwriters, an aggregate of 375,000 private warrants were assigned by the underwriters
to our sponsor.
A total of $75,750,000, comprised
of $72,000,000 of the proceeds from the initial public offering and $3,750,000 of the proceeds of the sale of the private warrants, was
placed in a U.S.-based trust account at Morgan Stanley, N.A. (the “trust account”) maintained by Continental, acting as trustee.
Six unaffiliated qualified institutional
buyers (who are also not affiliated with our sponsor or any member of our management team) purchased units in our initial public offering
at a level of 9.9% of the units sold in the initial public offering (which aggregated to 59.4% of the units sold in the initial public
offering) and entered into subscription agreements with the sponsor to memorialize their agreement. We refer to these investors as “anchor
investors.” In consideration of providing these agreements, the anchor investors each purchased membership interests in our sponsor,
for nominal consideration, entitling them to an interest in an aggregate of 270,000 founder shares held by our sponsor or 45,000 founder
shares for each anchor investor (which we refer to as the “anchor founder shares”). The anchor founder shares are treated
the same in all material respects as the founder shares held by our sponsor, except such anchor founder shares shall have the right not
to be subject to adjustments or cutbacks in the event our sponsor agrees to any such adjustments or cutbacks (of its shares) in connection
with our initial business combination. Discussions with each anchor investor were separate and the arrangements with them are not contingent
on each other. Further, to our knowledge, the anchor investors are not affiliated with each other and are not acting together with regards
to our company. Pursuant to the subscription agreements with our sponsor, the anchor investors have not been granted any material additional
shareholder or other rights, and were only issued membership interests in our sponsor with no right to control our sponsor or vote or
dispose of the anchor founder shares (which will continue to be held by our sponsor until following our initial business combination).
Further, the anchor investors are not required to: (i) hold any units, ordinary shares or warrants they may have purchased in the initial
public offering or thereafter for any amount time, (ii) vote any ordinary shares they may own at the applicable time in favor of our initial
business combination or (iii) refrain from exercising their right to redeem their ordinary shares at the time of the initial business
combination. The purchases by the anchor investors of units in our initial public offering or our securities in the open market (or both)
could, if they hold such securities, allow the anchor investors or any one of them to assert influence over our company, including with
respect to our initial business combination or any other actions our sponsor may take (including, for example, our pending proposal to
extend the deadline by which we must consummate our initial business combination).
It is the job of our sponsor and
management team to complete our initial business combination. Our management team is led by Robert Striar, our Chief Executive Officer,
and Christopher Calise, our Chief Financial Officer (each of whom are also directors of our company), who have many years of experience
in the sports, entertainment, financial and insurance industries. We must complete our initial business combination by May 3, 2022, which
is 18 months from the closing of our initial public offering (which date is subject to possible extension as described below). If
our initial business combination is not consummated by May 3, 2022, then our existence will terminate, and we will distribute all amounts
in the trust account.
On April 5, 2022, we filed
a definitive proxy statement to announce our intention to hold a special meeting of our shareholders on April 26, 2022 to seek an extension
of the deadline by which we must consummate our initial business combination on a month to month basis (subject to additional monies being
funded into our trust account by our sponsor or its designees as described in such definitive proxy statement) from May 3, 2022 up until
November 3, 2022. Such an extension requires the approval of our public shareholders to amend our charter, who will be provided the opportunity
to at the time of the special meeting to redeem all or a portion their ordinary shares. A significant number of such redemptions will
have a material adverse effect on the amount held in our trust account and other adverse effects on our company, such as our ability to
have enough cash to implement an initial business combination or to maintain our listing on Nasdaq. In connection with such special meeting
of shareholders, we may engage in negotiations and enter into transactions with certain (as of yet unidentified) shareholders of our company
with regard to transactions under which our sponsor would assign founder shares to such shareholders in consideration of their voting
in favor of the extension and not redeeming their holdings in our company in connection therewith. Additionally, our sponsor may also
separately explore transactions under which it would sell its interest in our company to another management team.
1
Our Business
While our efforts to identify
a prospective target business will not necessarily be limited to a particular industry, sector or region, since our initial public offering,
we have sought to capitalize on the expertise of our management team in the sports (including sports franchises or assets related to sports
franchises, and sports technology), entertainment and brands sectors. Our business combination focus is on leading sports, entertainment
and brand companies that have potential for brand and commercial growth.
