Attached files
As filed with the Securities and Exchange Commission on
November 27, 2013
Registration No. 333-191868
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
UNDER THE SECURITIES ACT OF 1933
CAMBRIDGE CAPITAL ACQUISITION CORPORATION
Delaware |
6770 |
46-3774077 |
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(State or other
jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
525 South Flagler Drive, Suite 201
West Palm Beach, FL 33401
(561) 932-1600
West Palm Beach, FL 33401
(561) 932-1600
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices)
Benjamin Gordon, Chief Executive Officer
Cambridge Capital Acquisition Corporation
525 South Flagler Drive, Suite 201
West Palm Beach, FL 33401
(561) 932-1600
Cambridge Capital Acquisition Corporation
525 South Flagler Drive, Suite 201
West Palm Beach, FL 33401
(561) 932-1600
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
David Alan Miller, Esq. Jeffrey M. Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 818-8800 (212) 818-8881Facsimile |
Douglas S. Ellenoff, Esq. Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 (212) 370-1300 (212) 370-7889Facsimile |
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Approximate date of commencement of
proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following
box. o
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. o
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer o |
Accelerated filer o |
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Non-accelerated filer [X] (Do not check if a smaller reporting company) |
Smaller reporting company o |
CALCULATION OF REGISTRATION FEE
Title of each Class of Security being registered |
Amount being Registered |
Proposed Maximum Offering Price Per Security(1) |
Proposed Maximum Aggregate Offering Price(1) |
Amount of Registration Fee |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Units, each
consisting of one share of Common Stock, $.0001 par value, and one Warrant |
8,050,000 Units(2) | $ | 10.00 | $ | 80,500,000 | $ | 10,980.20 | |||||||||||
Shares of Common
Stock, $.0001 par value, included as part of the Units |
8,050,000 Shares(2) | | | | (3) | |||||||||||||
Warrants
included as part of the Units |
8,050,000 Warrants(2) | | | | (3) | |||||||||||||
Shares of common
stock underlying the Warrants included in the Units |
8,050,000 Shares(4) | $ | 11.50 | $ | 92,575,000 | $ | 12,627.23 | |||||||||||
Total
|
$ | 173,075,000 | $ | 23,607.43 | (5) |
(1) |
Estimated solely for the purpose of calculating the registration fee. |
(2) |
Includes 1,050,000 Units and 1,050,000 shares of Common Stock and 1,050,000 Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. |
(3) |
No fee pursuant to Rule 457(g). |
(4) |
Pursuant to Rule 416, there are also being registered such additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions as a result of the anti-dilution provisions contained in the Warrants. |
(5) |
The filing fee has been previously paid. |
The registrant
hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this preliminary prospectus is not
complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
SUBJECT TO COMPLETION, DATED
NOVEMBER 27, 2013 |
PRELIMINARY PROSPECTUS |
$70,000,000
Cambridge Capital Acquisition Corporation
7,000,000 Units
Cambridge Capital
Acquisition Corporation is a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase,
recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial business
combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. Our efforts to identify a
target business will not be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that
operate in the supply chain industry, with an emphasis on target businesses that operate in the traditional transportation and logistics end of the
supply chain industry. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or
indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction.
This is an initial public offering of
our securities. Each unit that we are offering has a price of $10.00 and consists of one share of common stock and one warrant. Each warrant entitles
the holder to purchase one share of common stock at a price of $11.50. Each warrant will become exercisable upon the completion of an initial business
combination and will expire five years after the date of this prospectus, or earlier upon redemption.
If we are unable to consummate a
business combination within 18 months from the closing of this offering, or 24 months from the closing of this offering if we have entered into
a definitive agreement with a target business for a business combination within 18 months from the closing of this offering and such business
combination has not yet been consummated within such 18-month period, we will redeem 100% of the public shares using the funds in the trust
account described below.
We have granted EarlyBirdCapital, Inc.,
the representative of the underwriters, a 45-day option to purchase up to 1,050,000 units (over and above the 7,000,000 units referred to above) solely
to cover over-allotments, if any.
Our sponsors and EarlyBirdCapital
(and/or their designees) have committed to purchase from us an aggregate of 427,500 units (392,500 units by our sponsors and
35,000 units by EarlyBirdCapital), or private units, at $10.00 per unit (for a total purchase price of $4,275,000). These
purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our sponsors and EarlyBirdCapital have
also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an
additional number of private units (up to a maximum of 44,625 private units) pro rata with the amount of the over-allotment option
exercised so that at least $10.10 per share of common stock sold to the public in this offering is held in trust if the over-allotment option is
exercised in full. These additional private units will be purchased in a private placement that will occur simultaneously with the purchase of
units resulting from the exercise of the over-allotment option. All of the proceeds we receive from these purchases will be placed in the trust account
described below.
There is presently no public market for
our units, shares of common stock or warrants. We have applied to have our units listed on the Nasdaq Capital Market, or Nasdaq, under the
symbol CAMBU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing
on Nasdaq. The common stock and warrants comprising the units will begin separate trading on the 90th day after the date of this prospectus unless
EarlyBirdCapital determines that an earlier date is acceptable, subject to our filing a Current Report on Form 8-K with the Securities and Exchange
Commission, or SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release
announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the common stock and warrants will
be traded on Nasdaq under the symbols CAMB and CAMBW, respectively. We cannot assure you that our securities will
continue to be listed on Nasdaq after this offering.
We are an emerging growth
company as defined in the Jumpstart Our Business Startups Act of 2012 and will therefore be subject to reduced public company reporting
requirements.
Investing in our securities involves
a high degree of risk. See Risk Factors beginning on page 15 of this prospectus for a discussion of information that should be considered
in connection with an investment in our securities.
Neither the SEC nor any state
securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Price to Public |
Underwriting Discounts and Commissions(1) |
Proceeds, Before Expenses, to us |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Per
Unit |
$ | 10.00 | $ | 0.325 | $ | 9.675 | ||||||||
Total |
$ | 70,000,000 | $ | 2,275,000 | $ | 67,725,000 |
(1) |
Please see the section titled Underwriting for further information relating to the underwriting arrangements agreed to between us and the underwriters in this offering. |
Upon consummation of the offering,
$10.15 per unit sold to the public in this offering (or $10.10 if the over-allotment option has been exercised in full) will be deposited
into a United States-based trust account at UBS Financial Services Inc., maintained by Continental Stock Transfer & Trust Company, acting as
trustee. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business
combination and our redemption of the shares of common stock sold in this offering upon our failure to consummate a business combination within the
required time period.
The underwriters are offering the units
on a firm commitment basis. EarlyBirdCapital, acting as the representative of the underwriters, expects to deliver the units to purchasers on or about
,
2013.
EarlyBirdCapital, Inc. Sidoti & Company, LLC |
_____________, 2013
CAMBRIDGE CAPITAL ACQUISITION
CORPORATION
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F-1 |
This summary only highlights the
more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should
consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors
and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this
prospectus:
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references in this prospectus to we, us or our company refer to Cambridge Capital Acquisition Corporation; |
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references in this prospectus to insider shares refer to the 2,012,500 shares of common stock currently held by our sponsors (as defined below), which include up to an aggregate of 262,500 shares of common stock subject to forfeiture by our sponsors to the extent that the underwriters over-allotment option is not exercised in full or in part; |
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references in this prospectus to private units refer to the units we are selling privately to our sponsors and EarlyBirdCapital (and/or their designees) upon consummation of this offering and references to private shares and private warrants refers to the shares of common stock and warrants included within the private units; |
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references in this prospectus to our management or our management team refer to our officers and directors; |
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references in this prospectus to our public shares refer to shares of our common stock which are being sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public stockholders refer to the holders of our public shares, including our sponsors to the extent our sponsors purchase public shares, provided that their status as public stockholders shall exist only with respect to such public shares; |
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references in this prospectus to our sponsors refer to the holders of the insiders shares prior to the consummation of this offering; and |
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except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. |
You should rely only on the
information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We
are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted.
1
General
We are a blank check company formed
under the laws of the State of Delaware on October 1, 2013. We were formed for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as
our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. To date,
our efforts have been limited to organizational activities as well as activities related to this offering. We have not selected any target business on
which to concentrate our search for our initial business combination.
Our efforts to identify a target
business will not be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate
in the supply chain industry, with an emphasis on target businesses that operate in the traditional transportation and logistics end of the supply
chain industry. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or
indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction.
We will have until 18 months
from the closing of this offering (or 24 months from the closing of this offering if we have executed a definitive agreement for an initial business
combination within 18 months from the closing of this offering but have not completed the initial business combination within such
18-month period) to consummate our initial business combination. If we are unable to consummate our initial business combination within such
time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro
rata portion of the funds held in the trust account and then seek to dissolve and liquidate. In such event, our warrants will expire worthless. We
expect the per share redemption price to be $10.15 per share of common stock (or $10.10 if the underwriters exercise their over-allotment
option in full), without taking into account any interest earned on such funds. However, we may not be able to distribute such amounts as a result of
claims of creditors which may take priority over the claims of our public stockholders.
Pursuant to Nasdaq listing rules, our
initial business combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in
the trust account at the time of the execution of a definitive agreement for such business combination, although this may entail simultaneous
acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more
standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target
business or businesses that we acquire may have a collective fair market value substantially in excess of 80% of the trust account
balance.
We currently anticipate structuring our
initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our
initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the
target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such
business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of
the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on
valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a
substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial
business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the
equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or
businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test.
2
As more fully discussed in
Management Conflicts of Interest, if any of our officers or directors becomes aware of a business combination opportunity
that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he may be required to
present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our officers and
directors currently have certain pre-existing fiduciary duties or contractual obligations.
We are an emerging growth company as
defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act) and will remain such for up to five years.
However, if our non-convertible debt issued within a three-year period or our total revenues exceed $1 billion or the market value of our shares of
common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease
to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act,
to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act,
for complying with new or revised accounting standards.
Private Placements
In October 2013, our sponsors purchased
an aggregate of 2,012,500 shares of our common stock, which we refer to throughout this prospectus as the insider shares, for an aggregate
purchase price of $25,000, or approximately $0.01 per share. The insider shares held by our sponsors include an aggregate of up to 262,500 shares
subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that our sponsors will
collectively own 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and assuming our sponsors do
not purchase units in this offering). None of our sponsors has indicated any intention to purchase units in this offering.
The insider shares are identical to the
shares of common stock included in the units being sold in this offering. However, our sponsors have agreed (A) to vote their insider shares and any
public shares acquired in or after this offering in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment
to our amended and restated certificate of incorporation with respect to our pre-business combination activities prior to the consummation of such a
business combination, (C) not to convert any shares (including the insider shares) into the right to receive cash from the trust account in connection
with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate
of incorporation relating to stockholders rights or pre-business combination activity and (D) that the insider shares shall not participate in
any liquidating distribution upon winding up if a business combination is not consummated. Additionally, our sponsors have agreed not to transfer,
assign or sell any of the insider shares (except to certain permitted transferees) until (1) the earlier of one year after the date of the consummation
of our initial business combination and the date on which the closing price of our common stock equals or exceeds $13.00 per share (as adjusted for
stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our
initial business combination with respect to 50% of the insider shares and (2) one year after the date of the consummation of our initial business
combination with respect to the remaining 50% of the insider shares, or earlier, in either case, if, subsequent to our initial business combination, we
consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to
exchange their shares of common stock for cash, securities or other property.
In addition, our sponsors and
EarlyBirdCapital (and/or their designees) have committed to purchase an aggregate of 427,500 private units at a price of $10.00 per unit
($4,275,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our sponsors and
EarlyBirdCapital have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00
per unit an additional number of private units (up to a maximum of 44,625 private units) pro rata with the amount of the
over-allotment option exercised so that at least $ 10.10 per share of common stock sold to the public in this offering is held in trust if
the over-allotment option is exercised in full. These additional private units will be purchased in a private placement that will occur
simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The proceeds from the private placement of the
private units will be added to the proceeds of this offering and placed in a trust account in the United States at UBS Financial Services Inc. with
Continental Stock Transfer & Trust Company, as trustee.
3
The private units are identical to the
units sold in this offering except the private warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they
continue to be held by the initial purchasers or their permitted transferees. Additionally, the holders have agreed (A) to vote their private shares in
favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of
incorporation with respect to our pre-business combination activities prior to the consummation of such a business combination, (C) not to convert any
private shares into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business
combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders rights or
pre-business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business
combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the private units or underlying securities
(except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted
transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination.
Our executive offices are located at
525 South Flagler Drive, Suite 201, West Palm Beach, Florida 33401, and our telephone number is (561) 932-1600.
4
The Offering
In making your decision on whether
to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we
face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act.
You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the
other risks set forth in the section below entitled Risk Factors beginning on page 15 of this prospectus.
