ITEM 1. BUSINESS
Origo Acquisition
Corporation (the “Company”, “we”, “our” and “us”) is a blank check company formed
on August 26, 2014 under the name CB Pharma Acquisition Corp. for the purpose of entering into a merger, share exchange, asset
acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.
The Company’s efforts in identifying a prospective target business is not limited to a particular industry or geographic
region of the world.
On December 17, 2014,
we closed our initial public offering (the “IPO” or “initial public offering”) of 4,000,000 units (“Unit”),
with each unit consisting of one ordinary share, par value $0.0001 per share (“Ordinary Share”), one right (“Right”)
to receive one-tenth of one Ordinary Share upon consummation of an initial business combination (a “business combination”)
and one redeemable warrant (“Warrant”) entitling the holder to purchase one-half of one Ordinary Share at a price of
$11.50 per full share commencing on our completion of a business combination. Simultaneous with the consummation of the initial
public offering, we consummated the private placement of 285,000 private Units (“Private Placement Units”) at a price
of $10.00 per Private Placement Unit, generating total proceeds of $2,850,000. Of the Private Placement Units, 265,000 were purchased
by Fortress Biotech, Inc. (“Fortress”), formerly known as Coronado Biosciences, Inc., an affiliate of the Company’s
former executive officers and the original holder of a majority of the Company’s ordinary shares prior to the IPO, and 20,000
were purchased by EarlyBirdCapital, Inc. (“EBC”), the representative of the underwriters in the IPO.
On December 24, 2014,
we consummated the sale of an additional 200,000 Units upon the partial exercise of the over-allotment option (the “Over-Allotment”).
The Units from the IPO (including the Over-Allotment) were sold at an offering price of $10.00 per Unit, generating total gross
proceeds of $42,000,000. In a private sale that took place simultaneously with the consummation of the exercise of the Over-Allotment,
EBC purchased an additional 1,000 Private Placement Units at $10.00 per unit for a total consideration of $10,000. An aggregate
amount of approximately $42.85 million (approximately $10.20 per Unit) from the net proceeds of the sale of the Units in the IPO,
the Over-Allotment, and the Private Placement Units, net of fees of approximately $1.84 million associated with the Initial Public
Offering, inclusive of approximately $1.37 million of underwriting fees, was placed in a trust account (“trust account”)
immediately after the sales and invested in U.S. government treasury bills.
Prior to our IPO,
our original initial shareholders purchased an aggregate of 1,050,000 initial shares (the “Initial Shares”) from us
for an aggregate of $25,000.
On May 20, 2016, we
entered into an agreement (the “Transfer Agreement”) with the holders of the initial shares (the holders of the initial
shares (including the transferees described herein) being referred to as the “initial shareholders”) and each of EJF
Opportunities, LLC, Stephen B. Pudles, Jose M. Aldeanueva, Jeffrey J. Gutovich Profit Sharing Plan and Barry Rodgers (collectively
being referred to as the “investors”) pursuant to which the initial shareholders transferred to the investors the 1,050,000
initial shares held by them. Our former directors also (i) appointed Edward J. Fred, Jose M. Aldeanueva, Stephen B. Pudles, Jeffrey
J. Gutovich and Barry Rodgers as members of our board of directors and Messrs. Fred and Aldeanueva as Chief Executive Officer and
President and Chief Financial Officer, Treasurer and Secretary of the Company, respectively (such new officers and directors collectively
referred to herein as the “Current Management”), and (ii) tendered their resignations to be effective upon approval
of the Initial Extension (as defined below) in June 2016.
On June 10, 2016,
we held an extraordinary general meeting of shareholders (the “June Meeting”). At the June Meeting, the shareholders
approved each of the following items: (i) the extension of the date by which we had to consummate a business combination from June
12, 2016 to December 12, 2016 (the “Initial Extension”), (ii) an amendment to the amended and restated memorandum and
articles of association (the “charter”) to allow the holders of public shares (the “Public Shareholders”)
to elect to convert their public shares (the “public shares”) into their pro rata portion of the funds held in the
trust account, and (iii) to change the Company’s name from “CB Pharma Acquisition Corp.” to “Origo Acquisition
Corporation” (the “Name Change”). Under Cayman Islands law, the amendments to the charter took effect upon their
approval.
At the June
Meeting, shareholders holding 1,054,401 public shares exercised their right to convert such public shares into a pro rata
portion of the funds in the trust account. As a result, approximately $10.76 million (or approximately $10.20 per share)
was removed from the trust account to pay such holders. In connection with the Initial Extension, our Current Management
provided a loan to us of $0.20 for each public share that was not converted, for an aggregate amount of approximately
$629,000, which was deposited this in the trust account. In addition to the contribution, the Current Management
(the “Lender”) loaned to us an additional amount of approximately $371,000 for our working capital needs, for
an aggregate amount of $1,000,000. The loan was evidenced by a promissory note (the “Note”) and was
unsecured, non-interest bearing and is payable at our consummation of a business combination. As issued, the Note did not
bear interest, and up to $175,000 of the principal amount of the Note is convertible at the option of the Lender into 17,500
private placement units (consisting of one ordinary share, one right and one warrant for one-half of an ordinary share) at
$10.00 per unit. The terms of the units are identical to the units issued by us in our initial public offering except that
the warrants included in such units are non-redeemable by us and will be exercisable for cash or on a “cashless”
basis, in each case, if held by the initial holders or their permitted transferees. If the Current Management converts the
entire $175,000 of the principal balance of the Note, they would receive 17,500 private placement units. If a business
combination is not consummated, the Note will not be repaid by us and all amounts owed thereunder by us will be forgiven
except to the extent that we have funds available outside of the trust account.