Our objective is to generate
attractive returns and create value for our shareholders by applying our strategy of identifying opportunities and capitalizing on the
experience of our management team to acquire and manage a business that can benefit from our management team’s global experience
with teams, leagues, brands and investments. Our approach is focused on industries or sectors in which our management team has considerable
knowledge and emphasizes downside protection and the preservation of capital by opportunistically pursuing transactions where we believe
we have the ability to make an economic impact that drives revenue growth.
Business Strategy
Professional sports leagues
and teams and their brands are widely recognized with an economic reach that goes far beyond the field and city of play. For example,
in the United States, the National Football League, the National Hockey League, the National Basketball League, Major League Baseball
and Major League Soccer, and their teams, have been transformed into economic platforms by implementing business practices and operations
to optimize profit across a variety of platforms. Professional teams have established comprehensive commercial practices for strategy,
marketing, branding, licensing and sponsorship, and have diversified the revenue streams to include real estate and content development,
in addition to the more traditional revenue streams like advertising dollars, sponsorship revenues, royalties, ticket sales and endorsements.
Additionally, league organizations have created structured, rule-driven platforms to ensure compliance with best practices and the
maintenance of league brand value. This ability to manage a professional sports team as a business has taken sports teams and brands from
localized support to global fandoms with worldwide revenue bases, and has in turn made sports properties very low risk, secure asset classes
that should accrete in value, regardless of the on-field success of the sports franchise.
In addition to changes in
revenue streams and marketing and licensing practices, the sports media landscape is evolving in the way in which sports content is created
and consumed. New distribution channels, including free-to-air broadcasters, digital channels with native content, unofficial live
streams and pure OTT offerings, are increasing their reach positioning the media space for further disruption. Further, new types of sports
content including live video content, fan-generated content, sponsor-generated content and digital audio content has transformed
the way the public interacts with sports franchises. This proliferation of new consumption channels and content offers high-growth opportunities.
Additionally, the global e-sports market has grown, and is expecting to generate a revenue of $1.5 billion in 2020. This, along
with newly legalized betting markets across the States, has brought large new audiences to the sports media markets, and has created opportunities
for new marketing and broadcasting revenue streams.
Team management and
success in Europe and North America are varied among the leagues with diverse levels of development in commercial practices. For example,
the market for sports media and digital rights in America has grown more significantly than in Europe. As more teams understand the necessity
of building global brands in order to compete for revenue and brand recognition across fan bases, advanced departments, experiences and
expertise are required to enhance visibility and profitability. We believe that our management team can provide this.
With a process focused on
commercial success and profit both on and off the field, our management team has experience developing marketing and licensing programs
for teams, brands and other sports or entertainment companies that extend such company’s brand and economics. Our team brings specific
managerial and brand experience in assisting teams in achieving their global business goals. Our management team’s sector expertise
centers around Mr. Striar, who has advised sports federations, leagues, teams and commercial partners on how to elevate their brands,
manage business units and improve the areas of strategy, marketing and revenue. He has directly worked on five CONCACAF Gold Cups, the
development of the CONCACAF Champions League and certain teams therein, the NHL Winter Classic, NHL China and the World Cup of Hockey.
Mr. Striar’s work has merged the strategic goals of the sports business with the execution of comprehensive programs that have
driven sponsorship, ticket sales, attendance and licensing.
Our investment thesis and
competitive edge is grounded in the following three pillars:
2
Our acquisition and value
creation strategy is identifying, acquiring and, after our initial business combination, building a company in the public market. We are
seeking a company in the sports and entertainment industries that complements the experience and operational expertise of our management
team and is a business that we think our management team’s experience and operational expertise can help improve. Our selection
process leverages our team’s network of industry relationships, managerial expertise, private banking and investment opportunities
and unique industry specific expertise which we believe should provide us with a number of business combination opportunities.
In addition, we utilize the
established global relationships and industry experience of our directors in seeking an initial business combination. Over the course
of their careers, the members of our management team and board of directors have developed a broad network of contacts and corporate relationships
that we believe will serve as a useful source of acquisition opportunities.
This group has experience
in:
● Managing global brands and sports entities;
● Identifying, mentoring and recruiting world-class talent.
Acquisition Criteria
Consistent with this strategy,
we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.
We use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination
with a target business that does not meet any of these criteria and guidelines.