Securities
offered |
7,000,000 units, at $10.00 per unit, each unit consisting of one share of common stock and one warrant. |
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Listing of
our securities and proposed symbols |
We
anticipate the units, and the shares of common stock and warrants once they begin separate trading, will be listed on Nasdaq under the symbols
CAMBU, CAMB and CAMBW, respectively. |
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Each
of the common stock and warrants may trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital determines that an
earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the securities markets and small capitalization
companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will EarlyBirdCapital allow separate
trading of the common stock and warrants until we file an audited balance sheet reflecting our receipt of the gross proceeds of this
offering. |
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Once
the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into
the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and
warrants. |
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We
will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is
anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the
proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment
option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial
information to reflect the exercise of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form
8-K, information indicating if EarlyBirdCapital has allowed separate trading of the common stock and warrants prior to the 90th day after the date of
this prospectus. |
5
Shares of
common stock: |
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Number
outstanding before this offering |
2,012,500 shares1 |
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Number to
be outstanding after this offering and sale of private units |
9,177,500 shares2 |
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Warrants: |
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Number
outstanding before this offering |
0 |
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Number to
be outstanding after this offering and sale of private units |
7,427,500 warrants 2 |
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Exercisability |
Each
warrant is exercisable for one share of common stock. |
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Exercise
price |
$11.50. No public warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of
common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if
a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period
following the consummation of our initial business combination, public warrant holders may, until such time as there is an effective registration
statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis. |
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Exercise
period |
The
warrants will become exercisable upon the completion of an initial business combination. The warrants will expire at 5:00 p.m., New York City time, on
the fifth anniversary of the date of this prospectus, or earlier upon redemption. |
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Redemption |
We
may redeem the outstanding warrants (excluding the private warrants but including any outstanding warrants issued upon exercise of the unit purchase
option granted to EarlyBirdCapital and its designees described under Underwriting Purchase Option), in whole and not in part,
at a price of $0.01 per warrant: |
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at any time while the warrants are exercisable, |
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upon a minimum of 30 days prior written notice of redemption, |
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if, and only if, the last sales price of our shares of common stock equals or exceeds $14.50 per share for any 20 trading
days within a 30 trading day period (the 30-day trading period) ending three business days before we send the notice of redemption,
and |
1 |
This number includes an aggregate of 262,500 insider shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. |
2 |
Assumes the over-allotment option has not been exercised and an aggregate of 262,500 insider shares have been forfeited. |
6
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying
such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of
redemption. |
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If
the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the
scheduled redemption date. However, the price of the shares of common stock may fall below the $14.50 trigger price as well as the $11.50 warrant
exercise price after the redemption notice is issued. |
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The
redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial
exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price
declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the
warrants. |
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If we
call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so
on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of
common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by
the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The
fair market value shall mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the third
trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all
holders to exercise their warrants on a cashless basis will depend on a variety of factors including the price of our shares of common
stock at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock
issuances. |
||||||
Offering
proceeds to be held in the trust account |
$66,775,000 of the net proceeds of this offering (or $76,583,750 if the over-allotment option is exercised in full), plus the
$4,275,000 (or $4,721,250 if the over-allotment option is exercised in full) we will receive from the sale of the private units, for an
aggregate of $71,050,000 (or $81,305,000 if the over-allotment option is exercised in full) or $10.15 per unit sold to the public
in this offering (or $10.10 if the over-allotment |
7
option is exercised in full), will be placed in a trust account in the United States at UBS Financial Services Inc., maintained by Continental
Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. The remaining $450,000,
or $ 800,000 if the over-allotment option is exercised in full, of net proceeds of this offering will not be held in the trust
account. |
||||||
Except as set forth below, the proceeds held in the trust account will not be released until the earlier of: (1) the completion of our initial
business combination within the required time period and (2) our redemption of 100% of the outstanding public shares if we have not completed a
business combination in the required time period. Therefore, unless and until our initial business combination is consummated, the proceeds held in the
trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation
and selection of a target business and the negotiation of an agreement to acquire a target business. |
||||||
Notwithstanding the foregoing, there can be released to us from the trust account (1) any interest earned on the funds in the trust account
that we need to pay our income or other tax obligations and (2) any remaining interest earned on the funds in the trust account that we need for our
working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of
this offering not held in the trust account of approximately $450,000, or $ 800,000 if the over-allotment option is exercised in full;
provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust
account and interest earned on the funds held in the trust account available to us are insufficient, our sponsors, officers and directors or their
affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole
discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination,
without interest, or, at the lenders discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into
additional private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the units (and underlying securities) upon
conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we
do not complete a business combination, the loans will not be repaid. |
8
Limited
payments to insiders |
There
will be no fees, reimbursements or other cash payments paid to our sponsors, officers, directors or their affiliates prior to, or for any services they
render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is) other
than: |
|||||
repayment at the closing of this offering of a non-interest bearing loan in an aggregate amount of $100,000 made by
Cambridge Capital LLC, an affiliate of Benjamin Gordon, our Chief Executive Officer; |
||||||
payment of $10,000 per month to Cambridge Capital LLC for office space and related services; |
||||||
reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as
identifying and investigating possible business targets and business combinations; and |
||||||
repayment of loans which may be made by our sponsors or an affiliate of our sponsor or certain of our officers and directors
to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any
written agreements been executed with respect thereto. |
||||||
There
is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available
proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be
reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made
to any sponsor or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our
audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and
approval. |
||||||
Stockholder
approval of initial business combination |
In
connection with any proposed initial business combination, we will seek stockholder approval of such initial business combination at a meeting called
for such purpose at which stockholders may seek to convert their shares into a pro rata portion of the funds held in the trust account, regardless of
whether they vote for or against the proposed business combination. We will consummate our initial business combination only if we have net tangible
assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. |
9
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act.
However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or
requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our net tangible
asset threshold may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of shares
converted) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be
able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at
all. |
||||||
Our
sponsors and our officers and directors have agreed (1) to vote any of their insider shares, private shares and any public shares purchased in or after
this offering in favor of any proposed business combination and (2) not to convert any shares (including the insider shares) in connection with a
stockholder vote to approve a proposed initial business combination. None of our sponsors, officers, directors or their affiliates has indicated any
intention to purchase units in this offering or any units or shares of common stock in the open market or in private transactions. However, if a
significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our sponsors, officers, directors
or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the
foregoing, our officers, directors, sponsors and their affiliates will not make purchases of shares of common stock if the purchases would violate
Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a companys stock. |
||||||
Conversion
rights |
At
any meeting called to approve an initial business combination, any public stockholder voting either for or against such proposed business combination
will be entitled to demand that his shares of common stock be converted for a pro rata portion of the amount then in the trust account (initially
$10.15 per share, or $10.10 if the over-allotment option is exercised in full, plus any pro rata interest earned on the funds held in the
trust account and not previously released to us or necessary to pay our taxes). |
|||||
Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect
to |
10
20%
or more of the shares of common stock sold in this offering without our prior written consent. We believe this restriction will prevent an individual
stockholder or group from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt
to use the conversion right as a means to force us or our management to purchase its shares at a significant premium to the then current market price.
By limiting a stockholders ability to convert no more than 20% of the shares of common stock sold in this offering, we believe we have limited
the ability of a small group of stockholders to unreasonably attempt to block a transaction which is favored by our other public
stockholders. |
||||||
We
may require public stockholders, whether they are a record holder or hold their shares in street name, to either tender their certificates
to our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using
Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) System, at the holders option. There is a nominal cost associated with
this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the
tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. |
||||||
Liquidation
if no business combination |
If we
are unable to complete our initial business combination within 18 months from the closing of this offering (or 24 months from the closing of
this offering if we have executed a definitive agreement for a business combination within 18 months from the closing of this offering but have
not completed such business combination with the 18-month 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 outstanding public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining holders of common stock and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Holders of warrants will receive no
proceeds in connection with the liquidation. |
11
We
may not have funds sufficient to pay or provide for all creditors claims. Although we will seek to have all third parties (including any vendors
or other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such
agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the
trust account for monies owed them. Our executive officers have agreed that they will be jointly and severally liable to ensure that the proceeds in
the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services
rendered or contracted for or products sold to us, but they may not be able to satisfy their indemnification obligations if they are required to do so.
Furthermore, they will have no personal liability under this indemnity as to any claimed amounts owed to a target business or vendor or other entity
who has executed a valid and enforceable agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies
held in the trust account. |
||||||
The
holders of the insider shares and private units will not participate in any redemption distribution with respect to their insider shares or private
shares. |
||||||
If we
are unable to conclude our initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account,
without taking into account any interest earned on the trust account, we expect that the initial per-share redemption price will be approximately
$10.15, or $10.10 if the over-allotment option is exercised in full. The proceeds deposited in the trust account could, however, become subject
to claims of our creditors that are in preference to the claims of our stockholders. In addition, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
Therefore, the actual per-share redemption price may be less than $10.15, or $10.10 if the over-allotment option is exercised in
full. |
||||||
We
will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our executive
officers have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have
agreed not to seek repayment for such expenses. |
12
Risks
We are a newly formed company that has
conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate
no operating revenues. In making your decision on whether to invest in our securities, you should take into account not only the background of our
management team, but also the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in
compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be entitled to protections normally
afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this
offering, please see Proposed Business Comparison to offerings of blank check companies subject to Rule 419. You should
carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 15 of this
prospectus.
13
The following table summarizes the
relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any
significant operations to date, and accordingly only balance sheet data is presented.
October 8, 2013 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Actual |
As Adjusted(1) |
||||||||||
Balance
Sheet Data: |
|||||||||||
Working
capital (deficiency) |
$ | (11,000 | ) | $71,523,350 | |||||||
Total assets
|
123,250 | 71,523,350 | |||||||||
Total
liabilities |
100,000 | | |||||||||
Value of
common stock which may be converted for cash |
| 66,523,349 | |||||||||
Stockholders equity |
23,250 | 5,000,001 |
(1) |
Includes the $4,275,000 we will receive from the sale of the private units. |
The as adjusted information
gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated
remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid.
The as adjusted working
capital and total assets amounts include the $71,050,000 to be held in the trust account, which, except for limited situations described in this
prospectus, will be available to us only upon the consummation of our initial business combination within the time period described in this prospectus.
If our initial business combination is not so consummated, the trust account, less amounts we are permitted to withdraw as described in this
prospectus, will be distributed solely to our public stockholders (subject to our obligations under Delaware law to provide for claims of
creditors).
We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock
voted are voted in favor of the business combination.
14
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, which we believe represent the material risks related
to the offering, together with the other information contained in this prospectus, before making a decision to invest in our units. 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. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of
specific factors, including the risks described below.
Risks Associated with Our Business
We are a newly formed blank check company in the development stage with no operating history and, accordingly, you will not have any basis
on which to evaluate our ability to achieve our business objective.
We are a newly formed blank check
company in the development stage with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing
through the public offering of our shares. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to
achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or
understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of our
initial business combination.
Our independent registered public accounting firms
report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going
concern.
As of October 8, 2013, we had $89,000
in cash and cash equivalents and a working capital deficiency of $11,000. Further, we have incurred and expect to continue to incur significant costs
in pursuit of our acquisition plans. Managements plans to address this need for capital through this offering are discussed in the section of
this prospectus titled Managements 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. These factors, among others, raise substantial doubt about our
ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might
result from our inability to consummate this offering or our inability to continue as a going concern.
If we are unable to consummate our initial business
combination, our public stockholders may be forced to wait more than 24 months before receiving distributions from the trust
account.
We will have until 18 months
from the closing of this offering (or 24 months from the closing of this offering if we have executed a definitive agreement for an initial business
combination within 18 months from the closing of this offering but have not completed the initial business combination within such
18-month period) to consummate our initial business combination. We have no obligation to return funds to investors prior to such date unless we
consummate our initial business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the
expiration of this full time period will holders of our common stock be entitled to distributions from the trust account if we are unable to complete
our initial business combination. Accordingly, investors funds may be unavailable to them until after such date and to liquidate your investment,
public security holders may be forced to sell their public shares, potentially at a loss.
You will not be entitled to protections normally afforded to
investors of blank check companies.
Since the net proceeds of this offering
are intended to be used to complete our initial business combination with a target business that has not been identified, we may be deemed to be a
blank check company under the United States securities laws. However, since we will have net tangible assets in excess
15
of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities, require us to complete our initial business combination within 18 months of the effective date of the initial registration statement and restrict the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, our units will be immediately tradable, we will be entitled to withdraw amounts from the funds held in the trust account prior to the completion of our initial business combination and we may have a longer period of time to complete such a business combination than we would if we were subject to such rule.
We may issue shares of our capital stock to complete our
initial business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our
ownership.
Our certificate of incorporation
authorizes the issuance of up to 40,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value
$.0001 per share. Immediately after this offering and the purchase of the private units (assuming no exercise of the underwriters over-allotment
option), there will be 22,555,000 authorized but unissued shares of common stock available for issuance (after appropriate reservation for the
issuance of the shares upon full exercise of our outstanding warrants and the unit purchase option being issued to EarlyBirdCapital). Although we have
no commitment as of the date of this offering, we may issue a substantial number of additional shares of common stock or shares of preferred stock, or
a combination of common stock and preferred stock, to complete our initial business combination. The issuance of additional shares of common stock or
preferred stock:
|
may significantly reduce the equity interest of investors in this offering; |
|
may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; |
|
may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
|
may adversely affect prevailing market prices for our shares of common stock. |
We may incur significant indebtedness in order to consummate
our initial business combination.
If we find it necessary to incur
significant indebtedness in connection with our initial business combination, it could result in:
|
default and foreclosure on our assets if our operating revenues after our 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 security is payable on demand; and |
|
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. |
The funds held in the trust account may not earn significant
interest and, as a result, we may be limited to the funds held outside of the trust account to fund our search for target businesses, to pay our tax
obligations and to complete our initial business combination.
Of the net proceeds of this offering,
$450,000, or $ 800,000 if the over-allotment option is exercised in full, is anticipated to be available to us initially outside
the trust account to fund our working capital requirements. We will depend on sufficient interest being earned on the proceeds held in the trust
account to
16
provide us with additional working capital we will need to identify one or more target businesses and to complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several months. Accordingly, if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the funds held outside of the trust account, we may not have sufficient funds available with which to structure, negotiate or close our initial business combination. In such event, we would need to borrow funds from our sponsors, officers or directors to operate or may be forced to liquidate. Our sponsors, officers and directors are under no obligation to loan us any funds. If we are unable to obtain the funds necessary, we may be forced to cease searching for a target business and may be unable to complete our initial business combination.
If third parties bring claims against us, the proceeds held in
the trust account could be reduced and the per-share redemption price received by stockholders may be less than $10.15 (or $10.10 if the
over-allotment option is exercised in full).
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 and service providers we engage and
prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute
such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity of such agreements. Accordingly, the
proceeds held in the trust account could be subject to claims which could take priority over those of our public stockholders. If we are unable to
complete an initial business combination within the required time period, our executive officers have agreed that they will be personally liable to
ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed
money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute
such a waiver. However, they may not be able to meet such obligation. Therefore, the distribution from the trust account to each holder of shares of
common stock may be less than $10.15 (or $10.10 if the over-allotment option is exercised in full), plus interest, due to such
claims.