On December 12, 2016,
we held an annual meeting of shareholders (the “December Meeting”). At the December Meeting, the shareholders approved
each of the following items: (i) an amendment to the charter to extend the date by which we must consummate a business combination
from December 12, 2016 to March 12, 2017 (the “Second Extension”), (ii) the election of Barry Rodgers as a Class A
director, to serve until the 2019 annual meeting of shareholders or until his successor is elected and qualified, and (iii) to
direct the ratification of the selection by our audit committee of Marcum LLP to serve as our independent registered public accounting
firm for the year ending November 30, 2016. Under Cayman Islands law, the amendments to the charter took effect upon their approval.
At the
December Meeting, shareholders holding 36,594 public shares exercised their right to convert such public shares into a pro
rata portion of the funds in the trust account. As a result, $380,580 (or approximately $10.40 per share) was
removed from the trust account to pay such holders. In connection with the Second Extension, the Current Management provided
a loan to us for an aggregate amount of $320,000, of which approximately $310,900, or $0.10 for each public share that was
not converted, was deposited in the trust account. In exchange for the additional funding
, we
and the Lender entered into an amendment to the Note pursuant to which: (i) the principal amount of the Note was increased
by $320,000, and (ii) the Note will accrue interest, retroactively from its date of issuance in June 2016, at a rate of 5.5%
per annum up to a maximum of $32,335 in interest, which interest will be payable on the due date for payment of the principal
of the Note.
Recent Developments
On December 19,
2016, we entered into a Merger Agreement (the “Merger Agreement”) with Aina Le’a Inc., a Delaware corporation
(“Aina Le’a”), Aina Le’a Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Aina
Le’a (“Merger Sub”), and Jose Aldeanueva, in the capacity as the representative for the stockholders of the Company
and their successors and assign (the “OAC Representative”). Pursuant to the Merger Agreement, subject to the terms
and conditions set forth therein, at the closing of the transactions contemplated by the Merger Agreement (the “Closing”),
we will merge with and into Merger Sub, with Merger Sub continuing as the surviving entity (the “Merger”). As a result
of the consummation of the Merger, we will cease to exist and the holders of the Company’s equity securities and warrants,
options and rights to acquire or convert into the Company’s equity securities will convert into Aina Le’a equity securities
and warrants, options and rights to acquire or convert into Aina Le’a equity securities.
The
description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement which was
filed with the SEC on December 23, 2016 on Form 8-K. You are urged to read the entire Merger Agreement and the other
exhibits attached thereto. Our board of directors has approved the Merger Agreement. Unless specifically stated, this
Annual Report does not give effect to the Merger and does not contain the risks associated with the Merger. Such risks and effects
relating to the Merger will be included in our preliminary proxy statement and definitive proxy statement to be filed with the
SEC.
Competitive Advantages
We believe our competitive
strengths to be the following:
Status as a
Public Company
We believe our structure
will make us an attractive business combination partner to target businesses. As an existing public company, we offer a target
business an alternative to the traditional initial public offering through a merger or other business combination. In this situation,
the owners of the target business may exchange their shares in the target business for our shares or for a combination of shares
and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might find
this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In
a typical initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts that
will likely not be present to the same extent in connection with a business combination with us. Furthermore, once the business
combination is consummated, the target business will have effectively become public, whereas an initial public offering is always
subject to the underwriters’ ability to complete the offering as well as general market conditions that could prevent the
offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional
means of providing management incentives consistent with stockholders’ interests than it would have as a privately-held company.
It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
With respect to the
Merger, pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions
contemplated by the Merger Agreement, we will merge with and into the Merger Sub, with the Merger Sub continuing as the surviving
entity. As a result of the consummation of the Merger, we will cease to exist and the holders of our equity securities and warrants,
options and rights to acquire or convert into our equity securities will convert into Aina Le’a equity securities and warrants,
options and rights to acquire or convert into Aina Le’a equity securities.
While we believe that
our status as a public company will make us an attractive business partner, some potential target businesses may view the inherent
limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination with a more established
entity or with a private company.
Financial Position
With funds held in
trust available for our initial business combination in the amount of $32,657,327 as of December 31, 2016 ($32,728,640 as of November
30, 2016), we offer a target business a variety of options such as providing the owners of a target business with shares in a public
company and a public means to sell such shares, providing cash for stock, and providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use
the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires.
Effecting a Business Combination
General
We are not presently
engaged in any substantive commercial business until we complete a business combination, including the Merger. We intend to utilize
cash derived from the proceeds of our initial public offering and the private placement of Private Placement Units, our share capital,
debt or a combination of these, as well as the contributions made by our Current Management in connection with the June Meeting
and December Meeting, in effecting a business combination. Although substantially all of the net proceeds of the initial public
offering and the private placement of Private Placement Units are intended to be applied generally toward effecting a business
combination, which may include the Merger, the proceeds are not otherwise being designated for any more specific purposes. A business
combination (if not Aina Le’a pursuant to the Merger) may involve the acquisition of, or merger with, a company which does
not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what
it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense,
loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate
a business combination with a company that may be financially unstable or in its early stages of development or growth. While we
may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as
a result of our limited resources, to effect only a single business combination.
Sources of Target
Businesses
Target business candidates
have and may 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. These sources
have and 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 this prospectus and know what types of businesses we are targeting. Our officers and directors, as well
as their respective affiliates, may also bring to our attention target business candidates that they become aware of through their
business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or
conventions. To the extent we engage the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we have and may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s
length negotiation based on the terms of the transaction. In no event, however, will any of our existing officers, directors, special
advisors or initial shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee
or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination
(regardless of the type of transaction). If we decide to enter into a business combination with a target business that is affiliated
with our officers, directors or initial shareholders, we will do so only if we have obtained an opinion from an independent investment
banking firm 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 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, our management will have virtually unrestricted flexibility in identifying and selecting a prospective
target business. We have not established any other 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:
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financial condition and results of operation;
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experience and skill of management and availability of additional personnel;
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stage of development of its products, processes or services;
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degree of current or potential market acceptance of the products, processes or services;
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proprietary features and degree of intellectual property or other protection for its products, processes or services;
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costs associated with effecting the business combination.