We are seeking to acquire
companies, brands and/or teams that we believe meet certain of the following criteria:
● Enterprise values of between $300 million and $900 million;
● Have attractive growth prospects;
● Have a competitive advantage;
● Have an identifiable revenue of over $100 million;
● Exhibit industry leadership;
● Demonstrate attractive valuation;
● Demonstrate potential for free cash flow generation; and
● Have secondary potential revenue streams.
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines, as well as other considerations, factors and criteria deemed relevant by our management in effecting our
initial business combination consistent with our business objectives. In the event that we decide to enter into our initial business combination
with a target business that only meets some but not all of the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our shareholder communications related to our initial business combination, which, as discussed in
this report, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
3
Sourcing of Potential Initial Business Combination
Targets
We believe based on our management’s
business knowledge and past experience that there are numerous acquisition candidates available. Target business candidates are brought
to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged
buyout funds, management buyout funds and other members of the financial community. Target businesses are brought to our attention by
such unaffiliated sources as a result of being solicited by us through calls or mailings that did not commence until after the completion
of our initial public offering. These sources introduce us to target businesses they think we may be interested in on an unsolicited basis,
since many of these sources will have read the prospectus of our initial public offering and know what types of businesses we are targeting.
Our officers and directors,
as well as their respective affiliates, may also bring to our attention target business candidates of which they become aware through
their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or
conventions. While we have not engaged and do not anticipate engaging the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay
a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of
the transaction. In no event, however, will any of our existing officers, directors, or any entity with which they are affiliated, be
paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the
consummation of a business combination (regardless of the type of transaction).
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors, or completing the
business combination through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we
seek to complete our initial business combination with a target that is affiliated with our sponsor, officers or directors, we, or a committee
of independent directors, would obtain an opinion from an independent accounting firm, or independent investment banking firm that our
initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any
other context. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
If any of our officers or
directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she
has then-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity
to such entity prior to presenting such business combination opportunity to us.
Our officers have agreed not
to become involved with another publicly listed blank check company with a class of securities registered under the Exchange Act prior
to us announcing an agreement for our initial business combination, or the expiration of the period for us to announce and/or complete
our initial business combination.
Status as a Publicly Listed Company
We believe our structure as
a public company makes us an attractive business combination partner to prospective target businesses. As a publicly listed company, we
offer a target business an alternative to the traditional initial public offering. We believe that target businesses will favor this alternative,
which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering. During
an initial public offering, there are typically expenses incurred in marketing, which would be costlier than a business combination with
us. Furthermore, once a proposed business combination is approved by our shareholders (if applicable) and the transaction is consummated,
the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’
ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we
believe the target business would have greater access to capital and additional means of creating management incentives that are better
aligned with shareholders’ interests than it would as a private company. It can offer further benefits by augmenting a company’s
profile among potential new customers and vendors and aid in attracting talented management staffs.
4
Strong Financial Position and Flexibility
With a trust account initially
in the amount of $75,758,781, as of December 31, 2021, we can offer a target business a variety of options to facilitate a business combination
and fund future expansion and growth of its business. This amount assumes no redemptions (in connection with shareholder votes on either,
or both, of the proposal to approval our initial business combination or the pending proposal to amend our charter to extend the date
by which we must consummate our initial business combination), and includes up to $2,250,000 of deferred underwriting fees, subject to
adjustment as described elsewhere herein. Because we are able to consummate a business combination using the cash proceeds from our initial
public offering, our share capital, debt or a combination of the foregoing, we have the flexibility to use an efficient structure allowing
us to tailor the consideration to be paid to the target business to address the needs of the parties. However, if a business combination
requires us to use substantially all of our cash to pay for the purchase price, we will likely need to arrange third party financing to
help fund our business combination. As we have explored business combination possibilities, we have also explored potential third party
financing, although as of the date of this report we have no binding commitments for any third party or other financing. Accordingly,
our flexibility in structuring a business combination may be subject to these constraints.
Effecting our initial business combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial business combination. We will effectuate our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the private warrants, our shares,
new debt, or a combination of these, as the consideration to be paid in our initial business combination. We may seek to consummate our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth,
which would subject us to the numerous risks inherent in such companies and businesses, although we will not be permitted to effectuate
our initial business combination with another blank check company or a similar company with nominal operations.