Additionally, if we are forced to file
a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of
our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our holders of shares of common stock
at least $10.15 (or $10.10 if the over-allotment option is exercised in full).
Our stockholders may be held liable for claims by third
parties against us to the extent of distributions received by them.
If we have not completed our initial
business combination within 18 months from the closing of this offering (or 24 months from the closing of this offering if we have entered into
a definitive agreement with a target business for a business combination within 18 months from the closing of this offering but the business
combination has not been consummated within such 18-month 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 outstanding public shares of common stock, which
redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims that may be
potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third
parties may seek to recover from our stockholders amounts owed to them by us.
17
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the
trust account to our public stockholders promptly after expiration of the 18 or 24-month deadline, this may be viewed or interpreted as giving
preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board
may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public holders of common stock from the trust account prior to addressing the claims of creditors.
Claims may be brought against us for these reasons.
If we do not maintain a current and effective prospectus
relating to the shares of common stock issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a
cashless basis.
If we do not maintain a current and
effective prospectus relating to the shares of common stock issuable upon exercise of the public warrants at the time that holders wish to exercise
such warrants, they will only be able to exercise them on a cashless basis. As a result, the number of shares of common stock that holders
will receive upon exercise of the public warrants will be fewer than it would have been had such holders exercised their warrants for cash. Under the
terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus
relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that
we will be able to do so. If we are unable to do so, the potential upside of the holders investment in our company may be reduced.
Notwithstanding the foregoing, the private warrants and any other warrants that may be issued to our officers, directors, sponsors or their affiliates
as described elsewhere in this prospectus may be exercisable for unregistered shares of common stock for cash even if the prospectus relating to the
shares of common stock issuable upon exercise of the warrants is not current and effective.
An investor will only be able to exercise a warrant if the
issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of
residence of the holder of the warrants.
No public warrants will be exercisable
for cash and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise has been registered
or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time that the warrants
become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every
state. Accordingly, we believe holders in every state will be able to exercise their warrants as long as our prospectus relating to the shares of
common stock issuable upon exercise of the warrants is current. However, we cannot assure you of this fact. If the shares of common stock issuable upon
exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants
may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
We may amend the terms of the warrants in a way that may be
adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants will be issued in
registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The
warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including the private warrants) in order to make
any change that adversely affects the interests of the registered holders. Upon consummation of this offering, our sponsors will own approximately
5% of the outstanding warrants (assuming they do not purchase any units in this offering). Therefore, we would only need approval from holders
of more than 45% of public warrants to amend the terms of the warrants.
18
Since we are not limited to a particular industry or target
business with which to complete our initial business combination, we are unable to currently ascertain the merits or risks of the industry or business
in which we may ultimately operate.
We may consummate our initial business
combination with a company in any industry we choose and are not limited to any particular industry or type of business. Accordingly, there is no
current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business
which we may ultimately acquire. To the extent we complete our initial business combination with a financially unstable company or an entity in its
development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete our initial business
combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that
industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we may not properly
ascertain or assess all of the significant risk factors. An investment in our shares may not ultimately prove to be more favorable to investors in this
offering than a direct investment, if an opportunity were available, in a target business.
The requirement that the target business or businesses that we
acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution
of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business
combination with.
Pursuant to the Nasdaq listing rules,
the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the
trust account at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and
number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that satisfy this fair
market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust
account.
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 a business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target
business, but we will only complete such business combination if the post-transaction company acquires 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under
the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or
more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post
business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a
target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of
common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock
subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group
obtaining a larger share of the companys stock than we initially acquired. Accordingly, this may make it more likely that our management will not
be able to maintain our control of the target business.
19
Our ability to successfully effect our initial business
combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our
initial business combination. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of
these individuals may not prove to be correct.
Our ability to successfully effect our
initial business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our
key personnel, at least until we have consummated our initial business combination. None of our officers are required to commit any specified amount of
time to our affairs (although we expect them to devote approximately 10 hours per week to our business) and, accordingly, they will have conflicts of
interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the
related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the
services of our key personnel could have a detrimental effect on us.
The role of our key personnel after our
initial business combination, however, remains to be determined. Although some of our key personnel may serve in senior management or advisory
positions following our initial business combination, it is likely that most, if not all, of the management of the target business will remain in
place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may
not prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend
time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory
issues which may adversely affect our operations.
Our officers and directors may not have significant experience
or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
We may consummate a business
combination with a target business in any geographic location or industry we choose. Our officers and directors may not have enough experience or
sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding our initial business
combination.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
following 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 will be able to
remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting
agreements or other appropriate arrangements in connection with the business combination. Such negotiations would take place simultaneously with the
negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our
securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of
such individuals may influence their motivation in identifying and selecting a target business.
Our officers and directors will allocate their time to other
businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could
have a negative impact on our ability to consummate our initial business combination.
Our officers and directors are not
required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and
their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our
business. We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and
directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our
officers and directors other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their
ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. These conflicts
may not be resolved in our favor.
20
Our officers and directors have pre-existing fiduciary and
contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be
presented.
Our officers and directors have
pre-existing fiduciary and contractual obligations to other companies, including companies that are engaged in business activities similar to those
intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with our
consummation of our initial business combination. As a result, a potential target business may be presented by our management team to another entity
prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. For a more detailed
description of the pre-existing fiduciary and contractual obligations of our management team, and the potential conflicts of interest that such
obligations may present, see the section titled Management Conflicts of Interest.
The shares beneficially owned by our officers and directors
will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a
particular target business is appropriate for our initial business combination.
Our officers and directors have waived
their right to convert their insider shares, private shares or any other shares of common stock acquired in this offering or thereafter, or to receive
distributions with respect to their insider shares or private shares upon our liquidation if we are unable to consummate our initial business
combination. Accordingly, these securities will be worthless if we do not consummate our initial business combination. Their private warrants and any
other warrants they acquire will also be worthless if we do not consummate an initial business combination. The personal and financial interests of our
directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination.
Consequently, our directors and officers discretion in identifying and selecting a suitable target business may result in a conflict of
interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders
best interest.
Nasdaq may delist our securities from quotation on its
exchange which could limit investors ability to make transactions in our securities and subject us to additional trading
restrictions.
We anticipate that our securities will
be listed on Nasdaq, a national securities exchange, upon consummation of this offering. Although, after giving effect to this offering, we meet the
minimum initial listing standards of Nasdaq on a pro forma basis, which generally only requires that we meet certain requirements relating to
stockholders equity, market capitalization, aggregate market value of publicly held shares and distribution, our securities may not continue to
be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination, it is
likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient
continued listing requirements. We may not be able to meet those initial listing requirements at that time.
If Nasdaq delists our securities from
trading on its exchange, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities; |
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reduced liquidity with respect to our securities; |
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a determination that our shares are a penny stock, which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares; |
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a limited amount of news and analyst coverage for our company; and |
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a decreased ability to issue additional securities or obtain additional financing in the future. |
21
We may only be able to complete one business combination with
the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or
services.
It is likely we will consummate our
initial business combination with a single target business, although we have the ability to simultaneously acquire several target businesses. By
consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and
regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of
losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a
single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, or |
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dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may
subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
Alternatively, if we determine to
simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our
purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional
burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional
risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
The ability of our public stockholders to exercise their
conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.
If our initial business combination
requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise
conversion rights, we may either need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third
party financing to help fund our initial business combination. In the event that the acquisition involves the issuance of our stock as consideration,
we may be required to issue a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may
involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most
attractive business combination available to us.
We may be unable to consummate an initial business combination
if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain stockholders of
our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell their shares in the
open market.
A potential target may make it a
closing condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are
required to have pursuant to our organizational documents available at the time of closing. If the number of our public stockholders electing to
exercise their conversion rights has the effect of reducing the amount of money available to us to consummate an initial business combination below
such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate
such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case,
public stockholders may have to remain stockholders of our company and wait the full 24 months in order to be able to receive a pro rata portion of the
trust account, or attempt to sell their
22
shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust account for their shares.
We will offer each public stockholder the option to vote in
favor of the proposed business combination and still seek conversion of his, her or its shares.
In connection with any meeting held to
approve an initial business combination, we will offer each public stockholder (but not our sponsors, officers or directors) the right to have his, her
or its shares of common stock converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such
stockholder votes for or against such proposed business combination. We will consummate our initial business combination only if we have net tangible
assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. Accordingly, public stockholders owning shares of common stock sold in this offering may exercise their conversion rights and we could
still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business
combination. This is different than other similarly structured blank check companies where stockholders are offered the right to convert their shares
only when they vote against a proposed business combination. This threshold and the ability to seek conversion while voting in favor of a proposed
business combination may make it more likely that we will consummate our initial business combination.
Public stockholders that fail to vote either in favor of or
against a proposed business combination will not be able to have his shares converted to cash.
In order for a public stockholder to
have his shares converted to cash in connection with any proposed business combination, that public stockholder must vote either in favor of or against
a proposed business combination. If a public stockholder fails to vote in favor of or against a proposed business combination, whether that stockholder
abstains from the vote or simply does not vote, that stockholder would not be able to have his shares of common stock so converted to
cash.
Public stockholders, together with any affiliates of theirs or
any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more
than 20% of the shares of common stock sold in this offering.
In connection with any meeting held to
approve an initial business combination, we will offer each public stockholder (but not our sponsors, officers or directors) the right to have his,
her, or its shares of common stock converted into cash. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any
other person with whom he is acting in concert or as a group will be restricted from seeking conversion rights with respect to more than
20% of the shares of common stock sold in this offering. Generally, in this context, a stockholder will be deemed to be acting in concert or as a group
with another stockholder when such stockholders agree to act together for the purpose of acquiring, voting, holding or disposing of our equity
securities. Accordingly, if you purchase more than 20% of the shares of common stock sold in this offering and our proposed business combination is
approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such additional
shares of common stock or sell them in the open market. The value of such additional shares may not appreciate over time following our initial business
combination, and the market price of our shares of common stock may not exceed the per-share conversion price.
We may require public stockholders who wish to convert their
shares of common stock in connection with a proposed business combination to comply with specific requirements for conversion that may make it more
difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In connection with any stockholder
meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for
or against such proposed business combination, to demand that we convert his shares of common stock into a share of the trust
23
account. We may require public stockholders who wish to convert their shares of common stock in connection with a proposed business combination to either tender their certificates to our transfer agent at any time prior to the vote taken at the stockholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock certificate, a stockholders broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.
If we require public stockholders who wish to convert their
shares of common stock to comply with the delivery requirements for conversion, such converting stockholders may be unable to sell their securities
when they wish to in the event that the proposed business combination is not approved.
If we require public stockholders who
wish to convert their shares of common stock to comply with specific delivery requirements for conversion described above and such proposed business
combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to
convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their
securities to them. The market price for our shares of common stock may decline during this time and you may not be able to sell your securities when
you wish to, even while other stockholders that did not seek conversion may be able to sell their securities.
Because of our structure, other companies may have a
competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense
competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged
buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other
resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring
certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of our initial business combination may delay the
consummation of a transaction. Additionally, our outstanding warrants and unit purchase option, and the future dilution they represent, may not be
viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial
business combination.
Our ability to consummate an attractive business combination
may be impacted by the market for initial public offerings.
Our efforts to identify a prospective
target business will not be limited to any particular industry or geographic region, although it is very likely that our target will want to be a
public reporting company. If the market for initial public offerings is limited, we believe there will be a greater number of attractive target
businesses open to being acquired by us as a means to achieve publicly held status. Alternatively, if the market for initial public offerings is
robust, we believe that there will be fewer attractive target businesses amenable to being acquired by us to become a public reporting company.
Accordingly, during periods with strong public offering markets, it may be more difficult for us to complete an initial business
combination.
24
We may be unable to obtain additional financing, if required,
to complete our initial business combination or to fund the operations and growth of the target business, which could compel us to restructure or
abandon a particular business combination.
Although we believe that the net
proceeds of this offering will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective
target business, the capital requirements for any particular transaction remain to be determined. If the net proceeds of this offering prove to be
insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or
the obligation to convert into cash a significant number of shares of common stock, we will be required to seek additional financing. Such financing
may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a
particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek
an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the
operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or sponsors is required to provide any financing to us in connection with
or after our initial business combination.
Our sponsors, including our officers and directors, will
control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
Upon consummation of our offering and
sale of the private units, our sponsors, including our officers and directors, will collectively own approximately 23.3% of our issued and
outstanding shares of common stock (assuming they do not purchase any units in this offering). None of our sponsors, officers, directors or their
affiliates has indicated any intention to purchase units in this offering or any units or shares from persons in the open market or in private
transactions. However, our sponsors, officers, directors or their affiliates could determine in the future to make such purchases in the open market or
in private transactions, to the extent permitted by law, in order to influence the vote. In connection with any vote for a proposed business
combination, our sponsors, as well as all of our officers and directors, have agreed to vote the shares of common stock owned by them immediately
before this offering as well as the private shares and any shares of common stock acquired in this offering or in the aftermarket in favor of such
proposed business combination.
Our board of directors is and will be
divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year.
It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business
combination, in which case all of the current directors will continue in office until at least the consummation of the business combination.
Accordingly, you may not be able to exercise your voting rights under corporate law for up to 24 months. If there is an annual meeting, as a
consequence of our staggered board of directors, fewer than half of the board of directors will be considered for election and our
sponsors, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsors will continue to exert
control at least until the consummation of our initial business combination.
We may not hold an annual meeting of stockholders until after
the consummation of our initial business combination.
In accordance with Nasdaq corporate
governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.
Under Section 211(b) of the Delaware General Corporation Law, we are, however, required to hold an annual meeting of stockholders for the purposes of
electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. It is unlikely that there
will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be
in compliance with Section 211(b) of the Delaware General Corporation Law, which requires an annual meeting. Therefore, if our stockholders want us to
hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an
application to the Delaware Court of Chancery in accordance with Section 211(c) of the Delaware General Corporation Law.