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We believe such factors
will be important in evaluating prospective target businesses, regardless of the location or industry in which such target business
operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business combination
with a target business that does not meet these criteria and guidelines. A discussion of Aina Le’a will be included in our
preliminary proxy statement and definitive proxy statement to be filed with the SEC
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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.
The time and costs
required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained
with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available
to otherwise complete a business combination.
Fair Market
Value of Target Business
Pursuant to Nasdaq
listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80%
of the balance of the funds in the trust account (excluding taxes payable on the income earned on the trust account) at the time
of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose
fair market value significantly exceeds 80% of the trust account balance. A business combination can be structured where we acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination
where we merge directly with the target business (such as the Merger). We can also structure a business combination 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 of 1940,
as amended. 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 of a target. In this case, we would acquire a
100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our
initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what
will be valued for purposes of the 80% of net assets test. In order to consummate such an acquisition, we may issue a significant
amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private
offering of debt or equity securities. The fair market value of the target will be determined by our board of directors based upon
one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or
book value). If our board is not able to independently determine that the target business has a sufficient fair market value, we
will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders
valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria.
We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of
directors independently determines that the target business complies with the 80% threshold. We did not obtain such an opinion
in connection with the Merger.
Business Combination
Procedures
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 public shareholders may seek to convert their public shares, regardless of whether they vote for
or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account
(net of taxes payable), or (2) provide our public shareholders with the opportunity to sell their public 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. Notwithstanding
the foregoing, as described below, our initial shareholders have agreed, pursuant to written letter agreements with us, not to
convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account or
sell any public shares to us in any tender offer in connection with a proposed business combination. If we determine to engage
in a tender offer, such tender offer will be structured so that each public shareholder may tender any or all of his, her or its
public shares rather than some pro rata portion of his, her or its shares. The decision as to whether we will seek shareholder
approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made
by us based on a variety of factors such as the timing of the transaction, whether the terms of the transaction would otherwise
require us to seek shareholder approval or whether we were deemed to be a foreign private issuer at such time (which would require
us to conduct a tender offer rather than seeking shareholder approval under SEC rules). Unlike other blank check companies which
require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions
of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will
have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with
the SEC which will contain substantially the same financial and other information about the initial business combination as is
required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets
of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary
shares voted are voted in favor of the business combination. For the Merger, we intend to seek shareholder approval of the Merger
with Aina Le’a at a meeting called for such purpose at which public shareholders may seek to convert their public shares,
regardless of whether they vote for or against the Merger, into their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable).
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. The
$5,000,001 net tangible asset value would be determined once a target business is located and we can assess all of the assets and
liabilities of the combined company (which would include the fee payable to EBC in an amount equal to 4.0% of the total gross proceeds
raised in the offering as described elsewhere in this annual report, any out-of-pocket expenses incurred by our initial shareholders,
officers, directors or their affiliates in connection with certain activities on our behalf, such as identifying and investigating
possible business targets and business combinations that have not been repaid at that time, as well as any other liabilities of
ours and the liabilities of the target business). 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, our net tangible asset threshold may limit our ability
to consummate such initial business combination (as we may be required to have a lesser number of shares converted or sold to us)
and 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. With respect to the Merger, as part of the closing conditions, we must (i) have net tangible
assets of at least $5,000,001 after giving effect to any redemptions of public shareholders required by our organizational documents
and our IPO prospectus (the “Closing Redemption Offer”), and (ii) after giving effect to the Closing Redemption Offer
and deducting any unpaid transaction expenses, extension costs and deferred IPO offering costs, have cash and cash equivalents
of at least $15,000,000.
Our initial shareholders
and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any proposed business combination,
(2) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed initial business combination
and (3) not sell any ordinary shares in any tender in connection with a proposed initial business combination.
Conversion/Tender
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, into their pro rata share of the aggregate amount then on deposit in the trust
account, less any taxes then due but not yet paid. Any such conversions will be effected under our charter, as amended, and Cayman
Islands law as repurchases. A holder will always have the ability to vote against a proposed business combination and not seek
conversion of his shares.
Notwithstanding the
foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as
a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with
respect to 30% or more of the ordinary shares sold in our initial public offering. Accordingly, all shares in excess of 30% of
the shares sold in our initial public offering held by a holder will not be converted to cash. We believe this restriction will
prevent shareholders from accumulating large blocks of shares before the vote is held to approve a proposed business combination
and attempt to use the conversion right as a means to force us or our management to purchase their shares at a significant premium
to the then current market price. By limiting a shareholder’s ability to convert no more than 30% of the ordinary shares
sold in our initial public offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt
to block a transaction which is favored by our other public shareholders.
Alternatively, if
we engage in a tender offer, each public shareholder will be provided the opportunity to sell his public shares to us in such tender
offer. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the
minimum amount of time we would need to provide holders to determine whether they want to sell their public shares to us in the
tender offer or remain an investor in our company.
Our initial shareholders
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. EBC will not have conversion
rights with respect to the shares included in the Private Placement Units, or “private shares.”
We may also require
public shareholders, whether they are a record holder or hold their shares in “street name,” to either tender their
certificates to our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer
agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. Once the shares are converted by the beneficial holder, and effectively repurchased by us under Cayman Island law, the
transfer agent will then update our Register of Shareholders to reflect all conversions. The proxy solicitation materials that
we will furnish to shareholders in connection with the vote for any proposed business combination will indicate whether we are
requiring shareholders to satisfy such delivery requirements. Accordingly, a shareholder would have from the time the shareholder
received our proxy statement through the vote on the business combination to deliver his shares if he wishes to seek to exercise
his conversion rights. Under our amended and restated memorandum and articles of association, we are required to provide at least
10 days’ advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder would have to
determine whether to exercise conversion rights.
There is a nominal
cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system.
The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this
cost on to the converting 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 request to convert
or tender such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or expiration
of the tender offer. Furthermore, if a holder of a public share delivered his certificate in connection with an election of their
conversion or tender and subsequently decides prior to the vote on the business combination or the expiration of the tender offer
not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business
combination is not approved or completed for any reason, then our public shareholders who elected to exercise their conversion
or tender rights would not be entitled to convert or tender 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.
Automatic Liquidation
of trust account if No Business Combination
If we do not complete
a business combination by March 12, 2017, it will trigger our automatic winding up, dissolution and liquidation pursuant to the
terms of our amended and restated memorandum and articles of association. As a result, this has the same effect as if we had formally
gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be required from our shareholders
to commence such a voluntary winding up, dissolution and liquidation.
The amount in the
trust account (less $315 representing the aggregate nominal par value of the shares of our public shareholders) under the Companies
Law will be treated as share premium which is distributable under the Cayman Companies Law provided that immediately following
the date on which the proposed distribution is proposed to be made, we are able to pay our debts as they fall due in the ordinary
course of business. If we are forced to liquidate the trust account, we anticipate that we would distribute to our public shareholders
the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued
interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by
our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public
shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may
be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent
of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation. Furthermore, while we
will seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in
connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right,
title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they
will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will
not seek recourse against the trust account or that a court would conclude that such agreements are legally enforceable.
Each of our initial
shareholders has agreed to waive its rights to participate in any liquidation of our trust account or other assets with respect
to the insider shares and private shares and to vote their insider shares and private shares in favor of any dissolution and liquidation
proposal which we submit to a vote of shareholders. There will be no distribution from the trust account with respect to our warrants
and rights, which will expire worthless.
If we are unable to
complete an initial business combination and expend all of the net proceeds of our initial public offering, 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 distribution
from the trust account would be approximately $10.50.
The proceeds deposited
in the trust account could, however, become subject to the claims of our creditors which would be prior to the claims of our public
shareholders. Although we will seek to have all vendors, including lenders for money borrowed, prospective target businesses or
other entities we engage 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 a claim against our assets, including the funds
held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust
account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate
if such engagement would be in the best interest of our shareholders if such third party refused to waive such claims. Examples
of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing to
provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter
into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement
would be significantly more beneficial to us than any alternative. 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.
Fortress had agreed
that, if we liquidate the trust account prior to the consummation of a business combination, it will be liable to pay debts and
obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for
or products sold to us in excess of the net proceeds of our initial public offering not held in the trust account, but only to
the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only if such parties
have not executed a waiver agreement. As part of the resignations and appointment of the Current Management (as described elsewhere
in this Annual Report), Mr. Fred, our Chief Executive Officer, agreed to be responsible for such obligations and Fortress has been
released from such obligations. However, we cannot assure you that Mr. Fred will be able to satisfy those obligations if he is
required to do so. Accordingly, the actual per-share distribution could be less than $10.50, plus interest, due to claims of creditors.
Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed,
the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate
and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims
deplete the trust account, we cannot assure you we will be able to return to our public shareholders at least $10.50 per share.
Competition
In identifying, evaluating
and selecting a target business, we may encounter intense competition from other entities having a business objective similar to
ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our
financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete
in acquiring certain sizable target businesses may be limited by our available financial resources.
The following also may not be viewed favorably
by certain target businesses:
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our obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent
to shareholders in connection with such business combination may delay or prevent the completion of a transaction;
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our obligation to convert ordinary shares held by our public shareholders may reduce the resources available to us for a business
combination;
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Nasdaq may require us to file a new listing application and meet its initial listing requirements to maintain the listing of
our securities following a business combination;
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our outstanding rights, warrants and unit purchase options, and the potential future dilution they represent;
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our obligation to pay EBC a fee of 4.0% of the gross proceeds of the IPO upon consummation of our initial business combination
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our obligation to either repay or issue Private Placement Units upon conversion of up to $500,000 of working capital loans
that may be made to us by our initial shareholders and current or former officers, directors or their affiliates;
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our obligation to register the resale of the insider shares, as well as the Private Placement Units (and underlying securities)
and any securities issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital
loans; and
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the impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending
on developments involving us prior to the consummation of a business combination.
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Any of these factors
may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however,
that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage
over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth
potential on favorable terms.
If we succeed in effecting
a business combination, including the Merger, there will be, in all likelihood, intense competition from competitors of the target
business. We cannot assure you that, subsequent to a business combination, including the Merger, we will have the resources or
ability to compete effectively.
Employees
We have two executive
officers. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as
much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based on whether
a target business has been selected for the business combination and the stage of the business combination process the company
is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such
target business and negotiating and processing the business combination (and consequently spend more time to our affairs) than
they would prior to locating a suitable target business. We presently expect each of our executive officers to devote such amount
of time as they reasonably believe is necessary to our business. We do not intend to have any full time employees prior to the
consummation of a business combination.
ITEM 1A. RISK FACTORS
An investment in
our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe
represent the material risks related to our business and our securities, together with the other information contained in this
Form 10-K, before making a decision to invest in our securities. This Form 10-K also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as
a result of specific factors, including the risks described below.
Unless specifically stated,
this Annual Report does not give effect to the Merger and does not contain the risks associated with the Merger. A discussion on
the risks and effects relating to the Merger will be included in our preliminary proxy statement and definitive proxy statement
to be filed with the SEC.
If we are unable to consummate a business combination,
our public shareholders may be forced to wait until March 12, 2017 before receiving liquidation distributions.
We have until March
12, 2017 to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate
a business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the
expiration of this full time period will public shareholders be entitled to liquidation distributions if we are unable to complete
a business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your
investment, you may be forced to sell your securities potentially at a loss.
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.”
Our independent registered
public accounting firm has expressed in its report on our financial statements included as part of this Annual Report a substantial
doubt regarding our ability to continue as a going concern. The financial statements do not include any adjustments that might
result from our ability to continue as a going concern. Moreover, there is no assurance that we will consummate our initial business
combination, including the Merger. These factors raise substantial doubt about our ability to continue as a going concern.
The requirement that we complete an initial business combination
by March 12, 2017 may give potential target businesses leverage over us in negotiating a business transaction.