If our initial business combination
is paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment of the purchase
price in connection with our business combination or used for redemptions of purchases of our ordinary shares, we may apply the cash released
to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion
of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional
funds through a private offering of debt or equity securities in connection with the consummation of our initial business combination,
and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts raised in our
initial public offering and held in the trust account. Subject to compliance with applicable securities laws, we would consummate such
financing only simultaneously with the consummation of our business combination. In the case of an initial business combination funded
with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would
disclose the terms of the financing and, only if required by law or the rules of Nasdaq, we would seek shareholder approval of such financing.
There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination.
At this time, we are not a party to any legally binding arrangement or understanding with any third party with respect to raising any
additional funds through the sale of securities or otherwise.
Selection of a Target Business and Structuring
of a Business Combination
Subject to the requirement
that, so long as our securities are listed on Nasdaq, our initial business combination must be with one or more target businesses or assets
having an aggregate 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 less any interest earned thereon that is released to us for taxes) at the time of the agreement to
enter into such initial business combination, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another
blank check company or a similar company with nominal operations. In any case, we will only consummate an initial business combination
in which we become the majority shareholder of the target (or control the target through contractual arrangements in limited circumstances
for regulatory compliance purposes as discussed below) or are otherwise not required to register as an investment company under the Investment
Company Act. To the extent we effect our initial business combination with a company or business that may be financially unstable or in
its early stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we may not properly ascertain or assess all significant
risk factors.
5
In evaluating a prospective
target business, we have conducted and will continue to conduct an extensive due diligence review which encompasses, among other things,
meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available
to us. This due diligence review is conducted either by our management or by unaffiliated third parties we have engaged or may engage
in the future.
The time and costs required
to select and evaluate a target business and to structure and complete the business combination have been significant and are expected
to continue to be significant. Any costs incurred with respect to the identification and evaluation of a prospective target business with
which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise
complete a business combination.
Fair Market Value of Target Business or Businesses
So long as our securities
are listed on Nasdaq, the target business or businesses or assets with which we effect our initial business combination must have a collective
fair market value equal to at least 80% of the value of the trust account (less any deferred underwriting commissions and taxes payable
on interest earned and less any interest earned thereon that is released to us for taxes) at the time of the agreement to enter into such
initial business combination. So long as our securities are listed on Nasdaq, if we acquire less than 100% of one or more target businesses
in our initial business combination, the aggregate fair market value of the portion or portions we acquire must equal at least 80% of
the value of the trust account (less any deferred underwriting commissions and taxes payable on interest earned and less any interest
earned thereon that is released to us for taxes) at the time of the agreement to enter into such initial business combination. However,
we will always acquire at least a controlling interest in a target business. The fair market value of a portion of a target business or
assets will likely be calculated by multiplying the fair market value of the entire business by the percentage of the target we acquire.
We may seek to consummate our initial business combination with an initial target business or businesses with a collective fair market
value in excess of the balance in the trust account. In order to consummate such an initial business combination, we may issue a significant
amount of debt, equity or other securities to the sellers of such business and/or seek to raise additional funds through a private offering
of debt, equity or other securities (although our memorandum and articles of association will provide that we may not issue securities
that can vote with ordinary shareholders on matters related to our pre-initial business combination activity). If we issue securities
in order to consummate such an initial business combination, our shareholders could end up owning a minority of the combined company’s
voting securities as there is no requirement that our shareholders own a certain percentage of our company (or, depending on the structure
of the initial business combination, an ultimate parent company that may be formed) after our business combination. Since we have no specific
business combination under consideration, we have not entered into any such arrangement to issue our debt or equity securities and have
no current intention of doing so.
We anticipate structuring
our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however,
structure our initial business combination to acquire less than 100% of such interests or assets of the target business, but we will only
consummate such business combination if we will become the majority shareholder of the target (or control the target through contractual
arrangements in limited circumstances for regulatory compliance purposes) or are otherwise not required to register as an “investment
company” under the Investment Company Act. Even though we will own a majority interest in the target, our shareholders prior to
the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
The fair market value of a
target business or businesses or assets will be determined by our board of directors based upon standards generally accepted by the financial
community, such as actual and potential gross margins, the values of comparable businesses, earnings and cash flow, book value and, where
appropriate, upon the advice of appraisers or other professional consultants. If our board of directors is not able to independently determine
that the target business or assets has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from
an unaffiliated, independent investment banking firm or an independent accounting firm with respect to the satisfaction of such criterion.