25
If we determine to change our acquisition criteria or
guidelines, many of the disclosures contained in this prospectus would be rendered irrelevant and you would be investing in our company without any
basis on which to evaluate the potential target business we may acquire.
We could seek to deviate from the
acquisition criteria or guidelines disclosed in this prospectus although we have no current intention to do so. For instance, as required by Nasdaq
rules, we currently anticipate acquiring a target business that has a fair market value that is at least equal to 80% of the balance of the trust
account at the time of the execution of a definitive agreement for a business combination. However, we could be delisted from Nasdaq and therefore no
longer be required to meet this requirement. Furthermore, there are numerous agreements between us and third parties that could be amended between the
parties without approval of public stockholders. In such event, many of the acquisition criteria and guidelines set forth in this prospectus would be
rendered irrelevant. Accordingly, investors may be making an investment in our company without any basis on which to evaluate the potential target
business we may acquire.
Our sponsors paid an aggregate of $25,000, or approximately
$0.01 per share, for the insider shares and our sponsors and EarlyBirdCapital (and/or their designees) will pay $10.00 per unit for the private units,
resulting in an aggregate average price of approximately $1.97 per share, and, accordingly, you will experience immediate and substantial
dilution from the purchase of our shares of common stock.
The difference between the public
offering price per share and the pro forma net tangible book value per share of common stock after this offering constitutes the dilution to the
investors in this offering. Our sponsors acquired their initial shares of common stock at a nominal price, significantly contributing to this dilution.
Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution of approximately 80.9% or
$8.09 per share (the difference between the pro forma net tangible book value per share $1.91, and the initial offering price of $10.00
per unit). This is because investors in this offering will be contributing approximately 94.2% of the total amount paid to us for our
outstanding securities after this offering but will only own 76.3% of our outstanding securities. Accordingly, the per-share purchase price you
will be paying substantially exceeds our per share net tangible book value.
Our outstanding warrants and unit purchase option may have an
adverse effect on the market price of shares of common stock and make it more difficult to effect a business combination.
We will be issuing warrants to purchase
7,000,000 shares of common stock as part of the units offered by this prospectus and the private warrants to purchase 427,500 shares of common
stock. We will also issue a unit purchase option to purchase 420,000 units to the underwriters (and/or its designees) which, if exercised, will result
in the issuance of an additional 420,000 warrants. We may also issue additional units (including warrants) to our officers, directors, sponsors or
their affiliates upon conversion of promissory notes issued to such persons for loans made to supplement our working capital requirements, as described
elsewhere in this prospectus. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of a
substantial number of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target
business. Such securities, when exercised, will increase the number of issued and outstanding shares of common stock and reduce the value of the shares
issued to complete the business combination. Accordingly, our warrants and unit purchase option may make it more difficult to effectuate a business
combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying
the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent
these warrants are exercised, you may experience dilution to your holdings.
We may redeem the warrants at a time that is not beneficial to
public investors.
We may call the public warrants for
redemption at any time after the redemption criteria described elsewhere in this prospectus have been satisfied. If we call the public warrants for
redemption, public stockholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do
so.
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Our managements ability to require holders of our
warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants
than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for
redemption after the redemption criteria described elsewhere in this prospectus 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 initial stockholders 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 shares of common
stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the
effect of reducing the potential upside of the holders investment in our company.
If our security holders exercise their registration rights, it
may have an adverse effect on the market price of our shares of common stock and the existence of these rights may make it more difficult to effect our
initial business combination.
Our sponsors are entitled to make a
demand that we register the resale of the insider shares at any time commencing three months prior to the date on which their shares may be released
from escrow. Additionally, the purchasers of the private units and our sponsors, officers, directors or their affiliates are entitled to demand that we
register the resale of the private units (and underlying securities) and any securities our sponsors, officers, directors or their affiliates may be
issued in payment of working capital loans made to us commencing on the date that we consummate our initial business combination. The presence of these
additional securities trading in the public market may have an adverse effect on the market price of our securities. In addition, the existence of
these rights may make it more difficult to effectuate our initial business combination or increase the cost of acquiring the target business, as the
stockholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their
securities because of the potential effect the exercise of such rights may have on the trading market for our shares of common stock.
If we are deemed to be an investment company, we may be
required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our
initial business combination.
A company that, among other things, is
or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding
certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in
the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated
principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in the trust account may be invested by the
trustee only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the
applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. By restricting
the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the
Investment Company Act of 1940.
If we are nevertheless deemed to be an
investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to
complete our initial business combination, including:
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restrictions on the nature of our investments; and |
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restrictions on the issuance of securities. |
In addition, we may have imposed upon
us certain burdensome requirements, including:
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registration as an investment company; |
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adoption of a specific form of corporate structure; and |
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reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. |
Compliance with these additional
regulatory burdens would require additional expense for which we have not allotted.
The determination for the offering price of our units is more
arbitrary compared with the pricing of securities for an operating company in a particular industry.
Prior to this offering there has been
no public market for any of our securities. The public offering price of the units was negotiated between us and the representative of the
underwriters. Factors considered in determining the price of the shares of units include:
|
the history of other similarly structured blank check companies; |
|
prior offerings of those companies; |
|
our prospects for acquiring an operating business at attractive values; |
|
our capital structure; |
|
securities exchange listing requirements; |
|
market demand; |
|
expected liquidity of our securities; and |
|
general conditions of the securities markets at the time of the offering. |
However, although these factors were
considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry
since we have no historical operations or financial results to compare them to.
The requirement that we complete our initial business
combination within 18 or 24 months from the closing of this offering may give potential target businesses leverage over us in negotiating our
initial business combination.
We have 18 months from the
closing of this offering (or 24 months from the closing of this offering if we have executed a definitive agreement for an initial business combination
within 18 months from the closing of this offering but have not completed the business combination within such 18-month period) to
complete our initial business combination. Any potential target business with which we enter into negotiations concerning a business combination will
be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we
do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target
business. This risk will increase as we get closer to the time limit referenced above.
We may not obtain a fairness opinion with respect to the
target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors in approving a proposed
business combination.
We will only be required to obtain a
fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers, directors
or sponsors. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of
our board of directors in approving a proposed business combination.
We may not be required to obtain an opinion from an
independent investment banking firm as to the fair market value of the target business we are seeking to acquire.
We will not be required to obtain an
opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target
business we are seeking to acquire, as to the fair market value of such target business if our board of directors independently
determines
28
that the target business complies with the 80% threshold. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing such target business or businesses, and our board of directors may not properly value such target business or businesses.
Resources could be spent researching acquisitions that are not
consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
It is anticipated that the
investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other
instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made
not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number
of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially
adversely affect subsequent attempts to locate and acquire or merge with another business.
Compliance with the Sarbanes-Oxley Act of 2002 will require
substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act
of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls and may require that we have such system of
internal controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal
penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley
Act also requires that our independent registered public accounting firm report on managements evaluation of our system of internal controls. A
target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of
the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of
adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a
negative effect on the trading price of our stock.
We are an emerging growth company and we cannot be
certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to
investors.
We are an emerging growth
company, as defined in the JOBS Act. We will remain an emerging growth company for up to five years. However, if our non-convertible
debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our shares of common stock that are held by
non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth
company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements
of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such,
our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find
our shares of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock less attractive
as a result, there may be a less active trading market for our shares and our share price may be more volatile.
29
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the
Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out
of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is
irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised standard until the
time private companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another public
company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accountant standards used.
If we effect our initial business combination with a company
located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our
operations.
We may effect our initial business
combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with
companies operating in the target business home jurisdiction, including any of the following:
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rules and regulations or currency conversion or corporate withholding taxes on individuals; |
|
tariffs and trade barriers; |
|
regulations related to customs and import/export matters; |
|
longer payment cycles; |
|
tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
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currency fluctuations and exchange controls; |
|
challenges in collecting accounts receivable; |
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cultural and language differences; |
|
employment regulations; |
|
crime, strikes, riots, civil disturbances, terrorist attacks and wars; and |
|
deterioration of political relations with the United States. |
We may not be able to adequately
address these additional risks. If we are unable to do so, our operations may suffer.
If we effect our initial business combination with a target
business located outside of the United States, the laws applicable to such target business will likely govern all of our material agreements and we may
not be able to enforce our legal rights.
If we effect our initial business
combination with a target business located outside of the United States, the laws of the country in which such target business is domiciled will govern
almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements in such
jurisdiction and appropriate remedies to enforce its rights under such material agreements may not be available in this new jurisdiction. The system of
laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The
inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or
capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located
outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for
investors in the United States to enforce their legal rights, to effect service of process upon our
30
directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.
Provisions in our amended and restated certificate of
incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
our common stock and could entrench management.
Our amended and restated certificate of
incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best
interests. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. As a result, at a given annual meeting only one-third of the board of directors may be considered for election.
Since our staggered board may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it
may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our board of
directors has the ability to designate the terms of and issue new series of preferred stock.
We are also subject to anti-takeover
provisions under Delaware law, which could delay or prevent a change of control. Together these provisions 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.
Because we must furnish our stockholders with target business
financial statements prepared in accordance with U.S. generally accepted accounting principles or international financial reporting standards, we will
not be able to complete our initial business combination with prospective target businesses unless their financial statements are prepared in
accordance with U.S. generally accepted accounting principles or international financial reporting standards.
The federal proxy rules require that a
proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma
financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance with, or be reconciled to,
accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending
on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may
acquire.
There is currently no market for our securities and a market
for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our
securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this
offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to
sell your securities unless a market can be established and sustained.
Changes in laws or regulations, or a failure to comply with
any laws and regulations, may adversely affect our business, investments 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 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 and results of operations.
31
Supply Chain Industry Risks
Business combinations with companies
with operations in the supply chain industry entail special considerations and risks. If we are successful in completing a business combination with a
target business with operations in the supply chain industry, we will be subject to, and possibly adversely affected by, the following
risks:
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increased costs or decreased availability of third-party providers of certain transportation services; |
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the negative impacts of catastrophic events; |
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competition and consolidation of the specific sector of the supply chain management industry within which the target business operates; |
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obtaining the necessary insurance coverage for the target business operations; |
|
increased government regulations in the supply chain management industry, including with respect to, among other matters, increased anti-terrorism measures and handling of regulated waste, and the costs of compliance with such regulations; and |
|
changes in demands for outsourcing supply chain management activities. |
Any of the foregoing could have a
negative adverse impact on our operations following a business combination.
However, our efforts in identifying
prospective target businesses will not be limited to a particular industry. Accordingly, if we acquire a target business in another industry, these
risks will likely not affect us and we will be subject to other risks attendant with the specific industry in which we operate or target business which
we acquire, none of which can be presently ascertained.
32
The statements contained in this
prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements
regarding our or our managements expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that
refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. The words anticipate, believe, continue, could, estimate, expect,
intend, may, might, plan, possible, potential, predict,
project, should, would and similar expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about
our:
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ability to complete our initial business combination; |
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success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
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officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
|
potential ability to obtain additional financing to complete our initial business combination; |
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pool of prospective target businesses; |
|
the ability of our officers and directors to generate a number of potential investment opportunities; |
|
potential change in control if we acquire one or more target businesses for stock; |
|
the potential liquidity and trading of our securities; |
|
the lack of a market for our securities; |
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use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or |
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financial performance following this offering. |
The forward-looking statements
contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future
developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading
Risk Factors. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual
results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.
33
We estimate that the net proceeds of
this offering, in addition to the funds we will receive from the sale of the private units (all of which will be deposited into the trust account),
will be used as set forth in the following table:
Without Over-Allotment Option |
Over-Allotment Option Exercised |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross
proceeds |
|||||||||||||||||||
From offering
|
$70,000,000 | $80,500,000 | |||||||||||||||||
From private
placement |
4,275,000 | 4,721,250 | |||||||||||||||||
Total
gross proceeds |
74,275,000 | 85,221,250 | |||||||||||||||||
Offering expenses (1) |
|||||||||||||||||||
Underwriting discount (3.25% of gross proceeds from offering) |
2,275,000 | 2,616,250 | |||||||||||||||||
Legal fees
|
250,000 | 250,000 | |||||||||||||||||
Nasdaq
listing fee |
50,000 | 50,000 | |||||||||||||||||
Printing
and engraving expenses |
55,000 | 55,000 | |||||||||||||||||
Accounting
fees |
30,000 | 30,000 | |||||||||||||||||
FINRA
filing fee |
26,461 | 26,461 | |||||||||||||||||
SEC
registration fee |
23,607 | 23,607 | |||||||||||||||||
Miscellaneous expenses |
64,932 | 64,932 | |||||||||||||||||
Total
offering expenses |
2,775,000 | 3,116,250 | |||||||||||||||||
Net
proceeds |
|||||||||||||||||||
Held in
the trust account |
71,050,000 | 81,305,000 | |||||||||||||||||
Not held
in the trust account |
450,000 | 800,000 | |||||||||||||||||
Total net
proceeds |
$71,500,000 | $82,105,000 | |||||||||||||||||
Use of
net proceeds not held in the trust account and amounts available from interest income earned on the trust account (3)
(4) |
|||||||||||||||||||
Legal,
accounting and other third party expenses attendant to the search for target businesses and to the due diligence investigation, structuring and
negotiation of our initial business combination |
$50,000 | (9.1%) | $325,000 | (36.1%) | |||||||||||||||
Due diligence
of prospective target businesses by officers, directors and sponsors |
25,000 | (4.5%) | 70,000 | (7.8%) | |||||||||||||||
Legal and
accounting fees relating to SEC reporting obligations |
35,000 | (6.4%) | 65,000 | (7.2%) | |||||||||||||||
Payment of
administrative fee to Cambridge Capital LLC ($10,000 per month for up to 24 months) |
240,000 | (43.6%) | 240,000 | (26.7%) | |||||||||||||||
Corporate and
franchise taxes |
100,000 | (18.2%) | 100,000 | (11.1%) | |||||||||||||||
Working
capital to cover miscellaneous expenses, D&O insurance, general corporate purposes, liquidation obligations and reserves |
100,000 | (18.2%) | 100,000 | (11.1%) | |||||||||||||||
Total
|
$550,000 | (100.0%) | $900,000 | (100.0%) |
(1) |
A portion of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees, have been paid from the funds we received from Cambridge Capital LLC described below. These funds will be repaid out of the proceeds of this offering available to us. |
(2) |
No discounts or commissions will be paid with respect to the purchase of the private units. |
34
(3) |
The amount of proceeds not held in the trust account will equal $450,000, or $800,000 if the over-allotment is exercised in full. In addition, interest income earned on the amounts held in the trust account (after payment of taxes owed on such interest income) will be available to us to pay for our working capital requirements. We estimate the interest earned on the trust account will be approximately $100,000 over a 24-month period assuming an interest rate of approximately 0.1% per year. |
(4) |
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of that business combination. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would be deducted from our excess working capital. |
Our sponsors and EarlyBirdCapital
(and/or their designees) have committed that they and/or their designees will purchase the private units (for an aggregate purchase price of
$4,275,000) from us on a private placement basis simultaneously with the consummation of this offering. Our sponsors and EarlyBirdCapital have
also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $10.00 per unit an
additional number of private units (up to a maximum of 44,625 private units) pro rata with the amount of the over-allotment option
exercised so that at least $ 10.10 per share of common stock sold to the public in this offering is held in trust if the over-allotment
option is exercised in full. All of the proceeds we receive from these purchases will be placed in the trust account described
below.
$71,050,000, or
$81,305,000 if the over-allotment option is exercised in full, of net proceeds of this offering and the sale of the private units, will be
placed in a trust account in the United States at UBS Financial Services Inc., maintained by Continental Stock Transfer & Trust Company, as
trustee. The funds held in the trust account will be invested only in United States government treasury bills, notes or bonds having a maturity of 180
days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that
invest solely in U.S. treasuries, so that we are not deemed to be an investment company under the Investment Company Act. Except with respect to (1)
interest earned on the funds held in the trust account that may be released to us to pay our income or other tax obligations and (2) interest earned on
the funds held in the trust account that may be released to us for our working capital requirements, the proceeds will not be released from the trust
account until the earlier of the completion of our initial business combination or our redemption of 100% of the outstanding public shares if we have
not completed a business combination in the required time period. The proceeds held in the trust account may be used as consideration to pay the
sellers of a target business with which we complete our initial business combination. Any amounts not paid as consideration to the sellers of the
target business may be used to finance operations of the target business.
The payment to Cambridge Capital LLC,
an affiliate of Benjamin Gordon, of a monthly fee of $10,000 is for general and administrative services including office space, utilities and
secretarial support. This arrangement is being agreed to by Cambridge Capital LLC for our benefit and is not intended to provide Mr. Gordon with
compensation in lieu of a salary. We believe, based on rents and fees for similar services in West Palm Beach, Florida, that the fee charged by
Cambridge Capital LLC is at least as favorable as we could have obtained from an unaffiliated person. This arrangement will terminate upon completion
of our initial business combination or the distribution of the trust account to our public stockholders. Other than the $10,000 per month fee, no
compensation of any kind (including finders and consulting fees or other similar compensation) will be paid to our sponsors, members of our
management team or any of our or their respective affiliates, for services rendered to us prior to or in connection with the consummation of our
initial business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any
out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing
business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar
locations of prospective target businesses to examine their operations. Since the role of present management after our initial business combination is
uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after our initial business
combination.
35
Regardless of whether the
over-allotment option is exercised in full, the net proceeds from this offering available to us out of trust for our working capital requirements in
searching for our initial business combination will be approximately $450,000, or $ 800,000 if the over-allotment option is exercised in
full. In addition, interest earned on the funds held in the trust account (after payment of taxes owed on such interest income) may be released to
us to fund our working capital requirements in searching for our initial business combination. We intend to use the after-tax interest earned for
miscellaneous expenses such as paying fees to consultants to assist us with our search for a target business and for director and officer liability
insurance premiums, with the balance being held in reserve in the event due diligence, legal, accounting and other expenses of structuring and
negotiating business combinations exceed our estimates, as well as for reimbursement of any out-of-pocket expenses incurred by our sponsors, officers
and directors in connection with activities on our behalf as described below.
The allocation of the net proceeds
available to us outside of the trust account, along with the available interest earned on the funds held in the trust account, represents our best
estimate of the intended uses of these funds. In the event that our assumptions prove to be inaccurate, we may reallocate some of such proceeds within
the above described categories. If our estimate of the costs of undertaking in-depth due diligence and negotiating our initial business combination is
less than the actual amount necessary to do so, or the amount of interest available from the trust account is insufficient as a result of the current
low interest rate environment, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable.
In this event, we could seek such additional capital through loans or additional investments from members of our management team, but such members of
our management team are not under any obligation to advance funds to, or invest in, us.
We will likely use substantially all of
the net proceeds of this offering, including the funds held in the trust account, to acquire a target business and to pay our expenses relating
thereto, including a fee payable to EarlyBirdCapital in an amount equal to 3.0% of the total gross proceeds raised in the offering upon consummation of
our initial business combination for acting as our investment banker on a non-exclusive basis to assist us in structuring and negotiating a business
combination (but not for the purpose of identifying a target business). To the extent that our capital stock is used in whole or in part as
consideration to effect our initial business combination, the proceeds held in the trust account which are not used to consummate a business
combination will be disbursed to the combined company and will, along with any other net proceeds not expended, be used as working capital to finance
the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target
business operations, for strategic acquisitions and for marketing, research and development of existing or new products.
To the extent we are unable to
consummate a business combination, we will pay the costs of liquidation from our remaining assets outside of the trust account. If such funds are
insufficient, our executive officers have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than
$15,000) and have agreed not to seek repayment of such expenses.
As of October 8, 2013, Cambridge
Capital LLC loaned to us an aggregate of $100,000 to be used to pay a portion of the expenses of this offering referenced in the line items above for
SEC registration fee, FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees and expenses.
The loan is payable without interest on the earlier of (i) October 2, 2014, (ii) the date on which we consummate our initial public offering or (iii)
the date on which we determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this offering available
to us for payment of offering expenses.
We believe that, upon consummation of
this offering, we will have sufficient available funds (which includes amounts that may be released to us from the trust account) to operate for up to
the next 24 months, assuming that our initial business combination is not consummated during that time. However, if necessary, in order to meet our
working capital needs following the consummation of this offering, our sponsors, officers and directors or their affiliates may, but are not obligated
to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by
a promissory note. The notes would either be paid upon consummation of our initial business combination,
36
without interest, or, at the lenders discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete our initial business combination, the loans will not be repaid.
A public stockholder will be entitled
to receive funds from the trust account (including interest earned on his, her or its portion of the trust account to the extent not previously
released to us) only in the event of (1) our redemption of 100% of the outstanding public shares if we have not completed a business combination in the
required time period or (2) if that public stockholder elects to convert shares of common stock in connection with a stockholder vote to approve our
proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to
stockholders rights or pre-business combination activity. In no other circumstances will a public stockholder have any right or interest of any
kind to or in the trust account.
37
We have not paid any cash dividends on
our shares of common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of
cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent
to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the
discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our
business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. In addition, our
board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we
increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend immediately prior to
the consummation of the offering in such amount as to maintain our sponsors ownership at 20.0% of our issued and outstanding shares of our common
stock upon the consummation of this offering (excluding ownership of the private units). Further, if we incur any indebtedness in connection with our
initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection
therewith.
38
The difference between the public
offering price per share, assuming no value is attributed to the warrants included in the units we are offering by this prospectus and included in the
private units, and the pro forma net tangible book value per share after this offering constitutes the dilution to investors in this offering. Such
calculation does not reflect any dilution associated with the sale and exercise of warrants, including the private warrants. Net tangible book value
per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of
shares of common stock which may be converted into cash), by the number of outstanding shares of common stock.
At October 8, 2013, our net tangible
book value was $(11,000), or approximately $(0.01) per share. After giving effect to the sale of 7,000,000 shares of common stock included in the units
we are offering by this prospectus, and the deduction of underwriting discounts and estimated expenses of this offering, and the sale of the private
units, our pro forma net tangible book value at October 8, 2013 would have been $5,000,001 or $1.91 per share, representing an immediate
increase in net tangible book value of $1.92 per share to the initial stockholders and an immediate dilution of 80.9% per share or
$8.09 to new investors not exercising their conversion rights. For purposes of presentation, our pro forma net tangible book value after this
offering is $66,523,349 less than it otherwise would have been because if we effect a business combination, the ability of public stockholders
(but not our sponsors) to exercise conversion rights may result in the conversion of up to 6,554,024 shares sold in this
offering.
The following table illustrates the
dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units and the private
units:
Public
offering price |
$ | 10.00 | ||||||||
Net tangible
book value before this offering |
$(0.01 | ) | ||||||||
Increase
attributable to new investors and private sales |
1.92 | |||||||||
Pro forma net
tangible book value after this offering |
1.91 | |||||||||
Dilution to
new investors |
$8.09 | |||||||||
Percentage of
dilution to new investors |
80.9 | % |
The following table sets forth
information with respect to our sponsors and the new investors:
Shares Purchased |
Total Consideration |
Average Price per Share |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number |
Percentage |
Amount |
Percentage |
||||||||||||||||||||
Sponsors and
Underwriters |
2,177,500 | (1) | 23.7 | % | $4,300,000 | 5.8 | % | $1.97 | |||||||||||||||
New investors
|
7,000,000 | 76.3 | % | 70,000,000 | 94.2 | % | $10.00 | ||||||||||||||||
9,177,500 | 100.0 | % | $74,300,000 | 100.0 | % |
(1) |
Assumes the over-allotment option has not been exercised and an aggregate of 262,500 insider shares have been forfeited as a result thereof. Includes 427,500 private shares issued simultaneously with the consummation of this offering. |
39
The pro forma net tangible book value
per share after the offering is calculated as follows:
Numerator: |
||||||
Net tangible
book value before the offering |
$ | (11,000 | ) | |||
Net proceeds
from this offering and private placement of private units |
71,500,000 | |||||
Plus:
Offering costs accrued for and paid in advance, excluded from tangible book value before this offering |
34,250 | |||||
Plus:
Proceeds from sale of unit purchase option to underwriters |
100 | |||||
Less:
Proceeds held in the trust account subject to conversion |
(66,523,349 | ) | ||||
$ | 5,000,001 | |||||
Denominator: |
||||||
Shares of
common stock outstanding prior to this offering |
1,750,000 | (1 ) | ||||
Shares of
common stock to be sold in this offering |
7,000,000 | |||||
Shares of
common stock to be sold in private placement |
427,500 | |||||
Less: Shares
subject to conversion |
(6,554,024 | ) | ||||
2,623,476 |
(1) |
Assumes that the underwriters over-allotment option has not been exercised and an aggregate of 262,500 insider shares have been forfeited as a result thereof. |
40
The following table sets forth our
capitalization at October 8, 2013 and as adjusted to give effect to the sale of our units offered by this prospectus and the private units and the
application of the estimated net proceeds derived from the sale of such securities:
October 8, 2013 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Actual |
As Adjusted (1) |
||||||||||
Note payable
to related party(2) |
$ | 100,000 | $ | | |||||||
Common
stock, $.0001 par value, -0- and 6,554,024 shares which are subject to possible conversion |
| 66,523,349 | |||||||||
Stockholders equity: |
|||||||||||
Preferred
stock, $.0001 par value, 1,000,000 shares authorized; none issued or outstanding |
| | |||||||||
Common
stock, $.0001 par value, 40,000,000 shares authorized; 2,012,500 shares issued and outstanding, actual; 2,623,476 shares(3) issued
and outstanding (excluding 6,554,024 shares subject to possible conversion), as adjusted |
201 | 262 | |||||||||
Additional
paid-in capital |
24,799 | 5,001,489 | |||||||||
Deficit
accumulated during the development stage |
(1,750 | ) | (1,750 | ) | |||||||
Total
stockholders equity: |
$ | 23,250 | $ | 5,000,001 | |||||||
Total
capitalization |
$ | 123,250 | $71,523,350 |
(1) |
Includes the $4,275,000 we will receive from the sale of the private units. |
(2) |
Note payable to related party is a promissory note issued in the aggregate amount of $100,000 to Cambridge Capital LLC. The note is non-interest bearing and is payable on the earliest to occur of (i) October 2, 2014, (ii) the consummation of this offering or (iii) the date on which we determine not to proceed with this offering. |
(3) |
Assumes the over-allotment option has not been exercised and an aggregate of 262,500 insider shares have been forfeited by our sponsors as a result thereof. |
41
We were formed on October 1, 2013 for
the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business
combination with one or more target businesses. Our efforts to identify a target business will not be limited to a particular industry or geographic
region, although we intend to focus our search for target businesses that operate in the supply chain industry, with an emphasis on target businesses
that operate in the traditional transportation and logistics end of the supply chain industry.
We intend to utilize cash derived from
the proceeds of this offering and the private placement of the private units, our securities, debt or a combination of cash, securities and debt, in
effecting our initial business combination. The issuance of additional shares of common stock or preferred stock in our initial business
combination:
|
may significantly dilute the equity interest of our investors in this offering who would not have pre-emption rights in respect of any such issuance; |
|
may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; |
|
will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and |
|
may adversely affect prevailing market prices for our securities. |
Similarly, if we issue debt securities,
it could result in:
|
default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to pay our debt obligations; |
|
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant; |
|
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and |
|
our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding. |
We have neither engaged in any
operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through an offering
of our equity securities.
Liquidity and Capital Resources
As indicated in the accompanying
financial statements, at October 8, 2013, we had $89,000 in cash and cash equivalents and a working capital deficiency of $11,000. Further, we have
incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Managements plans to address this
uncertainty through this offering are discussed above. Our plans to raise capital or to consummate our initial business combination may not be
successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
Our liquidity needs have been satisfied
to date through receipt of $25,000 from the sale of the insider shares and a loan from Cambridge Capital LLC in an aggregate amount of $100,000 that is
more fully described below. We estimate that the net proceeds from (1) the sale of the units in this offering, after deducting offering expenses of
approximately $500,000 and underwriting discounts and commissions of $2,275,000 (or $2,616,250 if the over-allotment option is exercised in full) and
(2) the sale of the private units
42
for a purchase price of $4,275,000, will be $71,500,000 (or $82,105,000 if the over-allotment option is exercised in full). $71,050,000 (or $81,305,000 if the over-allotment option is exercised in full) will be held in the trust account. The remaining $450,000, or $ 800,000 if the over-allotment option is exercised in full, will not be held in the trust account.
We intend to use substantially all of
the net proceeds of this offering, including the funds held in the trust account, to acquire a target business or businesses and to pay our expenses
relating thereto, including a fee payable to EarlyBirdCapital in an amount equal to 3.0% of the total gross proceeds raised in the offering upon
consummation of our initial business combination for acting as our investment banker on a non-exclusive basis to assist us in structuring and
negotiating a business combination (but not for the purpose of identifying a target business). To the extent that our capital stock is used in whole or
in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds
not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of
ways including continuing or expanding the target business operations, for strategic acquisitions and for marketing, research and development of
existing or new products. Such funds could also be used to repay any operating expenses or finders fees which we had incurred prior to the
completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such
expenses.
We believe that, upon consummation of
this offering, the $450,000, or $ 800,000 if the over-allotment option is exercised in full, of net proceeds not held in the trust
account, plus the interest earned on the trust account balance (net of income and other tax obligations) that may be released to us to fund our working
capital requirements which we anticipate will be approximately $100,000, will be sufficient to allow us to operate for at least the next 24 months,
assuming that a business combination is not consummated during that time. Over this time period, we will be using these funds for identifying and
evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices,
plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses,
selecting the target business to acquire and structuring, negotiating and consummating the business combination. We anticipate that we will incur
approximately:
|
$50,000, or $ 325,000 if the over-allotment option is exercised in full, of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of our initial business combination; |
|
$25,000, or $ 70,000 if the over-allotment option is exercised in full, of expenses for the due diligence and investigation of a target business by our officers, directors and sponsors; |
|
$35,000, or $65,000 if the over-allotment option is exercised in full, of expenses in legal and accounting fees relating to our SEC reporting obligations; |
|
$240,000 for the payment of the administrative fee to Cambridge Capital LLC (of $10,000 per month for up to 24 months); |
|
$100,000 for corporate and franchise taxes; and |
|
$100,000 for general working capital that will be used for miscellaneous expenses, liquidation obligations and reserves, including director and officer liability insurance premiums. |
If our estimates of the costs of
undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of
interest available to us from the trust account is less than we expect as a result of the current interest rate environment, we may have insufficient
funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to
consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our
initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to
compliance with applicable securities laws, we would only consummate such
43
financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Related Party Transactions
As of October 8, 2013, Cambridge
Capital LLC, an affiliate of Benjamin Gordon, loaned an aggregate of $100,000 to us, on a non-interest bearing basis, for payment of offering expenses
on our behalf. The loan is payable without interest on the earlier of (i) October 2, 2014, (ii) the date on which we consummate our initial public
offering or (iii) the date on which we determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this
offering not being placed in the trust account.
We are obligated, commencing on the
date of this prospectus, to pay Cambridge Capital LLC a monthly fee of $10,000 for general and administrative services.
Our sponsors and EarlyBirdCapital
(and/or their designees) have committed that they and/or their designees will purchase an aggregate of 427,500 private units at $10.00 per
private unit (for a total purchase price of $4,275,000) from us. These purchases will take place on a private placement basis simultaneously
with the consummation of this offering. Our sponsors and EarlyBirdCapital have also agreed that if the over-allotment option is exercised by the
underwriters, they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 44,625
private units) pro rata with the amount of the over-allotment option exercised so that at least $ 10.10 per share of common stock sold to
the public in this offering is held in trust if the over-allotment option is exercised in full. These additional private units will be purchased
in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment
option.
We do not believe we will need to raise
additional funds following this offering in order to meet the expenditures required for operating our business. However, in order to finance
transaction costs in connection with an intended initial business combination, our sponsors, officers, directors or their affiliates may, but are not
obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working
capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such
loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest,
or, at the lenders discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private
units at a price of $10.00 per unit. We believe the purchase price of these units will approximate the fair value of such units when issued. However,
if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for
the excess of the fair value of the units on the day of issuance over the purchase price in accordance with ASC 718 Compensation Stock
Compensation.
Controls and Procedures
We are not currently required to
maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal
control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2014. As of the date of this prospectus, we have not completed
an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or
businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine
are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business
combination may have internal controls that need improvement in areas such as:
|
staffing for financial, accounting and external reporting areas, including segregation of duties; |
|
reconciliation of accounts; |
|
proper recording of expenses and liabilities in the period to which they relate; |
44
|
evidence of internal review and approval of accounting transactions; |
|
documentation of processes, assumptions and conclusions underlying significant estimates; and |
|
documentation of accounting policies and procedures. |
Because it will take time, management
involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and
market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities,
particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we
expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our managements report on
internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404. The
independent auditors may identify additional issues concerning a target businesss internal controls while performing their audit of internal
control over financial reporting.
Quantitative and Qualitative Disclosures about Market
Risk
The net proceeds of this offering,
including amounts in the trust account, will be invested in United States government treasury bills, bonds or notes having a maturity of 180 days or
less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest
solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate
risk.
Off-Balance Sheet Arrangements; Commitments and
Contractual Obligations; Quarterly Results
As of the date of this prospectus, we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual
obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.
JOBS Act
On April 5, 2012, the JOBS Act was
signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We
will qualify as an emerging growth company and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements
based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards,
and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective
dates.
45
Introduction
We are a Delaware blank check company
incorporated on October 1, 2013 formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not
be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate in the supply chain
industry, with an emphasis on target businesses that operate in the traditional transportation and logistics end of the supply chain
industry.
The Supply Chain Industry
Overview and Trends
The supply chain industry involves
companies that handle the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from
point of origin to point of consumption. We believe the supply chain sector provides many opportunities for our company. First, it is a large
market, with business logistics costs totaling $1.3 trillion according to the Council of Supply Chain Management Professionals (CSCMP). Second,
it is growing, with third-party logistics revenues increasing at a rate of 10% annually from 1996 to 2012, according to Armstrong & Associates.
Third, it is fragmented. For example, the top ten third-party logistics (3PL) providers generated just 22% of all industry revenue and the top ten
trucking carriers accounted for 32% of all industry revenue, based on research from Armstrong & Associates and Wall Street equity
research, respectively. And fourth, the industry includes large companies such as CH Robinson, Expeditors International, Landstar, FedEx,
UPS, and others.
Our universe of potential acquisition
targets in the supply chain industry includes, but is not limited to:
|
3PL |
o |
Subcontracted transportation services |
o |
Reverse logistics |
|
3PL Software |
o |
Logistics planning |
o |
Warehouse solutions |
|
4PL |
o |
Integrators managing logistic movements |
|
Aviation |
o |
Cargo logistics services |
|
Cold Chain Logistics |
o |
Cooler and freezer storage |
o |
Refrigerated transportation |
|
Dedicated Contract Carriage |
o |
Dedicated truck operations |
o |
Fleet management |
|
Distribution Logistics |
o |
Order processing |
o |
Transportation services |
|
Domestic Transportation Management |
o |
Transportation brokerage |
o |
Expedited services |
o |
Sourcing |
46
|
Electronics Reverse Logistics |
o |
IT asset disposition |
o |
Remarketing |
o |
Recycling |
|
Environmental Services |
o |
Waste treatment and disposal |
o |
Environmental logistics |
|
Intermodal |
o |
Container ship |
o |
Railroad |
o |
Cartage |
|
International Transportation Management |
o |
Air freight forwarding |
o |
Ocean freight forwarding |
o |
Customs brokerage |
|
Ocean and Coastal Transportation |
o |
Vessel transportation services |
o |
Container and bulk logistics |
|
Railroads |
o |
Container and bulk logistics |
|
Supply Chain Technology |
o |
RFID and GPS |
o |
Speech recognition |
o |
Remote tracking and management |
|
Trade Consulting |
o |
Duty draw back and tax recovery |
o |
Import/export trade management |
o |
Trade compliance |
|
Truckload |
o |
Long-haul services |
o |
Regional and interregional services |
|
Value-added Warehousing and Distribution |
o |
Warehouse management |
o |
Contract assembly and manufacturing |
o |
Reverse logistics |
Business Strategy
We have identified the following
criteria and guidelines that we believe are important in evaluating prospective target businesses. While these will be used in evaluating business
combination opportunities, we may decide to enter into a business combination with a target business or businesses that do not meet all of the proposed
criteria and guidelines.
Target profile characteristics
include:
|
Privately-held, family owned |
|
Target seeking to become public |
|
Limited capital expenditure requirements |
|
Strong organic and M&A driven growth potential |
47
|
Interest in retaining equity to build and grow the company |
Competitive Strengths
We believe our competitive strengths to
be the following:
Status as a Public
Company
We believe our structure will make us
an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the
traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange
their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. We believe target businesses might find this method a more certain and cost effective method to
becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in
marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us.
Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters ability to complete the offering, as well as general market conditions, that could prevent the offering
from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders interests than it would have as a privately-held company. It can offer further benefits by augmenting a
companys profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our status as a
public company will make us an attractive business partner, some potential target businesses may view the inherent limitations in our status as a blank
check company as a deterrent and may prefer to effect a business combination with a more established entity or with a private company.
Financial
Position
With funds held in trust available for
our initial business combination initially in the amount of $71,050,000 (or approximately $81,305,000 if the over-allotment option is
exercised in full), we offer a target business a variety of options such as providing the owners of a target business with shares in a public company
and a public means to sell such shares, providing cash for stock, and providing capital for the potential growth and expansion of its operations or
strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or
equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the
consideration to be paid to the target business to fit its needs and desires. However, since we have no specific business combination under
consideration, we have not taken any steps to secure third party financing and it may not be available to us.
Management Operating and
Investing Experience
Our executive officers have significant
experience in the supply chain industry. Benjamin Gordon, our chief executive officer, has approximately 20 years experience in the supply chain
industry and is the founder and chief executive officer of BG Strategic Advisors (BGSA) and Cambridge Capital LLC. Mitchell
Gordon, our president, chief financial officer and director, is a tenured member of the supply chain industry. He has served as executive vice
president and chief financial officer and member of the Office of the President of Interpool, Inc. (Interpool), one of the
worlds largest marine container and chassis leasing companies. In addition, he was a founder of Atlas Capital, a private equity
firm focused on acquiring transportation companies. We believe that this breadth of experience provides us with a competitive advantage in
evaluating businesses and acquisition opportunities in our target industry.
Effecting Our Initial Business
Combination
General
We are not presently engaged in, and we
will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived
from the proceeds of
48
this offering and the private placement of private units, our capital stock, debt or a combination of these in effecting our initial business combination. Although substantially all of the net proceeds of this offering and the private placement of private units are intended to be applied generally toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in this offering are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. Our initial business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.
We Have Not Identified a Target
Business
We do not have any specific business
combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or
had any discussions, formal or otherwise, with respect to such a transaction. Additionally, we have not, nor has anyone on our behalf, taken any
measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other
representative to identify or locate such an acquisition candidate. We have also not conducted any research with respect to identifying the number and
characteristics of the potential acquisition candidates. As a result, we may not be able to locate a target business, and we may not be able to engage
in a business combination with a target business on favorable terms or at all.
Subject to our management teams
pre-existing fiduciary duties and the limitations that a target business have a fair market value of at least 80% of the balance in the trust account
at the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate. We have not established any other specific attributes or
criteria (financial or otherwise) for prospective target businesses. Accordingly, there is no basis for investors in this offering to evaluate the
possible merits or risks of the target business with which we may ultimately complete a business combination. To the extent we effect our initial
business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without
established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and
early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular target
business, we may not properly ascertain or assess all significant risk factors.
Sources of Target
Businesses
While we have not yet identified any
acquisition candidates, we believe based on our managements business knowledge and past experience that there are numerous acquisition
candidates. We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These
sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will
have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring
to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or
discussions they may have, as well as attending trade shows or conventions. While we do not presently anticipate engaging the services of professional
firms or other individuals that specialize in business acquisitions on any formal basis (other than EarlyBirdCapital as described in this prospectus),
we may engage these firms or other individuals in the future, in which event we may pay a finders fee, consulting fee or other compensation to be
determined in an arms length negotiation based on the terms of the transaction. In no event, however,
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will any of our sponsors or members of our management team or special advisors or our or their respective affiliates be paid any finders fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). We have no present intention to enter into a business combination with a target business that is affiliated with any of our officers, directors or sponsors. However, we are not restricted from entering into any such transactions and may do so if (1) such transaction is approved by a majority of our disinterested and independent directors (if we have any at that time) and (2) we obtain an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated stockholders from a financial point of view. As of the date of this prospectus, there are no affiliated entities that we would consider as a business combination target.
Selection of a Target Business
and Structuring of Our Initial Business Combination
Subject to our management teams
pre-existing fiduciary duties and the limitation that a target business have a fair market value of at least 80% of the balance in the trust account at
the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, our management will have
virtually unrestricted flexibility in identifying and selecting a prospective target business. Except for the general criteria and guidelines set forth
above under the caption Business Strategy, we have not established any specific attributes or criteria (financial or otherwise) for
prospective target businesses. Furthermore, we do not have any specific requirements with respect to the value of a prospective target business as
compared to our net assets or the funds held in the trust account. In evaluating a prospective target business, our management may consider a variety
of factors, including one or more of the following:
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financial condition and results of operation; |
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growth potential; |
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brand recognition and potential; |
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return on equity or invested capital; |
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market capitalization or enterprise value; |
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experience and skill of management and availability of additional personnel; |
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capital requirements; |
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competitive position; |
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barriers to entry; |
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stage of development of the products, processes or services; |
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existing distribution and potential for expansion; |
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degree of current or potential market acceptance of the products, processes or services; |
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proprietary aspects of products and the extent of intellectual property or other protection for products or formulas; |
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impact of regulation on the business; |
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regulatory environment of the industry; |
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costs associated with effecting the business combination; |
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industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and |
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macro competitive dynamics in the industry within which the company competes. |
These criteria are not intended to be
exhaustive. Our management may not consider any of the above criteria in evaluating a prospective target business.
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Any evaluation relating to the merits
of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our
management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an
extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as
review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by
unaffiliated third parties we may engage, although we have no current intention to engage any such third parties.
The time and costs required to select
and evaluate a target business and to structure and complete our initial business combination remain to be determined. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a
loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair Market Value of Target
Business
Pursuant to Nasdaq listing rules, the
target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust
account at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose
fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of
the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the
target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target
management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it
not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or
more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the
post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a
transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. In
order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or
seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination under
consideration, we have not entered into any such fund raising arrangement and have no current intention of doing so. The fair market value of the
target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and
potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient
fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be
required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on
the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target
business complies with the 80% threshold.
Lack of Business
Diversification
We expect to complete only a single
business combination, although this process may entail the simultaneous acquisitions of several operating businesses. Therefore, at least initially,
the prospects for our success may be entirely dependent upon the future performance of a single business operation. Unlike other
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entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination, and |
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result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services. |
If we determine to simultaneously
acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to
complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect
to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
Limited Ability to Evaluate the
Target Business Management Team
Although we intend to scrutinize the
management team of a prospective target business when evaluating the desirability of effecting our initial business combination, our assessment of the
target business management team may not prove to be correct. In addition, the future management team may not have the necessary skills,
qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business
following our initial business combination remains to be determined. While it is possible that some of our key personnel will remain associated in
senior management or advisory positions with us following our initial business combination, it is unlikely that they will devote their full time
efforts to our affairs subsequent to our initial business combination. Moreover, they would only be able to remain with the company after the
consummation of our initial business combination if they are able to negotiate employment or consulting agreements in connection with the business
combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to receive
compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business
combination. While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target
business, their ability to remain with the company after the consummation of 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. Additionally, our officers and directors may not have
significant experience or knowledge relating to the operations of the particular target business.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have the ability to
recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management.
Stockholder Approval of Business
Combination
In connection with any proposed
business combination, we will seek stockholder approval of our initial business combination at a meeting called for such purpose at which public
stockholders (but not our sponsors, officers or directors) may seek to convert their shares of common stock, regardless of whether they vote for or
against the proposed business combination, into a portion of the aggregate amount then on deposit in the trust account (net of taxes payable), subject
to the limitations described herein.
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We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock
voted are voted in favor of the business combination. We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being
subject to Rule 419 promulgated under the Securities Act of 1933, as amended. However, if we seek to consummate an initial business combination with a
target business that imposes any
type of working capital closing
condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our
net tangible asset threshold may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of
shares converted) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may
not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period,
if at all. Public shareholders may therefore have to wait 18 months from the closing of this offering (or 24 months from the closing of this
offering if we have executed a definitive agreement for a business combination within 18 months from the closing of this offering but have not
consummated the business combination with such 18-month period) in order to be able to receive a pro rata share of the trust
account.
Our sponsors and our officers and
directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business combination and (2) not to convert any
shares of common stock in connection with a stockholder vote to approve a proposed initial business combination or a vote to amend the provisions of
our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity.
None of our officers, directors,
sponsors or their affiliates has indicated any intention to purchase units or shares of common stock in this offering or from persons in the open
market or in private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of stockholders
vote, or indicate an intention to vote, against such proposed business combination, our officers, directors, sponsors or their affiliates could make
such purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors,
sponsors and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the
Exchange Act, which are rules designed to stop potential manipulation of a companys stock.
Conversion
Rights
At any meeting called to approve an
initial business combination, any public stockholder, whether voting for or against such proposed business combination, will be entitled to demand that
his shares of common stock be converted for a full pro rata portion of the amount then in the trust account (initially $10.15, or $10.10 if the
over-allotment option is exercised in full, per share, plus any pro rata interest earned on the funds held in the trust account and not previously
released to us or necessary to pay our taxes).
Notwithstanding the foregoing, a public
stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section
13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the shares of common stock sold in this
offering. Such a public stockholder would still be entitled to vote against a proposed business combination with respect to all shares of common stock
owned by him or his affiliates. We believe this restriction will prevent stockholders from accumulating large blocks of shares before the vote held to
approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase their shares at a
significant premium to the then current market price. By limiting a stockholders ability to convert no more than 20% of the shares of common
stock sold in this offering, we believe we have limited the ability of a small group of stockholders to unreasonably attempt to block a transaction
which is favored by our other public stockholders.
Our sponsors, including our officers
and directors, will not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly, whether acquired prior
to this offering or purchased by them in this offering or in the aftermarket.
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We may also require public stockholders
who wish to convert, whether they are a record holder or hold their shares in street name, to either tender their certificates to our
transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using
Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) System, at the holders option.
There is a nominal cost associated with
the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee
would be incurred regardless of whether or not we require holders to deliver their shares prior to the vote on the business combination in order to
exercise conversion rights. This is because a holder would need to deliver shares to exercise conversion rights regardless of the timing of when such
delivery must be effectuated. However, in the event we require stockholders to exercise conversion rights prior to the consummation of the proposed
business combination and the proposed business combination is not consummated, this may result in an increased cost to stockholders.
The foregoing is different from the
procedures used by many blank check companies. Traditionally, in order to perfect conversion rights in connection with a blank check companys
business combination, the company would distribute proxy materials for the stockholders vote on an initial business combination, and a holder
could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his
conversion rights. After the business combination was approved, the company would contact such stockholder to arrange for him to deliver his
certificate to verify ownership. As a result, the stockholder then had an option window after the consummation of the business combination
during which he could monitor the price of the companys stock in the market. If the price rose above the conversion price, he could sell his
shares in the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to which
stockholders were aware they needed to commit before the stockholder meeting, would become a continuing right surviving past the
consummation of the business combination until the holder delivered its certificate. The requirement for physical or electronic delivery prior to the
meeting ensures that a holders election to convert his shares is irrevocable once the business combination is approved.
Any request to convert such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public share of common stock
delivered his certificate in connection with an election of their conversion and subsequently decides prior to the applicable date not to elect to
exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is
not approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights would not be entitled to convert
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public
holders.
Liquidation if No Business
Combination
If we do not complete a business
combination within 18 months from the closing of this offering (or 24 months from the closing of this offering if we have entered into a
definitive agreement for a business combination within 18 months from the closing of this offering but the business combination has not been
completed within such 18-month 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 outstanding public shares, at a per-share price, payable in cash, equal to
the aggregate amount then on deposit in the trust account, including any interest but net of franchise taxes and income taxes payable with respect to
interest earned on the trust account, divided by the number of then outstanding public shares, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii)
and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
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Under the Delaware General Corporation
Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a
dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public
shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation distribution
under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to
ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to
the lesser of such stockholders pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial
business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we are
unable to complete a business combination within the prescribed time frame, we will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest but net of franchise taxes and income taxes
payable with respect to interest earned on the trust account, divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible
following our 18 th or 24th month and, therefore, we do not intend to comply with those procedures. As such, our
stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with
Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan, based on facts
known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us
within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to
searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses.
We will seek to have all third parties
(including any vendors or other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable
agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result,
the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to
the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to
distribute the funds in the trust account to our public stockholders. Nevertheless, there is no guarantee that vendors, service providers and
prospective target businesses will execute such agreements. In the event that a potential contracted party was to refuse to execute such a waiver, we
will execute an agreement with that entity only if our management first determines that we would be unable to obtain, on a reasonable basis,
substantially similar services or opportunities from another entity willing to execute such a waiver. Examples of instances where we may engage a third
party that refused to execute a waiver would be the engagement of a third party consultant who cannot sign such an agreement due to regulatory
restrictions, such as our auditors who are unable to
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sign due to independence requirements, or whose particular expertise or skills are believed by management to be superior to those of other consultants that would agree to execute a waiver or a situation in which management does not believe it would be able to find a provider of required services willing to provide the waiver. There is also no guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our executive officers have agreed that they will be jointly and severally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, they may not be able to satisfy their indemnification obligations if they are required to so as we have not required them to retain any assets to provide for their indemnification obligations, nor have we taken any further steps to ensure that they will be able to satisfy any indemnification obligations that arise. Additionally the agreement entered into by our executive officers specifically provides that they will have no personal liability as to any claimed amounts owed to a target business or vendor or other entity who has executed a valid and enforceable agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. Moreover, they will not be personally liable to our public stockholders and instead will only have liability to us. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.15 (or $10.10 if the over-allotment option is exercised in full) due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate sum equal to the amount then held in the trust account, inclusive of any interest not previously released to us, plus any remaining net assets (subject to our obligations under Delaware law to provide for claims of creditors as described below).
We anticipate notifying the trustee of
the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate
such distribution. Our sponsors have waived their rights to participate in any liquidation distribution with respect to their insider shares. We will
pay the costs of any subsequent liquidation from our remaining assets outside of the trust account and from the interest income on the balance of the
trust account (net income and other tax obligations) that will be released to us to fund our working capital requirements. If such funds are
insufficient, our executive officers have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and have agreed not to seek repayment of such expenses.
Our public stockholders shall be
entitled to receive funds from the trust account only in the event of our failure to complete our initial business combination in the required time
period or if the stockholders seek to have us convert their respective shares of common stock upon a business combination which is actually completed
by us upon an amendment to our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination
activity. In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to
applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our
stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least
$10.15 per share (or $10.10 if the over-allotment option is exercised in full).
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the
trust account to our public stockholders promptly after 18 or 24 months from the closing of this offering, this may be viewed or interpreted as
giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our
board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Claims may be
brought against us for these reasons.
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Amended and Restated Certificate
of Incorporation
Our amended and restated certificate of
incorporation contains certain requirements and restrictions relating to this offering that will apply to us until the consummation of our initial
business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to stockholders rights
or pre-business combination activity, we will provide dissenting public stockholders with the opportunity to convert their public shares in connection
with any such vote. Our sponsors have agreed to waive any conversion rights with respect to any insider shares, private units and any public shares
they may hold in connection with any vote to amend our amended and restated certificate of incorporation. Specifically, our amended and restated
certificate of incorporation provides, among other things, that:
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prior to the consummation of our initial business combination, we shall seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their shares of common stock, regardless of whether they vote for or against the proposed business combination, into a portion of the aggregate amount then on deposit in the trust account, subject to the limitations described herein; |
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business combination; |
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if our initial business combination is not consummated within 18 (or 24) months of the closing of this offering, then our existence will terminate and we will distribute all amounts in the trust account and any net assets remaining outside the trust account on a pro rata basis to all of our public holders of shares of common stock; |
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upon the consummation of this offering, $71,050,000, or $81,305,000 if the over-allotment option is exercised in full, shall be placed into the trust account; |
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we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction prior to our initial business combination; and |
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prior to our initial business combination, we may not issue (i) any shares of common stock or any securities convertible into common stock, or (ii) any securities that participate in any manner in the proceeds of the trust account, or that vote as a class with the common stock sold in this offering on our initial business combination. |
Competition
In identifying, evaluating and
selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these
entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of
these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds
of this offering, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial
resources.
The following also may not be viewed
favorably by certain target businesses:
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our obligation to seek stockholder approval of our initial business combination may delay the completion of a transaction; |
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our obligation to convert shares of common stock held by our public stockholders may reduce the resources available to us for our initial business combination; |
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our outstanding warrants and unit purchase options, and the potential future dilution they represent; |
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our obligation to pay the fee to EarlyBirdCapital for acting as an investment banker in connection with our initial business combination; |
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our obligation to either repay or issue private units upon conversion of up to $500,000 of working capital loans that may be made to us by our sponsors, officers, directors or their affiliates; |
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our obligation to register the resale of the insider shares, as well as the private units (and underlying securities) and any securities issued to our sponsors, officers, directors or their affiliates upon conversion of working capital loans; and |
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the impact on the target business assets as a result of unknown liabilities under the securities laws or otherwise depending on developments involving us prior to the consummation of a business combination. |
Any of these factors may place us at a
competitive disadvantage in successfully negotiating our initial business combination. Our management believes, however, that our status as a public
entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a
similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.
If we succeed in effecting our initial
business combination, there will be, in all likelihood, intense competition from competitors of the target business. Subsequent to our initial business
combination, we may not have the resources or ability to compete effectively.
Facilities
We currently maintain our principal
executive offices at 525 South Flagler Drive, Suite 201, West Palm Beach, Florida 33401. The cost for this space is included in the $10,000 per-month
fee Cambridge Capital LLC, an affiliate of Benjamin Gordon, will charge us for general and administrative services commencing upon the date of this
prospectus pursuant to a letter agreement between us and Cambridge Capital LLC. We believe, based on rents and fees for similar services in West Palm
Beach, Florida, that the fee charged by Cambridge Capital LLC is at least as favorable as we could have obtained from an unaffiliated person. We
consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current
operations.
Employees
We have two executive officers. These
individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to
our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected for the business
combination and the stage of the business combination process the company is in. Accordingly, once a suitable target business to acquire has been
located, management will spend more time investigating such target business and negotiating and processing the business combination (and consequently
spend more time on our affairs) than had been spent prior to locating a suitable target business. We presently expect our executive officers to devote
an average of approximately 10 hours per week to our business. We do not intend to have any full time employees prior to the consummation of our
initial business combination.