We have until March
12, 2017 to complete an initial business combination. Any potential target business with which we enter into negotiations concerning
a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete a business combination with that particular target business, we may
be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time
limits referenced above.
We may issue ordinary or preferred shares or debt securities
to complete a business combination, which would reduce the equity interest of our shareholders and likely cause a change in control
of our ownership.
We may issue a substantial
number of additional ordinary shares or preferred shares, or a combination of ordinary shares and preferred shares, to complete
a business combination. The issuance of additional ordinary shares or preferred shares:
·
may
significantly reduce the equity interest of investors;
·
may
subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary
shares;
·
may
cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability
to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and
directors; and
·
may
adversely affect prevailing market prices for our ordinary shares.
Similarly, if we issue debt securities, it could
result in:
·
default
and foreclosure on our assets if our operating revenues after a 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 security is payable on demand; and
·
our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding.
The funds held in the trust account
may not earn significant interest and, as a result, we may be limited to the funds held outside of the trust account to fund our
search for target businesses, to pay our tax obligations and to complete our initial business combination.
As of December
31, 2016, we had approximately $54,000 available to us outside the trust account to fund our working capital requirements
(approximately $108,000 as of November 30, 2016). This amount was comprised of approximately $54,000 available in our
operating account and approximately $0 of interest income available to us for working capital purpose from our investments in
the trust account. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us
with additional working capital, as well as any funds from Current Management’s ability to fund our working capital
needs. To this end, the Current Management already loaned to us an aggregate of approximately $1.3 million, of which
approximately $380,000 was provided for working capital needs. We will need to identify one or more target businesses and to
complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on
permissible investments for us have been less than 1% over the last several years. Accordingly, if we do not earn a
sufficient amount of interest on the funds held in the trust account and use all of the funds held outside of the trust
account, we may not have sufficient funds available with which to structure, negotiate or close an initial
business combination. In such event, we may be forced to cease searching for a target business.
If third parties bring claims against
us, the proceeds held in trust could be reduced and the per-share liquidation price received by shareholders may be less than $10.50.
Our placing of funds
in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service
providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest
or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, they may not execute
such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the monies
held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could
be subject to claims which could take priority over those of our public shareholders. If we liquidate the trust account before
the completion of a business combination, Mr. Fred, our Chief Executive Officer, has agreed that he will be liable to ensure that
the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that
are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement.
However, Mr. Fred may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such
a situation may be less than $10.50, plus interest, due to such claims.
Additionally, if we
are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise
enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our
shareholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public shareholders
at least $10.50.
Our shareholders may be held liable
for claims by third parties against us to the extent of distributions received by them.
Our charter, as amended,
provides that we will continue in existence only until March 12, 2017 unless we complete an initial business combination by such
date.
As such, our shareholders
could potentially be liable for any claims to the extent of distributions received by them pursuant to such process and any liability
of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure you that third parties, or us
under the control of an official liquidator, will not seek to recover from our shareholders amounts owed to them by us.
If we are unable to
consummate a transaction within the required time period, upon notice from us, the trustee of the trust account will distribute
the amount in our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment, from funds not
held in trust, our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose.
If there are insufficient funds held outside the trust account for such purpose, Mr. Fred, our Chief Executive Officer, has agreed
that he will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims
of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which
have not executed a waiver agreement.
If we are forced to
enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was
proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due
in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore,
our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith,
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 offense and may be liable
to a fine of US$15,000 and to imprisonment for five years in the Cayman Islands.
Holders of rights and warrants will
not have redemption rights if we are unable to complete an initial business combination within the required time period.
If we are unable to
complete an initial business combination within the required time period and we redeem the funds held in the trust account, the
rights and warrants will expire and holders will not receive any of such proceeds with respect to such rights and warrants, respectively.
We have no obligation to net cash
settle the rights or warrants.
In no event will we
have any obligation to net cash settle the rights or warrants. Furthermore, there are no contractual penalties for failure to deliver
securities to the holders of the rights upon consummation of an initial business combination. Accordingly, the rights and warrants
may expire worthless unless converted and/or exercised.
We may amend the terms of the rights
in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding rights.
Our rights will be
issued in registered form under a rights agreement between Continental Stock Transfer & Trust Company, as rights agent, and
us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision. The rights agreement requires the approval by the holders of a majority of the then outstanding
rights (including the rights underlying the private units) in order to make any change that adversely affects the interests of
the registered holders.
If we do not maintain a current and
effective prospectus relating to the ordinary shares issuable upon exercise of the warrants, public holders will only be able to
exercise such warrants on a “cashless basis” which would result in a fewer number of shares being issued to the holder
had such holder exercised the warrants for cash.
If we do not maintain
a current and effective prospectus relating to the ordinary shares issuable upon exercise of the public warrant at the time that
holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided that
an exemption from registration is available. As a result, the number of ordinary shares that a holder will receive upon exercise
of its public warrants will be fewer than it would have been had such holder exercised its warrant for cash. Further, if an exemption
from registration is not available, holders would not be able to exercise their warrants on a cashless basis and would only be
able to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable upon exercise
of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions
and to maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants until
the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential
“upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless. Notwithstanding
the foregoing, the warrants included in the Private Placement Units, or “private warrants,” may be exercisable for
unregistered ordinary shares for cash even if the prospectus relating to the ordinary shares issuable upon exercise of the warrants
is not current and effective.
An investor will only be able to
exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under
the securities laws of the state of residence of the holder of the warrants.
No public warrants
will be exercisable for cash and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such
exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national securities
exchange, which would provide an exemption from registration in every state. However, we cannot assure you of this fact. If the
ordinary shares issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which
the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they
may expire worthless if they cannot be sold
Our management’s
ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer ordinary
shares upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public
warrants for redemption after the redemption criteria have been satisfied, our management will have the option to require any holder
that wishes to exercise his warrant (including any warrants held by our initial shareholders or their permitted transferees) to
do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless
basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised
his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment
in our company.
