Submission
of Matters to a Vote of Security Holders
On
November 1, 2016, we held a special meeting in lieu of an annual meeting of shareholders. At such meeting, the shareholders approved
the following items:
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an
amendment to our memorandum and articles of association (A) extending the date by which
we must consummate our initial business combination from November 4, 2016 to November
3, 2017; and (B) removing the prohibition on our offering to redeem public shares held
by our sponsor or its affiliates, directors or officers in connection with the consummation
of a business combination;
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an
amendment to the Investment Management Trust Agreement between us and Continental Stock
Transfer & Trust Company and the Company (“Continental”) extending the
date on which to commence liquidation of our trust account to November 3, 2017;
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to
direct the election of each of John Service and Daniel Winston as a director, to serve
until the 2019 annual meeting of shareholders or until his successor is elected and qualified;
and
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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 ended December 31,
2016.
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The
number of ordinary shares presented for redemption in connection with such meeting was 6,976,958. An aggregate of approximately
$73,400,000 (approximately $10.53 per share) was returned to holders of such shares. In addition, an aggregate of approximately
$145,000 was distributed to shareholders that voted to approve such extension, which amount is equal to $0.02 for each of the
7,230,088 public shares that were voted to approve such extension.
Amendments
to Letter Agreements
On
November 1, 2016, we amended those certain Letter Agreements, dated as of April 28, 2015, by and among us and our sponsor, officers
and directors to provide that:
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such
insiders shall be entitled to redemption and liquidation rights, as applicable, with
respect to any ordinary shares (other than founder shares, private placement shares and
shares issued or issuable upon conversion of our debt held by insiders) it holds (i) if we fail
to consummate a business combination by November 3, 2017 or (ii) in connection with the
consummation of a business combination; and
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such
insiders shall not have the right to vote any ordinary shares issuable upon conversion
of our debt held by such insiders in connection with a business combination.
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Waiver
of Deferred Underwriting Fee
On
November 1, 2016, Citigroup Global Markets Inc. (“Citi”), the representative of the underwriters in connection with
our initial public offering, waived its right to receive its deferred underwriting fee, in full, in the amount of $2,690,625,
which amount had been held in our trust account pursuant to the underwriting agreement entered into by and between the Company
and Citi in connection with our initial public offering.
Appointment
and Departure of Certain Officers and Directors
On
November 7, 2016, Mr. Jonathan Goodwin resigned as our Chief Executive Officer and a director, and Mr. Waheed Alli resigned as
our Chairman, each to pursue other professional interests. Such resignations were not the result of any disagreement with us.
On
November 7, 2016, our board of directors appointed Mr. Iain Abrahams as our Chief Executive Officer and Mr. Mark Klein (a director
of the Company prior to such date) as our Chairman. Mr. Abrahams will continue to serve as a director. Mr. Daniel Winston has
been appointed to serve on our audit committee in lieu of Mr. Abrahams.
Initial
Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of
at least 80% of the assets held in the trust account (excluding taxes payable on the income earned on the trust account) at the
time of the agreement to enter into the initial business combination. If our board is not able to independently determine the
fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm
that is a member of FINRA, or an accounting firm, with respect to the satisfaction of such criteria.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires 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, or the Investment Company Act. Even
if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to
the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we 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, 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. If the business combination involves more than one target business, the 80% of net assets test
will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial
business combination for purposes of a tender offer or for seeking shareholder approval, as applicable.
Our
Acquisition Process
In
evaluating a prospective target business, we conduct a thorough due diligence review, that encompasses, among other things, meetings
with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other
information made available to us. We also utilize our operational and capital planning experience.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm which is a member of FINRA or an accounting firm that our initial business combination is fair to our company from a financial
point of view.
Members
of our management team directly, or indirectly own ordinary shares and, accordingly, may have a conflict of interest in determining
whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further,
each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination
if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
If
any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business
of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such initial business
combination opportunity to such entity prior to presenting such initial business combination opportunity to us. Certain of our
officers and directors currently have certain relevant fiduciary duties or contractual obligations. We do not believe, however,
that any fiduciary duties or contractual obligations of our executive officers arising in the future would materially undermine
our ability to complete our initial business combination.
Our
sponsor, executive officers and directors have agreed not to participate in the formation of, or become an officer or director
of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination
or we have failed to complete our initial business combination within the required timeframe.
Members
of our management team are not obligated to devote any specific number of hours to our matters but they devote, and intend to
continue to devote, as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that our officers or any other members of our management devote in any time period will varies based on whether
a target business has been selected for our initial business combination and the current stage of the business combination process.
Sourcing
of Potential Business Combination Targets
Our
management team’s operating and transaction experience and relationships with companies provides us with a substantial number
of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships around the world, including in the case of Mr. Abrahams the contacts and
relationships he has developed resulting from his involvement in Fox Investments Limited, in the case of Mr. Klein the contacts
and relationships he has developed resulting from his involvement in M. Klein & Company, LLC, and in the case of Mr. Mitchell,
the contacts and relationships he developed resulting from his involvement with B. Riley Capital Management, LLC (formerly MK
Capital Advisors, LLC). This network has grown through the activities of our management team sourcing, acquiring and financing
businesses, our management team’s relationships with sellers, financing sources and target management teams and the experience
of our management team in executing transactions under varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure may 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 would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will 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, road show and public reporting efforts
that may not be present to the same extent in connection with an initial business combination with us.
Furthermore,
once a proposed business combination is completed, 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,
which 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 shareholders’ interests. It can offer
further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented
employees.
Financial
Position
With
funds available for an initial business combination in the amount of approximately $8,076,000 (including $595,939 of cash held
outside of the trust account as of December 31, 2016),
we offer a target business a variety of options such as creating a liquidity event for its owners, 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 complete
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. However, we have not taken any steps to secure third party financing and there can be no assurance it will
be available to us.
Effecting
our Initial Business Combination
We
intend to effectuate our initial business combination using cash from the remaining proceeds of our initial public offering and
the private placement of the private placement shares, our capital stock, debt or a combination of these as the consideration
to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks
inherent in such companies and businesses.
If
our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemptions of purchases
of our ordinary shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes,
including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due
on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
There
is no current basis for investors to evaluate the possible merits or risks of the target business with which we may ultimately
complete our initial business combination. Although our management will assess the risks inherent in a particular target business
with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business
may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce
the chances that those risks will adversely impact a target business.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would complete such
financing only simultaneously with the completion of our initial business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business
combination would disclose the terms of the financing and, only if required by law, we would seek shareholder approval of such
financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business
combination.
Sources
of Target Businesses and Potential Finder’s Fees
Target
business candidates are brought to our attention from various unaffiliated sources as a result of our management’s experience,
execution history and ability to deploy capital. These sources include, but are not limited to, investment bankers, private investment
funds and other members of our network of business relationships. Target businesses may be brought to our attention by unaffiliated
sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses
in which they think we may be interested on an unsolicited basis, since many of these sources will have read the prospectus relating
to our initial public offering and know what types of businesses we are targeting. Our officers and directors, as well as their
affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts
as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In
addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available
to us as a result of the business relationships of our officers and directors. We may engage professional firms or other individuals,
in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length
negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the
use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited
basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s
fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the
trust account. None of our sponsor or any of our existing officers or directors, or any entity with which they are affiliated,
will be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to
effectuate, the completion of our initial business combination (regardless of the type of transaction that it is) except that
we may pay Lepe Partners LLP, an entity affiliated with our former President and Chief Executive Officer, and/or M. Klein &
Co. LLC, an entity affiliated with one of our directors, a fee for financial advisory services rendered in connection with our
identification, negotiation and consummation of our initial business combination, which will not be made from the remaining proceeds
of our initial public offering held in the trust account prior to the completion of our initial business combination. The amount
of any fee we pay to Lepe Partners LLP and/or M. Klein & Co. LLC will be based upon the prevailing market for similar services
for such transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee’s
policies and procedures relating to transactions that may present conflicts of interest. None of our sponsor, executive officers
or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting
fees from a prospective business combination target in connection with a contemplated acquisition of such target by us, other
than Lepe Partners LLP and/or M. Klein & Co. LLC. Some of our officers and directors may enter into employment or consulting
agreements with the post-transaction company following our initial business combination. The presence or absence of any such fees
or arrangements will not be used as a criterion in our selection process of an acquisition candidate.
