Item 1. Business
We are a blank check company incorporated as a
Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Annual Report
as our initial business combination.
Although we will not be limited to a particular
industry or geographic region in our identification and acquisition of a target company, we intend to focus our search on Mexican target
businesses or target businesses with a significant presence in Mexico.
On February 10, 2022, we consummated our initial
public offering (the “initial public offering”) of 10,000,000 units, at $10.00 per unit (the “Units” and each
a “Unit”), generating gross proceeds of $100.0 million. We granted the underwriters a 45-day option to purchase up to an additional
1,500,000 units at the initial public offering price to cover over-allotments. On February 14, 2022, the underwriters partially exercised
the over-allotment option, and the closing of the issuance and sale of the additional 1,450,000 over-allotment units occurred on February
15, 2022. The issuance of the over-allotment units at a price of $10.00 per unit resulted in total gross proceeds of approximately $14.5
million.
Concurrently with the closing of the Initial Public
Offering, we also consummated the sale of 5,500,000 warrants (each, a “Private Placement Warrant” and, collectively, the “Private
Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to our sponsor and EarlyBirdCapital,
Inc. (and/or their designees), generating gross proceeds of $5,500,000.
Approximately $116.8 million of the net proceeds
of the initial public offering were placed in a trust account, located in the United States with Continental Stock Transfer & Trust
Company acting as trustee, and invested only in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940 (the “Investment Company Act”), having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invests only in direct U.S. government
treasury obligations, as determined by us, until the earlier of: (i) the completion of a business combination and (ii) the distribution
of the trust account as described below.
Our management has broad discretion with respect
to the specific application of the net proceeds of the initial public offering and the sale of Private Placement Warrants, although substantially
all of the net proceeds are intended to be applied generally toward consummating a business combination. There is no assurance that we
will be able to complete a Business Combination successfully.
We must complete one or more initial business
combination having an aggregate fair market value of at least 80% of the net assets held in the trust account (excluding the deferred
underwriting commissions and taxes payable on the interest earned on the trust account) at the time of the signing of the agreement to
enter into the initial Business Combination. However, we will only complete a 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.
If we are unable to complete an initial business
combination within 15 months, such date being May 10, 2023 extendable at our sponsor’s option to up to 18 months, such date being
August 10, 2023), from the closing of our initial public offering (such period, the “Business Combination Period”), we will
(1) cease all operations except for the purpose of winding up, (2) as promptly as reasonably possible but not more than 10 business days
thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of
taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public
shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any) and (3) 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 (2) and (3), to our obligations under Cayman Islands law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants,
which will expire worthless if we fail to consummate a Business Combination within the Combination Period.
On April 10, 2023, the Company amended the Original
Business Combination Agreement, entering into the Second Business Combination Agreement, (the “Business Combination Agreement”)
extending the extension date from August 10, 2023 to February 10, 2024.
Proposed Business Combination
Business Combination Agreement
On August 17, 2022, we, entered
into that certain Business Combination Agreement (the “Business Combination Agreement”) with Covalto, and Covalto Merger Sub
Ltd., a Cayman Islands exempted company and direct, wholly-owned subsidiary of Covalto (“Merger Sub”), pursuant to which,
among other things, Covalto will make an election to be classified as an association taxable as a corporation for U.S. federal income
tax purposes and effect a Pre-Closing Capital Restructuring (as defined below), and Merger Sub will subsequently be merged with and into
us, with our company being the surviving entity in the Merger (as defined below) and continuing (immediately following the Merger) as
a direct wholly-owned subsidiary of Covalto (following and after giving effect to the proposed business combination, “New Covalto”),
on the terms and subject to the conditions set forth therein (the “Merger”, and together with the other transactions contemplated
by the Business Combination Agreement, the “Business Combination”).
As a result of the proposed
business combination, each of our issued and outstanding Class A ordinary shares, par value US$0.0001 per share, and Class B ordinary
shares, par value US$0.0001 per share, will be automatically surrendered and exchanged for the right to receive one newly-issued Class
A ordinary share, par value US$0.0001 per share, of New Covalto (each a “New Covalto Class A Ordinary Share” and collectively,
the “New Covalto Class A Ordinary Shares”), and each issued and outstanding warrant to purchase our Class A ordinary shares
(a “LIVB Warrant”) will be converted into and become a warrant to purchase New Covalto Class A Ordinary Shares (a “New
Covalto Warrant”), and New Covalto shall assume each such LIVB Warrant in accordance with its terms.
The Business Combination
Agreement and the transactions contemplated thereby were unanimously approved by our board of directors and the board of directors of
Covalto.
On April 10, 2023, the Company amended the Original
Business Combination Agreement, entering into the Second Business Combination Agreement, (the “Business Combination Agreement”)
extending the extension date from May 10, 2023 to February 10, 2024.
Mandatorily Convertible Notes
In connection with the signing of the Business
Combination Agreement, Covalto obtained investments from certain investors in a private placement of mandatorily convertible notes, issued
by Covalto to the investors party thereto, and immediately following, and after giving effect to, the consummation of the Merger, such
securities shall convert into New Covalto Class A Ordinary Shares in accordance with their terms.
In addition, Covalto has obtained commitments
from an anchor investor (the “Anchor Investor”) pursuant to a mandatorily convertible note of the same series (the “Mandatorily
Convertible Anchor Note” and, together with the existing notes, the “Mandatorily Convertible Notes”), for an aggregate
principal amount of $30,000,000 (the “Anchor Investment Amount”).
The Mandatorily Convertible Notes accrue interest
at a rate equal to seven percent (7.0%) per annum, compounding annually, subject to the terms therein. The Mandatorily Convertible Notes
shall be payable in cash or, at Covalto’s option, in kind by way of addition to the outstanding principal, semi-annually. Interest
shall commence on the respective closing date of any note and shall continue on the outstanding principal of such Mandatorily Convertible
Note until paid or converted in accordance with the provisions thereof. Any payment made by Covalto with regard to any outstanding Mandatorily
Convertible Note will be made simultaneously with regard to each of the other Mandatorily Convertible Notes then outstanding on a pro
rata basis in the same proportion of the outstanding principal balance then due under the applicable Mandatorily Convertible Note to be
so paid bears to the outstanding aggregate principal balance then due under all of the Mandatorily Convertible Notes.
Each of the Mandatorily Convertible Notes, including
the Anchor Investment and the prior outstanding notes, is subject to conversion at the Closing of the proposed business combination into
ordinary shares of Covalto, at a conversion price equal to eighty percent (80%) of the lowest price per share paid by investors in the
proposed business combination or, if earlier: (i) upon another Qualified Financing (as defined therein); (ii) upon a Liquidity Event (as
defined therein); or (iii) on July 7, 2023, in each case subject to the conversion pricing and other terms set forth therein. The Mandatorily
Convertible Notes also contain certain anti-dilution provisions in the event of a down-round financing prior to conversion.
In addition, the Mandatorily Convertible Notes
contain a provision for additional consideration in the event that the Termination Fee (as defined in the Business Combination Agreement)
becomes payable by Covalto to us, then upon the subsequent Conversion of the Mandatorily Convertible Note in accordance with their terms,
Covalto shall issue an additional 1,025,000 shares, of the most senior class of preference shares then outstanding, or if no preference
shares are then outstanding, into ordinary shares, into which the Mandatorily Convertible Note is converted (the “Additional Consideration”),
which Additional Consideration shall be distributed pro rata among the holders of the Mandatorily Convertible Note, in proportion to the
outstanding principal balance of the Mandatorily Convertible Note held by each holder to the outstanding aggregate principal balance then
due under the Mandatorily Convertible Note; provided that no holder shall receive less than its pro rata share of such amount based on
its share of the aggregate principal amount outstanding as of the date hereof, subject to certain additional conditions and restrictions
described in Section 8(b) thereof.
Company Voting Agreement
Concurrently with the execution
of the Business Combination Agreement, we, Covalto and certain holders of the equity securities of Covalto (each, individually, a “Supporting
Holder” and, collectively, the “Supporting Holders”) entered into an agreement (the “Company Voting Agreement”)
to vote, at a duly called meeting of the shareholders of Covalto, all of such Supporting Holder’s equity securities (1) in favor
of the adoption of the Business Combination Agreement, (2) in favor of the approval of the proposed business combination and (3) to take
certain other actions in support of the foregoing. The Company Voting Agreement also prevents the Supporting Holders from transferring
their voting rights with respect to their equity interests or otherwise transferring their equity interests prior to the Closing, except
for certain customary permitted transfers.
Sponsor Voting Agreement
Concurrently with the execution
of the Business Combination Agreement, sponsor, certain permitted transferees of sponsor, we, and Covalto entered into an agreement (the
“Sponsor Voting Agreement”), pursuant to which the sponsor agreed to vote, at a duly called meeting of our shareholders, all
of such sponsor’s equity securities of the company (1) in favor of the adoption of the Business Combination Agreement, (2) in favor
of the approval of the proposed business combination and (3) to take certain other actions in support of the foregoing. The Sponsor Voting
Agreement also prevents the sponsor from transferring their voting rights with respect to their equity interests or otherwise transferring
their equity interests prior to the Closing, except for certain customary permitted transfers.
The sponsor also agreed,
subject to certain exceptions, to a lock-up for a period ending on the earlier of (a) the date one (1) year after the Closing or (b) the
date that is one hundred and eighty (180) days after the Closing if, prior to such date, the VWAP (as defined therein) has equaled or
exceeded $12.50 for any twenty (20) trading days within any thirty (30) consecutive trading day period.
Contribution Agreement
Concurrently with the execution of the Business
Combination Agreement, the sponsor, LIV Sponsor II GP, LLC (“GP”), certain limited partners of the sponsor, us and Covalto
entered into a contribution agreement (the “Contribution Agreement”), pursuant to which, certain limited partners of the sponsor
and GP have agreed to contribute promissory notes to Covalto in exchange for certain securities of Covalto, subject to the terms and conditions
therein.
