ITEM
1. BUSINESS
In
this Annual Report on Form 10-K (the “Form 10-K”), references to the “Company” and to “we,”
“us,” and “our” refer to Union Acquisition Corp. II.
For
a description of our inception and initial public offering (“IPO”) of units, ordinary shares, and warrants, and our simultaneous
private placement of warrants (the “Private Warrants”), see the section titled “Business” contained in our annual
report on Form 10-K for the period ended September 30, 2019, as filed with the Securities and Exchange Commission (“SEC”)
on December 30, 2019, which is incorporated by reference herein.
Effecting
a Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations until after the consummation of our initial business combination.
We intend to utilize cash derived from the proceeds of our IPO and the private placement of Private Warrants, our capital stock,
debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of the IPO
and the private placement of Private Placement Warrants are intended to be applied generally toward effecting a business combination,
the proceeds are not otherwise being designated for any more specific purposes.
If
we pay for our initial business combination using stock or debt securities, or we do not use all of the funds released from the
trust account for payment of the purchase price in connection with our business combination or for redemptions or purchases of
our ordinary shares, we may apply the balance of the cash released to us from the trust account 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.
A
business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital
but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences
of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance
with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company
that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business
combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect
only a single business combination.
Sources
of Target Businesses
We
expect that our principal means of identifying potential target businesses will be through the extensive contacts and relationships
of our initial shareholders, officers, and directors. While our officers and directors are not required to commit any specific
amount of time in identifying or performing due diligence on potential target businesses, we believe that the relationships they
have developed over their careers will generate a number of potential business combination opportunities that will warrant further
investigation. We also anticipate that target business candidates will be brought to our attention from various unaffiliated sources,
including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and
other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a
result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses they think
we may be interested in on an unsolicited basis, since many of these sources will have read the prospectus filed in connection
with our IPO and know what types of businesses we are targeting. Our initial shareholders, officers and directors, as well as
their affiliates, may also bring to our attention target business candidates that they become aware of through their business
contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.
We
may determine to engage the services of professional firms or other individuals that specialize in business acquisitions on a
formal basis. If we do, we may pay such firms a finder’s fee, consulting fee or other compensation to be determined in an
arm’s length negotiation based on the terms of the transaction. In no event, however, will any of our existing
officers, directors, special advisors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s
fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of
a business combination (regardless of the type of transaction). If we decide to enter into a business combination with a target
business that is affiliated with our officers, directors or initial stockholders, we will do so only if we have obtained an opinion
from an independent investment banking firm, another independent firm that commonly renders valuation opinions on the type of
target business we are seeking to acquire, that the business combination is fair to our unaffiliated stockholders from a financial
point of view.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to our management team’s pre-existing fiduciary duties and the Nasdaq requirement that a target business have a fair market
value of at least 80% of the balance in the trust account (excluding taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination, and that we must acquire a controlling
interest in the target business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective
target business, 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 evaluating a prospective target business, our management may consider a variety
of factors, including one or more of the following:
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financial
condition and results of operation;
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brand
recognition and potential;
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experience
and skill of management and availability of additional personnel;
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stage
of development of the products, processes, or services;
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existing
distribution and potential for expansion;
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degree
of current or potential market acceptance of the products, processes, or services;
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proprietary
aspects of products and the extent of intellectual property or other protection for products
or formulas;
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impact
of regulation on the business;
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regulatory
environment of the industry;
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costs
associated with effecting the business combination;
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industry
leadership, sustainability of market share and attractiveness of market industries in
which a target business participates; and
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macro
competitive dynamics in the industry within which the company competes.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be
based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting
a business combination consistent with our business objective. In evaluating a prospective target business, we expect to conduct
an extensive due diligence review which may encompass, among other things, meetings with incumbent management and inspection of
facilities, as well as review of financial and other information which is made available to us. This due diligence review will
be conducted either by our management or by unaffiliated third parties we may engage, although we have no current intention to
engage any such third parties.
The
time and costs required to select and evaluate a target business and to structure and complete the business combination cannot
presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce
the amount of capital available to otherwise complete a business combination.
Fair
Market Value of Target Business
Pursuant
to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account (excluding taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target
business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a
business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however,
structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other
reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or
acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business
combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than
100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair
market value test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities
to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities.
The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able
to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated,
independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target
business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion
from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type
of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that
the target business complies with the 80% threshold.
Lack
of Business Diversification
Our
business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at
the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating
businesses at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating
a business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive
and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which
we may operate subsequent to a business combination, and
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cause us to depend on the performance of a single
operating business or the development or market acceptance of a single or limited number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for
each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Shareholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek shareholder approval of our initial business combination
at a meeting called for such purpose at which shareholders may seek to convert their shares, regardless of whether they vote for
or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount on deposit
in the trust account (net of taxes payable), or (2) provide our shareholders with the opportunity to sell their shares to us by
means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the
aggregate amount on deposit in the trust account (net of taxes payable), in each case calculated as of two business days prior
to the consummation of the business combination and subject to the limitations described herein. If we determine to engage in
a tender offer, such tender offer will be structured so that each shareholder may tender all of his, her or its shares rather
than some pro rata portion of his, her or its shares. The decision as to whether we will seek shareholder approval of a proposed
business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our
discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek shareholder approval. Unlike other blank check companies which require shareholder votes and
conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for
cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility
to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E
of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which
will contain substantially the same financial and other information about the initial business combination as is required under
the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least
$5,000,001 upon such consummation and, if we seek shareholder approval, an ordinary resolution under Cayman Islands law, which
requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under
the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any
type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon
consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation
and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result,
we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within
the applicable time period, if at all. Public shareholders may therefore have to wait 18 months from the closing of this
offering in order to be able to receive a pro rata share of the trust account.
Our
initial shareholders and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any
proposed business combination, (2) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed
initial business combination and (3) not sell any ordinary shares in any tender in connection with a proposed initial business
combination.
None
of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units or ordinary
shares from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed business
combination and a significant number of shareholders vote, or indicate an intention to vote, against such proposed business combination
or to convert their shares, our officers, directors, initial shareholders or their affiliates could make such purchases in the
open market or in private transactions in order to influence the vote or increase the likelihood of satisfying the necessary closing
conditions to such transaction. Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates
will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which
are rules designed to stop potential manipulation of a company’s stock.
Conversion
Rights
At
any meeting called to approve an initial business combination, public shareholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the
aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business
combination, less any taxes then due but not yet paid. Alternatively, we may provide our public shareholders with the opportunity
to sell their ordinary shares to us through a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal
to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid.
Notwithstanding
the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights
with respect to 15% or more of the shares sold in this offering. Such a public shareholder would still be entitled to vote against
a proposed business combination with respect to all shares owned by him or his affiliates. We believe this restriction will prevent
shareholders from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt
to use the conversion right as a means to force us or our management to purchase their shares at a significant premium to the
then current market price. By limiting a shareholder’s ability to convert no more than 15% of the shares sold in this offering,
we believe we have limited the ability of a small group of shareholders to unreasonably attempt to block a transaction which is
favored by our other public shareholders.
Our
initial shareholders, officers, and directors will not have conversion rights with respect to any ordinary shares owned by them,
directly or indirectly.
We
may require public shareholders, whether they are a record holder or hold their shares in “street name,” to either
(i) tender their certificates (if any) to our transfer agent or (ii) deliver their shares to the transfer agent electronically
using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case
prior to a date set forth in the proxy materials sent in connection with the proposal to approve the business combination.
There
is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker a nominal amount and it would be up
to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or
not we require holders seeking to exercise conversion rights to deliver their shares prior to a specified date. The need to deliver
shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However,
in the event we require shareholders seeking to exercise conversion rights to deliver their shares prior to the consummation of
the proposed business combination and the proposed business combination is not consummated this may result in an increased cost
to shareholders.
Any
proxy solicitation materials we furnish to shareholders in connection with a vote for any proposed business combination will indicate
whether we are requiring shareholders to satisfy such certification and delivery requirements. Accordingly, a shareholder would
have from the time the shareholder received our proxy statement up until the vote on the proposal to approve the business combination
to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific
facts of each transaction. However, as the delivery process can be accomplished by the shareholder, whether or not he is a record
holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his
broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average
investor. However, we cannot assure you of this fact. Please see the risk factor titled “In connection with any shareholder
meeting called to approve a proposed initial business combination, we may require shareholders who wish to convert their shares
in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult
for them to exercise their conversion rights prior to the deadline for exercising their rights” for further information
on the risks of failing to comply with these requirements.
Any
request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or
the expiration of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an
election of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may
simply request that the transfer agent return the certificate (physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise
their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account as
of two business days prior to the consummation of the initial business combination. In such case, we will promptly return any
shares delivered by public holders.
Liquidation
if No Business Combination
On April 16, 2021, an
Extraordinary General Meeting of the Company was held, in which the shareholders approved a special resolution to amend the Amended and
Restated Memorandum and Articles of Association of the Company to extend the date by which the Company must consummate an initial business
combination from April 22, 2021 to October 22, 2021. Therefore, we have until October 22, 2021 to complete our initial business combination.
If we are unable to complete our initial business combination within such time period (or such longer period that our shareholders
may approve), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account, including interest earned on the trust account not and not previously released
to us (less up to $100,000 of interest to pay liquidation expenses and which interest shall be net of taxes payable), divided by the
number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the
case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject
to the other requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants
which will expire worthless if we fail to complete our initial business combination by October 22, 2021 (or such longer period that our
shareholders may approve).
Our
initial shareholders, which include our independent directors, have entered into agreements with us, pursuant to which they have
waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete
our initial business combination within the required time period. However, if our initial shareholders or management team acquire
public shares, they will be entitled to liquidating distributions from the trust account with respect to such public shares if
we fail to complete our initial business combination by such date.
Our
executive officers and directors have agreed, pursuant to written agreements with us, that they will not propose any amendment
to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within the required time period, unless
we provide our public shareholders with the opportunity to redeem their public shares upon approval of any such amendment at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
earned on the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
If
we were to expend all of the net proceeds of the IPO, other than the proceeds deposited in the trust account, and without taking
into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon our
dissolution would be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors
which would have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption
amount received by shareholders will not be less than $10.00. While we intend to pay such amounts, if any, we cannot assure you
that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In order to protect the amounts held in the trust account, Union Group
International Holdings Limited has contractually agreed pursuant to a written agreement with us that, if we liquidate the trust
account prior to the consummation of a business combination, it will be liable to ensure that the proceeds in the trust account
are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services
rendered or contracted for or products sold to us. We believe Union Group International Holdings Limited has sufficient net worth
to satisfy its indemnity obligation should it arise, however we have not asked it to reserve for such obligations and we cannot
assure you it will have sufficient liquid assets to satisfy such obligations if it is required to do so. Additionally, the agreement
entered into by Union Group International Holdings Limited specifically provides for two exceptions to the indemnity given: it
will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or
(2) as to any claims for indemnification by the underwriters of this offering against certain liabilities, including liabilities
under the Securities Act. As a result, we cannot assure you that the per-share distribution from the trust account, if we
liquidate the trust account because we have not completed a business combination within the required time period, will not be
less than $10.00.
In
the event that Union Group International Holdings Limited asserts that it is unable to satisfy any indemnification obligations
that may arise or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against Union Group International Holdings Limited to enforce such indemnification obligations. While
we currently expect that our independent directors would take legal action on our behalf to enforce these indemnification obligations,
it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular
instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per share.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public shareholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our shareholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public
shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be
brought against us for these reasons.
Our
public shareholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not complete our initial business combination within the required time period, (ii) in connection with a shareholder
vote to amend our amended and restated memorandum and articles of association that would affect our public shareholders’
ability to convert or sell their shares to us in connection with a business combination as described herein or affect the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within
the required time period or (iii) if they redeem their respective shares for cash upon the completion of our initial business
combination. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account. In
the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection
with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro
rata share of the trust account. Such shareholder must have also exercised its redemption rights and followed the procedures described
above and as detailed in the applicable proxy or tender offer materials. These provisions of our amended and restated memorandum
and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended
with a shareholder vote.
Competition
In
identifying, evaluating and selecting a target business for a business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will
be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek shareholder approval of a business combination or engage in a tender
offer may delay the completion of a transaction;
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our
obligation to convert or repurchase ordinary shares held by our public shareholders may
reduce the resources available to us for a business combination; and
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our
outstanding warrants, and the potential future dilution they represent.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management
believes, however, that our status as a public entity and potential access to the United States public equity markets may give
us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target
business with significant growth potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Human
Capital Resources
We
currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters
and intend to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time
period will vary based on whether a target business has been selected for the business combination and the stage of the business
combination process the company is in. Accordingly, once a suitable target business to acquire has been located, management will
spend more time investigating such target business and negotiating and processing the business combination (and consequently spend
more time on our affairs) than had been spent prior to locating a suitable target business. We presently expect our executive
officers to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full
time employees prior to the consummation of a business combination.
ITEM
1A. RISK FACTORS
Risk
Factors Specific to Our Business
If we are unable to consummate a business
combination, our public shareholders may be forced to wait until after October 22, 2021 before receiving distributions from the trust
account.
On April 16, 2021, an
Extraordinary General Meeting of the Company was held, in which the shareholders approved a special resolution to amend the Amended and
Restated Memorandum and Articles of Association of the Company to extend the date by which the Company must consummate an initial business
combination from April 22, 2021 to October 22, 2021. Therefore, we have until October 22, 2021 to complete a business combination (unless
our shareholders approve an amendment to our amended and restated memorandum and articles of association to provide for a longer period
of time). We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto
and only then in cases where investors have sought to convert or sell their shares to us. Only after the expiration of this full time
period will public security holders be entitled to distributions from the trust account if we are unable to complete a business combination.
Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment, public security
holders may be forced to sell their public shares or warrants, potentially at a loss.
Our independent registered public accounting
firm has expressed substantial doubt as to our ability to continue as a going concern in its report.
In its report on our
financial statements for the year ended September 30, 2020, our independent registered public accounting firm included an explanatory
paragraph expressing substantial doubt regarding our ability to continue as a going concern. A “going concern” opinion means,
in general, that our independent registered public accounting firm has substantial doubt about our ability to continue our operations
unless we complete a business combination by October 22, 2021.
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination.
We
will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public
shareholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination
or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable),
or (2) provide our public shareholders with the opportunity to sell their shares to us by means of a tender offer (and thereby
avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), in each case subject to the limitations described elsewhere in this Form 10-K. Accordingly,
it is possible that we will consummate our initial business combination even if holders of a majority of our public shares do
not approve of the business combination we consummate.
We
may issue shares or debt securities to complete a business combination, which would reduce the equity interest of our shareholders
and likely cause a change in control of our ownership.
Our
amended and restated memorandum and articles of association authorizes the issuance of up to 150,000,000 ordinary shares, par
value $.0001 per share, and 1,000,000 preference shares, par value $.0001 per share. We may issue a substantial number of additional
ordinary shares or preference shares, or a combination of ordinary shares and preference shares, to complete a business combination.
The issuance of additional ordinary shares or preference shares will not reduce the per-share conversion amount in the trust
account, but:
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may
significantly reduce the equity interest of investors in this offering;
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may
subordinate the rights of holders of ordinary shares if we issue preference shares with
rights senior to those afforded to our ordinary shares;
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may
cause a change in control if a substantial number of ordinary shares are issued, which
may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors;
and
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may
adversely affect prevailing market prices for our securities.
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Similarly,
if we issue debt securities or otherwise incur significant indebtedness, it could result in, among other things:
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default
and foreclosure on our assets if our operating revenues after a business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security
is payable on demand; and
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our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding.
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If
we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease
the per-share conversion amount in the trust account.
If
the net proceeds of the IPO not being held in trust are insufficient to allow us to operate for at least until October 22, 2021, we may
be unable to complete a business combination.
We
cannot assure you that available funds will be sufficient to allow us to operate for at least until October 22, 2021, assuming that a
business combination is not consummated during that time. Accordingly, if we use all of the funds held outside of the trust account,
we may not have sufficient funds available with which to structure, negotiate or close an initial business combination. In such event,
we would need to borrow funds from our initial shareholders, officers or directors or their affiliates to operate or may be forced to
liquidate. Our initial shareholders, officers, directors and their affiliates may, but are not obligated to, loan us funds, from time
to time or at any time, in whatever amount that they deem reasonable in their sole discretion for our working capital needs. Each loan
would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without
interest, or, at holder’s discretion, up to $1,500,000 of the notes may be converted into private warrants at a price of $1.00
per private warrant.
If
third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received
by shareholders may be less than $10.00.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors
and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,
they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse
against the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could
be subject to claims which could take priority over those of our public shareholders. If we are unable to complete a business
combination and distribute the proceeds held in trust to our public shareholders, Union Group International Holdings Limited has
agreed (subject to certain exceptions described elsewhere in this annual report) that it will be liable to ensure that the proceeds
in the trust account are not reduced below $10.00 per share by the claims of target businesses or claims of vendors or other entities
that are owed money by us for services rendered or contracted for or products sold to us. We believe Union Group International
Holdings Limited has sufficient net worth to satisfy its indemnity obligation should it arise, however we cannot assure you it
will have sufficient liquid assets to satisfy such obligations if it is required to do so. Therefore, the per-share distribution
from the trust account may be less than $10.00, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject
to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete
the trust account, we may not be able to return to our public shareholders at least $10.00.
Our
independent directors may decide not to enforce Union Group International Holdings Limited’s indemnification obligations,
resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.
In
the event that the proceeds in the trust account are reduced below $10.00 per public share and Union Group International Holdings
Limited asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related
to a particular claim, our independent directors would determine whether to take legal action against Union Group International
Holdings Limited to enforce such indemnification obligations. It is possible that our independent directors in exercising their
business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may
be reduced below $10.00 per share.
Our
shareholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Our On April 16, 2021,
an Extraordinary General Meeting of the Company was held, in which the shareholders approved a special resolution to amend the Amended
and Restated Memorandum and Articles of Association of the Company to extend the date by which the Company must consummate an initial
business combination from April 22, 2021 to October 22, 2021. Therefore, we have until October 22, 2021 (unless this time period is otherwise
extended by our shareholders). If we have not completed a business combination by such date, we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of
the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including any interest earned on the trust funds and not previously released to us (less up to $100,000 of such interest to
pay liquidation expenses and which interest shall be net of taxes payable), divided by the number of then outstanding public shares,
which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject (in the case of (ii)
and (iii) above) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable
law. We cannot assure you that we will properly assess all claims that may be potentially brought against us. Accordingly, we cannot
assure you that third parties will not seek to recover from our shareholders amounts owed to them by us.
If
we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful
payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts
as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our
shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or
may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust
account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these
reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out
of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be
guilty of an offense and may be liable to pay a fine of US$18,292.68 and subject to imprisonment for five years in the Cayman
Islands.
Since
we have not yet selected a particular industry or target business with which to complete a business combination, we are unable
to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
Although
we currently intend to focus our search for target businesses located in Latin America, we may consummate a business combination
with a company in any industry or geographic location we choose and are not limited to any particular industry or type of business.
Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we
may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination
with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the
business operations of those entities. If we complete a business combination with an entity in an industry characterized by a
high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor
to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove
to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business.
Our
ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts
of our key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals
we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our
ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our
success depends on the continued service of our key personnel, at least until we have consummated our initial business combination.
We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none
of our officers is required to commit any specified amount of time to our affairs and, accordingly, our officers will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of,
any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.
Additionally,
Juan Sartori, our non-executive Chairman of the Board, was elected as a senator of Uruguay in February 15, 2020. Mr. Sartori’s
involvement in Uruguayan politics may limit the time he is able to dedicate to our company and additional conflicts may arise
as a result of any other position he may ultimately hold. Furthermore, we cannot guarantee that Mr. Sartori will not resign
as our non-executive Chairman of the Board as a result of such involvement.
The
role of our key personnel after a business combination, however, cannot presently be ascertained. Although some of our key personnel
may serve in senior management or advisory positions following a business combination, it is likely that most, if not all, of
the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after
a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources
helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various
regulatory issues which may adversely affect our operations.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
We
may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure
you that our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the
target or its industry to make an informed decision regarding a business combination.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following a business combination and as a result, may
cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel will be able to remain with the company after the consummation of a business combination only if they are able to
negotiate employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such
negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals
to receive compensation in the form of cash payments and/or our securities for services they would render to the company after
the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination.
Our
officers and directors are officers and/or directors of other companies and will not commit their full time to our affairs. We
presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business.
However, we cannot guarantee that Mr. Sartori will not resign as our non-executive Chairman of the Board as a result
of his involvement in Uruguayan politics. We do not intend to have any full-time employees prior to the consummation of our initial
business combination. The foregoing could have a negative impact on our ability to consummate our initial business combination.
Our
officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for
a business combination.
Our
officers and directors have waived their right to convert their founders’ shares or any other shares purchased by them,
or to receive distributions from the trust account with respect to their founders’ shares upon our liquidation if we are
unable to consummate a business combination. Accordingly, the founder shares and the private warrants will be worthless if we
do not consummate a business combination.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in
identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms,
conditions, and timing of a particular business combination are appropriate and in our shareholders’ best interest.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly,
a potential target business may be presented by our management team to another entity prior to its presentation to us and we may
not be afforded the opportunity to engage in a transaction with such target business. Additionally, our officers and directors
may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial
business combination. For a more detailed description of the pre-existing fiduciary and contractual obligations of our management
team, and the potential conflicts of interest that such obligations may present, see the section titled “Management —
Conflicts of Interest.”
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our ordinary shares less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following October 22, 2024, (b) in which we have total annual gross revenue
of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our
outstanding ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on
which we have issued more than $1.0 billion in non-convertible debt during the prior three year period. As an emerging growth
company, we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, we
have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and we are exempt
from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or
revised accounting standards that have different effective dates for public and private companies until those standards apply
to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective
dates. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these provisions. If
some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our shares
and our share price may be more volatile.
We
may only be able to complete one business combination, which will cause us to be solely dependent on a single business which may
have a limited number of products or services.
It
is likely we will consummate a business combination with a single target business, although we have the ability to simultaneously
acquire several target businesses. By consummating a business combination with only a single entity, our lack of diversification
may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to
complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects
for our success may be:
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solely
dependent upon the performance of a single business, or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination.
We
may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth
of the target business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our IPO will be sufficient to allow us to consummate a business combination, because we have
not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction.
If the net proceeds of our IPO prove to be insufficient, either because of the size of the business combination, the depletion
of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number of shares
from shareholders seeking conversion, we will be required to seek additional financing. Such financing may not be available on
acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular
business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional
financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business. None of our initial shareholders, officers, directors
or shareholders is required to provide any financing to us in connection with or after a business combination.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete a business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under
the Investment Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account,
it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated
principal activities will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by
the trustee only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 180 days or less or in money market funds meeting all applicable conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations. By restricting the investment
of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated
under the Investment Company Act.
If
we are nevertheless deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions
that may make it more difficult for us to complete a business combination, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities.
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In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy, compliance policies and procedures and disclosure requirements
and other rules and regulations.
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Compliance
with these additional regulatory burdens would require additional expenses for which we have not allotted.
If
we do not conduct an adequate due diligence investigation of a target business, we may be required to subsequently take write-downs
or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition,
results of operations and our shares price, which could cause you to lose some or all of your investment.
We
must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming
and expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process.
Even if we conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect
a particular target business, and factors outside the control of the target business and outside of our control may later arise.
If our diligence fails to identify issues specific to a target business, industry or the environment in which the target business
operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have
an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions
about us or our ordinary shares. In addition, charges of this nature may cause us to violate net worth or other covenants to which
we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt
financing.
The
requirement that we complete an initial business combination by October 22, 2021 may give potential target businesses leverage over us
in negotiating a business combination.
We
currently have until October 22, 2021 to complete an initial business combination. Any potential target business with which we enter
into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain
leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular
target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get
closer to the time limit referenced above.
We
may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying
solely on the judgment of our board of directors in approving a proposed business combination.
We
will only be required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity
that is affiliated with any of our officers, directors or initial shareholders. In all other instances, we will have no obligation
to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving a proposed
business combination.
Resources
could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business.
It
is anticipated that the investigation of each specific target business 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 a decision is made not to complete a specific business combination, the costs
incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached
relating to a specific target business, we may fail to consummate the 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.
Because
we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability
to protect your rights through the U.S. Federal courts may be limited.
We
are an exempted company incorporated under the laws of the Cayman Islands and certain of our officers and directors are residents
of jurisdictions outside the United States. As a result, it may be difficult for investors to effect service of process within
the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against
our directors or officers.
Our
corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (2018 Revision)
(as the same may be supplemented or amended from time to time) or the common law of the Cayman Islands. The rights of shareholders
to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to
us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman
Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common
law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights
of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from statutes or
judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities
laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholders
derivative action in a Federal court of the United States.
We
have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce
against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws
of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us
predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the
liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement
in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce
a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that
a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been
given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be
final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman
Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind
the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple
damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent
proceedings are being brought elsewhere.
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions
taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a
United States company.
If
we effect a business combination with a company located in Latin America, we would be subject to a variety of additional risks
that may negatively impact our operations.
We
currently intend to focus our search for target businesses located in Latin America. If we acquired a company in Latin America
or in another jurisdiction outside of the United States, we would be subject to any special considerations or risks associated
with companies operating in the target business’ home jurisdiction, including any of the following:
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rules
and regulations or currency conversion or corporate withholding taxes on individuals;
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increased
tariffs and trade barriers;
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higher
costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements
of overseas markets;
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regulations
related to customs and import/export matters;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; and
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deterioration
of political relations with the United States, including as a result of new or additional regulations or restrictions on trade.
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We
cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations
might suffer.
If
we effect a business combination with a company located outside of the United States, the laws applicable to such company will
likely govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a business combination with a company located outside of the United States, the laws of the country in which such company
operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business
will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system
of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as
in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant
loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States,
it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors
might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their
legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.
Because
we must furnish our shareholders with target business financial statements prepared in accordance with U.S. generally accepted
accounting principles or international financial reporting standards, we will not be able to complete a business combination with
prospective target businesses unless their financial statements are prepared in accordance with U.S. generally accepted accounting
principles.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or international financial reporting standards as promulgated by the International Accounting Standards
Board (IASB), or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in
accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. We will include the
same financial statement disclosure in connection with any tender offer documents we use, whether or not they are required under
the tender offer rules. Additionally, to the extent we furnish our shareholders with financial statements prepared in accordance
with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at the time of the consummation of the
business combination. These financial statement requirements may limit the pool of potential target businesses we may acquire.
There
may be tax consequences to our business combinations that may adversely affect us.
While
we expect to undertake any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such
business combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain
the intended tax-free treatment upon a transfer of shares or assets. A non-qualifying reorganization could result in
the imposition of substantial taxes.
Risk
Factors Relating to our Securities
If
we do not file and maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants,
holders will only be able to exercise such warrants on a “cashless basis.”
If
we do not file and maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants
at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis”
provided that an exemption from registration is available. As a result, the number of ordinary shares that holders will receive
upon exercise of the warrants will be fewer than it would have been had such holder exercised his warrant for cash. Further, if
an exemption from registration is not available, holders would not be able to exercise on a cashless basis and would only be able
to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable upon exercise
of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to file and maintain
a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants until the expiration
of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside”
of the holder’s investment in our company may be reduced or the warrants may expire worthless.
An
investor will only be able to exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or
qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No
warrants will be exercisable and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such
exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the warrants. If the ordinary shares issuable upon exercise of the warrants are not registered or qualified or exempt from
registration or qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of
any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a
majority of the then outstanding public warrants.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any
holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of
at least a majority of the then outstanding public warrants in order to make any change that adversely affects the interests of
the registered holders. Accordingly, we would need approval from the holders of only 8,750,001 of the public warrants to amend
the terms of the warrants.
Nasdaq
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are listed on Nasdaq, a national securities exchange. However, we cannot assure you that our securities will continue
to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business
combination, it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements
as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial
listing requirements at that time.
If
Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity with respect to our securities;
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a
determination that our ordinary shares are “penny stock” which will require
brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting
in a reduced level of trading activity in the secondary trading market for our ordinary
shares;
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a
limited amount of news and analyst coverage for our company; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our units, ordinary shares, and warrants
are listed on Nasdaq, our units, ordinary shares, and warrants are covered securities. If we were no longer listed on Nasdaq, our securities
would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
The
ability of our shareholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us
to effectuate the most desirable business combination or optimize our capital structure.
If
our business combination requires us to use substantially all of our cash to pay the purchase price for the target business, because
we will not know how many shareholders may exercise conversion rights or seek to sell their shares to us in a tender offer, we
may need to arrange third party financing to help fund our business combination. 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.
In
connection with any vote to approve a business combination, we will offer each public shareholder the option to vote in favor
of a proposed business combination and still seek conversion of his, her or its shares.
In
connection with any vote to approve a 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 converted to cash (subject to the limitations described
elsewhere in this annual report) regardless of whether such shareholder votes for or against such proposed business combination.
This ability to seek conversion while voting in favor of our proposed business combination may make it more likely that we will
consummate a business combination.
In
connection with any shareholder meeting called to approve a proposed initial business combination, we may require shareholders
who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion
that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In
connection with any shareholder meeting called to approve a proposed initial business combination, each public shareholder will have
the right, regardless of whether he is voting for or against such proposed business combination or does not vote at all, to demand that
we convert his shares into a pro rata share of the trust account as of two business days prior to the consummation of the initial business
combination. Such conversion will be effectuated under Cayman Islands law as a compulsory redemption of the shares, with the redemption
price to be paid being the applicable pro rata portion of the monies held in the trust account. We may require public shareholders who
wish to convert their shares in connection with a proposed business combination to either (i) tender their certificates (if any) to our
transfer agent or (ii) deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holders’ option, in each case prior to a date set forth in the tender offer documents or proxy materials
sent in connection with 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, we cannot assure you of this fact. Accordingly,
if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to convert may be unable to meet
the deadline for exercising their conversion rights and thus may be unable to convert their shares.
If,
in connection with any shareholder meeting called to approve a proposed business combination, we require public shareholders who
wish to convert their shares to comply with specific requirements for conversion, such converting shareholders may be unable to
sell their securities when they wish to in the event that the proposed business combination is not approved.
If
we require public shareholders who wish to convert their shares to comply with specific delivery requirements for conversion and
such proposed business combination is not consummated, we will promptly return such certificates to the tendering public shareholders.
Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after
the failed acquisition until we have returned their securities to them. The market price for our 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 conversion
may be able to sell their securities.
Our
officers and directors and their affiliates will control a substantial interest in us and thus may influence certain actions requiring
a shareholder vote.
Our
officers and directors and their affiliates own approximately 20% of our issued and outstanding ordinary shares. None of our officers,
directors or their affiliates has indicated any intention to purchase units or ordinary shares from person in the open market
or in private transactions. However, our officers, directors or their affiliates could determine in the future to make such purchases
in the open market or in private transactions, to the extent permitted by law, in order to influence the vote or magnitude of
the number of shareholders seeking to tender their shares to us. In connection with any vote for a proposed business combination,
our officers and directors have agreed to vote the ordinary shares owned by them immediately before this offering as well as any
ordinary shares acquired in this offering or in the aftermarket in favor of such proposed business combination.