Selection
of a Target Business and Structuring of our Initial Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of
at least 80% of our assets held in the trust account (excluding taxes payable on the income earned on the trust account) at the
time of the agreement to enter into the initial business combination. The fair market value of the target or targets 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, discounted cash flow valuation or value of comparable businesses. If our board is
not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from
an independent investment banking firm that is a member of FINRA or an accounting firm with respect to the satisfaction of such
criteria. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction
company is what will be valued for purposes of the 80% of net assets test. There is no basis for investors to evaluate the possible
merits or risks of any target business with which we may ultimately complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we conduct a thorough due diligence review, which encompasses, among other things, meetings
with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as
well as a review of financial and other information made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination. We
will not pay any finders or consulting fees to members of our management team, or any of their respective affiliates, for services
rendered to or in connection with our initial business combination, except that we may pay Lepe Partners LLP, an entity affiliated
with our former President and Chief Executive Officer, and/or M. Klein & Co. LLC, an entity affiliated with one of our directors,
a fee for financial advisory services rendered in connection with our identification, negotiation and consummation of our initial
business combination, which will not be made from the remaining proceeds of our initial public offering held in the trust account
prior to the completion of our initial business combination. The amount of any fee we pay to Lepe Partners LLP and/or M. Klein
& Co. LLC will be based upon the prevailing market for similar services for such transactions at such time, and will be subject
to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions
that may present conflicts of interest.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
on the particular industry in which we operate after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our initial business combination with that business, our assessment of the target business’ management may not prove to
be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated
with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to
our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience
or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
May Not Have the Ability to Approve our Initial Business Combination
While
we may submit our initial business combination to a vote of shareholders (if it is required by law or the NASDAQ, or if we decide
to seek shareholder approval for business or other reasons), we may not seek shareholder approval in connection with our initial
business combination as not all the potential ways of structuring our initial business combinations require shareholder approval
under British Virgin Islands law. In that case, we will conduct redemptions pursuant to the tender offer rules of the SEC.
Presented
below is a table of the types of initial business combinations we may consider and whether shareholder approval is currently required
under British Virgin Islands law for each such transaction.
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Type of Transaction
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Whether Shareholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
NASDAQ’s listing rules, shareholder approval would be required for our initial business combination if, for example:
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we
issue ordinary shares that will be equal to or in excess of 20% of the number of ordinary shares then outstanding;
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any
of our directors, officers or substantial shareholders (as defined by NASDAQ rules) has a 5% or greater interest (or such
persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired
or otherwise and the present or potential issuance of ordinary shares could result in an increase in outstanding ordinary
shares or voting power of 5% or more; or
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the
issuance or potential issuance of ordinary shares will result in our undergoing a change of control.
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Permitted
Purchases of our Securities
In
the event we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates
may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of
our initial business combination. They will not make any such purchases when they are in possession of any material non-public
information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act
of 1934, as amended, or the Exchange Act. Such a purchase may include a contractual acknowledgement that such shareholder, although
still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will
be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances,
our insiders may either enter make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required
to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining shareholder approval of the business combination or (ii) satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where
it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our ordinary shares may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the shareholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the shareholders contacting us directly
or by our receipt of redemption requests submitted by shareholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling shareholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against the business combination. Our sponsors, officers, directors,
advisors or their affiliates will only purchase shares if such purchases comply with Regulation M and the other federal securities
laws. Any open market purchases by our sponsors, officers, directors and/or their affiliates who are affiliated purchasers under
Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule
10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule
10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser.
Our sponsors, officers, directors and/or their affiliates will not make purchases of our ordinary shares if the purchases would
violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption
Rights for Public Shareholders upon Completion of our Initial Business Combination
We
will provide our public shareholders with the opportunity to redeem all or a portion of their ordinary shares upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of the initial business combination including interest earned
on the funds held in the trust account and not previously released to us to pay our tax obligations, divided by the number of
then outstanding public shares, subject to the limitations described herein.
The
amount in the trust account is approximately $10.53 per public share. Our initial shareholder has entered into a letter agreement
with us, as amended, pursuant to which it has agreed to waive its redemption rights with respect to its founder shares, private
placement shares and any shares issued upon conversion of debt it may hold in connection with the completion of our initial business
combination.
Manner
of Conducting Redemptions
We
will provide our public shareholders with the opportunity to redeem all or a portion of their ordinary shares upon the completion
of our initial business combination either (i) in connection with a shareholder meeting called to approve the business combination
or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination
or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the
timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under the law
or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require shareholder approval
while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding
ordinary shares or seek to amend our memorandum and articles of association would require shareholder approval. If we structure
an initial business combination transaction with a target company in a manner that requires shareholder approval, we will not
have discretion as to whether to seek a shareholder vote to approve the proposed business combination. We may conduct redemptions
without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or stock
exchange listing requirements or we choose to seek shareholder approval for business or other legal reasons.
If
a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will,
pursuant to our memorandum and articles of association:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance
with Rule 10b5-1 to purchase ordinary shares in the open market if we elect to redeem our public shares through a tender offer,
to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not
tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on
the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001
(so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. If public shareholders tender more shares
than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, shareholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
shareholder approval for business or other legal reasons, we will, pursuant to our memorandum and articles of association:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek shareholder approval, we will complete our initial business combination only if a majority of the outstanding ordinary
shares voted are voted in favor of the business combination. In such case, our initial shareholder has agreed to vote its founder
shares, private placement shares and any public shares purchased during or after our initial public offering in favor of our initial
business combination. For purposes of seeking approval of the majority of our outstanding ordinary shares, non-votes will have
no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days
(but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall
be taken to approve our initial business combination. Each public shareholder may elect to redeem its public shares irrespective
of whether they vote for or against the proposed transaction. In addition, our initial shareholder has entered into a letter agreement
with us, as amended, pursuant to which it has agreed to waive its redemption rights with respect to its founder shares, private
placement shares and shares issued upon conversion of debt in connection with the completion of an initial business combination.
Our
memorandum and articles of association provides that in no event will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its
owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate
cash consideration we would be required to pay for all ordinary shares that are validly submitted for redemption plus any amount
required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of
cash available to us, we will not complete the business combination or redeem any shares, and all ordinary shares submitted for
redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Shareholder Approval
Notwithstanding
the foregoing, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our memorandum and articles of association provides
that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 20% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares.” We believe this restriction will discourage shareholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination
as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or
on other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 20% of the shares sold
in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’
ability to redeem no more than 20% of the shares sold in our initial public offering, we believe we will limit the ability of
a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly
in connection with an initial business combination with a target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash. However, we would not be restricting our shareholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the
business combination in the event we distribute proxy materials, 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. The tender
offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will indicate whether we are requiring public shareholders to satisfy such delivery requirements. Accordingly, a public
shareholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up
to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares
if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for shareholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the shareholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such shareholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the shareholder then had an “option window” after the completion of the business combination during which
he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he
or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which shareholders were aware they needed to commit before the shareholder meeting, would
become “option” rights surviving past the completion of the business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete an initial business combination
with a different target until November 3, 2017.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
sponsor, executive officers and directors have agreed that we will have until November 3, 2017 to complete our initial business
combination. If we are unable to complete our initial business combination by November 3, 2017, we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us
for the payment of taxes (and less up to $100,000 in interest reserved for expenses in connection with our dissolution), divided
by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights
as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board
of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the company, subject in each case
to our obligations to provide for claims of creditors and the requirements of the laws of the British Virgin Islands and other
applicable law. There will be no redemption rights or liquidating distributions with respect to our founder shares or placement
shares, which will expire worthless if we fail to consummate our initial business combination within the above time period. The
redemption of public shareholders from the trust account shall be done automatically by function of our memorandum and articles
of association and prior to any voluntary winding up, although at all times subject to the BVI Business Companies Act, 2004 or
the Companies Act.
Following
the redemption of public shares, we intend to enter “
voluntary liquidation
” which is the statutory process
for formally closing and dissolving a company under the laws of the British Virgin Islands. Given that we intend to enter voluntary
liquidation following the redemption of public shareholders from the trust account, we do not expect that the voluntary liquidation
process will cause any delay to the payment of redemption proceeds from our trust account. In connection with such a voluntary
liquidation, the liquidator would give notice to creditors inviting them to submit their claims for payment, by notifying known
creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in
the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal
place of business, and taking any other steps he considers appropriate to identify the company’s creditors, after which
our remaining assets would be distributed. As soon as the affairs of the company are fully wound-up, the liquidator must complete
his statement of account and make a notificational filing with the Registrar. We would be dissolved once the Registrar issues
a Certificate of Dissolution.
Our
initial shareholder has entered into a letter agreement with us, as amended, pursuant to which it has waived its rights to liquidating
distributions from the trust account with respect to its founder shares, private placement shares and shares issued upon conversion
of debt if we fail to complete our initial business combination by November 3, 2017. However, if our initial shareholder acquires
public shares after our initial public offering, it will be entitled to liquidating distributions from the trust account with
respect to such public shares if we fail to complete our initial business combination by November 3, 2017.
A
creditor or shareholder may file a petition with the BVI court which, if successful, may result in our liquidation being subject
to the supervision of that court. Such events might delay distribution of some or all of our remaining assets. Additionally, in
any liquidation proceedings of the company under British Virgin Islands law, the funds held in our trust account may be included
in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any
such claims deplete the trust account we may not be able to return to our public shareholders the liquidation amounts payable
to them.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our memorandum and articles of association that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by November 3, 2017, unless we provide our public
shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our tax obligations (and less up to $100,000 in interest reserved for expenses
in connection with our dissolution) divided by the number of then outstanding public shares. This redemption right shall apply
in the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director
nominee, or any other person. However, we may not redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules).
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the $595,939 of proceeds held outside the trust account (as of December 31, 2016),
although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient
to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest
accrued in the trust account not previously released to us to pay taxes on interest earned in the trust account, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the remaining 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 redemption amount received
by shareholders upon our dissolution would be approximately $10.50 per share. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders.
We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than
$10.50 per share.
Although
we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute
such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account
including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies
held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into
an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third
party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or
in cases where management is unable to find a service provider willing to execute a waiver. In 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. In order to protect the amounts
held in the trust account, Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell, our management team, have agreed that they will
be jointly and severally liable to us if and to the extent any claims by a vendor for services rendered or products sold to us,
or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds
in the trust account, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the
trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable
against a third party, then Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell will not be responsible to the extent of any liability
for such third party claims. We have not independently verified whether Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell have
sufficient funds to satisfy their indemnity obligations and we have not asked Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell
to reserve for such indemnification obligations. Therefore, we cannot assure you that Messrs. Goodwin, Klein, Abrahams, Alli and
Mitchell would be able to satisfy those obligations. None of our other officers or directors will indemnify us for claims by third
parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced and Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell assert that
they are unable to satisfy their indemnification obligations or that they have no indemnification obligations related to a particular
claim, our disinterested directors would determine whether to take legal action against Messrs. Goodwin, Klein, Abrahams, Alli
and Mitchell to enforce their indemnification obligations. While we currently expect that our disinterested directors would take
legal action on our behalf against Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell to enforce their indemnification obligations
to us, it is possible that our disinterested directors in exercising their business judgment may choose not to do so if, for example,
the cost of such legal action is deemed by such directors to be too high relative to the amount recoverable or if the disinterested
directors determine that a favorable outcome is not likely. We have not asked Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell
to reserve for such indemnification obligations and we cannot assure you that Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell
would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value
of the per-share redemption price will not be less than $10.50 per public share.
We
will seek to reduce the possibility that Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell will have to indemnify the trust
account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent auditors),
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell will
also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. We will have access to up to $595,939 from the remaining proceeds of our initial
public offering (as of December 31, 2016) with which to pay any such potential claims plus interest released to us (including
costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000).
In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
shareholders who received funds from our trust account could be liable for claims made by creditors.
If
the company is deemed insolvent for the purposes of the Insolvency Act (i.e. (i) it fails to comply with the requirements of a
statutory demand that has not been set aside under section 157 of the Insolvency Act, 2003, or the Insolvency Act; (ii) execution
or other process issued on a judgment, decree or order of a British Virgin Islands court in favor of a creditor of the company
is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or
the company is unable to pay its debts as they fall due), then there are very limited circumstances where prior payments made
to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act.
A voidable transaction would include, for these purposes, payments made as “unfair preferences” or “transactions
at an undervalue”. A liquidator appointed over an insolvent company who considers that a particular transaction or payment
is a voidable transaction under the Insolvency Act could apply to the British Virgin Islands courts for an order setting aside
that payment or transaction in whole or in part.
Additionally,
if the company enters insolvent liquidation under the Insolvency Act, the funds held in our trust account will likely be included
in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any
insolvency claims deplete the trust account you may not be able to return to our public shareholders the liquidation amounts due
them.
Our
public shareholders will be entitled to receive funds from the trust account only in the event of the redemption of our public
shares if we do not complete our initial business combination November 3, 2017 or if they redeem their respective shares for cash
upon the completion of the initial business combination. In no other circumstances will a shareholder have any right or interest
of any kind to or in the trust account. In the event we seek shareholder approval in connection with our initial business combination,
a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming
its shares to us for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption
rights described above.
Amendments
to our Memorandum and Articles of Association
As
set forth in our memorandum of association, the objects for which we were established are unrestricted and we shall have full
power and authority to carry out any object not prohibited by the Companies Act or as the same may be revised from time to time,
or any other law of the British Virgin Islands.
Our
memorandum and articles of association contain certain requirements and restrictions that apply to us until the consummation of
our initial business combination. These provisions, and those dealing with the rights attaching to our ordinary shares, cannot
be amended prior to our initial business combination without the approval of a resolution passed at a meeting by shareholders
owning 65% of the issued and outstanding shares that are present and voting at such meeting.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our memorandum and articles of association that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by November 3, 2017, unless we provide our public
shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account (less any interest previously released to us to pay
taxes), divided by the number of then outstanding public shares. This redemption right shall apply in the event of the approval
of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or any other person.
Specifically,
our memorandum and articles of association provide, among other things, that:
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if
we are unable to consummate our initial business combination by November 3, 2017, we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including any amounts representing interest earned on the trust account not previously released to us to pay our tax obligations
(less $100,000 which we may reserve for expenses of our liquidation or dissolution), divided by the number of then outstanding
public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the
right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, proceed
to commence a voluntary liquidation and thereby a formal dissolution of the company, subject in each case to our obligations
to provide for claims of creditors and the requirements of the laws of the British Virgin Islands and other applicable law;
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after
the consummation of our initial public offering and prior to our initial business combination, we may not issue additional
shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on
any initial business combination;
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although
we do not currently intend to enter into an initial business combination with a target business that is affiliated with our
initial shareholder, our directors or officers, we are not prohibited from doing so. In the event we enter into such a transaction,
we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a
member of FINRA or an accounting firm reasonably acceptable to the underwriters that such an initial business combination
is fair to our shareholders from a financial point of view;
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if
a shareholder vote on our initial business combination is not required by law or NASDAQ and we do not decide to hold a shareholder
vote for business or other reasons, we shall offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of
the Exchange Act, and will file tender offer documents with the SEC prior to consummating our initial business combination
which contain substantially the same financial and other information about our initial business combination and the redemption
rights as is required under Regulation 14A of the Exchange Act; and
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we
will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
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In
addition, our memorandum and articles of association provide that under no circumstances will we redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001. This notwithstanding, if the effect of any proposed
amendment, if adopted, would be either to (i) reduce the amount in the trust account available to redeeming shareholders to less
than $10.50 per share, or (ii) delay the date on which a public shareholder could otherwise redeem shares for such per share amount
in the trust account, we will provide a right for dissenting public shareholders to redeem public shares if such an amendment
is approved.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we have encountered intense competition
from other entities having a business objective similar to ours, including other blank check companies, private equity groups
and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target
businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing
the acquisition of a target business. Furthermore, our obligation to pay cash to our public shareholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination. Either of these factors may place us at
a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have two executive officers. Members of our management team are not obligated to devote any specific number of hours
to our matters but they devote, and intend to continue to devote, as much of their time as they deem necessary to our affairs
until we have completed our initial business combination. The amount of time that any member of our management team devotes in
any time period varies based on whether a target business has been selected for our initial business combination and the current
stage of the business combination process. We do not intend to have any full time employees prior to the consummation of our initial
business combination.
Periodic
Reporting and Financial Information
Our
ordinary shares are registered under the Exchange Act and we have reporting obligations, including the requirement that we file
annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports
contain financial statements audited and reported on by our independent registered public accountants.
The
federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financing reporting standards, or IFRS,
depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us
to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed
time frame.
We
are required to evaluate and report on our internal control procedures for the fiscal year ended December 31, 2016 as required
by the Sarbanes-Oxley Act. As long as we maintain our status as an emerging growth company, we will not be required to comply
with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their 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.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified
by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the auditor internal controls attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our
periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may
be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that are held
by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have
the meaning associated with it in the JOBS Act.
Item
1A. Risk Factors
You
should carefully consider the following risk factors and all other information contained in this Report, including the financial
statements. If any of the following events occur, our business, financial condition or results of operations may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your
investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation
with respect to us and our business.