We may amend the terms of the warrants
in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants have
been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure
any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of a majority of the
then outstanding warrants (including the private warrants) in order to make any change that adversely affects the interests of
the registered holders.
Other than Aina Le’a, we have
not yet selected a particular industry or target business with which to complete a business combination and are unable to currently
ascertain the merits or risks of the industry or business in which we may ultimately operate other than the business and industry
in which Aina Le’a operates.
We are not limited
in locations or industries for our target businesses and may consummate a business combination with a company in any location or
industry we choose. 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 other than Aina Le’a. To the extent
we complete a business combination with a financially unstable company or an entity in its development stage, we may be affected
by numerous risks inherent in the business operations of those entities. If we complete a business combination with an entity in
an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry.
Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors.
The requirement that the target business
or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the
trust account at the time of the execution of a definitive agreement for our initial business combination may limit the type and
number of companies that we may complete such a business combination with.
Pursuant to the Nasdaq
listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80%
of the balance of the funds in the trust account
(
excluding
t
axes payable on the income earned on the trust account
)
at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the
type and number of companies that with which may complete a business combination. If we are unable to locate a target business
or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive
your pro rata portion of the funds in the trust account.
If Nasdaq delists our securities
from quotation on its exchange, we would not be required to complete a business combination with a target business or businesses
meeting specific fair market value requirements.
If Nasdaq delists
our securities from listing on its exchange, we would not be required to satisfy the fair market value requirement described above
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.
Our ability to successfully effect
a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of
whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business
combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our ability to successfully
effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued
service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any
of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required
to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the
services of our key personnel could have a detrimental effect on us.
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 a business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources
helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory
issues which may adversely affect our operations.
Our officers and directors may not
have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
We may consummate
a business combination with a target business in any geographic location or industry we choose. We cannot assure you that our officers
and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry
to make an informed decision regarding a business combination. If we become aware of a potential business combination outside of
the geographic location or industry where our officers and directors have their most experience, our management may determine to
retain consultants and advisors with experience in such industries to assist in the evaluation of such business combination and
in our determination of whether or not to proceed with such a business combination. However, our management is not required to
engage such consultants and advisors in any situation. If they do not engage any consultants or advisors to assist them in the
evaluation of a particular target business or business combination, our management may not properly analyze the risks attendant
with such target business or business combination. As a result, we may enter into a business combination that is not in our shareholders’
best interests.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel
will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment
or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations would
take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to the company after the consummation of the
business combination. The personal and financial interests of such individuals may influence their motivation in identifying and
selecting a target business.
Our officers and directors will allocate
their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest
could have a negative impact on our ability to consummate our initial business combination.
Our officers and directors
are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time
between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as
they reasonably believe is necessary to our business. We do not intend to have any full time employees prior to the consummation
of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are
not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ other business
affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to
our affairs and could have a negative impact on our ability to consummate our initial business combination. We cannot assure you
these conflicts will be resolved in our favor.
Our officers and directors have pre-existing
fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Our officers and directors
have pre-existing fiduciary and contractual obligations to other companies, including companies that are engaged in business activities
similar to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may
be in conflict or competition with our consummation of our initial business combination. As a result, a potential target business
may be presented by our management team to another entity prior to its presentation to us and we may not be afforded the opportunity
to engage in a transaction with such target business.
Our officers’ and directors’
personal and financial interests may influence their motivation in determining whether a particular target business is appropriate
for a business combination.
Our officers and directors
have waived their right to convert their insider shares, private shares or any other ordinary shares, or to receive distributions
with respect to their insider shares or private shares upon our liquidation if we are unable to consummate our initial business
combination. Accordingly, these securities will be worthless if we do not consummate our initial business combination. Their private
rights, private warrants and any other rights or warrants they acquire will also be worthless if we do not consummate an initial
business combination. In addition, our officers and directors have and may continue to loan funds to us after our initial public
offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only
be repaid if we complete an initial business combination. The personal and financial interests of our directors and officers may
influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently,
our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict
of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and
in our shareholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter
of Cayman Islands law and we might have a claim against such individuals. However, we might not ultimately be successful in any
claim we may make against them for such reason.
Nasdaq may delist our securities
from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us
to additional trading restrictions.
Our securities are
listed on Nasdaq, a national securities exchange. However, we cannot assure you that our securities will continue to be listed
on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination,
it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as
opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If Nasdaq delists
our securities from trading on its exchange, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity with respect to our securities;
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a determination that our ordinary shares are “penny stock” which will require brokers trading in our ordinary shares
to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for
our ordinary shares;
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a limited amount of news and analyst coverage for our company; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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We may only be able to complete one
business combination with the proceeds of our initial public offering, which will cause us to be solely dependent on a single business
which may have a limited number of products or services.
We may only be able
to complete one business combination with the proceeds of our initial public offering. By consummating a business combination with
only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments.
Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses,
unlike other entities which may have the resources to complete several business combinations in different industries or different
areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse
impact upon the particular industry in which we may operate subsequent to a business combination.
Alternatively, 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 business
combinations, which may make it more difficult for us, and delay our ability, to complete the 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.
The ability of our public shareholders
to exercise their conversion rights or sell their public shares to us in a tender offer may not allow us to effectuate the most
desirable business combination or optimize our capital structure.
If our business combination
requires us to use substantially all of our cash to pay the purchase price, because we will not know how many shareholders may
exercise conversion rights or seek to sell their public shares to us in a tender offer, we may either need to reserve part of the
trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business
transaction. In the event that the business combination involves the issuance of our shares as consideration, we may be required
to issue a higher percentage of our shares to make up for a shortfall in funds. Raising additional funds to cover any shortfall
may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to
effectuate the most attractive business combination available to us.
We may be unable to consummate a
business combination if a target business requires that we have cash in excess of the minimum amount we are required to have at
closing and public shareholders may have to remain shareholders of our company and wait until our liquidation to receive a pro
rata share of the trust account or attempt to sell their shares in the open market.
A potential target
may make it a closing condition to our business combination that we have a certain amount of cash in excess of the $5,000,001 of
net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. In the Merger,
we are required, as a closing condition, after giving effect to the Closing Redemption Offer and deducting any unpaid transaction
expenses, extension costs and deferred IPO offering costs, to have cash and cash equivalents of at least $15,000,000. If
the number of our shareholders electing to exercise their conversion rights has the effect of reducing the amount of money available
to us to consummate a business combination below such minimum amount required by the target business and we are not able to locate
an alternative source of funding, we will not be able to consummate such business combination and we may not be able to locate
another suitable target within the applicable time period, if at all. In that case, public shareholders may have to remain shareholders
of our company and wait until March 12, 2017 in order to be able to receive a pro rata portion of the trust account, or attempt
to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust
account for their shares.
In connection with any meeting held
to approve an initial business combination, we will offer each public shareholder the option to vote in favor of a proposed business
combination and still seek conversion of his, her or its shares, which may make it more likely that we will consummate a business
combination.
In connection with
any meeting held to approve an initial business combination, we will offer each public shareholder (but not our initial shareholders)
the right to have his, her or its ordinary shares converted to cash (subject to the limitations described elsewhere herein) regardless
of whether such shareholder votes for or against such proposed business combination. Furthermore, we will consummate our initial
business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding
shares voted are voted in favor of the business combination. Accordingly, public shareholders owning shares sold in our initial
public offering may exercise their conversion rights and we could still consummate a proposed business combination so long as a
majority of shares voted at the meeting are voted in favor of the proposed business combination. This is different than other similarly
structured blank check companies where shareholders are offered the right to convert their shares only when they vote against a
proposed business combination. This is also different than other similarly structured blank check companies where there is a specific
number of shares sold in the offering which must not exercise conversion rights for the company to complete a business combination.
This threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely
that we will consummate our initial business combination.
In connection with any meeting held
to approve an initial business combination, public shareholders, together with any affiliates of theirs or any other person with
whom they are acting in concert or as a “group,” will be restricted from seeking conversion rights with respect to
more than 30% of the shares sold in our initial public offering.
In connection with
any meeting held to approve an initial business combination, we will offer each public shareholder (but not holders of our insider
shares) the right to have his, her, or its ordinary shares converted into cash. Notwithstanding the foregoing, a public shareholder,
together with any of its affiliates or any other person with whom it is acting in concert or as a “group” will be restricted
from seeking conversion rights with respect to more than 30% of the shares sold in our initial public offering. Accordingly, if
you hold more than 30% of the shares sold in our initial public offering and a proposed business combination is approved, you will
not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such shares following
the business combination over 30% or sell them in the open market. We cannot assure you that the value of such shares will appreciate
over time following a business combination or that the market price of our ordinary shares will exceed the per-share conversion
price.
We may require shareholders who wish
to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion
that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In connection with
any shareholder meeting called to approve a proposed initial business combination, each public shareholder will have the right,
regardless of whether it is voting for or against such proposed business combination, to demand that we convert its shares into
a share of the trust account. Such conversion will be effectuated under Cayman Islands law as a repurchase of the shares, with
the repurchase price to be paid being the applicable pro-rata portion of the monies held in the trust account. We may require public
shareholders who wish to convert their shares in connection with a proposed business combination to either tender their certificates
to our transfer agent at any time prior to the vote taken at the shareholder meeting relating to such business combination or to
deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At
Custodian) System. In order to obtain a physical share certificate, a shareholder’s broker and/or clearing broker, DTC and
our transfer agent will need to act to facilitate this request. It is our understanding that shareholders should generally allot
at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this
process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate. While
we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Accordingly,
if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to convert may be unable
to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.
Investors may not have sufficient
time to comply with the delivery requirements for conversion.
Pursuant to our memorandum
and articles of association, we are required to give a minimum of only ten days’ notice for each general meeting. As a result,
if we require public shareholders who wish to convert their public shares into the right to receive a pro rata portion of the funds
in the trust account to comply with specific delivery requirements for conversion, holders may not have sufficient time to receive
the notice and deliver their shares for conversion. Accordingly, investors may be forced to retain our securities when they otherwise
would not want to.
If we require public shareholders
who wish to convert their ordinary shares to comply with the delivery requirements for conversion, such converting shareholders
may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.
If we require public
shareholders who wish to convert their ordinary shares to comply with specific delivery requirements for conversion described above
and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public shareholders.
Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after
the failed acquisition until we have returned their securities to them. The market price for our shares may decline during this
time and you may not be able to sell your securities when you wish to, even while other shareholders that did not seek conversion
may be able to sell their securities.
Because of our limited resources
and structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter
intense competition from entities other than blank check companies having a business objective similar to ours, including venture
capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited
when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that
we could acquire with the net proceeds of our initial public offering, our ability to compete in acquiring certain sizable target
businesses 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, seeking shareholder approval of a business combination may
delay the consummation of a transaction. Additionally, our outstanding warrants and unit purchase options, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive
disadvantage in successfully negotiating a business combination.
Our initial shareholders and former
and current officers and directors control a substantial interest in us and thus may influence certain actions requiring a shareholder
vote.
Our initial shareholders
and former and current officers and directors collectively own approximately 23.6% of our issued and outstanding ordinary shares.
In connection with any vote for a proposed business combination, all of our initial shareholders, as well as all of our current
and former officers and directors, have agreed to vote the ordinary shares owned by them immediately before our initial public
offering as well as any ordinary shares acquired in our initial public offering or private placement or in the aftermarket in favor
of such proposed business combination.
Our board of directors
is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. There is no requirement under the Companies Law for us to hold annual or general meetings
or elect directors. Accordingly, shareholders would not have the right to such a meeting or election of directors, unless the holders
of not less than 10% in par value capital of our company requests such a meeting. If there is an annual meeting, as a consequence
of our “staggered” board of directors, only a minority of the board of directors will be considered for election and
our initial shareholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly,
our initial shareholders will continue to exert control at least until the consummation of a business combination.