Registration Rights Agreement
At the closing of the Business
Combination, Covalto, we, sponsor, EarlyBirdCapital, Inc., certain other securityholders of Covalto party thereto, will enter into a registration
rights agreement (the “Registration Rights Agreement”) pursuant to which, among other matters, Covalto agrees to file a shelf
registration statement within forty-five days following the closing of the Business Combination, and certain of our existing shareholders
and Covalto will be granted certain customary demand and “piggy-back” registration rights with respect to their respective
shares of New Covalto. Pursuant to the Registration Rights Agreement (i) we, sponsor, EarlyBirdCapital, Inc. and certain other securityholders
party to that certain registration rights agreement, dated as of February 7, 2022 (the “Original SPAC Agreement”) and (ii)
Covalto, the Covalto Co-Founders (as defined therein) and certain other investors, including investors party to that certain registration
rights agreement, dated as of October 16, 2020 (the “Investors’ Rights Agreement”), acknowledge and agree that the entry
into Registration Rights Agreement shall render the Original SPAC Agreement and the Investors’ Rights Agreement, respectively, to
be of no further force and effect, and such agreements shall be deemed to be superseded and replaced in their entirety therewith.
Effecting a Business Combination
General
We are not presently engaged in, and we will not
engage in, any substantive commercial business for an indefinite period of time following our initial public offering. We intend to effectuate
our initial business combination using cash from the proceeds of the public offering and the sale of the private placement warrants, our
equity, debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth,
which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for
using equity or debt, or not all of the funds released from the trust account are used for payment of the consideration in connection
with our initial business combination or used for redemptions of our Class A 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 the post-business
combination company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination,
to fund the purchase of other companies or for working capital.
In the event that the proposed business combination
is not consummated, we may pursue an initial business combination target in any industry. Accordingly, there is no current basis for investors
in the public offering to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial
business combination. Although our management will assess the risks inherent in a particular target business with which we may combine,
we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore,
some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will
adversely affect a target business.
We may need to obtain additional financing to
complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held
in our trust account, or because we become obligated to redeem a significant number of our public shares upon completion of the business
combination, in which case we may issue additional securities or incur debt in connection with such business combination. There are no
prohibitions on our ability to issue securities or incur debt in connection with our initial 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 sponsor, 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, our officers and directors believe that the relationships they have developed over their careers and their
access to our sponsor’s contacts and resources 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 our final prospectus relating to our initial public offering and
know what types of businesses we are targeting.
Our officers and directors must present to us
all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account (excluding taxes
payable on the income accrued in the trust account) at the time of the agreement to enter into the initial business combination, subject
to any pre-existing fiduciary or contractual obligations. While we do not presently anticipate engaging the services of professional
firms or other individuals that specialize in business acquisitions on any formal basis (other than EarlyBirdCapital, Inc. as described
elsewhere in the prospectus relating to our initial public offering), we may engage these firms or other individuals in the future, in
which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. In no event, however, will our sponsor, initial shareholders, officers, directors or their respective
affiliates 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 an initial business combination (regardless of the type of transaction that it is) other than the administrative
services fee of up to $10,000 per month, the payment of consulting, success or finder fees to our sponsor, officers, directors, initial
shareholders or their affiliates in connection with the consummation of our initial business combination, the repayment of a loan in the
aggregate amount of up to $300,000 and reimbursement of any out-of-pocket expenses.
Our audit committee will review and approve all
reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates, with any interested director
abstaining from such review and approval. We have no present intention to enter into a business combination with a target business that
is affiliated with any of our officers, directors or sponsor. However, we are not restricted from entering into any such transactions
and may do so if (i) such transaction is approved by a majority of our disinterested independent directors and (ii) we obtain an opinion
from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, that the business
combination is fair to our unaffiliated shareholders 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
obligations and the limitations 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, as described below in more detail, 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. We have not established any specific
attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management
may consider a variety of factors, including one or more of the following:
| ● | financial condition and results of operation; |
| ● | brand recognition and potential; |
| ● | experience and skill of management and availability of additional
personnel; |
| ● | stage of development of the products, processes or services; |
| ● | existing distribution and potential for expansion; |
| ● | degree of current or potential market acceptance of the products,
processes or services; |
| ● | proprietary aspects of products and the extent of intellectual
property or other protection for products or formulas; |
| ● | impact of regulation on the business; |
| ● | regulatory environment of the industry; |
| ● | the target business’s compliance with U.S. federal
law; |
| ● | costs associated with effecting the business combination; |
| ● | industry leadership, sustainability of market share and attractiveness
of market industries in which a target business participates; and |
| ● | macro competitive dynamics in the industry within which the
company competes. |
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 will conduct an extensive due diligence review which will 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
Nasdaq listing rules require that the target business
or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust
account (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. Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason, we would no
longer be required to meet the foregoing 80% fair market value test.
We may structure our initial 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 shareholders 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 shareholders 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 stock of a target.
In this case, we could acquire a 100% controlling
interest in the target; however, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
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,
the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of trust account balance
test.
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). The proxy solicitation materials or tender offer documents used by us in connection with
any proposed transaction will provide public shareholders with our analysis of the fair market value of the target business, as well as
the basis for our determinations. 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, with respect to the satisfaction of such criteria.
We will not be required to obtain an opinion from
an investment banking firm as to the fair market value if our board of directors independently determines that the target business complies
with the 80% threshold.
We have filed a Registration Statement on Form
8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange
Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing
a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial
business combination.
Lack of Business Diversification
We may seek to effect a business combination with
more than one target business, although we expect to complete our business combination with just one business. Therefore, at least initially,
the prospects for our success may be entirely dependent upon the future performance of a single business operation. 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:
| ● | 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, and |
| ● | result in our dependency upon the performance of a single
operating business or the development or market acceptance of a single or limited number of products, processes or services. |
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.
Limited Ability to Evaluate the Target Business’ Management
Although we intend to scrutinize the management
of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment
of the target business’ management will prove to be correct. In addition, we cannot assure you that the future management will have
the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors,
if any, in the target business following a business combination cannot presently be stated with any certainty. While it is possible that
some of our key personnel will remain associated in senior management or advisory positions with us following a business combination,
it is unlikely that they will devote their full time efforts to our affairs subsequent to a business combination. Moreover, they would
only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for them 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. While the personal and financial interests of our
key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company
after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed
with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant experience
or knowledge relating to the operations of the particular target business.
Following a business combination, we may seek
to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.
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 don’t 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 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 herein. 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. 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. 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. Whether we seek shareholder approval or engage in a tender offer, we will consummate
our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation
and, if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination.
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 of 1933, as amended. 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 15 months, such date being May 10, 2023 (extendable at our sponsor’s option to up to 18 months, such date being August
10, 2023), from the closing of our initial public offering in order to be able to receive a pro rata share of the trust account. Our sponsor,
initial shareholders, 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. On April 10, 2023, the Company amended the Original Business Combination Agreement, entering into the Second
Business Combination Agreement, (the “Business Combination Agreement”) extending the extension date from May 10, 2023 to February
10, 2024.
None of our officers, directors, sponsor, initial
shareholders or their affiliates has indicated any intention to purchase units or Class A ordinary shares in our initial public offering
or 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 that they
wish to have their shares redeemed, our officers, directors, sponsor, initial shareholders or their affiliates could make such purchases
in the open market or in private transactions in order to influence the vote and reduce the number of redemptions. Notwithstanding the
foregoing, our officers, directors, sponsor, initial shareholders and their affiliates will not make purchases of Class A 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 Class A 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.
Our sponsor, initial shareholders and our officers
and directors will not have conversion rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired
prior to our initial public offering or purchased by them in our initial public offering or in the aftermarket. Additionally, the holders
of the EBC founder shares will not have conversion rights with respect to the EBC founder shares.
We may require public shareholders, whether they
are a record holder or hold their shares in “street name,” to either (i) tender their certificates 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 $45.00 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. 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 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 two business days prior to the scheduled vote on the proposal to approve the business combination to deliver his, her or its
shares if he, she or it 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, she or it is a record holder
or his, her or its 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, her or its shares through the DWAC System, we believe this time period is sufficient for an average investor.
However, we cannot assure you of this fact.
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 Class A ordinary 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 or she 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. In such case, we will promptly return any shares delivered by public
holders.
Redemption of Public Shares and Liquidation if No Initial Business
Combination
Our sponsor, officers and directors have agreed
that we will have only the Business Combination Period to complete our initial business combination. If we are unable to complete our
initial business combination within the Business Combination Period, we will: (1) cease all operations except for the purpose of winding
up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest
to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public
shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive
further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the
approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under
Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination
within the 15-month time period (extendable at our sponsor’s option to up to a 18-month period.
Our initial shareholders have entered into a letter
agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to
their founders shares if we fail to complete our initial business combination within the Business Combination Period. However, if our
initial shareholders 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 within the allotted 15-month time frame (extendable at
our sponsor’s option to up to 18-month time frame.
Our sponsor, officers and directors have agreed,
pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles
of association (A) 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 to modify 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 Business Combination Period or (B) with respect to any other provision
relating to shareholders’ rights or pre-initial business combination activity, 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 (which interest shall be net of taxes payable), divided
by the number of then issued and outstanding public shares. However, we may not redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (so that we do not then become
subject to the SEC’s “penny stock” rules).
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the $500,000
of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However,
if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent
that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional
amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of
our initial public offering and the sale of the private warrants, 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 approximately $10.20. 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 substantially less than $10.20. 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 (other than our independent auditors), prospective target businesses or 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 enter into an agreement with a third party that has not executed a waiver only 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
we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree
to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our
initial business combination within the prescribed time frame (after giving effect to the Extension Period, as applicable), or upon the
exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims
of creditors that were not waived that may be brought against us within the 10 years following redemption. Our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or
products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount
of funds in the trust account to below (1) $10.20 per public share or (2) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in the value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights
to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be
unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third-party claims.
We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our
sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We
have not asked our sponsor to reserve for such obligations. None of our other officers will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account
are reduced below (1) $10.20 per public share or (2) such lesser amount per public share held in the trust account as of the date of the
liquidation of the trust account, due to reductions in the value of the trust assets, in each case net of the amount of interest which
may be withdrawn to pay taxes, and our sponsor 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
our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising
their business judgment 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 substantially less than $10.20 per share.
We will seek to reduce the possibility that our
sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other
than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. We will have access to up to $1,000,000 from the proceeds of our initial public offering and the sale of the
private warrants, with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation,
currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that
the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable for claims
made by creditors. In the event that our offering expenses exceed our estimate of $500,000, we may fund such excess with funds from the
funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease
by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $500,000, the amount of funds
we intend to be held outside the trust account would increase by a corresponding amount.
If we file a winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account
could be subject to applicable insolvency law, and may be included in our insolvency estate and subject to the claims of third parties
with priority over the claims of our shareholders. To the extent any insolvency claims deplete the trust account, we cannot assure you
we will be able to return $10.20 per share to our public shareholders. Additionally, if we file a winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders
could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance. As a result, a bankruptcy or insolvency
court could seek to recover some or all amounts received by our shareholders. Furthermore, our board 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 upon the earliest to occur of: (1) the completion of our initial business combination, and then only
in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described
herein, (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend our amended and restated
memorandum and articles of association (A) 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 to modify 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 Business Combination Period or (B) with respect
to any other provision relating to shareholders’ rights or pre-initial business combination activity and (3) the redemption
of our public shares if we are unable to complete our initial business combination within the Business Combination Period, subject to
applicable law and as further described herein. 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 our initial 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 described above.
Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles
of association contains certain requirements and restrictions that will apply to us until the completion of our initial business combination.
Our amended and restated memorandum and articles of association contains a provision which provides that, if we seek to amend our amended
and restated memorandum and articles of association (A) 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 to modify 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 Business Combination Period or (B) with respect
to any other provision relating to shareholders’ rights or pre-initial business combination activity, we will provide public shareholders
with the opportunity to redeem their public shares in connection with any such amendment.
Specifically, our amended and restated memorandum
and articles of association provides, among other things, that:
| ● | prior to the completion of our initial business combination,
we shall either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public
shareholders may elect to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against
the proposed business combination, or (2) provide our public shareholders with the opportunity to redeem all or a portion of their public
shares upon the completion of our initial business combination by means of a tender offer (and thereby avoid the need for a shareholder
vote), in each in cash, for an amount payable in cash equal to the aggregate amount then on deposit in the trust account as of two business
days prior to the completion of our initial business combination, including interest (which interest shall be net of taxes payable),
divided by the number of then issued and outstanding public shares, subject to the limitations described herein; |
| ● | we will consummate our initial business combination only
if we have net tangible assets of at least $5,000,001 either immediately prior to or upon completion of our initial business combination
and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the
business combination; |
|
● |
if our initial business combination is not consummated within the Business Combination Period, then our existence will terminate and we will distribute all amounts in the trust account; and |
|
● |
prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated memorandum and articles of association to (x) extend the time we have to consummate a business combination beyond the Business Combination Period or (y) amend the foregoing provisions. |
These provisions cannot be amended without the
approval of holders of at least two-thirds of our ordinary shares.
In the event we seek shareholder approval in connection
with our initial business combination, our amended and restated memorandum and articles of association will provide that we may consummate
our initial business combination only if approved by a majority of the ordinary shares voted by our shareholders at a duly held shareholders
meeting.
Additionally, our amended and restated memorandum
and articles of association provides that, prior to our initial business combination, only holders of our founders shares will have the
right to vote on the appointment of directors and that holders of a majority of our founders shares may remove a member of the board of
directors for any reason.
These provisions of our amended and restated memorandum
and articles of association may only be amended by a special resolution passed by at least 90% of our ordinary shares voting in a general
meeting. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business
combination, except as required by law, holders of our founders shares and holders of our public shares will vote together as a single
class, with each share entitling the holder to one vote.
Competition
We expect to encounter intense competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical,
human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. Additionally, the number of blank check companies looking for business combination targets has
increased compared to recent years, especially in the last twelve months, and many of these blank check companies are sponsored by entities
or persons that have significant experience with completing business combinations. While we believe there are numerous target businesses
we could potentially acquire with the net proceeds of our initial public offering and the sale of the private warrants, our ability to
compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.
This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore,
in the event we seek shareholder approval of our initial business combination and we are obligated to pay cash for our Class A ordinary
shares, it will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place
us at a competitive disadvantage in successfully negotiating a business combination.
Conflicts of Interest
All of our executive officers and certain of our
directors have or may have fiduciary and contractual duties to certain companies in which they have invested. These entities may compete
with us for acquisition opportunities. If these entities decide to pursue any such opportunity, we may be precluded from pursuing it.
However, we do not expect these duties to present a significant conflict of interest with our search for an initial business combination.
Certain of our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such
officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers
or directors becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present such business combination
opportunity to such entity, subject to their fiduciary duties under Cayman Islands law. We do not believe, however, that the fiduciary
duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
Indemnity
Our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to
us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in
the trust account to below (1) $10.20 per public share or (2) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to
the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a
third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations. We have not asked our sponsor to reserve for such
obligations.
Facilities
We currently maintain our executive offices at
Torre Virreyes, Pedregal No. 24, floor 6-601, Col. Molino del Rey, México, CDMX, 11040. The cost for the space is included
in the up to $10,000 monthly fee that we pay our sponsor for office space, administrative and support services. We consider our current
office space adequate for our current operations.
Employees
We currently have three executive officers and
do not intend to have any full-time employees prior to the completion of our initial business combination. Members of our management
team are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem
necessary to our affairs until we have completed our initial business combination. The amount of time that any such person will devote
in any time period may vary based on whether a target business has been selected for our initial business combination and the current
stage of the business combination process.
Periodic Reporting and Financial Information
We are required to file Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required to disclose certain material events (e.g., changes
in corporate control, acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business and
bankruptcy) in a Current Report on Form 8-K. The SEC maintains an Internet website that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at http://www.sec.gov.
In addition, the Company will provide copies of these documents without charge upon request from us in writing at Torre Virreyes Pedregal
No. 24, Piso 6-601 Col. Molino del Rey, México, CDMX 11040 or by telephone at + 52 55 1100 2470.
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk.
You should consider carefully all of the risks described below, together with the other information contained in this Annual Report, before
making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating results
may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part
of your investment.
Risks Relating to the Business Combination
We may not be able to effect the Business
Combination pursuant to the Business Combination Agreement. If we are unable to do so, we will incur substantial costs associated with
withdrawing from the transaction, and may not be able to find additional sources of financing to cover those costs.
In connection with the Business Combination Agreement,
we have incurred substantial costs researching, planning and negotiating the transaction. These costs include, but are not limited to,
costs associated with securing sources of equity and debt financing, costs associated with employing and retaining third party advisors
who performed the financial, auditing and legal services required to complete the transaction, and the expenses generated by our officers,
executives, managers and employees in connection with the transaction. If, for whatever reason, the transactions contemplated by the Business
Combination Agreement fail to close, we will be responsible for these costs, but will have no source of revenue with which to pay them.
We may need to obtain additional sources of financing in order to meet our obligations, which we may not be able to secure on the same
terms as our existing financing or at all. If we are unable to secure new sources of financing and do not have sufficient funds to meet
our obligations, we will be forced to cease operations and liquidate the trust account.
If the proposed business combination with
Covalto fails, it may be difficult to research a new prospective target business, negotiate and agree to a new business combination, and/or
arrange for new sources of financing by May 10, 2023 (extendable at our sponsor’s option until August 18, 2023), in which case we
would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
Finding, researching, analyzing and negotiating
with Covalto took a substantial amount of time, and if the proposed business combination with Covalto fails, we may not be able to find
a suitable target business and complete our initial business combination within the Business Combination Period. Our ability to complete
our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and
the other risks described herein. If we have not completed our initial business combination within such time period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including interest (less up to $100,000 of interest to pay dissolution expenses and 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 the requirements of other applicable
law.
Risks Relating to Our Business
We have no operating history and no revenues,
and you have no basis on which to evaluate our ability to achieve our business objective.
We were incorporated on February 11, 2021 under
the laws of the Cayman Islands and have no operating results, and all of our activities to date have been related to our formation, our
initial public offering, and our search for a business combination target. Because we lack an operating history, you have no basis upon
which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We have no arrangements or understandings with any prospective target business concerning a business combination and may be
unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any
operating revenues.
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
We have incurred and expect to continue to incur
significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this need for capital are discussed
in the section of this Annual Report titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful.
These factors, among others, raise substantial doubt about our ability to continue as a going concern.
As the number of special purpose acquisition
companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate
an initial business combination.
In recent years and especially in the last
twelve months, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many companies
preparing for an initial public offering. As a result, at times, fewer attractive targets may be available to consummate an initial business
combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive
deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases
in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could
increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and
may result in our inability to consummate an initial business combination on terms favorable to our investors.
Our public shareholders may not be afforded
an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though
a majority of our public shareholders do not support such a 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 elect to redeem their public shares
without voting, and if they do vote, irrespective of whether they vote for or against the proposed business combination, or (2) provide
our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business
combination by means of a tender offer (and thereby avoid the need for a shareholder vote), in each in cash, for an amount payable in
cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the completion of our initial
business combination, including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding
public shares, subject to the limitations described herein. 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. 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. For instance, Nasdaq rules currently allow
us to engage in a tender offer in lieu of a general meeting but would still require us to obtain shareholder approval if we were seeking
to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were
structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek shareholder approval
of such business combination instead of conducting a tender offer.
Your only opportunity to affect the investment
decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash,
unless we seek shareholder approval of such business combination.
At the time of your investment in us, you will
not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, since our board of
directors may complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity
to vote on the business combination, unless we seek such shareholder approval. Accordingly, if we do not seek shareholder approval, your
only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
shareholders in which we describe our initial business combination.
If we seek shareholder approval of our initial
business combination, our sponsor and members of our team have agreed to vote in favor of such initial business combination, regardless
of how our public shareholders vote.
Our amended and restated memorandum and articles of association provides
that, if we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to 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. Currently, shareholders that have agreed to vote ordinary shares owned by them in favor of the business combination
proposal with Covalto own approximately 7.44% of our issued and outstanding shares, in the aggregate, including the founder shares. Accordingly,
we would need only an additional 5,338,292, or approximately 45.98%. As a result, in addition to our initial shareholders’ founder
shares and EBC founder shares, we would need 5,338,292 or 45.98%, of our 11,610,000 public shares to be voted in favor of an initial business
combination in order to have our initial business combination approved. If only the minimum number of shares are voted to establish a
quorum, we would need only 1,157,153, or 9.97%, of our 11,610,000 public shares to be voted in favor of an initial business combination
in order to have such combination approved. Accordingly, if we seek shareholder approval of our initial business combination, the agreement
by our sponsor and our team to vote in favor of our initial business combination will increase the likelihood that we will receive the
requisite shareholder approval for such initial business combination.
The ability of our public shareholders to
redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it
difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public shareholders exercise their redemption rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (so that
we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement
that may be contained in the agreement relating to our initial business combination.
Consequently, if accepting all properly submitted
redemption requests would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination
or less than such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption
of our public shares and the related business combination, and we instead may search for an alternate business combination. Prospective
targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public shareholders to
exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into an agreement for our
initial business combination, we will not know how many shareholders may exercise their redemption rights and, therefore, we will need
to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial
business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us
to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements,
or arrange for third-party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected,
we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third-party financing.
Raising additional third-party financing
may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may
limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public shareholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful increases. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in
need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a
discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the
open market.
The requirement that we complete our initial
business combination within the prescribed time frame (after giving effect to the Extension Period, as applicable) may give potential
target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence
on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to
complete our initial business combination on terms that would produce value for our shareholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must complete our initial business combination within the Business
Combination Period. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that
if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial
business combination with any target business. This risk will increase as we get closer to the end of the 15-month period (or Extension
Period, as applicable). In addition, we may have limited time to conduct due diligence and may enter into our initial business combination
on terms that we would have rejected upon a more comprehensive investigation.
Our sponsor has the right to extend the
term we have to consummate our initial business combination to up to 18 months from the closing of our initial public offering without
providing our shareholders with a corresponding vote or redemption right.
We will initially have until 15 months from
the closing of our initial public offering to consummate our initial business combination, such date being May 10, 2023. However, if we
anticipate that we may not be able to consummate our initial business combination within 15 months, we may, by resolution of our
board of directors at the option of our sponsor, extend the period of time we will have to consummate an initial business combination
by an additional three months, for a total of up to 18 months from the closing of our initial public offering, such date being August
10, 2023, subject to our sponsor contributing $0.10 to the trust account for each unit sold in our initial public offering in the form
of a non-interest bearing loan which would be repaid upon consummation of an initial business combination. Our shareholders will
not be entitled to vote on, or redeem their shares in connection with, such extension being effectuated. Pursuant to the terms of our
amended and restated memorandum and articles of association, in order to extend the period of time to consummate an initial business combination
in such a manner, our sponsor must deposit $1,145,000, into the trust account on or prior to the date of the deadline for the Extension
Period. Our sponsor is not obligated to make such deposits and may have a conflict of interest in determining if and when to make such
deposit by exercising its option to extend the period of time we will have to consummate an initial business combination. This feature
is different than many other special purpose acquisition companies, in which any extension of the company’s period to consummate
an initial business combination would require a vote of the company’s shareholders and in connection with such vote shareholders
would have the right to redeem their public shares.
Our search for a business combination, and
any prospective partner business with which we ultimately consummate a business combination, may be materially adversely affected by the
coronavirus (COVID-19) pandemic and the status of debt and equity markets.
The COVID-19 outbreak has adversely affected,
and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) could adversely
affect, economies and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any
potential target business with which we consummate a business combination could be, or may already have been, materially and adversely
affected. Furthermore, we may be unable to complete a business combination if concerns relating to COVID-19 continue to restrict travel,
limit the ability to have meetings with potential investors or limit the ability to conduct due diligence, 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 events (such as terrorist attacks, natural disasters or a significant
outbreak of other infectious diseases) continue for an extensive 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.
In addition, our ability to consummate a transaction
may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events (such as terrorist
attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of increased market volatility
and decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Finally, the outbreak
of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such
as those related to the market for our securities and cross-border transactions.
We may be adversely affected by economic
uncertainty and volatility in the financial markets, including as a result of the military conflict in Ukraine.
In late February 2022, Russian military forces
invaded Ukraine. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential
for wider conflict may increase financial market volatility and could have adverse effects on regional and global economic markets, including
the markets for certain securities and commodities. Following Russia’s actions, various countries, including the United States,
Canada, the United Kingdom, Germany, and France, as well as the European Union, issued broad-ranging economic sanctions against Russia.
The sanctions consist of the prohibition of trading in certain Russian securities and engaging in certain private transactions, the prohibition
of doing business with certain Russian corporate entities, large financial institutions, officials and persons, and the freezing of Russian
assets. The sanctions include a possible commitment by certain countries and the European Union to remove selected Russian banks from
the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT,” the electronic network that connects
banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. A number
of large corporations and U.S. states have also announced plans to curtail business dealings with certain Russian businesses.
The imposition of the current sanctions (and potential
imposition of further sanctions in response to continued Russian military activity) and other actions undertaken by countries and businesses
may adversely impact various sectors of the Russian economy, and the military action has severe impacts on the Ukrainian economy, including
its exports and food production. The duration of ongoing hostilities and corresponding sanctions and related events cannot be predicted
and may result in a negative impact on the markets and thereby may negatively impact our ability to consummate a Business Combination.
We may not be able to complete our initial
business combination within the prescribed time frame (after giving effect to the Extension Period, as applicable), in which case we would
cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
shareholders may receive only $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our sponsor, officers and directors have agreed
that we must complete our initial business combination within the Business Combination Period. We may not be able to find a suitable target
business and complete our initial business combination within such time period. Our ability to complete our initial business combination
may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
If we are unable to complete our initial business
combination within such 15-month period (extendable at our sponsor’s option to up to 18 months), we will: (1) cease all
operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided
by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights
as shareholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject
in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
In such case, our public shareholders may receive only $10.20 per share, or less than $10.20 per share, on the redemption of their shares,
and our warrants will expire worthless.
If we seek shareholder approval of our initial
business combination, our sponsor, directors, officers, advisors or any of their affiliates may elect to purchase shares or warrants from
public shareholders, which may influence a vote on a proposed business combination and reduce the public “float” of our securities.
If we seek shareholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our initial shareholders, directors, officers, advisors or any of their affiliates may purchase public shares or public warrants
or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination, although they are under no obligation or duty to do so. Such a purchase may include a contractual acknowledgement
that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees
not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or any of their affiliates purchase
shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights or submitted
a proxy to vote against our initial business combination, such selling shareholders would be required to revoke their prior elections
to redeem their shares and any proxy to vote against our initial business combination. The price per share paid in any such transaction
may be different than the amount per share a public shareholder would receive if it elected to redeem its shares in connection with our
initial business combination. The purpose of such purchases could be to vote such shares in favor of our initial business combination
and thereby increase the likelihood of obtaining shareholder approval of our initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business
combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could
be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval
in connection with our initial business combination. This may result in the completion of our initial business combination that may not
otherwise have been possible.
In addition, if such purchases are made, the public
“float” of our Class A ordinary shares or public warrants and the number of beneficial holders of our securities may be reduced,
possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a shareholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or
proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with
these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable, such shareholder may not become aware
of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will describe the various procedures that must be
complied with in order to validly tender or redeem public shares. In the event that a shareholder fails to comply with these procedures,
its shares may not be redeemed.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced
to sell your public shares or warrants, potentially at a loss.
Our public shareholders are entitled to receive
funds from the trust account only upon the earliest to occur of: (1) the completion of our initial business combination, and then only
in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described
herein, (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend our amended and restated
memorandum and articles of association (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if
we do not complete our initial business combination within the Business Combination Period or (B) with respect to any other provision
relating to shareholders’ rights or pre-initial business combination activity and (3) the redemption of our public shares if
we are unable to complete our initial business combination within the Business Combination Period, subject to applicable law and as further
described herein. In no other circumstances will a shareholder have any right or interest of any kind in the trust account. Holders of
warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your
investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Nasdaq may delist our securities from its
exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units Class A ordinary shares and warrants
are listed on Nasdaq. Although, we expect to meet on a pro forma basis Nasdaq’s minimum initial listing standards, which generally
only require that we meet certain requirements relating to shareholders’ equity, market capitalization, aggregate market value of
publicly held shares and distribution requirements, we cannot assure you that our securities will continue to be, listed on Nasdaq in
the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business
combination, we must maintain certain financial, distribution and share price levels. 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 well as certain qualitative 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 any of our securities from trading
on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be
quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity with respect to such securities; |
| ● | a determination that our Class A ordinary shares are a “penny
stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules, possibly resulting
in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage for our company;
and |
| ● | a decreased ability to issue additional securities or obtain
additional financing in the future. |
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 and our Class A ordinary shares and warrants are listed on Nasdaq, our units,
Class A ordinary shares and warrants qualify as covered securities under such statute. Although the states are preempted from regulating
the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and,
if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under such statute and we would
be subject to regulation in each state in which we offer our securities.
If we seek shareholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders
are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15%
of our Class A ordinary shares.
If we seek shareholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our amended and restated memorandum and articles of association provides that a public shareholder, together with any affiliate
of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares
sold in our initial public offering, which we refer to as the “Excess Shares,” without our prior consent. However, we would
not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination
and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you
will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a
result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell
your shares in open market transactions, potentially at a loss.
Because of our limited resources and the
significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.20 per share,
or less in certain circumstances, on our redemption of their shares, and our warrants will expire worthless.
We expect to encounter intense competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical,
human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net
proceeds of our initial public offering and the sale of the private warrants, our ability to compete with respect to the acquisition of
certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation
gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek shareholder approval
of our initial business combination and we are obligated to pay cash for our Class A ordinary shares, it will potentially reduce the resources
available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination. If we are unable to complete our initial business combination, our public shareholders may receive
only approximately $10.20 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire
worthless.
If the funds not being held in the trust
account are insufficient to allow us to operate for at least the Business Combination Period, we may be unable to complete our initial
business combination.
Of the net proceeds of our initial public offering
and the sale of the private warrants, as of December 31, 2022, $125.26 were available to us outside the trust account to fund our working
capital requirements. The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least
the Business Combination Period, assuming that our initial business combination is not completed during that time (after giving effect
to the Extension Period, as applicable). We expect to incur significant costs in pursuit of our acquisition plans. If we are required
to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be
forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to loan funds
to, or invest in, us in such circumstances. Any such loans may be repaid only from funds held outside the trust account or from funds
released to us upon completion of our initial business combination. If we are unable to complete our initial business combination because
we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case,
our public shareholders may receive only $10.20 per share, or less in certain circumstances, and our warrants will expire worthless.
Subsequent to our completion of our initial
business combination, we may be required to 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 the price of our securities, which could cause you
to lose some or all of your investment.
Even if we conduct extensive due diligence on
a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present
with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence,
or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, 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 if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. 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 securities. 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. Accordingly, any shareholder or warrant holder who chooses to remain a shareholder or warrant holder following our initial
business combination could suffer a reduction in the value of their securities. Such shareholders and warrant holders are unlikely to
have a remedy for such reduction in value.
If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than
$10.20 per share.
Our placing of funds in the trust account may
not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than
our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against
the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as
well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our
assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies
held in the trust account, our management will perform an analysis of the alternatives available to it and will enter into an agreement
with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly
more beneficial to us than any alternative.
Making such a request of potential target businesses
may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver,
it may limit the field of potential target businesses that we might pursue. 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
we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree
to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our
initial business combination within the prescribed timeframe (after giving effect to the Extension Period, as applicable), or upon the
exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims
of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption
amount received by public shareholders could be less than the $10.20 per share initially held in the trust account, due to claims of such
creditors.
Our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to
us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in
the trust account to below (1) $10.20 per public share or (2) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to
the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against
a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets
are securities of our company.
Accordingly, our sponsor may not have sufficient
funds available to satisfy those obligations. We have not asked our sponsor to reserve for such obligations, and therefore, no funds are
currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the trust account, the
funds available for our initial business combination and redemptions could be reduced to less than $10.20 per public share. In such event,
we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with
any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public shareholders.
In the event that the proceeds in the trust account
are reduced below the lesser of (1) $10.20 per public share or (2) such lesser amount per share held in the trust account as of the date
of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may
be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations
related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our
sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so in any particular instance. For example, the cost of such legal action may be deemed by the independent directors
to be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome is not likely. If
our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available
for distribution to our public shareholders may be reduced below $10.20 per share.
The securities in which we invest the funds
held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public shareholders may be less than $10.20 per share.
The proceeds held in the trust account are invested
only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S.
government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent
years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal
Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we
do not to complete our initial business combination or make certain amendments to our amended and restated memorandum and articles of
association, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus
any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000
of interest to pay dissolution expenses). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption
amount received by public shareholders may be less than $10.20 per share.
If, after we distribute the proceeds in
the trust account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition
is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our
board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board
of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the trust
account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition
is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor
and/or insolvency laws as a voidable performance. As a result, a liquidator could seek to recover some or all amounts received by our
shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted
in bad faith by paying public shareholders from the trust account prior to addressing the claims of creditors, thereby exposing itself
and us to claims of punitive damages.
If, before distributing the proceeds in
the trust account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition
is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders
and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust
account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable insolvency law, and may
be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our shareholders. To
the extent any liquidation claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation would be reduced.
If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including:
| ● | restrictions on the nature of our investments; and |
| ● | restrictions on the issuance of securities; |
each of which may make it difficult for us to complete our initial
business combination. In addition, we may have imposed upon us burdensome requirements, including:
| ● | registration as an investment company with the SEC; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and compliance with
other rules and regulations that we are currently not subject to. |
In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in
a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning,
holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities
and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate
the post-transaction business or assets for the long-term. We do not plan to buy businesses or assets with a view to resale or profit
from their resale.
We also do not plan to buy unrelated businesses
or assets or to be a passive investor.
We do not believe that our principal activities
will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United
States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company
Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted
to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business
plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses in the manner of
a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment
Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our primary
business objective, which is a business combination; (ii) the redemption of any public shares properly submitted in connection with a
shareholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to
provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within the completion window; and (iii) absent a business combination, our return
of the funds held in the trust account to our public shareholders as part of our redemption of the public shares. If we do not invest
the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to
the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have
not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete our initial
business combination, our public shareholders may receive only approximately $10.20 per share on the liquidation of our trust account
and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $10.20 per share
on the redemption of their shares.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their
interpretation and application may also change from time to time and those changes could have a material adverse effect on our business,
investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied,
could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination,
and results of operations.
Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors and
officers liability insurance for special purpose acquisition companies has changed. The premiums charged for such policies have generally
increased and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable
terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the
post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even after we were to complete an
initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business
combination entity will likely need to purchase additional insurance with respect to any such claims (“run-off insurance”).
The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with
or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
If we are unable to consummate our initial
business combination within the Business Combination Period, our public shareholders may be forced to wait beyond such Business Combination
Period before redemption from our trust account.
If we are unable to consummate our initial business
combination within the Business Combination Period, we will distribute the aggregate amount then on deposit in the trust account, including
interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), pro rata to our
public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described
herein. Any redemption of public shareholders from the trust account shall be effected automatically by function of our amended and restated
memorandum and articles of association prior to any voluntary winding up. If we are required to windup, liquidate the trust account and
distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation
and distribution must comply with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond
the Business Combination Period, before the redemption proceeds of our trust account become available to them and they receive the return
of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date
of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of
our amended and restated memorandum and articles of association and then only in cases where investors have properly sought to redeem
their Class A ordinary shares.
Only upon our redemption or any liquidation will
public shareholders be entitled to distributions if we are unable to complete our initial business combination and do not amend certain
provisions of our amended and restated memorandum and articles of association prior thereto.
Our shareholders may be held liable for
claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation,
any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date
on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result,
a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having
breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing themselves and our company
to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought
against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to
be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would
be guilty of an offence and may be liable to a fine of up to $18,293 and to imprisonment for five years in the Cayman Islands.
We may not hold an annual general meeting
until after the completion of our initial business combination. Our public shareholders will not have the right to appoint directors prior
to the consummation of our Business Combination.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing
on Nasdaq. There is no requirement under the Companies Law for us to hold annual or extraordinary general meetings to appoint directors.
Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to discuss company affairs with management.
As holders of our Class A ordinary shares, our public shareholders also will not have the right to vote on the appointment of directors
prior to completion of our initial business combination. In addition, holders of a majority of our founders shares may remove a member
of the board of directors for any reason.
The grant of registration rights to our
initial shareholders and their permitted transferees may make it more difficult to complete our initial business combination, and the
future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
The holders of the founders shares, private warrants
and any warrants that may be issued on conversion of working capital loans (and any ordinary shares issuable upon the exercise of the
private warrants or warrants issued upon conversion of the working capital loans and upon conversion of the founders shares) are entitled
to registration rights pursuant to a registration rights agreement requiring us to register such securities for resale. We will bear the
cost of registering these securities. The registration and availability of such a significant number of securities for trading in the
public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration
rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target
business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact
on the market price of our Class A ordinary shares that is expected when the Class A ordinary shares owned by our initial shareholders
or their permitted transferees, our private warrants or warrants issued in connection with working capital loans are registered for resale.
Because we are not limited to a particular
industry or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the
merits or risks of any particular target business’s operations.
We may consummate a business combination with
a company in any industry 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 early stages of development or growth, 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 securities will not ultimately prove to be less favorable to investors than a direct investment,
if an opportunity were available, in a target business.
Past performance by our management team
and their affiliates may not be indicative of future performance of an investment in the Company.
Information regarding performance by our management
team and their affiliates is presented for informational purposes only. Past performance by our management team and their affiliates is
not a guarantee either (1) that we will be able to identify a suitable candidate for our initial business combination or (2) of success
with respect to any business combination we may consummate. You should not rely on the historical record of our management team and their
affiliates as indicative of our future performance of an investment in the company or the returns the company will, or is likely to, generate
going forward.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and
guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business
combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not
meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does
meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does
not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it
difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount
of cash. In addition, if shareholder approval of the transaction is required by applicable law or stock exchange listing requirement,
or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our initial business combination, our public shareholders may receive only approximately $10.20 per share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless.
We may seek acquisition opportunities with
an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business
combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings,
we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in
a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition
and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not
have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability
to control or reduce the chances that those risks will adversely impact a target business.
We may seek business combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.
We may seek business combination opportunities
with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements,
to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as
successful as we anticipate.
To the extent we complete our initial business
combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent
in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our
team will endeavor to evaluate the risks inherent in a particular prospective partner business and its operations, we may not be able
to properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to
achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains
that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control
or reduce the chances that those risks and complexities will adversely impact a prospective partner business. Such combination may not
be as successful as a combination with a smaller, less complex organization.
We are not required to obtain an opinion
from an independent investment banking firm or from another independent entity that commonly renders valuation opinions, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless we complete our initial business combination
with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm, or from another independent
entity that commonly renders valuation opinions, that the price we are paying is fair to our company from a financial point of view. If
no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value
based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents
or proxy solicitation materials, as applicable, related to our initial business combination.
We may issue additional Class A ordinary
shares or preferred shares to complete our initial business combination or under an employee incentive plan after completion of our initial
business combination. We may also issue Class A ordinary shares upon the conversion of the founders shares at a ratio greater than one-to-one
at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum
and articles of association. Any such issuances would substantially dilute the interest of our shareholders and likely present other risks.
Our amended and restated memorandum and articles
of association authorize the issuance of ordinary shares, including 500,000,000 Class A ordinary shares, par value $0.0001 per share,
and 50,000,000 Class B ordinary shares, par value $0.0001 per share, as well as 5,000,000 preferred shares, par value $0.0001. As of December
31, 2022 there are 488,390,000 and 49,066,583 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively,
available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable
upon conversion of the Class B ordinary shares, and 5,000,000 authorized but unissued preferred shares available for issuance.
We may issue a substantial number of additional
Class A ordinary shares, and may issue preferred shares, in order to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue Class A ordinary shares upon conversion of the Class B ordinary
shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
as set forth herein. However, our amended and restated memorandum and articles of association will provide, among other things, that prior
to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (1) receive funds from
the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment
to our amended and restated memorandum and articles of association to (x) extend the time we have to consummate a business combination
beyond the Business Combination Period or (y) amend the foregoing provisions. The issuance of additional ordinary shares or preferred
shares:
| ● | may significantly dilute the equity interest of investors in our initial public offering; |
| | |
| ● | may subordinate the rights of holders of Class A ordinary shares if preferred shares are
issued with rights senior to those afforded our Class A ordinary shares; |
| | |
| ● | could cause a change in control if a substantial number of Class A 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 |
| | |
| ● | may adversely affect prevailing market prices for our units, Class A ordinary shares and/or
warrants. |
Unlike certain other blank check companies,
our initial shareholder will receive additional Class A ordinary shares if we issue shares to consummate an initial business combination.
The founders shares will automatically convert
into Class A ordinary shares on the first business day following the completion of our initial business combination on a one-for-one basis,
subject to adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities convertible
or exercisable for Class A ordinary shares, are issued or deemed issued in excess of the amounts issued in our initial public offering
and related to the closing of our initial business combination, the ratio at which founders shares will convert into Class A ordinary
shares will be adjusted (subject to waiver by holders of a majority of the Class B ordinary shares then in issue) so that the number of
Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis,
20% of the sum of our ordinary shares issued and outstanding upon the completion of our initial public offering plus the number of Class
A ordinary shares and equity-linked securities issued or deemed issued in connection with our initial business combination (net of
redemptions), excluding the EBC founder shares and any Class A ordinary shares or equity-linked securities issued, or to be issued,
to any seller in our initial business combination and any private warrants issued to our sponsor, an affiliate of our sponsor or any of
our officers or directors. This is different than certain other blank check companies in which the initial shareholder will only be issued
an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
We may be a passive foreign investment company,
or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion
thereof) that is included in the holding period of a beneficial owner of units, Class A ordinary shares or warrants who or that is for
United States federal income tax purposes: (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity
treated as a corporation for United States federal income tax purposes) that is created or organized (or treated as created or organized)
in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions
of the trust, or (B) it has in effect a valid election to be treated as a U.S. person (a “U.S. Holder”), such U.S. Holder
may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC
status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception. Depending on the
particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that
we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current
taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, moreover, will not be determinable until after
the end of such taxable year. If we determine we are a PFIC for any taxable year (of which there can be no assurance), we will endeavor
to provide to a U.S. Holder such information as the Internal Revenue Service may require, including a PFIC annual information statement,
in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance
that we will timely provide such required information, and such election would be unavailable with respect to our warrants in all cases.
We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules.
We may reincorporate in another jurisdiction
in connection with our initial business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection with our initial business
combination and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction in which the target
company or business is located or in another jurisdiction. The transaction may require a shareholder to recognize taxable income in the
jurisdiction in which the shareholder is a tax resident or in which its members are resident if it is a tax transparent entity. We do
not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding taxes or other
taxes with respect to their ownership of us after the reincorporation.
Resources could be wasted in researching
acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.20
per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We anticipate 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 we decide not to complete a
specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination
for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred
which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to
complete our initial business combination, our public shareholders may receive only approximately $10.20 per share, or less in certain
circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We may seek acquisition opportunities in
acquisition targets that may be outside of our management’s areas of expertise.
We will consider a business combination in sectors
which may be outside of our management’s areas of expertise if such business combination candidate is presented to us and we determine
that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue an acquisition outside
of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or
operation, and the information contained in this Annual Report regarding the areas of our management’s expertise would not be relevant
to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess
all of the significant risk factors relevant to such acquisition. Accordingly, any shareholders or warrant holders who choose to remain
a shareholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities.
Such shareholders or warrant holders are unlikely to have a remedy for such reduction in value.
We are dependent upon our officers and directors
and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals. We believe that our success depends on the continued service of our officers and directors, at least until
we have completed our initial business combination. In addition, our officers and directors are not required to commit any specified amount
of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including
identifying potential business combinations and monitoring the related due diligence. Moreover, certain of our officers and directors
have time and attention requirements for investment funds of which affiliates of our sponsor are the investment managers. We do not have
an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services
of one or more of our directors or officers could have a detrimental effect on us.
Our ability to successfully effect our initial
business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us
following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory
positions following our initial business combination, it is likely that some or all of the management of the target business will remain
in place.
While we closely scrutinize any individuals we
engage after our initial 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 company regulated by the SEC, which could cause us to have to
expend time and resources helping them become familiar with such requirements.
In addition, the officers and directors of an
acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate
following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to
remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
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 our initial 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 may be able to remain with the
company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
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 us after the completion of our initial business combination. The personal and financial interests of such individuals may influence
their motivation in identifying and selecting a target business, subject to their fiduciary duties under Cayman Islands law. However,
we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the
determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty,
however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure
you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any
of our key personnel will remain with us will be made at the time of our initial business combination.
We may have limited ability to assess the
management of a prospective target business and, as a result, we may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business’s management may
be limited due to a lack of time, resources or information.
Our assessment of the capabilities of the target’s
management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should
the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively impacted. Accordingly, shareholders or warrant holders who choose
to remain shareholders or warrant holders following our initial business combination could suffer a reduction in the value of their securities.
Such shareholders or warrant holders are unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate
may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could
negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that
certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our
initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
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 conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to,
and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations
and our search for a business combination and their other businesses. We do not intend to have more than one full-time employee prior
to the completion of our initial business combination. Each of our officers is engaged in several other business endeavors for which he
may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to
our affairs. Our independent directors may also serve as officers and board members for other entities. If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels,
it could limit their ability to devote time to our affairs, which may have a negative impact on our ability to complete our initial business
combination.
Certain of our officers and directors are
now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be
conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should
be presented.
We are engaged in the business of identifying
and combining with one or more businesses. Our sponsor and officers and directors are, or may in the future become, affiliated with entities
that are engaged in a similar business, and they are not prohibited from sponsoring, or otherwise becoming involved with, other blank
check companies prior to us completing our initial business combination. Moreover, certain of our officers and directors have time and
attention requirements for investment funds of which affiliates of our sponsor are the investment managers. Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe
certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to other entities prior to its presentation to us, subject to their fiduciary duties under Cayman Islands law.
Our officers, directors, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits
our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with our sponsor, directors or officers, although we do not intend to do so. Nor
do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types
conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
In particular, affiliates of our sponsor have
invested in industries as diverse as financial services, medical technologies, entertainment and IT services. As a result, there may be
substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive
target for such other affiliates.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers or directors
which may raise potential conflicts of interest.
In light of the involvement of our sponsor, officers
and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers and directors.
Our officers and directors also serve as officers and board members for other entities. Such entities may compete with us for business
combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete
our initial business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning
a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction
with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business
combination.
Since our initial shareholders will lose
their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they
may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our
initial business combination.
As of December 31, 2022, after giving effect to
the Rollover Redemption (as defined below) our sponsor owned an aggregate of 933,417 founders shares, which will be worthless if we do
not complete an initial business combination. In addition, after giving effect to the Rollover Redemption, our sponsor owns 1,706,667
private warrants, that will also be worthless if we do not complete a business combination. Each private warrant may be exercised for
one Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided herein.
The founders shares are identical to the ordinary
shares included in the units being sold in our initial public offering except that: (1) prior to our initial business combination, only
holders of the founders shares have the right to vote on the appointment of directors and holders of a majority of our founders shares
may remove a member of the board of directors for any reason; (2) the founders shares are subject to certain transfer restrictions; (3)
our initial shareholders have entered into a letter agreement with us, pursuant to which they have agreed to waive: (x) their redemption
rights with respect to their founders shares and any public shares held by them in connection with the completion of our initial business
combination (and not seek to sell its shares to us in any tender offer we undertake in connection with our initial business combination);
(y) their redemption rights with respect to their founders shares and any public shares held by them in connection with a shareholder
vote to approve an amendment to our amended and restated memorandum and articles of association (A) 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 to modify 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 Business
Combination Period or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination
activity; and (z) their rights to liquidating distributions from the trust account with respect to any founders shares they hold if we
fail to complete our initial business combination within the Business Combination Period (although they will be entitled to liquidating
distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination
within the prescribed time frame (after giving effect to the Extension Period, as applicable)); (4) the founders shares will automatically
convert into our Class A ordinary shares on the first business day following the completion of our initial business combination on a one-for-one basis
subject to adjustment pursuant to certain anti-dilution rights and (5) the founders shares are entitled to registration rights. Our
directors and officers have also entered into the letter agreement with respect to public shares acquired by them, if any.
The personal and financial interests of our sponsor,
officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial
business combination and influencing the operation of the business following the initial business combination. This risk may become more
acute as the 15-month deadline (extendable at our sponsor’s option to up to 18 months), following the closing of our initial
public offering nears, which is the deadline for the completion of our initial business combination.
We may issue our shares to investors in
connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.
In connection with our initial business combination,
we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a price of $10.00 per share or
which approximates the per-share amounts in our trust account at such time, which is generally approximately $10.20. The purpose
of such issuances will be to enable us to provide sufficient liquidity to the post-business combination entity. The price of the
shares we issue may therefore be less, and potentially significantly less, than the market price for our shares at such time.
Our initial shareholders stand to make a
substantial profit on the founder shares even if an initial business combination subsequently declines in value or is unprofitable for
our public shareholders, and may have an incentive to recommend such an initial business combination to our shareholders.
Our initial shareholders paid an aggregate of
$25,000, or approximately $0.009 per founder share. As a result of the low acquisition cost of our founder shares, our initial shareholders
could make a substantial profit even if we select and consummate an initial business combination with an acquisition target that subsequently
declines in value or is unprofitable for our public shareholders. Thus, they may have more of an economic incentive for us to enter into
an initial business combination with a riskier, weaker-performing or financially unstable business, or an entity lacking an established
record of revenues or earnings, than would be the case if such parties had paid the full offering price for their founder shares.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our shareholders’ investment in us.
Although we have no commitments as of the date
of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial public
offering, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies
held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust
account.
Nevertheless, the incurrence of debt could have
a variety of negative effects, including:
| ● | default and foreclosure on our assets if our operating revenues after an initial business
combination are insufficient to repay our debt obligations; |
| | |
| ● | 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; |
| | |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt is payable
on demand; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt security is outstanding; |
| | |
| ● | our inability to pay dividends on our Class A ordinary shares; |
| | |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions
and other general corporate purposes; |
| | |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and
in the industry in which we operate; |
| | |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive
conditions and adverse changes in government regulation; and |
| | |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures,
acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors
who have less debt. |
We may be able to complete only one business
combination with the proceeds of our initial public offering and the sale of the private warrants, which will cause us to be solely dependent
on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations
and profitability.
We may effectuate our initial business combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able
to effectuate our initial business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial
business combination with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory
risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses,
unlike other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. Accordingly, the prospects for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset; or |
| | |
| ● | dependent upon the development or market acceptance of a single or limited number of products,
processes or services. |
This lack of diversification may subject us to
numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry
in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several
businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent
on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens
and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional
risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating
business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business
combination with a private company about which little information is available, which may result in a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek
to effectuate our initial business combination with a privately held company. Very little public information generally exists about private
companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of
limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
We expect to need to comply with the rules
of Nasdaq that require our initial business combination to occur with one or more target businesses having an aggregate fair market value
equal to at least 80% of the assets held in the trust account at the time of the agreement to enter into the initial business combination.
The rules of Nasdaq require that our initial business
combination occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held
in the trust account (excluding taxes payable on the income earned on the trust account) at the time of the agreement to enter into the
initial business combination. This restriction may limit the type and number of companies that we may complete a business combination
with. If we are unable to locate a target business or businesses that satisfy this fair market value test, our public shareholders may
receive only approximately $10.20 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants
will expire worthless. If we are not then listed on Nasdaq for whatever reason, we would not be required to satisfy the foregoing 80%
fair market value test and could complete a business combination with a target business having a fair market value substantially below
80% of the balance in the trust account.
EarlyBirdCapital, Inc. may have a conflict
of interest in rendering services to us in connection with our initial business combination.
We have engaged EarlyBirdCapital, Inc. to assist
us in connection with our initial business combination. We will pay EarlyBirdCapital, Inc. a cash fee for such services upon the consummation
of our initial business combination in an aggregate amount equal to 3.5% of the total gross proceeds raised in our initial public offering.
The EBC founder shares will also be worthless if we do not consummate an initial business combination. These financial interests may result
in EarlyBirdCapital, Inc. having a conflict of interest when providing the services to us in connection with an initial business combination.
Our management may not be able to maintain
control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination
so that the post-transaction company in which our public shareholders own shares will own less than 100% of the equity interests
or assets of a target business, but we will complete such business combination only if the post-transaction company owns or acquires
50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business
sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider
any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities
of the target, our shareholders prior to our initial business combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us in our initial business combination transaction. For example,
we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the issued
and outstanding capital stock or shares of a target. In this case, we would acquire a 100% interest in the target.
However, as a result of the issuance of a substantial
number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our issued
and outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine
their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired.
Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial
majority of our shareholders do not agree.
Our amended and restated memorandum and articles
of association will not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in
an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (such
that we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement
that may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial
business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed
their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares
to our sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be required
to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business
combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we
instead may search for an alternate business combination.
In order to effectuate an initial business
combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments.
We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments,
in a manner that will make it easier for us to complete our initial business combination that some of our shareholders may not support.
In order to effectuate an initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. For example,
blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate
an initial business combination. Amending our amended and restated memorandum and articles of association will require at least a special
resolution of our shareholders as a matter of Cayman Islands law. A resolution is deemed to be a special resolution as a matter of Cayman
Islands law where it has been approved by either (1) at least two-thirds (or any higher threshold specified in a company’s
articles of association) of a company’s shareholders at a general meeting for which notice specifying the intention to propose the
resolution as a special resolution has been given or (2) if so authorized by a company’s articles of association, by a unanimous
written resolution of all of the company’s shareholders. Our amended and restated memorandum and articles of association provides
that special resolutions must be approved either by at least two-thirds of our shareholders who attend and vote at a general meeting
(i.e., the lowest threshold permissible under Cayman Islands law) (other than amendments relating to the appointment or removal of directors
prior to our initial business combination, which require the approval of at least 90% of our ordinary shares voting in a general meeting),
or by a unanimous written resolution of all of our shareholders. We cannot assure you that we will not seek to amend our amended and restated
memorandum and articles of association or governing instruments or extend the time to consummate an initial business combination in order
to effectuate our initial business combination.
The provisions of our amended and restated
memorandum and articles of association that relate to our pre-business combination activity (and corresponding provisions of
the agreement governing the release of funds from our trust account) may be amended with the approval of holders of at least two-thirds
of our ordinary shares who attend and vote at a general meeting, which is a lower amendment threshold than that of some other blank check
companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association and the trust
agreement to facilitate the completion of an initial business combination that some of our shareholders may not support.
Some other blank check companies have a provision
in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business combination
activity, without approval by holders of a certain percentage of the company’s shares. In those companies, amendment of these provisions
typically requires approval by holders holding between 90% and 100% of the company’s public shares. Our amended and restated memorandum
and articles of association provide that any of its provisions, including those related to pre-business combination activity (including
the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account and not
release such amounts except in specified circumstances), may be amended if approved by holders of at least two-thirds of our ordinary
shares who attend and vote in a general meeting, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our ordinary shares (other than amendments relating to the appointment
or removal of directors prior to our initial business combination, which require the approval of at least 90% of our ordinary shares voting
in a general meeting). Our initial shareholders, who collectively beneficially own 20% of our ordinary shares upon the closing of our
initial public offering (excluding the EBC founder shares), may participate in any vote to amend our amended and restated memorandum and
articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be
able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination
behavior more easily than some other blank check companies, and this may increase our ability to complete our initial business combination
with which you do not agree. However, our amended and restated memorandum and articles of association prohibits any amendment of its provisions
(A) 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 to modify 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 Business Combination Period or (B) with respect to any other provision relating to shareholders’
rights or pre-initial business combination activity, unless we provide public shareholders with the opportunity to redeem their public
shares. Furthermore, our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose
such an amendment unless we provide our public shareholders with the opportunity to redeem their public shares. In certain circumstances,
our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
We may amend the terms of the warrants in
a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding
public warrants.
Our warrants are 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, but
requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely
affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner
adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our
ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited,
examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise
period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
Certain agreements related to our initial
public offering may be amended without shareholder approval.
Each of the agreements related to our initial
public offering to which we are a party, other than the warrant agreement and the investment management trust agreement, may be amended
without shareholder approval. These agreements contain various provisions that our public shareholders might deem to be material. For
example, our letter agreement and the underwriting agreement contain certain lock-up provisions with respect to the founders shares,
private warrants and other securities held by our initial shareholders, officers and directors.
Amendments to such agreements would require the
consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons,
including to facilitate our initial business combination. While we do not expect our board of directors to approve any amendment to any
of these agreements prior to our initial business combination, it may be possible that our board of directors, in exercising its business
judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any material amendment
entered into in connection with the completion of our initial business combination will be disclosed in our proxy solicitation or tender
offer materials, as applicable, related to such initial business combination, and any other material amendment to any of our material
agreements will be disclosed in a filing with the SEC. Any such amendments would not require approval from our shareholders, may result
in the completion of our initial business combination that may not otherwise have been possible, and may have an adverse effect on the
value of an investment in our securities. For example, amendments to the lock-up provision discussed above may result in our initial
shareholders selling their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of
our securities.
We may be unable to obtain additional financing
to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
Although we believe that the net proceeds of our
initial public offering and the sale of the private warrants will be sufficient to allow us to complete our initial business combination,
we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering and the
sale of the private warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of
the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from shareholders
who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in
connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business
combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to complete our initial 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, even if
we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection
with or after our initial business combination. If we are unable to complete our initial business combination, our public shareholders
may receive only approximately $10.20 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants
will expire worthless.
Our initial shareholders will control the
appointment of our board of directors until completion of our initial business combination and will hold a substantial interest in us.
As a result, they will appoint all of our directors prior to our initial business combination and may exert a substantial influence on
actions requiring shareholder vote, potentially in a manner that you do not support.
Our initial shareholders own 20% of our issued
and outstanding ordinary shares (excluding the EBC founder shares). In addition, prior to our initial business combination, only the founders
shares, all of which are held by our initial shareholders, will have the right to vote on the appointment of directors, and holders of
a majority of our founders shares may remove a member of the board of directors for any reason.
Neither our initial shareholders nor, to our knowledge,
any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this Annual
Report. Factors that would be considered in making such additional purchases would include consideration of the current trading price
of our Class A ordinary shares.
In addition, as a result of their substantial
ownership in our company, our initial shareholders may exert a substantial influence on other actions requiring a shareholder vote, potentially
in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association and approval
of major corporate transactions. If our initial shareholders purchase any Class A ordinary shares in the aftermarket or in privately negotiated
transactions, this would increase their influence over these actions. Accordingly, our initial shareholders will exert significant influence
over actions requiring a shareholder vote at least until the completion of our initial business combination.
A provision of our warrant agreement may
make it more difficult for us to consummate an initial business combination.
If (x) we issue additional Class A ordinary shares
or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a
Newly Issued Price of less than $9.20 per Class A ordinary share, (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date
of the consummation of our initial business combination (net of redemptions), and (z) the Market Value is below $9.20 per share, the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the
Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target
business.
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 public
warrants 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 our Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period commencing once
the warrants become exercisable and ending on the third trading day prior to proper notice of such redemption provided that on the date
we give notice of redemption to the warrant holders. 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 to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be
disadvantageous for you to do so; (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants;
or (3) 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. None of the private warrants will be redeemable by us so long as they are held by our sponsor
or its permitted transferees.
Our warrants and founders shares may have
an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase up to 8,587,500
Class A ordinary shares, at a price of $11.50 per warrant, as part of the units offered in our initial public offering and simultaneously
with the closing of our initial public offering, we issued in a private placement an aggregate of 5,500,000 private warrants, each exercisable
to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided in our final prospectus relating
to our initial public offering. Our initial shareholders currently hold 933,417 founders shares. In addition, if our sponsor, an affiliate
of our sponsor or certain of our officers and directors make any working capital loans, up to $1,500,000 of such loans may be converted
into warrants, at the price of $1.00 per warrant, at the option of the lender. Such warrants would be identical to the private warrants.
To the extent we issue ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial number of
additional Class A ordinary shares upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle
to a target business. Any such issuance will increase the number of issued and outstanding Class A ordinary shares and reduce the value
of the Class A ordinary shares issued to complete the business transaction. Therefore, our warrants and founders shares may make it more
difficult to effectuate a business combination or increase the cost of acquiring the target business.
The private warrants are identical to the warrants
sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or its permitted transferees:
(1) they will not be redeemable by us; (2) they (including the ordinary shares issuable upon exercise of these warrants) may not, subject
to certain limited exceptions, be transferred, assigned or sold by our sponsor; (3) they may be exercised by the holders on a cashless
basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.
Because each unit contains three-quarters
of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains three-quarters of one
warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole warrants
will be eligible to trade. This is different from other offerings similar to ours whose units include one share of common stock and one
whole warrant to purchase one share. We have established the components of the units in this way in order to reduce the dilutive effect
of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for three-quarters of
the number of shares compared to units that each contain a whole warrant to purchase one share, thus making us, we believe, a more attractive
merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included a warrant
to purchase one whole share.
A market for our securities may not develop,
which would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for
our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market
can be established and sustained.
Because we must furnish our shareholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules require that a proxy statement
with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial
statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer
documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in
accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or U.S. GAAP, or international
financing reporting standards as issued by the International Accounting Standards Board, 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. These financial statement requirements may limit the pool of potential target businesses we may acquire
because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance
with federal proxy rules and complete our initial business combination within the prescribed time frame (after giving effect to the Extension
Period, as applicable).
We are an emerging growth company and a
smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to
investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our
ordinary shares held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case
we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict whether investors will find our
securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result
of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides
that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means
that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Additionally, we are a “smaller reporting
company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds
$250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during
such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the
end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make
comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2023. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify
as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with
which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such acquisition.
We have identified a material weakness in
our internal control over financial reporting. If our remediation of such material weaknesses is not effective, or if we identify additional
material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, our ability
to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
In preparing our financial statements as of June 28,
2021, for the period from February 11, 2021 (inception) through June 28, 2021, and reviewing our interim financial statements
as of September 30, 2021, we identified a material weakness in our internal control over financial reporting, as defined in the SEC
guidelines for public companies. The material weakness identified relates to ineffective review controls over the financial statement
preparation process including the valuation of complex financial instruments. This was identified through errors that were identified
and corrected during our Independent Registered Public Accounting Firm review of the draft financial statements prior to filing.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material
weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
If we identify any new material weaknesses in
the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or
disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable
to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange
listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot
assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future
material weaknesses.
We may face litigation and other risks as
a result of the material weakness in our internal control over financial reporting.
As a result of the material weakness identified
in our internal control over financial reporting and certain other matters raised or that may in the future be raised by the SEC, we face
potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual
claims or other claims arising from the material weaknesses in our internal control over financial reporting and the preparation of our
financial statements. As of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide
no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not,
could have a material adverse effect on our business, results of operations and financial condition or our ability to complete an initial
business combination.
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. As a result, it may be difficult for investors to effect service of process within the United States upon
our directors or 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 and 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 what they would be under 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, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law.
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 (1) 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 (2) 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, 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.
Provisions in our amended and restated memorandum
and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our Class A ordinary shares and could entrench management.
Our amended and restated memorandum and articles
of association contains provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best
interests. These provisions include two-year director terms and the ability of the board of directors to designate the terms of and
issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise
could involve payment of a premium over prevailing market prices for our securities.
After our initial business combination,
it is possible that a majority of our directors and officers will live outside the United States and all or substantially all of our assets
will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their other legal
rights.
It is possible that after our initial business
combination, a majority of our directors and officers will reside outside of the United States and all or substantially all of our assets
will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United
States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United
States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.
If we effect a business combination with
a company located in Mexico or outside of the United States, we would be subject to a variety of additional risks that may negatively
impact our operations.
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 likely 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.
If our management following our initial
business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws,
which could lead to various regulatory issues.
Following our initial business combination, any
or all of our management could resign from their positions as officers of the Company, and the management of the target business at the
time of the business combination could remain in place. Management of the target business may not be familiar with U.S. securities laws.
If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws.
This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our initial business combination,
substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations
in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political,
social and government policies, developments and conditions in the country in which we operate.
The economic, political and social conditions,
as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be
uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future
such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in
certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find
an attractive target business with which to consummate our initial business combination and if we effect our initial business combination,
the ability of that target business to become profitable.
We will be subject to changing laws and
regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of
non-compliance.
We are subject to rules and regulations of various
governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose
securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing
laws and regulations are likely to continue to result in increased general and administrative expenses and a diversion of management time
and attention from our search for a business combination target to compliance activities.
Moreover, because these laws, regulations and
standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions
to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may
be subject to penalty and our business may be harmed.
Cyber incidents or attacks directed at us
could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss.
Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court
for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the
exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any
other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity
purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum
provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant
agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District
of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented
to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action
brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process
made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action
as agent for such warrant holder.
This choice-of-forum provision may limit
a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may
discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our team and board of directors.
Risks Associated with Acquiring and Operating a Business Outside
the United States
If we effect a business combination with
a company located in Mexico or outside the United States, we would be subject to a variety of additional risks that may negatively impact
our operations.
If we are successful in consummating a business
combination with a target business in Mexico, or if we effect a business combination with a company located in another foreign country,
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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tariffs and trade barriers; |
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regulations related to customs and import/export matters; |
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longer payment cycles; |
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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
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deterioration of political relations with the United States,
which could result in uncertainty and/or changes in or to existing trade treaties. |
In particular, if we acquire a target business
in Mexico, we would be subject to the risk of changes in economic conditions, social conditions and political conditions inherent in Mexico,
including changes in laws and policies that govern foreign investment, as well as changes in United States laws and regulations relating
to foreign trade and investment, including the North American Free Trade Agreement.
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.
Because of the costs and difficulties inherent
in managing cross-border business operations, our results of operations may be negatively impacted.
Managing a business, operations, personnel or
assets in another country is challenging and costly. Any management that we may have (whether based abroad or in the U.S.) may be inexperienced
in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labor practices.
Even with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border business operations,
personnel and assets can be significant (and much higher than in a purely domestic business) and may negatively impact our financial and
operational performance.
We may re-incorporate in another jurisdiction
in connection with our initial business combination, and the laws of such jurisdiction will likely govern all of our material agreements
and we may not be able to enforce our legal rights.
In connection with our initial business combination,
we may relocate the home jurisdiction of our business from the Cayman Islands to Mexico or another jurisdiction. If we determine to do
this, the laws of such jurisdiction would likely govern all of our material agreements. 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 or the Cayman Islands. 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. Any such reincorporation may subject us to foreign regulations that could materially and adversely affect our business.
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.
Exchange rate fluctuations and currency
policies may cause a prospective partner business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. prospective
partner, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions,
if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our prospective partner
regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value
of such currency against our reporting currency may affect the attractiveness of any prospective partner business or, following consummation
of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value
against the dollar prior to the consummation of our initial business combination, the cost of a prospective partner business as measured
in dollars will increase, which may make it less likely that we are able to consummate such transaction.