Notwithstanding the foregoing, unless we consummate a business combination with an affiliated entity, we are not required to obtain an
opinion from an independent investment banking firm or an independent accounting firm that the price we are paying is fair to our shareholders.
6
Lack of Business Diversification
For an indefinite period of
time after consummation of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. By consummating our initial business combination with only a single entity, our lack of diversification may:
Limited Ability to Evaluate the Target’s
Management Team
Although we closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business’ management may not prove to be correct. The future role of members of our management
team, if any, in the target business cannot presently be stated with any certainty. Consequently, members of our management team may not
become a part of the target’s management team, and the future management may not have the necessary skills, qualifications or abilities
to manage a public company. Further, it is also not certain whether one or more of our directors will remain associated in some capacity
with us following our initial business combination. Moreover, members of our management team may not have significant experience or knowledge
relating to the operations of the particular target business. Our key personnel may not remain in senior management or advisory positions
with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made
at the time of our initial business combination.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have
the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary
to enhance the incumbent management.
Shareholders May Not Have the Ability to Approve
Our Initial Business Combination
Although we may seek shareholder
approval before we effect our initial business combination, we may not do so for business or legal reasons (so long as such transaction
does not require shareholder approval under the Companies Act or the rules of Nasdaq). Presented in the table below is a graphic explanation
of the types of initial business combinations we may consider and whether we expect shareholder approval would be required under the Companies
Act for each such transaction.
Type of Transaction Whether Shareholder Approval is Required
Purchase of assets No
Purchase of stock of target not involving a merger with the company No
Merger of target with a subsidiary of the company No
Merger of the company with a target Yes
Entering into contractual agreements with a target to obtain control No
Additionally, under Nasdaq’s
listing rules, shareholder approval would be required for our initial business combination if, for example:
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We also may be required to
obtain shareholder approval if we wish to take certain actions in connection with our initial business combination such as adopting an
incentive stock plan or amending our memorandum and articles of association. So long as we maintain a listing of our securities on Nasdaq,
we are required to comply with such rules.
Redemption Rights for Public Shareholders Upon
Consummation of Our Initial Business Combination or In Connection with a Business Combination Deadline Extension Proposal
We will provide our public
shareholders with the opportunity to redeem all or a portion their shares upon the consummation of our initial business combination at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of
taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the
trust account was initially $10.10 per share. The per-share amount we will distribute to investors who properly redeem their
shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial shareholders have agreed
to waive their right to receive liquidating distributions if we fail to consummate our initial business combination within the requisite
time period. However, if our initial shareholders or any of our officers, directors or affiliates acquires public shares in or after our
initial public offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate
our initial business combination within the required time period.
On April 5, 2022, we filed
a definitive proxy statement to announce our intention to hold a special meeting of our shareholders on April 26, 2022 to seek an extension
of the deadline by which we must consummate our initial business combination on a month to month basis (subject to additional monies being
funded into our trust account by our sponsor or its designees as described in such definitive proxy statement) from May 3, 2022 up until
November 3, 2022. Such an extension requires the approval of our public shareholders to amend our charter, who will be provided the opportunity
to at the time of the special meeting to redeem all or a portion their ordinary shares in the manner described above with respect to our
initial business combination. A significant number of such redemptions will have a material adverse effect on the amount held in our trust
account and other adverse effects on our company, such as our ability to have enough cash to implement an initial business combination
or to maintain our listing on Nasdaq. In connection with such special meeting of shareholders, we may engage in negotiations and enter
into transactions with certain (as of yet unidentified) shareholders of our company with regard to transactions under which our sponsor
would assign founder shares to such shareholders in consideration of their voting in favor of the extension and not redeeming their holdings
in our company in connection therewith.
Additionally, our sponsor
may also separately explore transactions under which it would sell its interest in our company to another management team.
Manner of Conducting Redemptions
We provide our public shareholders
with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either
(i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer.
We intend to hold a shareholder
vote in connection with our business combination. In such case, we will:
● file proxy materials with the SEC.
In the event that we seek
shareholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public shareholders with the redemption rights described above upon consummation of the initial business combination.
If we seek shareholder approval,
we will consummate our initial business combination only if a majority of the outstanding ordinary shares voted are voted in favor of
the business combination. In such case, our initial shareholders have agreed to vote their founder shares and any public shares purchased
during or after our initial public offering in favor of our initial business combination and our officers and directors have also agreed
to vote any public shares purchased during or after our initial public offering in favor of our initial business combination. As a result,
we would need only 2,812,501 of the 7,500,000 public shares, or approximately 37.5%, sold in our initial public offering to be voted in
favor of a transaction in order to have our initial business combination approved (assuming they do not purchase shares in the open market).
Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.
In addition, our initial shareholders have agreed to waive their redemption rights with respect to their founder shares and public shares
in connection with the consummation of our initial business combination. Furthermore, if one or more of the anchor investors hold a significant
number of ordinary shares at the time of the business combination, they could have significant influence over the outcome of our business
combination process. One or more of the anchor investors could also have significant influence over the outcome of our pending proposal
to amend our charter to extend the date by which we must consummate our initial business combination.
We will only redeem our public
shares so long as (after such redemption) our net tangible assets will be at least $5,000,001, either immediately prior to or upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions. Furthermore, the redemption threshold
may be further limited by the terms and conditions of our initial business combination. If too many public shareholders exercise their
redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth or cash requirements, we would not proceed
with the redemption of our public shares and the related business combination, and instead may search for an alternate business combination.
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Notwithstanding the foregoing,
if we do not decide to hold a shareholder vote in conjunction with our initial business combination for business or other legal reasons
(so long as shareholder approval is not required by the Companies Act or the rules of Nasdaq), we will conduct redemptions pursuant to
the tender offer rules of the SEC and our memorandum and articles of association. In such case, we will:
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act.
In connection with the successful
consummation of our business combination, we will only redeem our public shares so long as (after such redemption) our net tangible assets
will be at least $5,000,001 either immediately prior to or upon the consummation of our initial business combination. However, the redemption
threshold may be further limited by the terms and conditions of our proposed initial business combination. For example, the proposed business
combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred
to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance
with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all
shares that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination
exceed the aggregate amount of cash available to us, we will not consummate the business combination, we will not purchase any shares
pursuant to the tender offer and all shares will be returned to the holders thereof following the expiration of the tender offer. Additionally,
since we are required to maintain net tangible assets of at least $5,000,001 either immediately prior to or upon the consummation of our
initial business combination (which may be substantially higher depending on the terms of our potential business combination), the chance
that the holders of our ordinary shares electing to redeem in connection with a redemption conducted pursuant to the proxy rules will
cause us to fall below such minimum requirement is increased.
When we conduct a tender offer
to redeem our public shares upon consummation of our initial business combination, in order to comply with the tender offer rules, the
offer will be made to all of our shareholders, not just our public shareholders. Our initial shareholders have agreed to waive their redemption
rights with respect to their founder shares and public shares in connection with any such tender offer.
Limitation on Redemption Rights upon Consummation
of Our Initial Business Combination if We Seek Shareholder Approval.
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 1,125,000
shares, or 15% of the shares sold in our initial public offering. We believe this restriction will discourage shareholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights as a means to
force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable
terms. Absent this provision, a public shareholder holding more than an aggregate of 15% of the shares sold in our initial public offering
could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium
to the then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no more than
15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of shareholders to unreasonably
attempt to block our ability to consummate our initial business combination, particularly in connection with our initial business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not
be restricting our shareholders’ ability to vote all of their shares (including all shares held by those shareholders that hold
more than 15% of the shares sold in our initial public offering) for or against our initial business combination. We will resolve any
disputes relating to whether a public shareholder is acting in concert or as a “group” either by requiring certifications
under the penalty of perjury to such effect by public shareholders or via adjudication in court.
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Permitted Purchases of Our Securities by Our
Affiliates
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 sponsor, 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 sponsor, 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. Although very unlikely, our initial shareholders, officers,
directors and their affiliates could purchase sufficient shares so that the initial business combination may be approved without the majority
vote of public shares held by non-affiliates. It is intended that purchases will comply with Rule 10b-18 under the Exchange Act,
which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases.
The purpose of such purchases
would be to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) to 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.
As a consequence of any such
purchases, the public “float” of our ordinary shares may be reduced and the number of beneficial holders of our securities
may be reduced, which may make it difficult to maintain the listing or trading of our securities on a national securities exchange following
consummation of a business combination.
Tendering Share Certificates in Connection
with a Tender Offer or Redemption Rights
We 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 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,
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. Accordingly, a public shareholder would have from the time we send out our tender offer
materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short
exercise period, it is advisable for shareholders to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on
to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption