Item
1. Business.
Overview
We
are a blank check company incorporated in the Cayman Islands on December 8, 2020 for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).
We were originally incorporated under the name Waldencast Acquisition Inc. and on January 5, 2021 that name was changed to Waldencast
Acquisition Corp. Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination,
we intend to focus on businesses operating in the beauty, personal care and wellness sectors. We are an early stage and emerging growth
company and, as such, the we are subject to all of the risks associated with early stage and emerging growth companies. Our sponsor is
Waldencast Long-Term Capital LLC, a Delaware limited liability company (the “Sponsor”).
Our
registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on March 15,
2021 (the “Effective Date”). On March 18, 2021, we consummated the Initial Public Offering of 34,500,000 units
(the “Units” and, with respect to the Class A ordinary shares included in the Units offered, the “Public Shares”),
which includes the full exercise by the underwriters of their overallotment option of 4,500,000 Units at $10.00 per Unit, generating
gross proceeds of $345,000,000.
Simultaneously
with the closing of the Initial Public Offering, we consummated the sale of 5,933,333 warrants (the “Private Placement Warrants”),
at a price of $1.50 per Private Placement Warrant in a private placement to our Sponsor generating gross proceeds of $8,900,000.
Following
the closing of the Initial Public Offering on March 18, 2021, $345,000,000 ($10.00 per Unit) from the net offering proceeds of the
sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust
Account”) and invested in U.S. government securities, with a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”),
which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust
Account that may be released to us to pay its tax obligations, the proceeds from the Initial Public Offering will not be released from
the Trust Account until the earliest to occur of: (1) the completion of the our initial Business Combination within 24 months and
(2) our redemption of 100% of the outstanding Public Shares if we have not completed a Business Combination in the required time
period.
Our
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although
substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination. Our Business Combination
must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust
Account (net of taxes payable) at the time of the signing of an agreement to enter into a Business Combination. However, we will only
complete a Business Combination if the post-Business Combination 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. There is no assurance that we will be able to successfully effect a Business
Combination.
We
intend to effectuate a Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, our shares, debt or a combination of cash, shares and debt. We have neither engaged in any operations nor generated
any operating revenues to date. For the period from December 8, 2020 (inception) through December 31, 2020, there had been no activity
since the formation of the entity and no equity shares were issued. We commenced operations on January 12, 2021 when the Founder Shares
(as defined below) were issued. All activity since January 12, 2021 relates to our formation, the Initial Public Offering and identifying
a target or targets for a Business Combination. We will not generate any operating revenues until after the completion of our initial
Business Combination, at the earliest. We will generate non-operating income in the form of interest income on cash and cash equivalents
from the proceeds derived from the Initial Public Offering.
We
have until March 18, 2023 (the “Combination Period”) as may be extended from time to time by us as a result of a shareholder
vote to amend our amended and restated memorandum and articles of association (an “Extension Period”) to consummate a Business
Combination. However, if we have not completed a Business Combination within the Combination Period or any Extension 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 100% of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net
of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish the
rights of the public shareholders as shareholders (including the right to receive further liquidating distributions, if any), and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining public shareholders and board
of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors
and the requirements of other applicable law.
Proposed
Obagi And Milk Business Combinations
Obagi
and Milk Business Combinations
Obagi
Merger Agreement and Related Agreements
On
November 15, 2021, the Company entered into an Agreement and Plan of Merger (the “Obagi Merger Agreement”), by and among
the Company, Obagi Merger Sub, Inc., a Cayman Islands exempted company limited by shares and an indirect wholly owned subsidiary of the
Company (“Merger Sub”), and Obagi Global Holdings Limited, a Cayman Islands exempted company limited by shares (“Obagi”).
The
Obagi Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions
will occur (together with the other agreements and transactions contemplated by the Obagi Merger Agreement, the “Obagi Transaction”):
| (i) | at
the closing of the transactions contemplated by the Obagi Merger Agreement (the “Obagi
Closing”), upon the terms and subject to the conditions of the Obagi Merger Agreement
and in accordance with the Companies Act (As Revised) of the Cayman Islands (“Cayman
Act”), Merger Sub will merge with and into Obagi, the separate corporate existence
of Merger Sub will cease and Obagi will be the surviving company and an indirect wholly owned
subsidiary of the Company (the “Merger”); |
| (ii) | as
a result of the Merger, among other things, each share of common stock of Obagi that is issued
and outstanding immediately prior to the effective time of the Merger (other than in respect
of Excluded Shares (as defined in the Obagi Merger Agreement)) will be cancelled and converted
into the right to receive (i) an amount in cash equal to (A) the Obagi Cash Consideration
(as defined in the Obagi Merger Agreement), subject to substitution for Obagi Stock Consideration
(as defined in the Obagi Merger Agreement) based on the amount of cash available to the Company
at the Closing (as defined below), taking into account, among other things, the level of
shareholder redemptions, divided by (B) the number of Aggregate Fully Diluted Company Common
Shares (as defined in the Obagi Merger Agreement), and (ii) a number of shares of Waldencast
Common Stock (as defined below) equal to (A) the Obagi Stock Consideration divided by (B)
the number of Aggregate Fully Diluted Company Common Shares; and |
| (iii) | upon
the effective time of the Domestication (as defined below), the Company will immediately
be renamed “Waldencast plc”. |
The
Company’s board of directors has unanimously (i) approved and declared advisable the Obagi Merger Agreement, the Obagi Transaction
and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Obagi Merger Agreement and related matters
by the shareholders of the Company.
Milk
Equity Purchase Agreement
On
November 15, 2021, the Company entered into an Equity Purchase Agreement (the “Milk Equity Purchase Agreement” and together
with the Obagi Merger Agreement, the “Transaction Agreements”), by and among the Company, Obagi Holdco 1 Limited, a limited
company incorporated under the laws of Jersey (“Holdco Purchaser”), Waldencast Partners LP, a Cayman Islands exempted limited
partnership (“Waldencast LP” and together with Holdco Purchaser, the “Purchasers”), Milk Makeup LLC, a Delaware
limited liability company (“Milk”), certain members of Milk (the “Milk Members”), and Shareholder Representative
Services LLC, a Colorado limited liability company, solely in its capacity as representative of the Milk Members (the “Equityholder
Representative”).
The
Milk Equity Purchase Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following
transactions will occur (together with the other agreements and transactions contemplated by the Milk Equity Purchase Agreement, the
“Milk Transaction”):
| (i) | at
the closing of the transactions contemplated by the Milk Equity Purchase Agreement (the “Milk
Closing” and together with the Obagi Closing, the “Closing”), upon the
terms and subject to the conditions of the Milk Equity Purchase Agreement, the Purchasers
will acquire from the Milk Members and the Milk Members will sell to the Purchasers all of
the issued and outstanding membership units of Milk in exchange for the Milk Cash Consideration
(as defined in the Milk Equity Purchase Agreement), and the Milk Equity Consideration (as
defined in the Milk Equity Purchase Agreement), which consist of partnership units of Waldencast
LP exchangeable for Waldencast Common Stock (as defined below), and the Domesticated Acquiror
Non-Economic Common Stock (as defined in the Milk Equity Purchase Agreement); |
| (ii) | as
a result of the Milk Transaction, among other things, (i) Holdco Purchaser will purchase
from the Milk Members a percentage of the outstanding membership units in exchange for the
Milk Cash Consideration and the Domesticated Acquiror Non-Economic Common Stock equal to
the Milk Equity Consideration and (ii) Waldencast LP will purchase from the Milk Members
the remainder of the outstanding membership units in exchange for the Milk Equity Consideration;
and |
| (iii) | (iii)
upon the effective time of the Domestication (as defined below), the Company will immediately
be renamed “Waldencast plc.” |
Immediately
following consummation of the Milk Transaction, (i) Holdco Purchaser will contribute its equity interest in (a) Milk to Waldencast LP
in exchange for limited partnership units in Waldencast LP and (b) Obagi Holdco 2 Limited, a limited company incorporated under the Laws
of Jersey (“Holdco 2”) and a direct subsidiary of Holdco Purchaser, to Waldencast LP in exchange for limited partnership
units in Waldencast LP. The combined company will be organized in an “Up-C” structure, in which the equity interests of Obagi
and Milk will be held by Waldencast LP. The Company will in turn hold its interests in Obagi and Milk through Waldencast LP and Holdco
Purchaser.
The
Board has unanimously (i) approved and declared advisable the Milk Equity Purchase Agreement, the Milk Transaction and the other transactions
contemplated thereby and (ii) resolved to recommend approval of the Milk Equity Purchase Agreement and related matters by the shareholders
of the Company.
Prior
to the Closing, subject to the approval of the Company’s shareholders, and in accordance with the Cayman Act, the Companies (Jersey)
Law 1991, as amended (the “Jersey Companies Law”) and the Company’s amended and restated memorandum and articles of
association, the Company will effect a deregistration under the Cayman Act and a domestication under Part 18C of the Jersey Companies
Law (by means of filing a memorandum and articles of association with the Registrar of Companies in Jersey), pursuant to which the Company’s
jurisdiction of incorporation will be changed from the Cayman Islands to Jersey (the “Domestication”).
In
connection with the Domestication, (i) each of the then issued and outstanding Class A ordinary shares, par value $0.0001 per share,
of the Company, will convert automatically, on a one-for-one basis, into an ordinary share of common stock, par value $0.0001 per share,
of the Company (following its Domestication) (the “Waldencast Common Stock”), (ii) each of the then issued and outstanding
Class B ordinary shares, par value $0.0001 per share, of the Company, will convert automatically, on a one-for-one basis, into a share
of Waldencast Common Stock, (iii) each then issued and outstanding warrant of the Company will convert automatically into a warrant to
acquire one share of Waldencast Common Stock (“Domesticated Waldencast Warrant”), pursuant to the Warrant Agreement, dated
March 15, 2021, between the Company and Continental Stock Transfer & Trust Company, as warrant agent, and (iv) each then issued and
outstanding unit of the Company shall be cancelled and will entitle the holder thereof to one share of Waldencast Common Stock and one-third
of one Domesticated Waldencast Warrant.
On
November 15, 2021, the Company entered into a Sponsor Support Agreement (the “Obagi Sponsor Support Agreement”), by and among
the Sponsor, Obagi, the Company and the persons set forth on Schedule I attached thereto (the “Sponsor Persons”), pursuant
to which the Sponsor and the Sponsor Persons agreed to, among other things, vote in favor of the Obagi Merger Agreement and the transactions
contemplated thereby, in each case, subject to the terms and conditions contemplated by the Obagi Sponsor Support Agreement.
On
November 15, 2021, the Company entered into a Sponsor Support Agreement (the “Milk Sponsor Support Agreement”), by and among
the Sponsor, the Equityholder Representative, the Company and the Sponsor Persons, pursuant to which the Sponsor and the Sponsor Persons
agreed to, among other things, vote in favor of the Milk Equity Purchase Agreement and the transactions contemplated thereby, in each
case, subject to the terms and conditions contemplated by the Milk Sponsor Support Agreement.
On
November 15, 2021, the Company also entered into a Stockholder Support Agreement (the “Stockholder Support Agreement”),
by and among the Company, Obagi and Cedarwalk Skincare Ltd., a Cayman Islands exempted company limited by shares
(“Cedarwalk”). Pursuant to the Stockholder Support Agreement, Cedarwalk agreed to, among other things, within two (2)
business days after the proxy statement/prospectus relating to the approval by the Company shareholders of the Obagi and Milk
Business Combinations is declared effective by the SEC and delivered or otherwise made available to the Company shareholders,
execute and deliver a written consent with respect to the outstanding ordinary shares of Obagi held by Cedarwalk adopting the Obagi
Merger Agreement and related transactions and approving the Obagi and Milk Business Combinations.
The
consummation of the proposed Obagi and Milk Business Combinations is subject to certain conditions as further described in the Obagi
Merger Agreement and the Milk Equity Purchase Agreement.
For
more information about the Obagi Merger Agreement, the Milk Equity Purchase Agreement and the proposed Obagi and Milk Business Combinations,
see our Current Report on Form 8-K/A filed with the SEC on November 17, 2021, and the Obagi and Milk Disclosure Statement that we filed
with the SEC. Unless specifically stated, this Annual Report on Form 10-K does not give effect to the proposed Obagi and Milk Business
Combinations and does not contain the risks associated with the proposed Obagi and Milk Business Combinations. Such risks and effects
relating to the proposed Obagi and Milk Business Combinations will be included in the Obagi and Milk Disclosure Statement.
Effecting
a Business Combination
Our
Business Strategy
Our
goal is to identify and complete our initial Business Combination with a brand in the beauty, personal care, or wellness industries.
We are embarking on a multi-year journey to build a global multi-branded platform focused on digital-first, purpose-driven,
next-generation brands in our core sectors. We intend to seek brands that share our vision to make the beauty and wellness industry
more sustainable, transparent, and inclusive. We believe having a multi-branded portfolio approach will help to mitigate execution
risk and increase the ability to share best practices and capture potential synergies across brands. Our long-term objective is
to create a platform of brands supported by a modern, data-driven infrastructure, unencumbered by challenges faced by traditional
consumer goods conglomerates.
Our
management team will deploy a proactive sourcing strategy and focus our efforts on companies where we believe the combination of our
team’s unique industry expertise, operating experience, deal-making track record, global relationships, and capital markets
expertise can be catalysts to enhance the growth potential and value of a target business and provide opportunities for an attractive
return to our shareholders. Given our management team’s combined experience in the beauty and consumer industries with both public
and private businesses, we believe we are differentiated from other blank check companies in the marketplace, we will be able to access
proprietary target opportunities, and we have the ability to offer founders and owners a unique value proposition when considering a
potential combination with us.
Our
management team has extensive global experience and demonstrated success in both investing in and operating business in our target sectors,
including:
| ● | Building
and managing a large portfolio of brands in beauty, personal care, and wellness; |
| ● | Deploying
a value-creating playbook which includes identifying value enhancements, enhancing product development and innovation, leveraging data,
recruiting and retaining skilled talent, delivering operating efficiencies, and integrating strategic acquisitions; |
| ● | Sourcing,
structuring, and acquiring businesses globally and under varying economic and financial market conditions; |
| ● | Long-term
public company experience and in-depth knowledge of public company governance with our management team serving as board members and in
key senior leadership positions in multiple publicly traded large consumer companies; and |
| ● | Accessing
the capital markets across various business cycles. |
We
intend to focus on generating attractive long-term returns for shareholders and enhancing the value of a Business Combination target
through operational excellence in the following areas:
| ● | Product
development: offer hands-on expertise in building a robust and relevant product pipeline and provide access to skilled innovation partners; |
| ● | Marketing:
enhance consumer-led storytelling to amplify brand awareness through brand and performance marketing channels; |
| ● | Digital
and data: develop and shape digital strategy to align with target consumers and leverage data to inform go-to-market, marketing, and
merchandising decisions; |
| ● | Supply
chain and distribution: ensure a streamlined and efficient sourcing strategy and provide support in identifying and structuring agreements
with relevant global retail and commerce partners; |
| ● | Sustainability:
support the development and improvement of supply chains, ingredients and formulations to align with the best practices in sustainable
product development and packaging to offer consumers clean and sustainable beauty and wellness experiences; |
| ● | Talent:
identify, recruit, and retain the skillful talent to support brand growth ambitions; |
| ● | Administrative
support: provide key support around financial management, accounting, human resources, and office management; and |
| ● | Platform
expansion and brand incubation: we may selectively pursue value-enhancing acquisitions to enter new geographies, augment existing capabilities,
or expand product offerings. We intend to provide support around all aspects of deal structuring, financial analysis, and negotiations
when pursuing potential acquisitions. In addition, we intend to continue incubating brands where we believe there is meaningful whitespace
in the market. |
Immediately
upon completion of the Initial Public Offering, our management team began communication with our extensive global networks of relationships
to articulate the parameters of our search for a potential Business Combination and began the process of pursuing and evaluating potential
opportunities. This international network encompasses brand founders and owners, management teams and board members of public and private
companies, private equity firms, venture capital firms, family offices, investment bankers, consultants, and other advisors and financial
sponsors, which we believe provides us with a number of potential Business Combination opportunities.
Acquisition
Criteria
We
believe that there are numerous potential targets that embody the following characteristics and could become an attractive public company
with long-term growth prospects, attractive profitability profiles and provide a platform for future consolidation. We plan to deploy
an acquisition strategy that targets differentiated businesses with enduring brand value and attributes that resonate with today’s
consumer. Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are
important in evaluating prospective target businesses in the beauty, personal care, and wellness industries. We will use these criteria
and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial Business Combination with a target
business that does not meet these criteria and guidelines. We intend to seek to acquire companies that have the following characteristics:
| ● | Strong
brand identity with enduring brand equity: purpose-driven brand with high-quality products and values such as authenticity, social consciousness,
inclusiveness, sustainability, and transparency with respect to clean ingredients and responsible sourcing practices. We seek brands
that are able to stand the test of time with qualities that transcend fads and trends; |
| ● | High
level of consumer affinity: established an active and engaged community of users with a high degree of loyalty and emotional connection
to the brand; |
| ● | Differentiated
offering and market positioning: unique innovation capabilities or formulations, a defensible strategic moat, and a modern business model
aimed at disrupting the category in which it plays; |
| ● | Multiple
levers for long-term sustainable growth: ability to increase penetration in existing markets, categories, and consumer segments, capitalize
on untapped opportunities with respect to international expansion, channel diversification, and thoughtful product line expansions which
augment consumer segments; |
| ● | Benefit
from online acceleration and omni-channel access: potential to rapidly scale through a combination of online acceleration and diversification
to appropriate offline channels; |
| ● | Long-term
sustainable business model: strong unit economics, gross margin profile that is aligned with or above industry standard, positive operating
profits, or clear path to profitability; |
| ● | Leverage
management team’s extensive operating expertise and network: leverage over five decades of direct beauty and consumer goods operating
and investing experience at the world’s leading consumer companies and benefit from hands-on guidance to optimize operations to
extract operational efficiencies; and |
| ● | Attractive
value creation opportunity: potential combination targets with the appropriate risk and reward profile that can generate attractive returns
for our shareholders based on our rigorous strategic, operational, and financial assessment. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial Business Combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors, and criteria that our management
may deem relevant. In the event that we decide to enter into our initial Business Combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications
related to our initial Business Combination, which, as discussed in this Annual Report on Form 10-K, would be in the form of proxy solicitation
materials or tender offer documents that we would file with the SEC.
Additional
Disclosures
Our
Acquisition Process
Each
of our directors and officers presently has, and any of them in the future may have, additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a Business Combination opportunity to
such entity. Accordingly, if any of our directors or officers becomes aware of a Business Combination opportunity that is suitable for
an entity to which he or she has then-current fiduciary or contractual obligations, he or she may need to honor these fiduciary
or contractual obligations to present such Business Combination opportunity to such entity, subject to his or her fiduciary duties under
Cayman Islands law. We do not believe, however, that the fiduciary duties or contractual obligations of our directors or officers will
materially affect our ability to identify and pursue Business Combination opportunities or complete our initial Business Combination.
Our directors and officers are also not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts
of interest in allocating management time among various business activities, including identifying potential Business Combinations and
monitoring the related due diligence. See “Item 1.A. Risk Factors — Certain of our directors and officers are now, and
all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.”
You
should not rely on the historical record of our founders’ and management’s performance as indicative of our future performance.
See “Item 1.A. Risk Factors — Past performance by our management team and their affiliates may not be indicative of
future performance of an investment in the Company.”
Initial
Business Combination
Nasdaq
listing rules require that our initial Business Combination must be with one or more operating businesses or assets with a fair market
value equal to at least 80% of the assets held in the Trust Account (net of amounts disbursed to management for working capital purposes,
if permitted, and excluding the amount of any deferred underwriting fees and taxes payable on the income earned on the Trust Account).
We refer to this as the 80% fair market value test. If our board of directors 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 or another independent
entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. We do not currently intend to purchase
multiple businesses in unrelated industries in conjunction with our initial Business Combination, although there is no assurance that
will be the case.
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 issued and outstanding 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
issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient
for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our shareholders prior to our initial Business Combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial Business
Combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the issued and outstanding capital stock, shares or other equity securities of a target business or issue a substantial number
of new shares to third-parties in connection with financing our initial Business Combination. 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 issued and 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% fair market value test. If our initial Business Combination involves more than one target business, the 80% fair market value
test will be based on the aggregate value of all of the target businesses. Notwithstanding the foregoing, if we are not then listed on
Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% fair market value test.
Corporate
Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), 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 attestation requirements of Section 404
of the Sarbanes-Oxley Act of 2002 (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 the Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion,
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held
by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, and (2) the date on which
we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References
herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
ordinary shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our
annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds
$700 million as of the end of that year’s second fiscal quarter.
Exempted
companies are Cayman Islands companies wishing to conduct business outside the Cayman Islands and, as such, are exempted from complying
with certain provisions of the Cayman Act. As an exempted company, we have received a tax exemption undertaking from the Cayman Islands
Government that, in accordance with Section 6 of the Tax Concessions Act (As Revised) of the Cayman Islands, for a period of 20 years
from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains
or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations
or which is in the nature of estate duty or inheritance tax shall be payable (1) on or in respect of our shares, debentures or other
obligations or (2) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital
by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us.
We
are a Cayman Islands exempted company incorporated on December 8, 2020. Our executive offices are located at 10 Bank Street, Suite
560, White Plains, NY 10606 and our telephone number is (917) 546-6828. Our corporate website address is waldencast.com. Our website
and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and
is not considered part of, this Annual Report on Form 10-K.
Competition
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. Additionally, the number of blank check
companies looking for Business Combination targets has increased compared to recent years and many of these blank check companies are
sponsored by entities or persons that have significant experience with completing Business Combinations. While we believe there are numerous
target businesses we could potentially acquire with the net proceeds of the Initial Public Offering and the sale of the Private Placement
Warrants, if the proposed Obagi and Milk Business Combinations are not consummated, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation
gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek shareholder approval
of our initial Business Combination and we are obligated to pay cash for our Class A ordinary shares, it will potentially reduce
the resources available to us for our initial Business Combination. Any of these obligations may place us at a competitive disadvantage
in successfully negotiating a Business Combination. If we have not completed our initial Business Combination within the required time
period, our public shareholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation
of our Trust Account and our warrants will expire worthless.
Human
Capital
We
currently have four officers and do not intend to have any full-time employees prior to the completion of our initial Business Combination.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial Business Combination. The amount of time that
any such person will devote in any time period will vary based on the status of the proposed Obagi and Milk Business Combinations and,
if the proposed Obagi and Milk Business Combinations are not consummated, whether a different target business has been selected for our
initial Business Combination and the current stage of the Business Combination process.
Item 1.A. Risk Factors.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report on Form 10-K, including our financial statements and related notes, before
making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating
results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all
or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties
that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business,
financial condition and operating results. For risk factors related to the proposed Obagi and Milk Business Combinations, see the “Risk
Factors” section of the Obagi and Milk Disclosure Statement that we have filed with the SEC.
Risks
Relating to Our Search for, and Consummation of or Inability to Consummate, a Business Combination
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 to approve our initial Business Combination unless the Business Combination would require shareholder
approval under applicable law or stock exchange rules or if we decide to hold a shareholder vote for business or other reasons. For instance,
Nasdaq listing rules currently allow us to engage in a tender offer in lieu of a general meeting, but would still require us to obtain
shareholder approval if we were seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration
in any Business Combination. Therefore, if we were structuring a Business Combination that required us to issue more than 20% of our
issued and outstanding shares, we would seek shareholder approval of such Business Combination. However, except as required by applicable
law or stock exchange rules, the decision as to whether we will seek shareholder approval of a proposed Business Combination or will
allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a
variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek
shareholder approval. Accordingly, we may consummate our initial Business Combination even if holders of a majority of the issued and
outstanding ordinary shares do not approve of the Business Combination we consummate.
If
we seek shareholder approval of our initial Business Combination, our initial shareholders, directors and officers have agreed to vote
in favor of such initial Business Combination, regardless of how our public shareholders vote.
Unlike
some 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 shareholders, directors
and officers have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with
us, to vote their Founder Shares and any Public Shares held by them in favor of our initial Business Combination. As a result, in addition
to our initial shareholders’ Founder Shares, we would need 12,937,501, or 37.5% (assuming all issued and outstanding shares are
voted) of the 34,500,000 Public Shares sold in the Initial Public Offering to be voted in favor of an initial Business Combination in
order to have such initial Business Combination approved, assuming no resolution or other approval is required pursuant to Cayman Islands
or other applicable law. We expect that our initial shareholders and their permitted transferees will own at least 20% of our issued
and outstanding ordinary shares at the time of any such shareholder vote. 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 such persons
agreed to vote their Founder Shares in accordance with the majority of the votes cast by our public shareholders.
Your
only opportunity to affect the investment decision regarding a potential Business Combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek shareholder approval of such Business Combination.
Since
our board of directors may complete a Business Combination without seeking shareholder approval, public shareholders may not have the
right or opportunity to vote on the Business Combination, unless we seek such shareholder approval. Accordingly, if we do not seek shareholder
approval, your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to exercising
your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public shareholders in which we describe our initial Business Combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential Business
Combination targets, which may make it difficult for us to enter into a Business Combination with a target.
We
may seek to enter into a Business Combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination. The amount of the
deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with
a Business Combination and such amount of deferred underwriting discount is not available for us to use as consideration in an initial
Business Combination. If we are able to consummate an initial Business Combination, the per-share value of shares held by non-redeeming shareholders
will reflect our obligation to pay and the payment of the deferred underwriting commissions. 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 following such redemptions, or any
greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial Business Combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 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 a Business Combination transaction with us.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable Business Combination or optimize our capital structure.
At
the time we enter into an agreement for our initial Business Combination, we will not know how many shareholders may exercise their redemption
rights and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the
purchase price, or requires us to have a minimum amount of cash at Closing, we will need to reserve a portion of the cash in the Trust
Account to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares is submitted
for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the
Trust Account or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity issuances
or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most
desirable Business Combination available to us or optimize our capital structure.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If
our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or
requires us to have a minimum amount of cash at Closing, the probability that our initial Business Combination would be unsuccessful
increases. If our initial Business Combination is unsuccessful, you would not receive your pro rata portion of the Trust Account until
we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market;
however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation,
you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate
or you are able to sell your shares in the open market.
The
requirement that we complete our initial Business Combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a Business Combination and may limit the time we have in which to conduct due diligence on potential Business
Combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial
Business Combination on terms that would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete
our initial Business Combination within 24 months from the closing of the Initial Public Offering. Consequently, such target business
may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our initial Business Combination
with that particular target business, we may be unable to complete our initial Business Combination with any target business. This risk
will increase as we get closer to the end of the 24-month period. 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.
In
July 2021, the SEC charged a Special Purpose Acquisition Company (a “SPAC”) for misleading disclosures, which could have
been corrected with more adequate due diligence, and obtained substantial relief against the SPAC and its sponsor. Although we will invest
in due diligence efforts and commit management time and resources to such efforts, there can be no assurance that our due diligence will
unveil all potential issues with a target business and that we or our sponsor will not become subject to regulatory actions related to
such efforts.
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 liquidate, in which case our public shareholders may receive
only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
Sponsor, directors and officers have agreed that we must complete our initial Business Combination within 24 months from the closing
of the Initial Public Offering. We may not be able to find a suitable target business and complete our initial Business Combination within
such time period. Our ability to complete our initial Business Combination may be negatively impacted by general market conditions, volatility
in the capital and debt markets and the other risks described herein, including as a result of terrorist attacks, natural disasters,
global hostilities or a significant outbreak of infectious diseases. For example, the COVID-19 pandemic continues to grow both in the
U.S. and globally and, while the extent of the impact of the pandemic on us will depend on future developments, it could limit our ability
to complete our initial Business Combination, including as a result of increased market volatility, decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all. Additionally, the COVID-19 pandemic and other events (such as terrorist attacks,
natural disasters, global hostilities or a significant outbreak of other infectious diseases) may negatively impact businesses we may
seek to acquire.
If
we have not completed our initial Business Combination within such time period or during any Extension Period, we will: (1) cease
all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter,
redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided
by the number of then issued and outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights
as shareholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve,
subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public shareholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their
shares, and our warrants will expire worthless. See “Item 1.A. Risk Factors — 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 $10.00 per share” and other risk factors herein.
Our
search for a Business Combination, and any target business with which we ultimately consummate a Business Combination, may be materially
adversely affected by the COVID-19 pandemic and other events and the status of debt and equity markets.
The
COVID-19 pandemic has adversely affected, and other events (such as terrorist attacks, natural disasters, global hostilities or a significant
outbreak of other infectious diseases) could adversely affect, economies and financial markets worldwide, business operations and the
conduct of commerce generally, and the business of any potential target business with which we consummate a Business Combination could
be, or may already have been, materially and adversely affected. Furthermore, we may be unable to complete a Business Combination if
concerns relating to COVID-19 or other events restrict travel, limit the ability to have meetings with potential investors or limit the
ability to conduct due diligence, or the target company’s personnel, vendors, and service providers are unavailable to negotiate
and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a Business Combination will
depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 variants and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other events (such as terrorist attacks, natural disasters, global hostilities or a significant outbreak of other
infectious diseases) continue for a prolonged period of time, our ability to consummate a Business Combination, or the operations of
a target business with which we ultimately consummate a Business Combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events (such as terrorist attacks, natural disasters, global hostilities or a significant outbreak of other
infectious diseases), including as a result of increased market volatility and decreased market liquidity and third party financing being
unavailable on terms acceptable to us or at all.
Finally,
the COVID-19 pandemic and other events may also have the effect of heightening many of the other risks described in this “Risk
Factors” section, such as those related to the market for our securities and cross-border transactions.
Global or regional
conditions may adversely affect our business and our ability to consummate our initial Business Combination.
Adverse changes in global or regional economic conditions periodically
occur, including recession or slowing growth, changes, or uncertainty in fiscal, monetary or trade policy, higher interest rates, tighter
credit, inflation, lower capital expenditures by businesses, increases in unemployment and lower consumer confidence and spending. Adverse
changes in economic conditions can harm global business and adversely affect our ability to consummate our initial Business Combination.
Such adverse changes could result from geopolitical and security issues, such as armed conflict and civil or military unrest, political
instability, human rights concerns and terrorist activity, catastrophic events such as natural disasters and public health issues (including
the COVID-19 pandemic), supply chain interruptions, new or revised export, import or doing-business regulations, including trade sanctions
and tariffs or other global or regional occurrences.
In particular, in response to Russia’s recent invasion of
Ukraine, the United States, the European Union, and several other countries are imposing far-reaching sanctions and export control restrictions
on Russian entities and individuals. This rising conflict and the resulting market volatility could adversely affect global economic,
political and market conditions. Additionally, tensions between the United States and China have led to increased tariffs and trade restrictions.
The United States has imposed economic sanctions on certain Chinese individuals and entities and restrictions on the export of U.S.-regulated
products and technology to certain Chinese technology companies. These and other global and regional conditions may adversely impact our
business and our ability to consummate our initial Business Combination.
If
we seek shareholder approval of our initial Business Combination, our Sponsor, directors, officers, advisors or any of their respective
affiliates may elect to purchase shares or warrants from public shareholders or warrant holders, which may influence a vote on a proposed
Business Combination and reduce the public “float” of our securities.
If
we seek shareholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business
Combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or any of their respective affiliates may
purchase Public Shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial Business Combination. Any such price per share may be different than the amount per share a public shareholder would receive
if it elected to redeem its shares in connection with our initial Business Combination. Additionally, at any time at or prior to our
initial Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), our Sponsor,
directors, officers, advisors or any of their respective affiliates may enter into transactions with investors and others to provide
them with incentives to acquire Public Shares, vote their Public Shares in favor of our initial Business Combination or not redeem their
Public Shares. However, our Sponsor, directors, officers, advisors or any of their respective affiliates are under no obligation or duty
to do so and they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or
conditions for any such transactions. The purpose of such purchases could be to vote such shares in favor of our initial Business Combination
and thereby increase the likelihood of obtaining shareholder approval of our initial Business Combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public
warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant
holders for approval in connection with our initial Business Combination. This may result in the completion of our initial Business Combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national
securities exchange.
If
a shareholder fails to receive notice of our offer to redeem our Public Shares in connection with our initial Business Combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial Business
Combination. Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable,
such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials,
as applicable, that we will furnish to holders of our Public Shares in connection with our initial Business Combination will describe
the various procedures that must be complied with in order to validly tender or redeem Public Shares. In the event that a shareholder
fails to comply with these procedures, its shares may not be redeemed.
You
are not entitled to protections normally afforded to investors of many other blank check companies.
We
are exempt from certain rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly,
investors are not afforded the benefits or protections of those rules. Among other things, this means we will have a longer period of
time to complete our initial Business Combination than do companies subject to Rule 419. Moreover, if the Initial Public Offering
was 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 15% of our Class A ordinary shares, you will
lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If
we seek shareholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business
Combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public
shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as
a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% of the shares sold in the Initial Public Offering, which we refer to as the “Excess Shares,”
without our prior consent. However, we would not be restricting our shareholders’ ability to vote all of their shares (including
Excess Shares) for or against our initial Business Combination. Your inability to redeem the Excess Shares will reduce your influence
over our ability to complete our initial Business Combination and you could suffer a material loss on your investment in us if you sell
Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares
if we complete our initial Business Combination. And as a result, you will continue to hold that number of shares exceeding 15% and,
in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete
our initial Business Combination. If we have not completed our initial Business Combination within the required time period, our public
shareholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption of their shares, and
our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target
businesses we could potentially acquire with the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
Furthermore, in the event we seek shareholder approval of our initial Business Combination and we are obligated to pay cash for our Class A
ordinary shares, it will potentially reduce the resources available to us for our initial Business Combination. Any of these obligations
may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we have not completed our initial Business
Combination within the required time period, our public shareholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. See “Item 1.A. Risk Factors —
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 $10.00 per share” and other risk factors herein.
As
the number of SPACs increases, there may be increased costs associated with completing our initial Business Combination and may result
in our inability to complete our initial Business Combination.
In
recent years, the number of SPACs that have been formed has increased substantially. Many companies have entered into Business Combinations
with SPACs, and there are still many SPACs seeking targets for their initial Business Combination, as well as many additional SPACs currently
in registration. As a result, because there are more SPACs seeking to enter into an initial Business Combination with available targets,
the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies
to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector
downturns, geopolitical tensions or increases in the cost of additional capital needed to close Business Combinations or operate targets
post-Business Combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to complete our initial
Business Combination.
If
the funds not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months following the closing
of the Initial Public Offering, we may be unable to complete our initial Business Combination.
The funds available to us
outside of the Trust Account may not be sufficient to allow us to operate for at least the 24 months following the closing of the
Initial Public Offering, assuming that our initial Business Combination is not completed during that time. We have incurred and expect
to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through the
proceeds from the Initial Public Offering held outside of the Trust Account, the promissory note issued by us on August 18, 2021 to our
Sponsor in an aggregate amount of $1,500,000 (the “Working Capital Promissory Note”) and other potential loans from certain
of our affiliates are discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
As of December 31, 2021, the Company has drawn down the entire $1,500,000 in aggregate principal amount of this Working Capital
Promissory Note. However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional
financing from unaffiliated parties necessary to fund our expenses. Such limitations on liquidity and capital resources available to
the Company may negatively impact our ability to continue as a going concern.
Of
the funds available to us, we could use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with
other companies or investors 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 enter into a letter of intent or merger agreement 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 have not completed our initial Business Combination within the required time period, our public shareholders may receive
only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will
expire worthless. See “Item 1.A. Risk Factors — 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 $10.00 per share” and
other risk factors herein.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial Business Combination.
Recently,
the market for directors and officers liability insurance for SPACs has changed in ways adverse to us and our management team. Fewer
insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally
increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate and complete an initial Business Combination. In order to obtain directors and officers liability insurance or modify
its coverage as a result of becoming a public company, the post-Business Combination entity might need to incur greater expense and/or
accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse
impact on the post-Business Combination’s ability to attract and retain qualified officers and directors.
In
addition, after completion of any initial Business Combination, our directors and officers could be subject to potential liability from
claims arising from conduct alleged to have occurred prior to such initial Business Combination. As a result, in order to protect our
directors and officers, the post-Business Combination entity may need to purchase additional insurance with respect to any such claims
(“run-off insurance”). The need for run-off insurance would be an added expense for the post-Business Combination entity
and could interfere with or frustrate our ability to consummate an initial Business Combination on terms favorable to our investors.
If 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 $10.00 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 and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public
shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing
claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim
against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims
to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will enter into
an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative.
Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that
such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we
have not completed our initial Business Combination within the required time period, 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 $10.00 per Public Share initially held in the Trust Account, due to claims of such creditors.
Our Sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or
products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount
of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust
Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of
the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights
to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of the Initial Public Offering
against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed
to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any liability for such third-party claims.
We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our
Sponsor’s only assets are securities of our company. Our Sponsor may not have sufficient funds available to satisfy those obligations.
We have not asked our Sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations.
As a result, if any such claims were successfully made against the Trust Account, the funds available for our initial Business Combination
and redemptions could be reduced to less than $10.00 per Public Share. In such event, we may not be able to complete our initial Business
Combination, and you would receive such lesser amount per Public Share in connection with any redemption of your Public Shares. None of
our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
Our directors may
decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account
available for distribution to our public shareholders.
In the event that the proceeds
in the Trust Account are reduced below the lesser of (1) $10.00 per Public Share or (2) such lesser amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in
each case net of the interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose
not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders
may be reduced below $10.00 per share.
The securities in
which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets
held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
The proceeds held in the
Trust Account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds
investing solely in U.S. Treasuries. While short-term U.S. government treasury obligations currently yield a positive rate of interest,
they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero
in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt
similar policies in the United States. In the event that we are unable to complete our initial Business Combination or make certain
amendments to our amended and restated memorandum and articles of association, our public shareholders are entitled to receive their pro-rata share
of the proceeds held in the Trust Account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to
complete our initial Business Combination, $100,000 of interest). Negative interest rates could reduce the value of the assets held in
trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share. Negative interest
rates could also reduce the amount of funds we have available to complete our initial Business Combination.
If, after we distribute
the proceeds in the Trust Account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up
or bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our
board of directors and us to claims of punitive damages.
If, after we distribute the
proceeds in the Trust Account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or
bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable
debtor/creditor and/or insolvency laws as a voidable preference. As a result, a liquidator could seek to recover some or all amounts received
by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having
acted in bad faith by paying public shareholders from the Trust Account prior to addressing the claims of creditors, thereby exposing
itself and us to claims of punitive damages.
If, before distributing
the proceeds in the Trust Account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up
or bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the
claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation
may be reduced.
If, before distributing the
proceeds in the Trust Account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency
law, and may be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our shareholders.
To the extent any liquidation claims deplete the Trust Account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation would be reduced.
If we are deemed
to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our
activities may be restricted, which may make it difficult for us to complete our initial Business Combination.
If we are deemed to be an
investment company under the Investment Company Act, our activities may be restricted, including:
| ● | restrictions on the nature of our investments; and |
| ● | restrictions on the issuance of securities; |
each of which may make it
difficult for us to complete our initial Business Combination.
In addition, we may have
imposed upon us burdensome requirements, including:
| ● | registration as an investment company with the SEC; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that
we are currently not subject to. |
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the Trust Account may be invested
by the trustee only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely
in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of
the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated
under 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 a Business Combination.
If we have not completed our initial Business Combination within the required time period, our public shareholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Changes in laws
or regulations, or how such laws or regulations are interpreted or applied, or a failure to comply with any laws and regulations, may
adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other
legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those
laws and regulations and their interpretation and application may also change from time to time, including as a result of changes in economic,
political, social and governmental policies, and those changes could have a material adverse effect on our business, investments and results
of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material
adverse effect on our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
If we have not completed
our initial Business Combination within the allotted time period, our public shareholders may be forced to wait beyond such allotted time
period before redemption from our Trust Account.
If we have not completed
our initial Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period,
we will distribute the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay
dissolution expenses and which interest shall be net of taxes payable), pro rata to our public shareholders by way of redemption and cease
all operations except for the purposes of winding up of our affairs, as further described herein. Any redemption of public shareholders
from the Trust Account shall be effected automatically by function of our amended and restated memorandum and articles of association
prior to any voluntary winding up. If we are required to windup, liquidate the Trust Account and distribute such amount therein, pro rata,
to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable
provisions of the Cayman Act. In that case, investors may be forced to wait beyond the allotted time period before the redemption proceeds
of our Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from our Trust Account.
We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate
our initial Business Combination or amend certain provisions of our amended and restated memorandum and articles of association and then
only in cases where investors have properly sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation
will public shareholders be entitled to distributions if we have not completed our initial Business Combination within the required time
period and do not amend certain provisions of our amended and restated memorandum and articles of association prior thereto.
Our shareholders
may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter
into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that
immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course
of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors
may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing
themselves and our company to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and
willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as
they fall due in the ordinary course of business would be guilty of an offense and may be liable for a fine of up to approximately $18,300
and to imprisonment for up to five years in the Cayman Islands.
We may not hold
an annual general meeting until after the consummation of our initial Business Combination. Our public shareholders will not have the
right to elect or remove directors prior to the consummation of our initial Business Combination.
In accordance with Nasdaq
corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end
following our listing on Nasdaq. There is no requirement under the Cayman Act for us to hold annual or general meetings to appoint directors.
Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to discuss company affairs with management.
In addition, as holders of our Class A ordinary shares, our public shareholders will not have the right to vote on the appointment
of directors prior to consummation of our initial Business Combination. In addition, holders of a majority of our Founder Shares may remove
a member of our board of directors for any reason.
The grant of registration
rights to our initial shareholders and their permitted transferees may make it more difficult to complete our initial Business Combination,
and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to a registration
rights agreement entered into in connection with the initial public offering, at or after the time of our initial Business Combination,
our initial shareholders and their permitted transferees can demand that we register the resale of their Founder Shares after those shares
convert to our Class A ordinary shares. In addition, our Sponsor and its permitted transferees can demand that we register the resale
of the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants, and holders
of warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such warrants or the
Class A ordinary shares issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market
price of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial Business Combination
more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek
in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary
shares that is expected when the ordinary shares owned by our initial shareholders or their permitted transferees, our Private Placement
Warrants or warrants issued in connection with working capital loans are registered for resale.
Because we are not
limited to a particular industry or any specific target businesses with which to pursue our initial Business Combination, you will be
unable to ascertain the merits or risks of any particular target business’s operations.
We may seek to complete a
Business Combination with an operating company of any size (subject to our satisfaction of the 80% fair market value test) and in any
industry, sector or geographic area. However, we will not, under our amended and restated memorandum and articles of association, be permitted
to effectuate our initial Business Combination solely with another blank check company or similar company with nominal operations. 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 development stage entity.
Although our directors and officers 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 securities will not ultimately prove
to be less favorable to our investors than a direct investment, if such opportunity were available, in a Business Combination target.
Accordingly, any shareholder or warrant holder who chooses to remain a shareholder or warrant holder, respectively, following our initial
Business Combination could suffer a reduction in the value of their securities. Such shareholders and warrant holders are unlikely to
have a remedy for such reduction in value.
We may seek acquisition
opportunities outside the health, beauty, and wellness industries, which may be outside of our management’s areas of expertise.
We will consider a Business
Combination outside of our management’s areas of expertise, if a Business Combination candidate is presented to us and we determine
that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue an acquisition outside
of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or
operation, and our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As
a result, our management may not be able to adequately ascertain or assess all of the significant risk factors relevant to such acquisition.
Accordingly, any shareholder or warrant holder who chooses to remain a shareholder or warrant holder, respectively, following our initial
Business Combination could suffer a reduction in the value of their securities. Such shareholders and warrant holders are unlikely to
have a remedy for such reduction in value.
Although we have
identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into
our initial Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with
which we enter into our initial Business Combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial Business Combination will not have all of these positive attributes. If we complete our initial Business Combination
with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination
with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights,
which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or
a certain amount of cash. In addition, if shareholder approval of the transaction is required by applicable law or stock exchange listing
requirements, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder
approval of our initial Business Combination if the target business does not meet our general criteria and guidelines. If we have not
completed our initial Business Combination within the required time period, our public shareholders may receive only approximately $10.00
per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
We may seek acquisition
opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete
our initial Business Combination with an early stage company, a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks
include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our directors and officers 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 regarding fairness. 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 that the price we are paying is fair to our company
from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our tender offer documents or proxy solicitation materials, as applicable, related to our initial Business Combination.
We may issue additional
Class A ordinary shares or preferred shares to complete our initial Business Combination or under an employee incentive plan after
completion of our initial Business Combination. We may also issue Class A ordinary shares upon the conversion of the Class B
ordinary shares at a ratio greater than one-to-one at the time of our initial Business Combination as a result of the anti-dilution provisions
contained in our amended and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders
and likely present other risks.
Our amended and restated
memorandum and articles of association authorizes the issuance of up to 500,000,000 Class A ordinary shares, par value $0.0001 per
share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 5,000,000 undesignated preferred shares, par value $0.0001
per share. As of December 31, 2021, there were 465,500,000 and 41,375,000 authorized but unissued Class A ordinary shares and Class B
ordinary shares, respectively, available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding
warrants but not upon conversion of the Class B ordinary shares or any securities issuable pursuant to the Forward Purchase Agreements
(as defined below) (including shares issuable upon exercise of forward purchase warrants). Class B ordinary shares are convertible
into Class A ordinary shares, initially at a one-for-one ratio but subject to adjustment as set forth herein. As of December
31, 2021, there were no preferred shares issued and outstanding.
We may issue a substantial
number of additional Class A ordinary shares, and may issue preferred shares, in order to complete our initial Business Combination
or under an employee incentive plan after completion of our initial Business Combination. We may also issue Class A ordinary shares
to redeem the warrants or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our
initial Business Combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles
of association. However, our amended and restated memorandum and articles of association provide, among other things, that prior to our
initial Business Combination, we may not issue additional ordinary shares that would entitle the holders thereof to (1) receive funds
from the Trust Account or (2) vote as a class with our Public Shares on any initial Business Combination. The issuance of additional
ordinary shares or preferred shares, including pursuant to the Forward Purchase Agreements:
| ● | may significantly dilute the equity interest of our public investors, which dilution would increase if
the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater
than one-to-one basis upon conversion of the Class B ordinary shares; |
| ● | may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior
to those afforded our ordinary shares; |
| ● | could cause a change of control if a substantial number of our ordinary shares is 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 directors and officers; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the share ownership
or voting rights of a person seeking to obtain control of us; |
| ● | may adversely affect prevailing market prices for our Units, ordinary shares and/or warrants; and |
| ● | may not result in adjustment to the exercise price of our warrants. |
Our initial Business
Combination or reincorporation may result in taxes imposed on shareholders or warrant holders.
We may, subject to requisite
shareholder approval by special resolution under the Cayman Act, effect a Business Combination with a target company in another jurisdiction,
reincorporate in the jurisdiction in which the target company or business is located, or reincorporate in another jurisdiction. Such transactions
may result in tax liability for a shareholder or warrant holder in the jurisdiction in which the shareholder or warrant holder is a tax
resident (or in which its members are resident if it is a tax transparent entity), in which the target company is located, or in which
we reincorporate. In the event of a reincorporation pursuant to our initial Business Combination, such tax liability may attach prior
to any consummation of redemptions. We do not intend to make any cash distributions to pay such taxes. Shareholders or warrant holders
may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
Resources could
be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and
acquire or merge with another business. If we have not completed our initial Business Combination within the required time period, our
public shareholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation
of our Trust Account and our warrants will expire worthless.
We anticipate that the investigation
of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to
complete a specific initial Business Combination, the costs incurred up to that point for the proposed transaction likely would not be
recoverable. Furthermore, although we have entered into the Transaction Agreements, we may fail to complete the Obagi and Milk Business
Combinations 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 have
not completed our initial Business Combination within the required time period, our public shareholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Failure to maintain
our status as tax resident solely in the Cayman Islands could adversely affect our financial and operating results.
Our intention is that prior
to our initial Business Combination we should be resident solely in the Cayman Islands. Continued attention must be paid to ensure that
major decisions by the Company are not made from another jurisdiction, since this could cause us to lose our status as tax resident solely
in the Cayman Islands. 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 in the Cayman Islands.
If we were to be considered as tax resident within another jurisdiction, we may be subject to additional tax in that jurisdiction, which
could negatively affect our financial and operating results, and/or our shareholders’ or warrant holders’ investment returns
could be subject to additional or increased taxes (including withholding taxes).
We may engage in
a Business Combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor,
directors or officers which may raise potential conflicts of interest.
In light of the involvement
of our Sponsor, directors and officers with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor,
directors and officers. Certain of our directors and officers also serve as officers and board members for other entities, including those
described under “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest.” Such
entities, including the other existing reinvest SPACs, may compete with us for Business Combination opportunities. 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 and guidelines for a Business Combination and such transaction was approved by a majority
of our independent and disinterested directors. Despite our agreement that we, or a committee of independent and disinterested directors,
will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, regarding
the fairness to our company from a financial point of view of a Business Combination with one or more domestic or international businesses
affiliated with our Sponsor, directors or officers, 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 initial shareholders
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 12, 2021, the
Company issued 7,187,500 Class B ordinary shares to the Sponsor for an aggregate purchase price of $25,000 (the “Founder
Shares”). In February 2021, the Sponsor transferred 20,000 Waldencast Class B ordinary shares to each of Sarah Brown, Juliette Hickman,
Lindsay Pattison and Zachary Werner (the “Investor Directors”), resulting in the Sponsor holding 7,107,500 Waldencast Class
B ordinary shares. On March 15, 2021, the Company effected a dividend of 0.2 of a share of Class B ordinary shares for
each share of Class B ordinary shares, resulting in 8,625,000 shares of Class B ordinary shares being issued and outstanding,
of which 8,545,000 are held by the Sponsor.
The Founder Shares are identical
to the ordinary shares included in the Units except that: (1) prior to our initial Business Combination, only holders of the Founder
Shares have the right to vote on the appointment of directors and holders of a majority of our Founder Shares may remove a member of our
board of directors for any reason; (2) the Founder Shares are subject to certain transfer restrictions; (3) our initial shareholders,
directors and officers have entered into a letter agreement with us, pursuant to which they have agreed to waive: (i) their redemption
rights with respect to any Founder Shares and Public Shares held by them, as applicable, in connection with the completion of our initial
Business Combination; (ii) their redemption rights with respect to any Founder Shares and Public Shares held by them in connection
with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing
of our obligation to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we
do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with
respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity; and (iii) their
rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if we fail to complete our initial
Business Combination within 24 months from the closing of the Initial Public Offering or during any Extension Period (although they
will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if we fail to complete
our initial Business Combination within the prescribed time frame); (4) the Founder Shares will automatically convert into our Class A
ordinary shares at the time of our initial Business Combination, or earlier at the option of the holder, on a one-for-one basis,
subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and (5) the Founder Shares
are entitled to registration rights. If we submit our initial Business Combination to our public shareholders for a vote, our initial
shareholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us,
to vote their Founder Shares and any Public Shares held by them purchased during or after the Initial Public Offering in favor of our
initial Business Combination. While we do not expect our board of directors to approve any amendment to or waiver of the letter agreement
or registration rights agreement prior to our initial Business Combination, it may be possible that our board of directors, in exercising
its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to or waivers of such agreements
in connection with the consummation of our initial Business Combination. Any such amendments or waivers would not require approval from
our stockholders, may result in the completion of our initial Business Combination that may not otherwise have been possible, and may
have an adverse effect on the value of an investment in our securities.
The personal and financial
interests of our Sponsor, directors and officers may influence their motivation in identifying and selecting a target Business Combination,
completing an initial Business Combination and influencing the operation of the business following the initial Business Combination. This
risk may become more acute as the 24-month deadline following the closing of the Initial Public Offering nears, which is the deadline
for the completion of our initial Business Combination.
We may issue notes or other
debt securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely affect our leverage and
financial condition and thus negatively impact the value of our shareholders’ investment in us.
We may choose to incur substantial
debt to complete our initial Business Combination. We have agreed that we will not incur any indebtedness unless we have obtained from
the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance
of debt will affect the per-share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could
have a variety of negative effects, including:
| ● | default and foreclosure on our assets if our operating revenues after an initial Business Combination
are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments
when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation
of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting our
ability to obtain such financing while the debt is outstanding; |
| ● | our inability to pay dividends on our ordinary shares; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce
the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and
adverse changes in government regulation; and |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less
debt. |
We may be able to
complete only one Business Combination with the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of
diversification may negatively impact our operations and profitability.
We may effectuate our initial
Business Combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial Business Combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By
completing our initial Business Combination with only a single entity our lack of diversification may subject us to numerous financial,
economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several Business Combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset; or |
| ● | dependent upon the development or market acceptance of a single or limited number of products, processes
or services. |
This lack of diversification
may subject us to numerous financial, economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial Business Combination.
We may attempt to
simultaneously complete Business Combinations with multiple prospective targets, which may hinder our ability to complete our initial
Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other Business Combinations, which may make it more difficult for us, and delay
our ability, to complete our initial Business Combination. With multiple Business Combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies
in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results
of operations.
We may attempt to
complete our initial Business Combination with a private company about which little information is available, which may result in a Business
Combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition
strategy, we may seek to effectuate our initial Business Combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial Business Combination
on the basis of limited information, which may result in a Business Combination with a company that is not as profitable as we suspected,
if at all.
We do not have a
specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a Business
Combination with which a substantial majority of our shareholders do not agree.
Our amended and restated
memorandum and articles of association do 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 following such redemptions, or any
greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial Business Combination. As
a result, we may be able to complete our initial Business Combination even though a substantial majority of our public shareholders do
not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial Business Combination
and do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, have entered into
privately negotiated agreements to sell their shares to our Sponsor, directors, officers, advisors or any of their respective affiliates.
In the event the aggregate cash consideration we would be required to pay for all Public 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, and we instead may search for an alternate Business Combination.
In order to effectuate
an initial Business Combination, blank check companies have, in the past, amended various provisions of their charters and modified governing
instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated memorandum
and articles of association or governing instruments in a manner that will make it easier for us to complete our initial Business Combination
that some of our shareholders may not support.
In order to effectuate
an initial Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and
modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition
of Business Combination, increased redemption thresholds and extended the time to consummate an initial Business Combination and,
with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other
securities. Amending our amended and restated memorandum and articles of association requires at least a special resolution of our
shareholders as a matter of Cayman Islands law. A resolution is deemed to be a special resolution as a matter of Cayman Islands law
where it has been approved by either (1) holders of at least two-thirds (or any higher threshold specified in a
company’s articles of association) of a company’s ordinary shares at a general meeting for which notice specifying the
intention to propose the resolution as a special resolution has been given or (2) if so authorized by a company’s
articles of association, by a unanimous written resolution of all of the Company’s shareholders. Our amended and restated
memorandum and articles of association provide that special resolutions must be approved either by holders of at least
two-thirds of our ordinary shares who attend and vote at a general meeting (i.e., the lowest threshold permissible under Cayman
Islands law) (other than amendments relating to provisions governing the appointment or removal of directors prior to our initial
Business Combination, which require the approval of a majority of at least 90% of our ordinary shares attending and voting in a
general meeting), or by a unanimous written resolution of all of our shareholders. The warrant agreement provides that (a) the
terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct
any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the
warrant agreement set forth in this Annual Report on Form 10-K, or defective provision or (ii) adding or changing any
provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem
necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants and
(b) all other modifications or amendments require the vote or written consent of at least 65% of the then outstanding public
warrants and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant
agreement with respect to the Private Placement Warrants, at least 65% of the then outstanding Private Placement Warrants. We cannot
assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments,
including the warrant agreement, or extend the time to consummate an initial Business Combination in order to effectuate our initial
Business Combination. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the
securities offered through our registration statement for our Initial Public Offering, we would register, or seek an exemption from registration for, the affected
securities.
Certain provisions
of our amended and restated memorandum and articles of association that relate to our pre-Business Combination activity (and corresponding
provisions of the agreement governing the release of funds from our Trust Account) may be amended with the approval of holders of at least
two-thirds of our ordinary shares who attend and vote at a general meeting, which is a lower amendment threshold than that of some other
blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association and
the trust agreement to facilitate the completion of an initial Business Combination that some of our shareholders may not support.
Some other blank check companies
have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-Business Combination activity, without approval by holders of a certain percentage of the Company’s shares. In those companies,
amendment of these provisions typically requires approval by holders holding between 90% and 100% of the Company’s Public Shares.
Our amended and restated memorandum and articles of association provide that any of its provisions, including those related to pre-Business
Combination activity (including the requirement to deposit proceeds of the Initial Public Offering and the sale of Private Placement Warrants
into the Trust Account and not release such amounts except in specified circumstances), may be amended if approved by holders of at least
two-thirds of our ordinary shares who attend and vote at a general meeting, and corresponding provisions of the trust agreement governing
the release of funds from our Trust Account may be amended if approved by holders of 65% of our ordinary shares (other than amendments
relating to provisions governing the appointment or removal of directors prior to our initial Business Combination, which require the
approval of a majority of at least 90% of our ordinary shares attending and voting in a general meeting). Our initial shareholders, who
collectively beneficially own 20% of our ordinary shares, may participate in any vote to amend our amended and restated memorandum and
articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be
able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-Business Combination
behavior more easily than some other blank check companies, and this may increase our ability to complete our initial Business Combination
with which you do not agree. In certain circumstances, our shareholders may pursue remedies against us for any breach of our amended and
restated memorandum and articles of association.
We may 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 net proceeds of the
Initial Public Offering and the sale of the Private Placement Warrants available to us prove to be insufficient, either because of the
size of our initial Business Combination, the depletion of the available net proceeds in search of a target business, the obligation to
redeem for cash a significant number of shares from shareholders who elect redemption in connection with our initial Business Combination
or the terms of negotiated transactions to purchase shares in connection with our initial Business Combination, we may be required to
seek additional financing or to abandon the proposed Business Combination. We cannot assure you that such financing will be available
on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial Business
Combination, we would be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative
target business candidate.
In addition, even if we
do not need additional financing to complete our initial Business Combination, we may require such financing to fund the operations or
growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. Other than in connection with the Forward Purchase Agreements, 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 have not completed our
initial Business Combination within the required time period, our public shareholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our Trust Account, and our warrants will expire worthless.
Our initial shareholders
will control the election of our board of directors until consummation of our initial Business Combination and will hold a substantial
interest in us. As a result, they will appoint all of our directors prior to our initial Business Combination and may exert a substantial
influence on actions requiring shareholder vote, potentially in a manner that you do not support.
Our initial shareholders
own 20% of our issued and outstanding ordinary shares. In addition, prior to our initial Business Combination, holders of the Founder
Shares will have the right to appoint all of our directors and may remove members of our board of directors for any reason. Holders of
our Public Shares will have no right to vote on the appointment of directors during such time. These provisions of our amended and restated
memorandum and articles of association may only be amended by a special resolution passed by a majority of at least 90% of our ordinary
shares attending and voting in a general meeting. As a result, you will not have any influence over the appointment of directors prior
to our initial Business Combination.
In addition, as a result
of their substantial ownership in our company, our initial shareholders may exert a substantial influence on other actions requiring a
shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles
of association and approval of major corporate transactions. If our initial shareholders purchase any Class A ordinary shares in
the open market or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, our initial
shareholders will exert significant influence over actions requiring a shareholder vote at least until the completion of our initial Business
Combination.
A provision of our
warrant agreement may make it more difficult for us to consummate an initial Business Combination.
Unlike some blank check companies,
if
| (i) | we issue additional ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share
(with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such
issuance to the Sponsor or its affiliates, without taking into account any founder shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), |
| (ii) | the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of our initial Business Combination on the date of the completion of our initial Business
Combination (net of redemptions), and |
| (iii) | the volume weighted average trading price of our Class A ordinary shares during the 20 trading day period
starting on the trading day prior to the day on which we consummate our initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, |
then the exercise price of the
warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption
trigger price applicable to our warrants will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value
and the Newly Issued Price, and the $10.00 per share redemption trigger price applicable to our warrants will be adjusted (to the nearest
cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an
initial Business Combination with a target business.
Our warrants and
Founder Shares may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate
our initial Business Combination.
We have issued warrants to
purchase 11,500,000 Class A ordinary shares, at a price of $11.50 per whole share (subject to adjustment), as part of the Units and,
simultaneously with the closing of the Initial Public Offering, we issued in a private placement an aggregate of 5,933,333 Private Placement
Warrants, each exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. Our initial
shareholders currently hold 8,625,000 Class B ordinary shares. The Class B ordinary shares are convertible into Class A
ordinary shares on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our Sponsor, an affiliate of our
Sponsor or certain of our directors and officers make any working capital loans, up to $1,500,000 of such loans may be converted into
warrants, at the price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.
To the extent we issue Class A ordinary shares to effectuate a Business Combination, the potential for the issuance of a substantial
number of additional Class A ordinary shares upon exercise of these warrants or conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding Class A ordinary shares
and reduce the value of the Class A ordinary shares issued to complete the Business Combination. Therefore, our warrants and Founder
Shares may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target business.
The Private Placement Warrants
are identical to the warrants sold as part of the Units except that, so long as they are held by our Sponsor or its permitted transferees:
(1) they will not be redeemable by us (except under certain limited exceptions); (2) they (including the Class A ordinary shares
issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsor
until 30 days after the completion of our initial Business Combination; (3) they may be exercised by the holders on a cashless
basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.
Because we must
furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial
Business Combination with some prospective target businesses.
The federal proxy rules require
that a proxy statement with respect to a vote on a Business Combination meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection
with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or U.S. GAAP (“GAAP”), or international financial reporting standards as issued by the International Accounting Standards
Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with
the standards of the Public Company Accounting Oversight Board (United States), or PCAOB (“PCAOB”). These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial
statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial Business
Combination within the prescribed time frame.
Compliance obligations
under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial Business Combination, require substantial financial
and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act
requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the
year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer
qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements
of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which
we seek to complete our initial Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such acquisition.
If our management
team pursues a company with operations or opportunities outside of the United States for our initial Business Combination, we may
face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial Business
Combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If our management team pursues
a company with operations or opportunities outside of the United States for our initial Business Combination, we would be subject
to risks associated with cross-border Business Combinations, including in connection with investigating, agreeing to and completing
our initial Business Combination, conducting due diligence in a foreign market, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial
Business Combination with such a company, we would be subject to any special considerations or risks associated with companies operating
in an international setting (including how relevant governments respond to such factors), including any of the following:
| ● | costs and difficulties inherent in managing cross-border business operations and complying with commercial
and legal requirements of overseas markets; |
| ● | rules and regulations regarding currency redemption; |
| ● | complex corporate withholding taxes on individuals; |
| ● | laws governing the manner in which future Business Combinations may be effected; |
| ● | tariffs and trade barriers; |
| ● | regulations related to customs and import/export matters; |
| ● | tax consequences, such as tax law changes, including termination or reduction of tax and other incentives
that the applicable government provides to domestic companies, and variations in tax laws as compared to the United States; |
| ● | currency fluctuations and exchange controls, including devaluations and other exchange rate movements; |
| ● | rates of inflation, price instability and interest rate fluctuations; |
| ● | liquidity of domestic capital and lending markets; |
| ● | challenges in collecting accounts receivable; |
| ● | cultural and language differences; |
| ● | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other forms
of social instability; |
| ● | deterioration of political relations with the United States; |
| ● | obligatory military service by personnel; and |
| ● | government appropriation of assets. |
We may not be able to adequately
address these additional risks. If we were unable to do so, we may be unable to complete such combination or, if we complete such combination,
our operations might suffer, either of which may adversely impact our results of operations and financial condition.
Risks Relating to the Post-Business
Combination Company
We may face risks
related to companies in the health, beauty, and wellness industries.
Business Combinations with
companies in the health, beauty, and wellness industries entail special considerations and risks. If we are successful in completing a
Business Combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
| ● | an inability to compete effectively in a highly competitive environment with many incumbents having substantially
greater resources than we do; |
| ● | an inability to manage rapid change, increasing consumer expectations and growth; |
| ● | an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty; |
| ● | a reliance on proprietary technology to provide services and to manage our operations, and the failure
of this technology to operate effectively, or our failure to use such technology effectively; |
| ● | an inability to deal with our subscribers’ or customers’ privacy concerns; |
| ● | an inability to attract and retain subscribers or customers; |
| ● | an inability to license or enforce intellectual property rights on which our business may depend; |
| ● | any significant disruption in our computer systems or those of third parties that we would utilize in
our operations; |
| ● | an inability by us, or a refusal by third parties, to license content to us upon acceptable terms; |
| ● | potential liability for negligence, copyright, or trademark infringement or other claims based on the
nature and content of materials that we may distribute; |
| ● | competition for advertising revenue; |
| ● | competition for the leisure and entertainment time and discretionary spending of subscribers or customers,
which may intensify in part due to advances in technology and changes in consumer expectations and behavior; |
| ● | disruption or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,”
misappropriation of data or other malfeasance, as well as outages, natural disasters, global hostilities, terrorist attacks, accidental
releases of information or similar events; |
| ● | an inability to obtain necessary hardware, software and operational support; and |
| ● | reliance on third-party vendors or service providers. |
Any of the foregoing could
have an adverse impact on our operations following a Business Combination. However, our efforts in identifying prospective target businesses
will not be limited to the health, beauty, and wellness industries. Accordingly, if we acquire a target business in another industry,
we will be subject to risks attendant with the specific industry in which we operate or target business which we acquire, which may or
may not be different than those risks listed above. For risk factors related to the proposed Obagi and Milk Business Combinations, see
the “Risk Factors” section of the Obagi and Milk Disclosure Statement that we have filed with the SEC.
Subsequent to our
completion of our initial Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or
other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities,
which could cause you to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that
may be present with a particular target business that it would be possible to uncover all material issues through a customary amount of
due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors,
we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could
result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously
known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items
and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market
perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which
we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt
financing. Accordingly, any shareholder or warrant holder who chooses to remain a shareholder or warrant holder, respectively, following
our initial Business Combination could suffer a reduction in the value of their securities. Such shareholders and warrant holders are
unlikely to have a remedy for such reduction in value.
After our initial
Business Combination, our results of operations and prospects could be subject, to a significant extent, to the economic, political, social
and government policies, developments and conditions in the country in which we operate.
The economic, political and
social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic
growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future.
If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand
for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our
ability to find an attractive target business with which to consummate our initial Business Combination and if we effect our initial Business
Combination, the ability of that target business to become profitable.
Our management may
not be able to maintain control of a target business after our initial Business Combination. We cannot provide assurance that, upon loss
of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such
business.
We may structure our initial
Business Combination so that the post-transaction company in which our public shareholders own shares will own less than 100% of
the equity interests or assets of a target business, but we will complete such Business Combination only if the post-transaction company
owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest
in the target business sufficient for us not to be required to register as an investment company under the Investment Company Act. We
will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the
voting securities of the target, our shareholders prior to our initial Business Combination may collectively own a minority interest in
the post Business Combination company, depending on valuations ascribed to the target and us in our initial Business Combination transaction.
For example, we could pursue a transaction in which we issue a substantial number of new ordinary shares in exchange for all of the issued
and outstanding capital stock, shares or other equity securities of a target, or issue a substantial number of new shares to third-parties in
connection with financing our initial Business Combination. 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 issued and 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 shares than
we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target
business.
We may have limited
ability to assess the management of a prospective target business and, as a result, may affect our initial Business Combination with a
target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability
of effecting our initial Business Combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore,
may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any shareholder or warrant holder who chooses to remain
a shareholder or warrant holder, respectively, following our initial Business Combination could suffer a reduction in the value of their
securities. Such shareholders and warrant holders are unlikely to have a remedy for such reduction in value.
The directors and officers
of an acquisition candidate may resign upon completion of our initial Business Combination. The departure of a Business Combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition
candidate’s key personnel upon the completion of our initial Business Combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate
following our initial Business Combination, it is possible that members of the management of an acquisition candidate will not wish to
remain in place.
After our initial
Business Combination, it is possible that a majority of our directors and officers will live outside the United States and all or
substantially all of our assets will be located outside the United States; therefore investors may not be able to enforce federal
securities laws or their other legal rights.
It is possible that after
our initial Business Combination, a majority of our directors and officers will reside outside of the United States and all or substantially
all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible,
for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers
or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers
under United States laws.
If our management
following our initial Business Combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming
familiar with such laws, which could lead to various regulatory issues.
Following our initial Business
Combination, any or all of our management could resign from their positions as officers of the Company, and the management of the target
business at the time of the Business Combination could remain in place. Management of the target business may not be familiar with U.S.
securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar
with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect
our operations.
Risks Relating to Our Management
Team
We are dependent
upon our directors and officers and their departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and in particular, Michel Brousset, Felipe Dutra, Cristiano Souza and Hind Sebti. We believe
that our success depends on the continued service of our directors and officers, at least until we have completed our initial Business
Combination. In addition, our directors and officers are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating their time among various business activities, including identifying potential Business Combinations
and monitoring the related due diligence. Moreover, certain of our directors and officers have time and attention requirements for investment
funds of which affiliates of our Sponsor are the investment managers. We do not have an employment agreement with, or key-man insurance
on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could
have a detrimental effect on us.
Our ability to successfully
effect our initial Business Combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some
of whom may join us following our initial Business Combination. The loss of our or a target’s key personnel could negatively impact
the operations and profitability of our post-combination business.
Our ability to successfully
effect our initial Business Combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial Business Combination, it is likely that some or all of the management of the target business
will remain in place. While we 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.
In addition, the directors
and officers of an acquisition candidate may resign upon completion of our initial Business Combination. The departure of a Business Combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an acquisition candidate’s key personnel upon the completion of our initial Business Combination cannot be ascertained at this
time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the
acquisition candidate following our initial Business Combination, it is possible that members of the management of an acquisition candidate
will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our key personnel
may negotiate employment or consulting agreements with a target business in connection with a particular Business Combination. These agreements
may provide for them to receive compensation following our initial Business Combination and as a result, may cause them to have conflicts
of interest in determining whether a particular Business Combination is the most advantageous.
Our key personnel may be
able to remain with the Company after the completion of our initial Business Combination only if they are able to negotiate employment
or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with the negotiation
of the Business Combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of our initial Business Combination. The personal and financial interests of
such individuals may influence their motivation in identifying and selecting a target business, subject to his or her fiduciary duties
under Cayman Islands law. However, we believe the ability of such individuals to remain with us after the completion of our initial Business
Combination will not be the determining factor in our decision as to whether or not we will proceed with any potential Business Combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial Business Combination.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as
to whether any of our key personnel will remain with us will be made at the time of our initial Business Combination.
Our directors and
officers 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 directors and officers
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their
time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees
prior to the completion of our initial Business Combination. Our officers are engaged in several other business endeavors for which they
may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to
our affairs. Certain of our independent directors also serve as officers and/or board members for other entities. If our officers’
and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current
commitment levels, it could limit their ability to devote time to our affairs, which may have a negative impact on our ability to complete
our initial Business Combination. For a complete discussion of our officers’ and directors’ other business affairs, please
see “Item 10. Directors, Executive Officers and Corporate Governance.”
Certain of our directors
and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those
intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity
should be presented.
Until we consummate our initial
Business Combination, we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsor and directors
and officers are, or may in the future become, affiliated with entities that are engaged in a similar business. Our Sponsor and directors
and officers are also not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies prior
to us completing our initial Business Combination, and such involvement may result in conflicts of interest as described above.
Our directors and officers
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe
certain fiduciary or contractual duties or otherwise have an interest in, and any other SPAC in which they may become involved with. Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to other entities prior to its presentation to us, subject
to his or her fiduciary duties under Cayman Islands law. Our amended and restated memorandum and articles of association will provide
that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty,
except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business
activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to
participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand,
and us, on the other.
For a complete discussion
of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of,
please see “Item 10. Directors, Executive Officers and Corporate Governance.”, “Item 10. Directors, Executive Officers
and Corporate Governance.—Conflicts of Interest” and “Item 13. Certain Relationships and Related Party Transactions,
and Director Independence.— Administrative Support Agreement.”
Our directors, officers,
security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy
that expressly prohibits our directors, officers, security holders or their respective affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a Business Combination with a target business that is affiliated with our Sponsor, our directors or officers.
Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types
conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours. In particular, affiliates
of our Sponsor have invested in industries as diverse as healthcare, education, financial services, artificial intelligence and social
media. As a result, there may be substantial overlap between companies that would be a suitable Business Combination for us and companies
that would make an attractive target for such other affiliates.
Risks Relating to Our Securities
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 and/or warrants, potentially at a loss.
Our public shareholders will
be entitled to receive funds from the Trust Account only upon the earliest to occur of: (1) our completion of an initial Business
Combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject
to the limitations described herein; (2) the redemption of any Public Shares properly submitted in connection with a shareholder
vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation
to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our
initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other
provision relating to shareholders’ rights or pre-initial Business Combination activity; and (3) the redemption of our
Public Shares if we have not completed an initial Business Combination within 24 months from the closing of the Initial Public Offering,
subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the Trust Account.
Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate
your investment, you may be forced to sell your Public Shares and/or warrants, potentially at a loss.
Nasdaq may delist
our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject
us to additional trading restrictions.
We cannot assure you that
our securities will continue to be listed on Nasdaq. In order to continue listing our securities on Nasdaq prior to our initial Business
Combination, we must maintain certain financial, distribution and stock price levels. In general, we must maintain a minimum amount in
shareholders’ equity (generally $2,500,000) and a minimum of 300 public holders. Additionally, in connection with our initial Business
Combination, we will be required to demonstrate compliance with applicable exchange’s initial listing requirements, which are more
rigorous than continued listing requirements, in order to continue to maintain the listing of our securities. We cannot assure you that
we will be able to meet those initial listing requirements at that time.
If any of our securities
are delisted from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse
consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A ordinary shares are a “penny stock” which will require
brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading
activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or pre-empts the states from regulating the sale of certain securities,
which are referred to as “covered securities.” Our Units, Class A ordinary shares and warrants currently qualify as covered
securities under such statute. Although the states are preempted from regulating the sale of covered securities, the federal statute does
allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the
states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers
to prohibit or restrict the sale of securities issued by SPACs, 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 securities would not qualify as covered securities under such statute and we would
be subject to regulation in each state in which we offer our securities, which may negatively impact our ability to consummate our initial
Business Combination.
We are not registering
the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this
time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being
able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
You will not be permitted
to exercise your warrants unless we register and qualify the issuance of the underlying Class A ordinary shares or certain exemptions
are available. Pursuant to terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15
business days after the closing of our initial Business Combination, we will use our commercially reasonable efforts to file a registration
statement covering the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective
within 60 business days after the closing of our initial Business Combination and to maintain the effectiveness of such registration statement
and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed. We cannot assure you
that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth
in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current,
complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the
Securities Act in accordance with the above requirements, we will be required to permit holders to exercise their warrants on a cashless
basis, in which case, the number of Class A ordinary shares that you will receive upon cashless exercise will be based on a formula
subject to a maximum amount of shares equal to 0.361 Class A ordinary shares per warrant (subject to adjustment). However, no warrant
will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their
warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the
exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A ordinary shares are
at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise
their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event
we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will
we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that
we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no exemption is available.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In
such event, holders who acquired their warrants as part of a purchase of Units will have paid the full Unit purchase price solely for
the Class A ordinary shares included in the Units. There may be a circumstance where an exemption from registration exists for holders
of our Private Placement Warrants to exercise their warrants while a corresponding exemption does not exist for holders of the public
warrants that were included as part of the Units. In such an instance, our Sponsor and its permitted transferees (which may include our
directors and executive officers) would be able to exercise their warrants and sell the ordinary shares underlying their warrants while
holders of our public warrants would not be able to exercise their warrants and sell the underlying ordinary shares. If and when the warrants
become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying Class A
ordinary shares for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if
the holders are otherwise unable to exercise their warrants.
We may amend the
terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of
the then outstanding public warrants.
Our warrants will be issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The
warrant agreement provides that (a) the terms of the warrants may be amended without the consent of any holder for the purpose of
(i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description
of the terms of the warrants and the warrant agreement set forth in the prospectus related to the Initial Public Offering, or defective
provision or (ii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the
parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered
holders of the warrants and (b) all other modifications or amendments require the vote or written consent of at least 65% of the
then outstanding public warrants and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision
of the warrant agreement with respect to the Private Placement Warrants, at least 65% of the then outstanding Private Placement Warrants.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding
public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least
65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the warrants, shorten the exercise period or decrease the number of ordinary shares purchasable upon exercise of
a warrant.
We may redeem your
unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem
the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant if,
among other things, the last reported sale price of Class A ordinary shares for any 20 trading days within a 30-trading day period ending
on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference
Value”) equals or exceeds $18.00 per share (as adjusted). If and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities
laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption
of the outstanding warrants as described above could force you to: (1) exercise your warrants and pay the exercise price therefor
at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current market price when you
might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, we expect would be substantially less than the market value of your warrants.
In addition, we have the
ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10
per warrant if, among other things, the Reference Value equals or exceeds $10.00 per share (as adjusted). In such a case, the holders
will be able to exercise their warrants prior to redemption for a number of Class A ordinary shares determined based on the redemption
date and the fair market value of our Class A ordinary shares. The value received upon exercise of the warrants (1) may be less
than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is
higher and (2) may not compensate the holders for the value of the warrants, including because the number of ordinary shares received
is capped at 0.361 Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
Because each Unit
contains one-third of one redeemable warrant and only a whole warrant may be exercised, the Units may be worth less than Units of other
blank check companies.
Each Unit contains one-third of
one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the Units, and only
whole warrants will trade. This is different from other offerings similar to ours whose Units include one ordinary share and one whole
warrant or a greater fraction of one whole warrant to purchase one share. We have established the components of the Units in this way
in order to reduce the dilutive effect of the warrants upon completion of a Business Combination since the warrants will be exercisable
in the aggregate for a fourth of the number of shares compared to Units that each contain a whole warrant to purchase one whole share,
thus making us, we believe, a more attractive Business Combination partner for target businesses. Nevertheless, this Unit structure may
cause our Units to be worth less than if they included one whole warrant or a greater fraction of one whole warrant to purchase one whole
share.
Our management’s
ability to require holders of our public warrants to exercise such public warrants on a cashless basis will cause holders to receive fewer
Class A ordinary shares upon their exercise of the public warrants than they would have received had they been able to exercise their
public warrants for cash.
If we call our public warrants
for redemption after the redemption criteria described elsewhere in this Annual Report on Form 10-K have been satisfied, our management
will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our sponsor, officers,
directors or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to
exercise their warrants on a cashless basis, the number of Class A ordinary shares received by a holder upon exercise will be fewer than
it would have been had such holder exercised his, her or its warrant for cash. This will have the effect of reducing the potential “upside”
of the holder’s investment in our company.
Because we are incorporated
under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights
through the U.S. Federal courts may be limited.
We are an exempted company
incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within
the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors
or officers.
Our corporate affairs will
be governed by our amended and restated memorandum and articles of association, the Cayman Act (as the same may be supplemented or amended
from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions
by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed
by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent
in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding
on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands
law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular,
the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware,
may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing
to initiate a shareholders derivative action in a Federal court of the United States.
We have been advised by Maples
and Calder, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (1) to recognize or enforce against
us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the
United States or any state; and (2) in original actions brought in the Cayman Islands, to impose liabilities against us predicated
upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed
by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments
obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign
court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes
upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign
judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in
respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds
of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the
Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay
enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the
above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members
of our board of directors or controlling shareholders than they would as public shareholders of a United States company.
Our warrant agreement
designates the courts of the State of New York or the United States District Court for the Southern District of New York
as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could
limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant
agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States
District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction
shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and
that such courts represent an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement do not apply to suits brought to enforce any liability or duty created by the Exchange Act or
any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person
or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court
for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall
be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York
in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having
service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in
the foreign action as agent for such warrant holder.
This choice-of-forum provision
may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
Provisions in our
amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might
be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our amended and restated
memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider
to be in their best interests. These provisions include two-year director terms and the ability of our board of directors to designate
the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions
that otherwise could involve payment of a premium over prevailing market prices for our securities.
General Risk Factors
We are a newly incorporated
company with no operating history and no operating revenues, and you have no basis on which to evaluate our ability to achieve our business
objective.
We are a newly incorporated
company incorporated under the laws of the Cayman Islands 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. We have no plans, arrangements or understandings with any prospective target business concerning a Business Combination
and may be unable to complete our initial Business Combination. If we fail to complete our initial Business Combination, we will never
generate any operating revenues.
Past performance
by our management team and their affiliates may not be indicative of future performance of an investment in the Company.
Information regarding performance
by our management team and their affiliates is presented for informational purposes only. Past performance by our management team and
their affiliates is not a guarantee either (1) that we will be able to identify a suitable candidate for our initial Business Combination
or (2) of success with respect to any Business Combination we may consummate. You should not rely on the historical record of our
management team or their affiliates or any related investment’s performance as indicative of our future performance of an investment
in the Company or the returns the Company will, or is likely to, generate going forward.
Cyber incidents or attacks
directed at us could result in information theft, data corruption, operation disruption and/or financial loss.
We depend on digital technologies,
including information systems, infrastructure and cloud applications and services, including those of third parties with which we may
deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure
of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential
data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against
such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability
to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business
and lead to financial loss.
We may be a passive
foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any
taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ordinary shares or warrants, the U.S.
Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC
status for prior our taxable year, our current taxable year, and our subsequent taxable years may depend upon the status of an acquired
company pursuant to a Business Combination and whether we qualify for the PFIC start-up exception. Depending on the particular circumstances,
the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for
the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our prior taxable year,
our current taxable year, or any subsequent taxable year. Our actual PFIC status for any taxable year, moreover, will not be determinable
until after the end of such taxable year. If we determine we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder
such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order
to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we
will timely provide such required information, and such election would likely be unavailable with respect to our warrants in all cases.
We urge U.S. Holders to consult their own tax advisors regarding the possible application of the PFIC rules to holders of our ordinary
shares and warrants.
We are an emerging
growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions
from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less
attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments
not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market
value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year,
in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict whether investors
will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there
may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means
that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates equals
or exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues equaled or exceeded
$100 million during such completed fiscal year or the market value of our ordinary shares held by non-affiliates equals or exceeds
$700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure
obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We have identified
a material weakness in our internal control over financial reporting. If we are unable to develop and maintain an effective system of
internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may
adversely affect investor confidence in us and materially and adversely affect our business and operating results.
In connection with the preparation
of the Company’s financial statements as of September 30, 2021, the Company reevaluated the classification of its Class A ordinary
shares subject to possible redemption. After consultation with our advisors and discussion with our independent registered public accounting
firm, our management and our audit committee concluded that the previously issued financial statements as of March 18, 2021, March 31,
2021 and June 30, 2021 and for the periods from January 1, 2021 through March 31, 2021, and the three months and six months ended June
30, 2021 (the “Relevant Periods”) should be restated to report all Class A ordinary shares subject to possible redemption
as temporary equity. In addition, the Company identified a deficiency in its accounting for warrants, which resulted in the restatement
of our audited opening balance sheet as of March 18, 2021. The Company determined that these deficiencies constituted a material weakness
in accounting for complex financial instruments. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented, or detected and corrected on a timely basis. Based on the material weakness as described above, our management
has concluded that our internal control over financial reporting was not effective as of December 31, 2021. Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We have taken a number of measures to remediate the material
weakness, and continue to evaluate steps to remediate the material weakness. However, these remediation measures may be time consuming
and costly and there is no assurance that these initiatives will ultimately have the intended effects. If we are unable to remediate our
material weakness in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information
in a timely and reliable manner and we may incorrectly report financial information. If our financial statements are not filed on a timely
basis, we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to timely file would
cause us to be ineligible to utilize short form registration statements on Form F-3 or Form F-4, which may impair our ability to obtain
capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. If any of these events were to
occur, it could have a material adverse effect on our business.
In addition, the existence
of material weaknesses or a significant deficiency in internal control over financial reporting could adversely affect our reputation
or investor perceptions of us, which could have a negative effect on the trading price of our securities.
We can provide no assurance
that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional
material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate
internal control over financial reporting. In addition, even if we are successful in strengthening our controls and procedures, in the
future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation
of our financial statements.
We may face litigation
and other risks as a result of the material weakness in our internal control over financial reporting.
As a result of such material
weakness described above and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or
other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims
arising from the material weakness in our internal control over financial reporting and the preparation of our financial statements. As
of the date of this Annual Report on Form 10-K, we have no knowledge of any such litigation or dispute. However, we can provide no assurance
that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a
material adverse effect on our business, results of operations and financial condition or our ability to complete a Business Combination.
Our independent
registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability
to continue as a “going concern.”
As of December 31, 2021,
we had cash of $1,503,768 and working capital of $1,340,636. Further, we have incurred, and expect to continue to incur, significant costs
in pursuit of our acquisition plans. Management’s plans to address this need are discussed under “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate our initial
Business Combination may not be successful. The initial deadline for us to complete our initial business combination is March 18, 2023.
These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained
elsewhere in this Annual Report on Form 10-K do not include any adjustments that might result from our inability to continue as a going
concern.
Our warrants are
accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting
Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting
and reporting considerations for warrants issued by SPACs entitled “Staff Statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically,
the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a Business Combination,
which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Statement, we reevaluated
the accounting treatment of our 11,500,000 public warrants and 5,933,333 Private Placement Warrants and determined to classify the warrants
as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on
our balance sheet as of December 31, 2021 contained elsewhere in this Annual Report on Form 10-K are derivative liabilities related to
embedded features contained within our warrants. ASC 815, “Derivatives and Hedging,” (“ASC 815”), provides for
the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to
the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement,
our financial statements and results of operations may fluctuate quarterly based on factors which are outside of our control. Due to the
recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and
that the amount of such gains or losses could be material.