Our outstanding rights, warrants
and unit purchase options may have an adverse effect on the market price of our ordinary shares and make it more difficult to effect
a business combination.
We have outstanding
rights, warrants and unit purchase options that may result in the issuance of additional securities. Additionally, to the extent
we issue ordinary shares to effect a business combination, the potential for the issuance of a substantial number of additional
shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such
securities, when exercised, will increase the number of issued and outstanding ordinary shares and reduce the value of the shares
issued to complete the business combination. Accordingly, our rights, warrants and unit purchase options may make it more difficult
to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the
possibility of sale, of the shares underlying the warrants and unit purchase options could have an adverse effect on the market
price for our securities or on our ability to obtain future financing. If and to the extent these warrants and options are exercised,
you may experience dilution to your holdings.
We may redeem the warrants at a time
that is not beneficial to public investors.
We may call the public
warrants for redemption at any time after the redemption criteria described elsewhere have been satisfied. If we call the public
warrants for redemption, public shareholders may be forced to accept a nominal redemption price or sell or exercise the warrants
when they may not wish to do so.
If our shareholders exercise their
registration rights with respect to their securities, it may have an adverse effect on the market price of our ordinary shares
and the existence of these rights may make it more difficult to effect a business combination.
Our initial shareholders
are entitled to make a demand that we register the resale of their insider shares at any time commencing three months prior to
the date on which their shares may be released from escrow. Additionally, the purchasers of the private units and our initial shareholders,
officers and directors are entitled to demand that we register the resale of the private units (and the underlying securities)
and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment of working capital
loans made to us at any time after we consummate a business combination. The presence of these additional securities trading in
the public market may have an adverse effect on the market price of our securities. In addition, the existence of these rights
may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business, as the shareholders
of the target business may be discouraged from entering into a business combination with us or will request a higher price for
their securities because of the potential effect the exercise of such rights may have on the trading market for our ordinary shares.
If we are deemed to be an investment
company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make
it difficult for us to complete a business combination.
A company that, among
other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment
company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment
Company Act of 1940. To this end, the proceeds held in trust may be invested by the trustee only in United States government treasury
bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule
2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States treasuries. By restricting the
investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated
under the Investment Company Act of 1940.
If we are nevertheless
deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may
make it more difficult for us to complete a business combination, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities.
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In addition, we may
have imposed upon us certain burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and
regulations.
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Compliance with these
additional regulatory burdens would require additional expense for which we have not allotted.
We may not seek an opinion from an
unaffiliated third party as to the fair market value of the target business we acquire or that the price we are paying for the
business is fair to our shareholders from a financial point of view.
We are not required
to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at
least 80% of the balance of the trust account unless our board of directors cannot make such determination on its own. We are also
not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders
from a financial point of view unless the target is affiliated with our officers, directors, initial shareholders or their affiliates.
If no opinions are obtained, our shareholders will be relying on the judgment of our board of directors, whose collective experience
in business evaluations for blank check companies like ours is not significant. Furthermore, our directors may have a conflict
of interest in analyzing the transaction due to their personal and financial interests.
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. Our corporate affairs will be governed by our amended and restated memorandum
and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) or the common law
of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of
the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the
Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding
on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United
States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and certain
states, such as Delaware, 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 (i) to recognize or enforce against us judgments
of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States
or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the
civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed
by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands
of judgments obtained in the United States, the courts of the Cayman Islands will recognise and enforce a foreign money judgment
of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent
foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain
conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and
for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in
respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of
which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well
be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are
being brought elsewhere.
As a result of all
of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management,
members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
Foreign currency fluctuations could
adversely affect our business and financial results.
A target business
with which we may combine may do business and generate sales within other countries. Foreign currency fluctuations may affect the
costs that we incur in such international operations. It is also possible that some or all of our operating expenses may be incurred
in non-U.S. dollar currencies. The appreciation of non-U.S. dollar currencies in those countries where we have operations against
the U.S. dollar would increase our costs and could harm our results of operations and financial condition.
If we effect a business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact
our business operations and financial results.
If we consummate a
business combination with a target business in one of these areas, or another location outside of the United States, we would be
subject to any special considerations or risks associated with companies operating in the target business’ governing jurisdiction,
including any of the following:
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rules and regulations or currency redemption 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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economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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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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challenges in collecting accounts receivable;
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cultural and language differences;
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protection of intellectual property; and
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employment regulations.
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We cannot assure you
that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
If we effect a business combination
with a company located outside of the United States, the laws applicable to such company will likely govern all of our material
agreements and we may not be able to enforce our legal rights.
If we effect a business
combination with a company located outside of the United States, the laws of the country in which such company operates will govern
almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to
enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the
enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business,
business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that
substantially all of our assets would be located outside of the United States and some of our officers and directors might reside
outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights,
to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil
liabilities and criminal penalties of our directors and officers under Federal securities laws.
Because we must furnish our shareholders
with financial statements of the target business prepared in accordance with U.S. GAAP or IFRS or reconciled to U.S. GAAP, we may
not be able to complete an 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. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or GAAP, or international financial reporting standards as promulgated by the International Accounting Standards Board, 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.
Compliance with the Sarbanes-Oxley
Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the
Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such
system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls,
we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide
reliable financial reports could harm our business. A target may also not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure
to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our
financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have
a negative effect on the trading price of our securities.
We are an “emerging growth
company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make
our securities less attractive to investors.
We are an “emerging
growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years.
However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our
ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given
fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we
are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the
requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments
not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting
standards that have different effective dates for public and private companies until those standards apply to private companies.
As such, our financial statements may not be comparable to companies that comply with public company effective dates. We cannot
predict if investors will find our shares less attractive because we may rely on these provisions. If some investors find our shares
less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.
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 an 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, will not adopt the new or revised standard until the time private
companies are required to 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 accountant standards used.