Our
board of directors is and will be divided into three classes, each of which will generally serve for a term of three years with
only one class of directors being elected in each year. There is no requirement under the Companies Law for us to hold annual
or general meetings to elect directors. Accordingly, you may not be able to exercise your voting rights under corporate law for
up to 18 months. If there is an annual general meeting, as a consequence of our “staggered” board of directors,
only a minority of the board of directors will be considered for election and our initial shareholders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our initial shareholders will continue to exert
control at least until the consummation of a business combination.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants (excluding the private warrants and any warrants issued in payment of working
capital loans made to us, to the extent they are held by the initial purchasers or their permitted transferees) at any time after
they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales
price of the ordinary shares equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations
and recapitalizations) for any 20 trading days within a 30 trading-day period ending on the third business day prior to proper
notice of such redemption provided that on the date we give notice of redemption and during the entire period thereafter until
the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the ordinary shares
issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become
redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you (i) to exercise your
warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants
at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption
price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market
value of your warrants.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders
to receive fewer ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise
their warrants for cash.
If
we call our public warrants for redemption, our management will have the option to require any holder that wishes to exercise
his warrant (including any warrants held by our officers or directors or their permitted transferees) to do so on a “cashless
basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of ordinary
shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash.
This will have the effect of reducing the potential “upside” of the holder’s investment in our company.
If
our security holders exercise their registration rights, it may have an adverse effect on the market price of our ordinary shares
and the existence of these rights may make it more difficult to effect a business combination.
Our
initial shareholders are entitled to make a demand that we register the resale of the founders’ shares at any time commencing
three months prior to the date on which their shares may be released from escrow. Additionally, the holders of the private warrants
and any warrants our officers, directors, or their affiliates may be issued in payment of working capital loans made to us are
entitled to demand that we register the resale of the private warrants and any other warrants we issue to them (and the underlying
ordinary shares) commencing at any time after we consummate an initial business combination. The presence of these additional
ordinary shares trading in the public market may have an adverse effect on the market price of our securities. In addition, the
existence of these rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the
target business, as the shareholders of the target business may be discouraged from entering into a business combination with
us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on
the trading market for our ordinary shares.
In accordance with updated guidance
from the SEC on accounting treatment of the warrants, our management determined that our warrants should be accounted for as liabilities
rather than as equity and such requirement resulted in a restatement of our previously issued financial statements, which has resulted
in unanticipated costs and diversion of management resources and may make it more difficult to effect a business combination.
On April 12, 2021, the
staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued
by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Staff Statement”). In the SEC Staff Statement, the
SEC expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities
on the SPAC’s balance sheet as opposed to equity. Since issuance, our warrants were accounted for as equity within our balance
sheet, and after our management’s discussion and evaluation, including with our independent auditors, the we concluded that our
warrants should be presented as liabilities with subsequent fair value remeasurement. Therefore, we conducted a valuation of its warrants
by an independent third-party valuation firm and restated our previously issued financial statements, which resulted in unanticipated
costs and diversion of management resources. The classification of these financial instruments as a liability resulted in the application
of derivative liability accounting, which requires a quarterly valuation of these liabilities with any change in value required to be
reflected in quarterly and annual financial statements of the issuer. Although the Company has completed the restatement, we cannot guarantee
that it will have no further inquiries from the SEC or Nasdaq regarding its restated financial statements or matters relating thereto.
The impact of changes in fair value on earnings may have an adverse effect on the market price of our common shares.
Any future inquiries from
the SEC or Nasdaq as a result of the restatement of Union’s historical financial statements will, regardless of the outcome, likely
consume a significant amount of our resources in addition to those resources already consumed in connection with the restatement itself.
We may face litigation and other risks
as a result of the material weakness in our internal control over financial reporting.
Following the issuance
of the SEC Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee
concluded that it was appropriate to restate our previously issued audited financial statements as of September 30, 2020 and for the
period ended December 31, 2020. As part of the restatement, we identified a material weakness in our internal controls over financial
reporting.
As a result of such material
weakness, the restatement, the change in accounting for the warrants, and other matters raised or that may in the future be raised by
the SEC, we face potential for litigation or other disputes that may include, among others, claims invoking the federal and state securities
laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial
reporting and the preparation of our financial statements. As of the date of this report, we have no knowledge of any such litigation
or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or
dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition
or our ability to complete a business combination.
General
Risk Factors
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 recent coronavirus (COVID-19) outbreak.
The
coronavirus (COVID-19) pandemic has resulted in a widespread health crisis that has adversely affect the economies and financial
markets worldwide, and the business of any potential target business with which we consummate a business combination could be
materially and adversely affected. 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.