We
are an early stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
We
are an early stage company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
If we fail to complete our initial business combination, we will never generate any operating revenues.
If the net proceeds of our initial public offering
not being held in the trust account and loans from AAP Sponsor are insufficient, it could limit the amount available to complete
our initial business combination and we may be unable to continue as a going concern.
Of the net proceeds of our initial
public offering and advances, $595,939 (as of December 31, 2016) was available to us outside the trust account to fund our working
capital requirements. For the year ended December 31, 2016, we used cash of $2,468,536 in operating activities. As of December
31, 2016, we had current liabilities of $240,485, primarily representing amounts owed to lawyers, accountants and consultants who
have advised us on matters related to a potential business combination. Effective September 13, 2016, all efforts related to such
potential business combination were terminated. Funds in the trust account are not available for paying these costs absent an initial
business combination. There can be no assurances that we will complete a business combination.
If we are required to seek additional
capital, we would need to borrow funds from AAP Sponsor, our management team or other third parties to operate or may be forced
to liquidate. To date, we have received $2,852,000 in advances from certain directors in order to finance transaction costs in
connection with a business combination. On November 1, 2016, (i) $1,000,000 of the outstanding advances were converted into ordinary
shares of the Company at a conversion price of $10.00 per share and (ii) $1,852,000 of the outstanding advances were converted
into ordinary shares of the Company at a conversion price of approximately $10.50 per share. Other than the $2,852,000 in advances
(all of which have been converted into ordinary shares), neither our sponsor, members of our management team nor any of their
affiliates are under any obligation to advance funds to us in such circumstances. Accordingly, we may not be able to obtain additional
financing. Any such loans and advances would be repaid only from funds held outside the trust account or from funds released to
us upon completion of our initial business combination. If we are unable to raise additional capital, we may be required to take
additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a
potential transaction. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms,
if at all. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements
included herein do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities
that might be necessary should we be unable to continue as a going concern. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust
account. Consequently, our public shareholders may only receive approximately $10.53 per share on our redemption of our public
shares.
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public shareholders do not support such a combination.
We
may not hold a shareholder vote before we complete our initial business combination unless the business combination would require
shareholder approval under applicable law or NASDAQ listing requirements or if we decide to hold a shareholder vote for business
or other legal reasons. Accordingly, we may complete our initial business combination even if holders of a majority of our public
shares do not approve of the business combination we complete.
If
we seek shareholder approval of our initial business combination, our initial shareholder has agreed to vote in favor of such
initial business combination, regardless of how our public shareholders vote.
Unlike
many other blank check companies in which the initial shareholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public shareholders in connection with an initial business combination, our initial shareholder has agreed
to vote its founder shares, private placement shares as well as any public shares purchased during or after our initial public
offering, in favor of our initial business combination. Our initial shareholder owns 80.7% of our outstanding ordinary shares.
Accordingly, if we seek shareholder approval of our initial business combination, it is more likely that the necessary shareholder
approval will be received than would be the case if our initial shareholder agreed to vote its founder shares and private placement
shares in accordance with the majority of the votes cast by our public shareholders.
Your
only opportunity to affect the decision regarding a potential business combination will be limited to the exercise of your right
to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one
or more target businesses. Since our board of directors may complete an initial business combination without seeking shareholder
approval (unless shareholder approval is required by law or NASDAQ rules, or we decide to obtain shareholder approval for business,
legal or other reasons), public shareholders may not have the right or opportunity to vote on the business combination, unless
we seek such shareholder vote. Accordingly, your only opportunity to affect the decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public shareholders in which we describe our initial business combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
We
may seek to enter into an initial business combination transaction agreement with a prospective target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption
rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or
cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount
necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and,
thus, may be reluctant to enter into an initial business combination transaction with us.
The
ability of our shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash
in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve
a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a
larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to
reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party
financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations
may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The
ability of our shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem
your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination by November 3, 2017 may give potential target businesses leverage
over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business
combination on terms that would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination by November 3, 2017. Consequently, such target business may obtain leverage
over us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This
risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and thereafter commence a voluntary liquidation,
in which case our public shareholders may only receive approximately $10.53 per share.
Our
sponsor, executive officers and directors have agreed that we must complete our initial business combination by November 3, 2017.
We may not be able to find a suitable target business and complete our initial business combination by November 3, 2017. If we
have not completed our initial business combination within such time period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
earned on the funds held in the trust account and not previously released to us to pay our tax obligations (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely
extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining shareholders and our board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution
of the company, subject in each case to our obligations under the laws of the British Virgin Islands to provide for claims of
creditors and the requirements of other applicable law. In such case, our public shareholders may only receive approximately $10.53
per share.
If
we seek shareholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their
affiliates may elect to purchase shares from public shareholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our ordinary shares.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates
may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of
our initial business combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement
that such shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore
agrees not to exercise its redemption rights. In the event that our sponsor, directors, executive officers, advisors or their
affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise
their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining shareholder approval of the business combination, or to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where
it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our ordinary shares and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to retain the listing or trading of our securities on a national
securities exchange.
If
a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials,
as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public shareholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote
on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to
the transfer agent electronically. In the event that a shareholder fails to comply with these or any other procedures, its shares
may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares, potentially at a loss.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion
of an initial business combination, and then only in connection with those ordinary shares that such shareholder properly elected
to redeem, subject to the limitations described herein, and (ii) the redemption of our public shares if we are unable to complete
an initial business combination by November 3, 2017, subject to applicable law and as further described herein. In no other circumstances
will a public shareholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment,
you may be forced to sell your public shares, potentially at a loss.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds from our initial public offering and the sale of the private placement shares are intended to be used to complete
an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules
promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded
the benefits or protections of those rules. Among other things, this means our ordinary shares are tradable and that we will have
a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial
public offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust
account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial
business combination.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of shareholders are deemed to hold in excess of 20% of our ordinary shares, you will
lose the ability to redeem all such shares in excess of 20% of our ordinary shares.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 20% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” However,
we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against
our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete
our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open
market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete
our initial business combination. And as a result, you will continue to hold that number of shares exceeding 20% and, in order
to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public shareholders
may receive only approximately $10.53 per share on our redemption of our public shares.
We
encounter intense competition from other entities having a business objective similar to ours, including private investors (which
may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services
to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there are numerous target businesses we could potentially acquire with the remaining net proceeds of our initial public
offering and the sale of the private placement shares, our ability to compete with respect to the acquisition of certain target
businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others
an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the
ordinary shares which our public shareholders redeem in connection with our initial business combination, target companies will
be aware that this may reduce the resources available to us for our initial business combination. This may place us at a competitive
disadvantage in successfully negotiating an initial business combination. If we are unable to complete our initial business combination,
our public shareholders may receive only approximately $10.53 per share on the liquidation of our trust account.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient to allow us to operate until
at least November 3, 2017, we may be unable to complete our initial business combination, in which case our public shareholders
may only receive approximately $10.53 per share.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until at least November 3, 2017,
assuming that our initial business combination is not completed during that time. We believe that funds available to us outside
of the trust account will be sufficient to allow us to operate until at least November 3, 2017; however, we cannot assure you
that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to
consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or
to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping”
around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed
business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid
for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our initial business combination, our public shareholders may receive
only approximately $10.53 per share on the liquidation of our trust account.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient to allow us to operate at
least until November 3, 2017, it could limit the amount available to fund our search for a target business or businesses and complete
our initial business combination and we will depend on loans from our sponsor or management team to fund our search for an initial
business combination, to pay our taxes and to complete our initial business combination. If we are unable to obtain these loans,
we may be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering, only $595,939 (as of December 31, 2016), is available to us outside the trust
account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds
from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members
of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such
advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial
business combination. If we are unable to obtain these loans, we may be unable to complete our initial business combination. If
we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the trust account. Consequently, our public shareholders may only receive approximately
$10.53 per share on our redemption of our public shares.
Subsequent
to our completion of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on our financial condition, results of operations
and our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly,
any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of
their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed by
them to our company, or if they are able to successfully bring a private claim under securities laws that the tender offer materials
or proxy statement relating to the business combination contained an actionable material misstatement or material omission.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by shareholders may be less than $10.53 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with
which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they
execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to,
fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in
the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In 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 or that they will not seek recourse against the trust account
for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the
prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will
be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years
following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.50
per share initially held in the trust account, due to claims of such creditors. In order to protect the amounts held in the trust
account, Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell, our management team, have agreed that they will be jointly and severally
liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account.
This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek
access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is
deemed to be unenforceable against a third party, then Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell will not be responsible
to the extent of any liability for such third party claims. We have not independently verified whether Messrs. Goodwin, Klein,
Abrahams, Alli and Mitchell have sufficient funds to satisfy their indemnity obligations and we have not asked Messrs. Goodwin,
Klein, Abrahams, Alli and Mitchell to reserve for such indemnification obligations. Therefore, we cannot assure you that Messrs.
Goodwin, Klein, Abrahams, Alli and Mitchell would be able to satisfy those obligations.
If
we liquidate, distributions, or part of them, may be delayed while the liquidator determines the extent of potential creditor
claims.
If
we do not complete our initial business combination by November 3, 2017, we will be required to redeem our public shares using
the available funds in the trust account pursuant to our memorandum and articles of association, resulting in our repayment of
available funds in the trust account. Following this redemption, we will proceed to commence a voluntary liquidation and thereby
a formal dissolution of the company. In connection with such a voluntary liquidation, the liquidator would give notice to our
creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims
and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least
one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he
considers appropriate, after which our remaining assets would be distributed.
As
soon as our affairs are fully wound-up, if we were to liquidate, the liquidator must complete his statement of account and will
then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”) that the liquidation
has been completed. However, the liquidator may determine that he requires additional time to evaluate creditors’ claims
(particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder
may file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to
the supervision of that court. Such events might delay distribution of some or all of our remaining assets.
To
the extent that any liquidation proceedings of the company were to be commenced prior to the redemption of our public shares (and
the distribution of available funds in the trust account) referred to above under British Virgin Islands law, the funds held in
our trust account would then be included in our estate and subject to the claims of third parties with priority over the claims
of our shareholders. To the extent any such claims deplete the trust account we may not be able to return to our public shareholders
the full redemption amounts which would be otherwise payable to them.
Our
directors may decide not to enforce the indemnification obligations of Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell, resulting
in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.
In
the event that the proceeds in the trust account are reduced and Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell assert that
they are unable to satisfy their joint and several obligations or that they have no such indemnification obligations related to
a particular claim, our disinterested directors would determine whether to take legal action against Messrs. Goodwin, Klein, Abrahams,
Alli and Mitchell to enforce their joint and several indemnification obligations. While we currently expect that our disinterested
directors would take legal action on our behalf against Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell to enforce their indemnification
obligations to us, it is possible that our disinterested directors in exercising their business judgment may choose not to do
so if, for example, the cost of such legal action is deemed by such directors to be too high relative to the amount recoverable
or if the independent directors determine that a favorable outcome is not likely. If our disinterested directors choose not to
enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders
may be reduced below $10.50 per share.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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addition, we may have imposed upon us 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 and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets
for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan
to buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in U.S. “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant
to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of
the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term
(rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being
deemed an “investment company” within the meaning of the Investment Company Act. The trust account is intended as
a holding place for funds pending the earlier to occur of either: (i) the completion of our primary business objective, which
is an initial business combination; or (ii) absent an initial business combination, our return of the funds held in the trust
account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed
above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company
Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds
and may hinder our ability to complete an initial business combination. If we are unable to complete our initial business combination,
our public shareholders may receive only approximately $10.53 per share on the liquidation of our trust account.
We
are not subject to the supervision of the Financial Services Commission of the British Virgin Islands and, as a result, our shareholders
are not protected by any regulatory inspections in the British Virgin Islands.
We
are not an entity subject to any regulatory supervision in the British Virgin Islands by the Financial Services Commission. As
a result, shareholders are not protected by any regulatory supervision or inspections by any regulatory agency in the British
Virgin Islands and the company is not required to observe any restrictions in respect of its conduct, save as disclosed in this
Report or its memorandum and articles of association.
If
we are unable to consummate our initial business combination by November 3, 2017, our public shareholders may be forced to wait
beyond the 10 business day period thereafter before redemption from our trust account.
If
we are unable to consummate our initial business combination by November 3, 2017, we will, as promptly as reasonably possible
but not more than 10 business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the
trust account not previously released to us to pay our tax obligations, less up to $100,000 of interest for our dissolution expenses,
divided by the number of then outstanding public shares and cease all operations except for the purposes of winding up of our
affairs by way of a voluntary liquidation, as further described herein. Any redemption of public shareholders from the trust account
shall be effected automatically by function of our memorandum and articles of association prior to our commencing any voluntary
liquidation. If we are required to liquidate prior to distributing the aggregate amount then on deposit in the trust account,
then such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act and/or the
Insolvency Act. In that case, investors may be forced to wait beyond the 10 business days following November 3, 2017 before the
redemption proceeds of our trust account become available to them, and they receive the return of their portion of the proceeds
from our trust account.
If
deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent of
potential creditor claims. In these circumstances, prior payments made by the company may be deemed “voidable transactions.”
If
we do not complete our initial business combination by November 3, 2017, we will be required to redeem our public shares from
the trust account pursuant to our memorandum and articles of association.
However,
if at any time we are deemed insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements
of a statutory demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued
on a judgment, decree or order of a British Virgin Islands court in favor of a creditor of the company is returned wholly or partly
unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay
its debts as they fall due), we are required to immediately enter insolvent liquidation. In these circumstances, a liquidator
will be appointed who will give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors
(if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British
Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of
business, and taking any other steps he considers appropriate, after which our assets would be distributed. Following the process
of insolvent liquidation, the liquidator will complete its final report and accounts and will then notify the Registrar of Corporate
Affairs in the British Virgin Islands (the “Registrar”). The liquidator may determine that he requires additional
time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any
creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands court which, if successful, may
result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all
of our assets to our public shareholders. In such liquidation proceedings, the funds held in our trust account may be included
in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any
such claims deplete the trust account we cannot assure you we will be able to return to our public shareholders the amounts otherwise
payable to them.
If
we are deemed insolvent, then there are also limited circumstances where prior payments made to shareholders or other parties
may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would
be, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where
a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British
Virgin Islands court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part.
Our
initial shareholder has waived its right to participate in any liquidation distribution with respect to the founder shares, private
placement shares and shares issued upon the conversion of debt. We will pay the costs of our liquidation and distribution of the
trust account from the remaining assets outside the trust account and up to $100,000 of interest that accrued in the trust account
that may be used for this purpose. In addition, pursuant to a written agreement, Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell
have agreed that they will be jointly and severally liable to us, for all claims of creditors to the extent that we fail to obtain
executed waivers from such entities in order to protect the amounts held in trust, except as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’
claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure
you that a creditor or shareholder will not file a petition with the British Virgin Islands court which, if successful, may result
in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our
assets to our public shareholders.
If
deemed to be insolvent, distributions made to public shareholders, or part of them, from our trust account may be subject to claw
back in certain circumstances.
If
we do not complete our initial business combination by November 3, 2017, and instead distribute the aggregate amount then on deposit
in the trust account (less interest previously released to us to pay taxes and less up to $100,000 in interest reserved for expenses
in connection with our dissolution) to our public shareholders by way of redemption, it will be necessary for our directors to
pass a board resolution approving the redemption of those ordinary shares and the payment of the proceeds to public shareholders.
Such board resolutions are required to confirm that we satisfy the solvency test prescribed by the Companies Act, (namely that
our assets exceed our liabilities; and that we are able to pay our debts as they fall due). If, after the redemption proceeds
are paid to public shareholders, it transpires that our financial position at the time was such that it did not satisfy the solvency
test, the Companies Act provides a mechanism by which those proceeds could be recovered from public shareholders. However, the
Companies Act also provides for circumstances where such proceeds could not be subject to claw back, namely where (a) the public
shareholders received the proceeds in good faith and without knowledge of our failure to satisfy the solvency test; (b) a public
shareholder altered its position in reliance of the validity of the payment of the proceeds; or (c) it would be unfair to require
repayment of the proceeds in full or at all.
The
grant of registration rights to our initial shareholder, the holder of our private placement shares and holders of shares issuable
upon conversion of working capital loans may make it more difficult to complete our initial business combination, and the future
exercise of such rights may adversely affect the market price of our ordinary shares.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
shareholder and its permitted transferees can demand that we register the founder shares, and the holder of our private placement
shares, holders of shares issuable upon conversion of working capital loans and their respective permitted transferees can demand
that we register such ordinary shares. We will bear the cost of registering these securities. The registration and availability
of such a significant number of securities for trading in the public market may have an adverse effect on the market price of
our ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly
or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the
combined entity or ask for more cash consideration to offset the negative impact on the market price of our ordinary shares that
is expected when the securities owned by our initial shareholder, the holder of our private placement shares and holders of shares
that may be issued upon conversion of working capital loans or their respective permitted transferees are registered.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
We
seek to complete an initial business combination with an operating company, except that we will not, under our memorandum and
articles of association, be permitted to effectuate our initial business combination with another blank check company or similar
company with nominal operations. There is no basis to evaluate the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial
business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example,
if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by the risks inherent in the business and operations of a financially unstable or an early stage entity. Although our
officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that
we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business. We also cannot assure you that an investment in our shares will ultimately
prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination
target. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer a reduction
in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able
to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed by them to us, or if they are able to successfully bring a private claim under securities laws that the tender offer
materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission.
Although
we identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the
target business with which we enter into our initial business combination may not have attributes entirely consistent with our
general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction
is required by law, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult
for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public shareholders may receive only approximately
$10.53 per share on the liquidation of our trust account.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue
or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers
and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain
or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking that is a member of FINRA or accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent
investment banking that is a member of FINRA or an accounting firm that the price we are paying is fair to our company from a
financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors,
who will determine fair market value based on one or more standards generally accepted by the financial community, such as actual
and potential sales, earnings, cash flow and/or book value, discounted cash flow valuation or value of comparable businesses.
Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to
our initial business combination.
We
may issue additional ordinary or preferred shares to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination, which would dilute the interest of our shareholders and likely present
other risks.
Our
memorandum and articles of association authorizes the issuance of an unlimited number of ordinary shares, no par value, and an
unlimited number of preferred shares, no par value. We may issue a substantial number of additional ordinary or preferred shares
to complete our initial business combination or under an employee incentive plan after completion of our initial business combination;
however our memorandum and articles of association provides, among other things, that prior to our initial business combination,
we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii)
vote on any initial business combination. The issuance of additional ordinary or preferred shares:
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may
significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of ordinary shares if preferred shares are issued with preferential rights to those afforded
our ordinary shares;
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could
cause a change of control if a substantial number of ordinary shares are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and
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may
adversely affect prevailing market prices for our shares.
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We
may qualify as a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income
tax consequences to U.S. investors.
If
we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder
(as defined below) of our ordinary shares, the U.S. Holder may be subject to increased U.S. federal income tax liability and may
be subject to additional reporting requirements. The discussion below of the U.S. federal income tax consequences to “U.S.
Holders” will apply to a beneficial owner of our ordinary shares that is for U.S. federal income tax purposes (i) an individual
citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation) that is created or organized
(or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
(iii) an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv)
a trust if (A) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons
are authorized to control all substantial decisions of the trust, or (B) it has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a U.S. person. If any partnership (including for this purpose any entity treated as a partnership
for U.S. federal income tax purposes) holds our ordinary shares, the tax treatment of a partner generally will depend on the status
of the partner and the activities of the partner and the partnership. This summary does not address any tax consequences to any
partnership that holds our securities (or to any direct or indirect partner of such partnership).
A
foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year,
including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares
by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year
of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its
pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held
for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties
(other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive
assets.
Because
we are a blank check company, with no current active business, we believe that it is likely that we met the PFIC asset or income
test for our initial taxable year ending December 31, 2015. However, pursuant to a start-up exception, a corporation will not
be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2)
the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up
year; and (3) the corporation is not in fact a PFIC for either of those years. Because we did not complete a business combination
on or prior to December 31, 2016, we cannot satisfy the start-up exception and we believe we have been PFIC since our inception.
If
we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder
of our ordinary shares and the U.S. Holder did not make either a timely qualified electing fund (“QEF”) election for
our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares or a “mark to market”
election (in each case, as described below) such holder generally will be subject to special rules with respect to:
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any
gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares; and
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any
“excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable
year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect
of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s
holding period for the ordinary shares).
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Under
these rules,
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the
U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for
the ordinary shares;
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the
amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess
distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in
which we are a PFIC, will be taxed as ordinary income;
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the
amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be
taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
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the
interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such
other taxable year of the U.S. Holder.
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In
general, if we are determined to be a PFIC, a U.S. Holder will avoid the PFIC tax consequences described above in respect to our
ordinary shares by making a timely QEF election to include in income its pro rata share of our net capital gains (as long-term
capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed,
in the taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder may make a separate election
to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be
subject to an interest charge.
The
QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A
U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign
investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to
a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally
may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent
of the IRS. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a retroactive
QEF election under their particular circumstances.
In
order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us.
If we determine we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder such information as the IRS may
require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election.
However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information
to be provided.
If
a U.S. Holder has made a QEF election with respect to our ordinary shares, and the special tax and interest charge rules do not
apply to such shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or
is deemed to hold) such shares), any gain recognized on the sale of our ordinary shares generally will be taxable as capital gain
and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares
of its earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits
that were previously included in income generally should not be taxable as a dividend to such U.S. Holders. The tax basis of a
U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed
but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property
the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.
Although
a determination as to our PFIC status will be made annually, an initial determination that our company is a PFIC will generally
apply for subsequent years to a U.S. Holder who held ordinary shares while we were a PFIC, whether or not we meet the test for
PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as
a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC tax
and interest charge rules discussed above in respect of such shares. In addition, such U.S. Holder will not be subject to the
QEF inclusion regime with respect to such shares for any taxable year of us that ends within or with a taxable year of the U.S.
Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in
which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will
continue to apply to such shares unless the holder makes a “purging election”, as described below, and pays the tax
and interest charge with respect to the gain inherent in such shares attributable to the pre-QEF election period. A “purging
election” creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will
be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a
result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares for purposes of
the PFIC rules.
Alternatively,
if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder
may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market
election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) ordinary shares in
us and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in
respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if
any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares.
The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary
shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount
of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its ordinary shares
will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition
of the ordinary shares will be treated as ordinary income.
The
mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered
with the Securities and Exchange Commission, including the Nasdaq Capital Market, or on a foreign exchange or market that the
IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S.
Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in
respect to our ordinary shares under their particular circumstances.
If
we are a PFIC and, at any time, have a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed
to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest
charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or
the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. We will endeavor to cause any lower-tier
PFIC to provide to a U.S. Holder the information that may be required to make or maintain a QEF election with respect to the lower-tier
PFIC. However, there is no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition,
we may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause
the lower-tier PFIC to provide the required information. Further, a U.S. Holder may be unable to make a mark-to-market election
with respect to the shares of the lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax
issues raised by lower-tier PFICs.
A
U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS
Form 8621(whether or not a QEF or market-to-market election is made) and such other information as may be required by the U.S.
Treasury Department.
The
rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in
addition to those described above. Accordingly, U.S. Holders of our ordinary shares should consult their own tax advisors concerning
the application of the PFIC rules to our ordinary shares under their particular circumstances.
If
any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than
the U.S. dollar amount that you will actually ultimately receive.
If
you are a U.S. holder, you will be taxed on the U.S. dollar value of your dividends, if any, at the time you receive them, even
if you actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically,
if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your
income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot rate
of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether
the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually convert
the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will
actually ultimately receive.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
shareholders may receive only approximately $10.53 per share on the liquidation of our trust account.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
shareholders may receive only approximately $10.53 per share on the liquidation of our trust account.
Our
ability to successfully effect our initial 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 our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel, including,
in particular, Messrs. Goodwin, Klein, Abrahams, Alli and Mitchell with regard to our selection of a target company. The role
of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may
remain with the target business in senior management or advisory positions following our initial business combination, it is likely
that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a
result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business
combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us.
The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business
combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company, which could, in turn, negatively impact the value of our shareholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of
their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
us, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement
relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon consummation of a business combination. The loss of an acquisition
target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The
role of an acquisition candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with us following our initial business combination, it is possible that members of the management of an acquisition candidate
will not wish to remain in place. The loss of an acquisition target’s key personnel could negatively impact the operations
and profitability of our post-combination business.
Our
executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in
a conflict of interest in allocating their time between our operations and our search for an initial business combination and
their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination.
Each of our executive officers is engaged in several other business endeavors for which he or she may be entitled to substantial
compensation and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
Our independent directors also serve as officers or board members for other entities. If our executive officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment
levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors may in the future become, affiliated with entities engaged in business activities similar to
those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining
to which entity a particular business opportunity should be presented.
We
are in the business of identifying and combining with one or more businesses. Our executive officers and directors may in the
future become affiliated with entities that are engaged in business activities similar to those intended to be conducted by us.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary duties. Accordingly, they may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to another entity prior to its presentation to us.
Our
executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that
conflict with our interests.
We
have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having
a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into an initial business combination with a target business
that is affiliated with our sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a
policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted
by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We
may engage in an initial business combination with one or more target businesses that have relationships with entities that may
be affiliated with our sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with our sponsor, executive officers and directors. Our directors also serve as officers and board
members for other entities. Such entities may compete with us for business combination opportunities. Our sponsor, officers and
directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities
with which they are affiliated, and there have been no preliminary discussions concerning an initial business combination with
any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated
entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business
combination and such transaction was approved by a majority of our disinterested directors.
Our
directors have a statutory and fiduciary duty to act in the best interests of our company whether or not a conflict of interest
may exist.
Despite
our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or an accounting firm,
regarding the fairness to our company from a financial point of view of an initial business combination with one or more domestic
or international businesses affiliated with our sponsor, executive officers or directors, potential conflicts of interest still
may exist and, as a result, the terms of the business combination may not be as advantageous to our public shareholders as they
would be absent any conflicts of interest.
Since
our sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not
completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for
our initial business combination.
On
January 15, 2015, our sponsor purchased an aggregate of 2,156,250 founder shares for an aggregate purchase price of $25,000, or
approximately $0.012 per share. The number of founder shares issued was determined based on the expectation that such founder
shares would represent 20% of the outstanding public shares and founder shares after our initial public offering. The founder
shares will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased an aggregate
of 778,438 ordinary shares at a price of $10.00 per share ($7,784,380 in the aggregate) in a private placement that closed simultaneously
with the closing of our initial public offering, that will also be worthless if we do not complete an initial business combination.
In addition, on November 1, 2016, (i) an aggregate of $1,000,000 of such advances were converted into ordinary shares at a conversion
price of $10.00 per share and (ii) an aggregate of $1,852,000 of such advances were converted into ordinary shares at a conversion
price of approximately $10.50 per share. In the aggregate, 276,378 ordinary shares were issued to the sponsor in connection with
such conversions. The founder shares and private placement shares are identical to the ordinary shares sold in our initial public
offering. However, the holders have agreed (A) to vote any shares owned by them in favor of any proposed business combination
(except for the shares issued on November 1, 2016 upon conversion of certain loans, which shares may not be voted prior to the
consummation of our initial business combination) and (B) not to redeem any founder shares, private placement shares and shares
issuable upon conversion of our debt held by insiders in connection with a shareholder vote or tender offer to approve or in connection
with a proposed initial business combination. The personal and financial interests of our executive officers and directors may
influence their motivation in identifying and selecting a target business combination, completing an initial business combination
and influencing the operation of the business following the initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which
may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment
in us.
Although
we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding;
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our
inability to pay dividends on our ordinary shares;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our ordinary shares if declared, our ability to pay expenses, make capital expenditures and acquisitions, and
fund other general corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement shares, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
The
remaining net proceeds from our initial public offering and the sale of the private placement shares provides us with approximately
$8,380,319 (including $595,939 held outside the trust account as of December 31, 2016), that we may use to complete our initial
business combination.
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory 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, property or asset, 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 our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in an initial business
combination with a company that is not as profitable as we suspected, if at all.
If
we effect our initial business combination with a business located outside of the United States, we would be subject to a variety
of additional risks that may negatively impact our operations.
We
may effect an initial business combination with a business located outside of the United States. If we do, we would be subject
to any special considerations or risks associated with businesses operating in the target’s home jurisdiction, including
any of the following:
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rules
and regulations or currency conversion or corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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differing
laws and regulations regarding exchange listing and delisting requirements;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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inflation
greater than that experienced in the United States;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we are unable to do so, our operations might suffer.
If
we effect our initial business combination with a business located outside of the United States, the laws applicable to such business
will likely govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect our initial business combination with a business located outside of the United States, the laws of the country in which
such business operates will govern almost all of the material agreements relating to its operations. The target business may not
be able to enforce any of its material agreements or enforce remedies for breaches of those agreements in that 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 business 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 U.S. courts predicated upon
civil liabilities and criminal penalties of our directors and officers under federal securities laws.
Because
of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively
impacted.
Managing
a business, operations, personnel or assets in another country is challenging and costly. Any management that we may have (whether
based abroad or in the United States) may be inexperienced in cross-border business practices and unaware of significant differences
in accounting rules, legal regimes and labor practices. Even with a seasoned and experienced management team, the costs and difficulties
inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely
domestic business) and may negatively impact our financial and operational performance.
We
may re-domicile into another foreign jurisdiction in connection with our initial business combination, and the laws of such jurisdiction
may govern all of our material agreements and we may not be able to enforce our legal rights.
In
connection with our initial business combination, we may relocate the home jurisdiction of our business from the British Virgin
Islands to another foreign jurisdiction. If we determine to do this, the laws of such jurisdiction would likely govern all of
our material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in
implementation and interpretation as in the British Virgin Islands or 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. Any
such re-domiciliation and the international nature of our business will likely subject us to foreign regulation.
Many
countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject
to corruption and inexperience, which may adversely impact our results of operations and financial condition.
Our
ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to
defend ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could
adversely impact our operations, assets or financial condition. Rules and regulations in many countries are often ambiguous or
open to differing interpretation by responsible individuals and agencies at the municipal, state, regional and federal levels.
The attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent. Delay with respect
to the enforcement of particular rules and regulations, including those relating to customs, tax, environmental and labor, could
cause serious disruption to operations abroad and negatively impact our results.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, our management team may resign from their positions as officers or directors of the company
and the management of the target business at the time of the business combination will remain in place. Management of the target
business may not be familiar with U.S. securities laws. If new management is unfamiliar with such laws, they may have to expend
time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory
issues, which may adversely affect our operations.
Currency
policies may cause a target business’ ability to succeed in the international markets to be diminished.
In
the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar
equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency.
The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and
economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness
of any target business or, following consummation of our initial business combination, our financial condition and results of
operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business
combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able
to consummate such transaction.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
may structure an initial business combination so that the post-transaction company in which our public shareholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will 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 us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a
minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new ordinary shares
in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target.
However, as a result of the issuance of a substantial number of new ordinary shares, our shareholders immediately prior to such
transaction could own less than a majority of our outstanding ordinary shares subsequent to such transaction. In addition, other
minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of
the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be
able to maintain our control of the target business. We cannot provide assurance that, upon loss of control of a target business,
new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete an initial business combination with which a substantial majority of our shareholders do not agree.
Our
memorandum and articles of association does not provide a specified maximum redemption threshold, except that in no event will
we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are
not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial
business combination even though a substantial majority of our public shareholders do not agree with the transaction and have
redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in
connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements
to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration
we would be required to pay for all ordinary shares that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us,
we will not complete the business combination or redeem any shares, all ordinary shares submitted for redemption will be returned
to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their constitutional documents. We cannot assure you that we will not seek to amend our memorandum and articles of association
that will make it easier for us to consummate an initial business combination that our shareholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments. For example, blank check companies have amended the definition of initial
business combination, increased redemption thresholds and changed industry focus. We cannot assure you that we will not seek to
amend our memorandum and articles of association prior to our initial business combination, however, to do so would require the
approval of at least 65% of the issued and outstanding shares attending and voting at a meeting of shareholders.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our memorandum and articles of association that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by November 3, 2017, unless we provide our public
shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account (less any interest released to us for taxes), divided
by the number of then outstanding public shares. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, any executive officer, director or director nominee, or any other person. These agreements are
contained in letter agreements that we have entered into with our sponsor, executive officers and directors. Our shareholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies
against our sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach,
our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
Provisions
of our memorandum and articles of association (and corresponding provisions of the agreement governing the release of funds from
our trust account) relating to the rights and obligations attaching to our ordinary shares and certain aspects of our pre-business
combination activity may be amended prior to the consummation of our initial business combination by a resolution of shareholders
holding 65% of the issued and outstanding ordinary shares attending and voting at the meeting at which the resolution is considered,
which is a lower amendment threshold than that of many blank check companies. It may be easier for us, therefore, to amend our
memorandum and articles of association to facilitate the consummation of an initial business combination that some of our shareholders
may not support.
Many
blank check companies have a provision in their constitutional documents which prohibits the amendment of certain provisions,
including those which relate to a company’s pre-business combination activity, without approval by a certain percentage
of the company’s shareholders. Amendment of these provisions requires approval by between 90% and 100% of the company’s
public shareholders in many cases. Our memorandum and articles of association provides that the provisions thereof relating to
the rights and obligations attaching to our ordinary shares and certain aspects of our pre-business combination activity may be
amended prior to an initial business combination by a resolution approved by shareholders holding 65% of the issued and outstanding
ordinary shares attending and voting at the relevant meeting, and corresponding provisions of the trust agreement governing the
release of funds from our trust account may be amended if approved in the same manner (in each case including the votes of our
sponsor, officers and directors). This is a lower amendment threshold than that of many blank check companies. It may be easier
for us, therefore, to amend our memorandum and articles of association to facilitate the consummation of an initial business combination
that some of our shareholders may not support.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our memorandum and articles of association that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by November 3, 2017, unless we provide our public
shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account (less any interest released to us for taxes), divided
by the number of then outstanding public shares. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, any executive officer, director or director nominee, or any other person. These agreements are
contained in letter agreements that we have entered into with our sponsor, executive officers and directors. Our shareholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies
against our sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach,
our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
If
the remaining net proceeds of our initial public offering and the sale of the private placement shares prove to be insufficient,
either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target
business, the obligation to repurchase for cash a significant number of shares from shareholders who elect redemption in connection
with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial
business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot
assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves
to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. If we are unable to complete
our initial business combination, our public shareholders may receive only approximately $10.50 per share plus any pro rata interest
earned on the funds held in the trust account and not previously released to us to pay our tax obligations, less up to $100,000
of interest for dissolution expenses, on the liquidation of our trust account. In addition, even if we do not need additional
financing to complete our initial business combination, we may require such financing to fund the operations or growth of the
target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in
connection with or after our initial business combination. If we are unable to complete our initial business combination, our
public shareholders may only receive approximately $10.53 per share on the liquidation of our trust account.
Our
initial shareholder controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder
vote, potentially in a manner that you do not support.
Our
initial shareholder owns 80.7% of our issued and outstanding ordinary shares. Accordingly, they may exert a substantial influence
on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our memorandum
and articles of association. If our initial shareholder purchases any additional ordinary shares in the aftermarket or in privately
negotiated transactions, this would increase its control. Neither our initial shareholder nor, to our knowledge, any of our officers
or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional
purchases would include consideration of the current trading price of our ordinary shares. In addition, our board of directors,
whose members were elected by our initial shareholder, 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. 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 shareholder, because of its ownership position, will have considerable influence regarding the outcome.
Additionally, under our memorandum and articles of association, a director may not be removed from office by a resolution of our
shareholders prior to the consummation of our initial business combination. Accordingly, our initial shareholder will continue
to exert control at least until the completion of our initial business combination.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank
Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ and other applicable securities rules and regulations.
Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult,
time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging
growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and
procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls
and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight
may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely
affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply
with these requirements, which will increase our costs and expenses.
A
market for our ordinary shares may not develop, which would adversely affect the liquidity and price of our ordinary shares.
The
price of our ordinary shares may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our ordinary shares may never develop or, if developed, it may not be sustained.
You may be unable to sell your ordinary shares unless a market can be established and sustained.
NASDAQ
may delist our ordinary shares from trading on its exchange, which could limit investors’ ability to make transactions in
our securities and subject us to additional trading restrictions.
Our
ordinary shares are currently listed on NASDAQ. However, we cannot assure you that our ordinary shares will be, or will continue
to be, listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our ordinary
shares on NASDAQ prior to our initial business combination, we must maintain certain financial, distribution and stock price levels.
Generally, we must maintain a minimum amount in shareholders’ equity ($2,500,000) and a minimum number of holders of our
securities (300 holders). Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements,
in order to continue to maintain the listing of our ordinary shares on NASDAQ. For instance, our stock price would be required
to be at least $4.00 per share, our shareholders’ equity would be required to be at least $5.0 million and we would be required
to have at least 300 round lot holders. We cannot assure you that we will be able to meet those initial listing requirements at
that time.
If
NASDAQ delists our ordinary shares from trading on its exchange and we are not able to list our ordinary shares on another national
securities exchange, we expect our ordinary shares could be quoted on an over-the-counter market. If this were to occur, we could
face significant material adverse consequences, including:
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a
limited availability of market quotations for our ordinary shares;
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reduced
liquidity for our ordinary shares;
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a
determination that our ordinary shares is a “penny stock” which will require brokers trading in our ordinary shares
to adhere to more stringent rules and possibly result 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; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our ordinary shares are listed
on NASDAQ, our ordinary shares are covered securities. Although the states are preempted from regulating the sale of our ordinary
shares, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is
a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While
we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies,
certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these
powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on NASDAQ,
our ordinary shares would not be covered securities and we would be subject to regulation in each state in which we offer and
sell our ordinary shares.
Because
we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financing reporting standards, or IFRS,
depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us
to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed
time frame.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such 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, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Report.
As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other
public companies because a target company with which we seek to complete our initial business combination may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition.
You
may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may
be limited, because we are incorporated under British Virgin Islands law.
We
are a company incorporated under the laws of the British Virgin Islands. As a result, it may be difficult for investors to enforce
judgments obtained in the U.S. courts against us or our directors or officers.
Our
corporate affairs will be governed by our memorandum and articles of association, the Companies Act and the common law of the
British Virgin 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 British Virgin Islands law are governed by the Companies Act and the
common law of the British Virgin Islands. The common law of the British Virgin Islands is derived from English common law, and
whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the British Virgin
Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law may
not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States.
In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some
states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory
provisions do exist in British Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders
in BVI companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The
circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any
such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of a company
organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate
wrongdoing has occurred.
The
British Virgin Islands courts are also unlikely to recognize or enforce against us judgments of courts of the United States based
on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or
similar fiscal or revenue obligations of the company; and to impose liabilities against us, in original actions brought in the
British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
There
is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the
British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself
which may be sued upon as a debt at common law so that no retrial of the issues would be necessary provided that the U.S. judgment:
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the
U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was
resident or carrying on business within such jurisdiction and was duly served with process;
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final and for a liquidated sum;
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the
judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of
the company;
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in
obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;
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recognition
or enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and
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the
proceedings pursuant to which judgment was obtained were not contrary to natural justice.
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In
appropriate circumstances, a British Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final
foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.
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
U.S. company.
Our
memorandum and articles of association permit the board of directors by resolution to amend our memorandum and articles of association,
including to create additional classes of securities, including shares with rights, preferences, designations and limitations
as they determine which may have an anti-takeover effect.
Our
memorandum and articles of association permits the board of directors by resolution to amend certain provisions of the memorandum
and articles of association including to designate rights, preferences, designations and limitations attaching to the preferred
shares as they determine in their discretion, without shareholder approval with respect the terms or the issuance. If issued,
the rights, preferences, designations and limitations of the preferred shares would be set by the board of directors and could
operate to the disadvantage of the outstanding ordinary shares the holders of which would not have any pre-emption rights in respect
of such an issue of preferred shares. Such terms could include, among others, preferences as to dividends and distributions on
liquidation, or could be used to prevent possible corporate takeovers. We may issue some or all of such preferred shares in connection
with our initial business combination. Notwithstanding the foregoing, we and our directors and officers have agreed not to propose
any amendment to our memorandum and articles of association that would affect the substance and timing of our obligation to redeem
our public shares if we are unable to consummate our initial business combination by November 3, 2017.
Failure
to maintain our tax status as a non-UK resident may negatively affect our financial and operating results.
Under
present legislation, we are not subject to any income, withholding or capital gains taxes in the British Virgin Islands and no
capital or stamp duties would be levied in the British Virgin Islands on the issue, transfer or redemption of shares provided
that we do not hold any interest in real estate situated in the British Virgin Islands (which we do not). While the Board intends
to exercise strategic management and control of our affairs outside of the United Kingdom, continued attention must be paid to
ensure that our major decisions are made in a manner that would not result in us losing our status as a non-U.K. tax resident.
The composition of the Board, the place of residence of the individual members of the Board and the location(s) in which the Board
makes decisions will all be important factors in determining and maintaining our tax residence outside of the United Kingdom.
If we were to be considered as resident within the United Kingdom for U.K. taxation purposes, or if we were to be considered to
carry on a trade or business within the United Kingdom for U.K. taxation purposes, we would be subject to U.K. corporation tax
on all or a portion of our profits, as the case may be, which may negatively affect our financial and operating results. Further,
if we are treated as being centrally managed and controlled in the United Kingdom for U.K. tax purposes, stamp duty reserve tax
will be payable in respect of any agreement to transfer our ordinary shares.