Periodic Reporting and Audited Financial
Statements
We have registered our units, common
stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and reported on by
our independent registered public accountants.
We will provide stockholders with
audited financial statements of the prospective target business as part of any proxy solicitation materials sent to stockholders to assist them in
assessing the target business. These financial statements will need to be prepared in accordance with or reconciled to United States GAAP or IFRS. A
particular target business identified by us as a potential acquisition candidate may not have the necessary financial statements. To the extent that
this requirement cannot be met, we may not be able to acquire the proposed target business.
58
We may be required by the
Sarbanes-Oxley Act to have our internal control procedures audited for the fiscal year ending December 31, 2014. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any
such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such
acquisition.
We are an emerging growth company as
defined in the JOBS Act and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our total
revenues exceed $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of
the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging
growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards.
Legal Proceedings
There is no material litigation,
arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against us or any members of our
management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 10 years
preceding the date of this prospectus.
Comparison to Offerings of Blank Check Companies Subject to
Rule 419
The following table compares and
contrasts the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross
proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering and that the underwriters will not
exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to this offering because we will have net tangible assets in
excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet
demonstrating this fact.
Terms of the Offering |
Terms Under a Rule 419 Offering |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Escrow of
offering proceeds |
$71,050,000 of the net offering proceeds and proceeds from the sale of the private units will be deposited into a trust account in the
United States at UBS Financial Services Inc., maintained by Continental Stock Transfer & Trust Company, acting as trustee. |
$60,952,500 of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or
in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the
account. |
||||||||
Investment
of net proceeds |
The
$71,050,000 of net offering proceeds and proceeds from the sale of the private units held in the trust account will only be invested in United
States government treasury bills, bonds or notes with a maturity of 180 days or less or in money market funds meeting the applicable conditions under
Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. |
Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act of 1940
or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States. |
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Terms of the Offering |
Terms Under a Rule 419 Offering | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Limitation
on fair value or net assets of target business |
The
initial target business that we acquire must have a fair market value equal to at least 80% of the balance in our trust account at the time of the
execution of a definitive agreement for our initial business combination. |
We
would be restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent at least 80% of the
maximum offering proceeds. |
||||||||
Trading of
securities issued |
The
units may commence trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin to trade
separately on the 90th day after the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading
(based upon its assessment of the relative strengths of the securities markets and small capitalization companies in general, and the trading pattern
of, and demand for, our securities in particular), provided we have filed with the SEC a Current Report on Form 8-K, which includes an audited balance
sheet reflecting our receipt of the proceeds of this offering. |
No
trading of the shares of common stock would be permitted until the completion of our initial business combination. During this period, the securities
would be held in the escrow or trust account. |
||||||||
Election to
remain an investor |
We
will give our stockholders the opportunity to vote on the business combination. We will send each stockholder a proxy statement containing information
required by the SEC. Under Delaware law and our bylaws, we must provide at least 10 days advance notice of any meeting of stockholders. Accordingly,
this is the minimum amount of time we would need to provide holders to determine whether to exercise their rights to convert their shares into cash or
to remain an investor in our company. |
A
prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the
company, in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective
amendment, to decide whether he or she elects to remain a stockholder of the company or require the return of his or her investment. If the company has
not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow
account would automatically be returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all of the deposited
funds in the escrow account must be returned to all investors and none of the securities will be issued. |
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Terms of the Offering |
Terms Under a Rule 419 Offering | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Business
combination deadline |
Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within
18 months from the closing of this offering (or 24 months from the closing of this offering if the extension criteria described elsewhere is
satisfied), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders rights as
stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
(in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. |
If an
acquisition has not been consummated within 18 months after the effective date of the initial registration statement, funds held in the trust or escrow
account would be returned to investors |
||||||||
Interest
earned on the funds in the trust account |
There
can be released to us, from time to time, any interest earned on the funds in the trust account (1) that we may need to pay our tax obligations and (2)
any remaining interest that we need for our working capital requirements. |
All
interest earned on the funds in the trust account will be held in the trust account for the benefit of public stockholders until the earlier of the
completion of our initial business combination and our liquidation upon failure to effect our initial business combination within the allotted
time. |
||||||||
Release of
funds |
Except for (1) interest earned on the funds in the trust account that we may need to pay our tax obligations and (2) any remaining interest
that we may need for our working capital requirements that may be released to us from the interest earned on the trust account balance, the proceeds
held in the trust account will not be released until the earlier of the completion of our initial business combination and our liquidation upon failure
to effect our initial business combination within the allotted time. |
The
proceeds held in the escrow account would not be released until the earlier of the completion of our initial business combination or the failure to
effect our initial business combination within the allotted time. |
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Directors and Executive Officers
Our current directors and executive
officers are as follows:
Name |
Age |
Position |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Benjamin
Gordon |
40 | Chief Executive Officer, Secretary, Treasurer and Director |
||||||||
Mitchell
Gordon |
56 | President, Chief Financial Officer and Director |
||||||||
Michael
Durham |
62 | Director |
||||||||
Nathan
Gantcher |
73 | Director |
||||||||
Scott
Laurans |
66 | Director |
Benjamin
Gordon has served as our chief executive officer and a member of our board of directors since our inception and as our secretary and treasurer
as of October 2013. Mr. Gordon founded BG Strategic Advisors in 2002 and has served as its managing director since. BGSA is a leading investment bank
in the supply chain industry. Clients include firms in trucking, warehousing, logistics, freight forwarding, truck brokerage, distribution, and other
supply chain segments. Mr. Gordon has also been the chief executive officer of Cambridge Capital LLC since its founding in 2009. Cambridge Capital is
the merchant banking investment partner of BGSA. In 1999, Mr. Gordon founded and ran 3PLex, a web-based transportation management systems company that
was sold to Maersk in 2002. From 1995 to 1998, Mr. Gordon led strategic projects in transportation and technology at Mercer Management Consulting,
where he developed one of the first e-marketplace strategies for a logistics client.
Mr. Gordon is a recognized expert on
the supply chain sector, and has been quoted extensively by national media including CNBC, The New York Times, Business Week, ABC, Lehrer News Hour,
Journal of Commerce, Transport Topics, Supply Chain Management Quarterly, and Traffic World. Mr. Gordon has been a featured speaker at the
Council of Supply Chain Management Professionals (CSCMP), NASSTRAC, the Transportation Intermediaries Association (TIA), AMB, the International
Warehousing and Logistics Association (IWLA), and other industry events. Mr. Gordon is also an active civic leader, serving as a board
member of the Palm Beach United Way, the Palm Beach Federation, the Joint Distribution Committee, and other community organizations. Mr. Gordon
also serves as chairman of the Young Presidents Organization (YPO) of Palm Beach.
Mr. Gordon received a Masters in
Business Administration from Harvard Business School and a Bachelor of Arts degree from Yale College.
We believe Mr. Gordon is well-qualified
to serve as a member of the board due to his operational, investing and advisory experience in the supply chain industry, as well as his business
contacts.
Mitchell Gordon has
served as our president and chief financial officer and a member of our board of directors since November 2013. Mr. Gordon has served as a
partner of BGSA and Cambridge Capital LLC since November 2013. From 2003 to November 2013, Mr. Gordon was the president of Morpheus Capital
Advisors, an investment firm serving middle market and growth companies. From 2000 to 2003, Mr. Gordon served as executive vice president and
chief financial officer and member of the Office of the President of Interpool, one of the worlds largest marine container and
chassis leasing companies which was listed on the New York Stock Exchange. Before joining Interpool, he was the founder and president of Atlas
Capital, a private equity firm focused on acquiring transportation companies, from 1998 to 2000. Prior to that, he served as co-head of
the Transportation Investment Banking Group at Salomon Smith Barney (now Citi Investment Banking) and head of the Transportation and Automotive
Investment Banking Groups at Furman Selz. Mr. Gordon serves on the board of directors of Mesa Air Group, Inc. and has served on the
public company board of Indigo Aviation AB, a leading aircraft leasing company and on the board of Almedica Corporation, a health care logistics
company. He also served on the global advisory board of Nedship Bank, NV, a Rotterdam-based bank focused on the shipping, logistics and
energy sectors. He is a board member of the Best-Shot Foundation and is chairman of the Hunter College (CUNY) neighborhood Advisory Committee.
He is a co-founder and past president of the Olin Club of New York.
62
Mr. Gordon received a Masters in
Business Administration from Harvard Business School and a Bachelor of Science in Business Administration from Washington Universitys Olin
School of Business.
Mitchell Gordon and Benjamin Gordon
are not related.
We believe that Mr. Gordon is
well-qualified to serve as a member of the board due to his operational, investing and advisory experience in the supply chain industry as well as his
business contacts and management expertise.
Michael J. Durham has
served as a member of the board since November 2013. Mr. Durham is currently a director of Hertz Global Holdings, Inc. and its primary
subsidiary, The Hertz Corporation. Hertz Global Holdings, Inc. is principally engaged in the global car rental industry and in the equipment
rental industry through The Hertz Corporation. Previously, Mr. Durham served as director, president and chief executive officer of Sabre,
Inc. (Sabre), then a NYSE-listed company providing information technology services to the travel industry, from October 1996, the
date of Sabres initial public offering, to October 1999. From March 1995 to July 1996, when Sabre was a subsidiary of AMR Corporation, he
served as Sabres president. Prior to joining Sabre, Mr. Durham spent approximately 16 years with American Airlines, serving as the senior
vice president and treasurer of AMR Corporation and senior vice president of finance and chief financial officer of American Airlines
from October 1989 until he assumed the position of president of Sabre in March 1995. From its formation in 2000 until 2012, Mr. Durham had been
the president of Cognizant Associates, Inc., an independent consulting company he formed. During this time, Mr. Durham also served on the boards
of directors of numerous private and publicly listed companies, including Asbury Automotive Group, Inc. (where for part of his tenure he
served as the non-executive chairman of the board), Acxiom Corporation (where he was also non-executive chair for part of his tenure), NWA Corp.
(the parent company of Northwest Airlines) and AGL Resources, Inc. Mr. Durham has also served on the board of directors of Bombardier, Inc.,
a publicly-traded Canadian corporation.
Mr. Durham received a Bachelor of
Arts degree from The University of Rochester in 1973 and a Masters of Business Administration from Cornell University in
1977.
We believe Mr. Durham is
well-qualified to serve as a member of our board due to his extensive business experience, including his service as chief executive officer and
chief financial officer of large multinational public companies, and from his serving in leadership roles on numerous public and private company
boards.
Nathan Gantcher has
served as a member of the board since November 2013. Mr. Gantcher is the managing member of EXOP Capital LLC, an investment firm he founded in
2005. From 2004 to 2006, Mr. Gantcher served as a member of the board of directors of Refco, Inc. and a member of the board of directors
of Neuberger Berman, a NYSE-listed company, and served as a member of its audit and compensation committees, from 2001 until 2003. Mr. Gantcher
also served as the co-chairman, president and chief executive officer of Alpha Investment Management L.L.C. from 2001 until July 2004.
Prior to joining Alpha Investment Management L.L.C., Mr. Gantcher was a private investor from 1999 to 2001. Mr. Gantcher served as vice chairman
of CIBC Oppenheimer Corp. from 1997 to 1999. Prior to becoming vice chairman of CIBC Oppenheimer Corp., Mr. Gantcher served as co-chief
executive officer and chief operating officer of Oppenheimer & Co., Inc. Mr. Gantcher currently serves as member of the board of directors
of Mack-Cali Realty Corporation and is a member of its audit committee, nominating and corporate governance committee and executive
committee. Previously, Mr. Gantcher served as a member of the board of directors of NDS Group Ltd. from 2004 to February 2009, and was a member
of the compensation committee and the audit committee of the board of directors of NDS Group Ltd. Mr. Gantcher also served as a member of the
board of directors of Centerline Holding Company from 2003 to 2008, and as a member of its nominating and governance, compensation and
capital markets committees. Mr. Gantcher also served as a member of the board of directors of Liberty Acquisition Holdings Corp., a blank
check company that completed a business combination with Promotora de Informaciones, S.A. in November 2010, and as a member of its audit,
compensation and governance, and nominating committees.
Mr. Gantcher currently serves as
chairman of the board of trustees of Evermore Funds Trust and as chairman of its nominating and governance committee, and as a member of its
audit and valuation
63
committees. He previously served as chairman of the board of trustees of Tufts University and as a member of the Council of Foreign Relations and currently serves on the board of trustees of Montefiore Medical Center.
Mr. Gantcher received his A.B. in
economics and biology from Tufts University and his Masters in Business Administration from the Columbia Business School.
We believe Mr. Gantcher is
well-qualified to serve as a member of our board due to his extensive experience as a director with several public companies and his investment
banking, management, and financial expertise, as well as his experience with blank check companies like our company.
Scott Laurans has
served as a member of the board since November 2013. Mr. Laurans has served as a managing director in the Rhode Island and Florida offices of
The Bank of New York Mellon, a leading investment management and investment services company, since 2005. He has also been affiliated
with the Lifespan Health System, Rhode Islands first health system, since its establishment in 1994, serving as chair of the finance
committee, and most recently becoming its chairman of the board in December 2011. From 1991 to 2005, he was a managing director and
partner of The Providence Group Investment Advisory Company of Providence, Rhode Island, which was sold to The Bank of New York Mellon in 2005.
From 1988 to 1991, he served as president of the New England division of Wetterau of St. Louis. From 1971 to 1988, he held various positions
eventually becoming president, chief executive officer and owner of Roger Williams Foods of Providence, Rhode Island, a full-line distributor of
food products to the retail and wholesale food industry throughout New England, which was sold to Wetterau of St. Louis. Mr. Laurans has served
as a director or advisor for a number of companies including Giant Food, Inc. (formerly an American Stock Exchange-listed company) and C&S
Wholesale Grocery Company.
Mr. Laurans received a Bachelor of
Arts in economics from the University of Pennsylvania.
We believe Mr. Laurans is
well-qualified to serve as a member of our board due to his extensive operational and public company experience, as well as his industry
contacts.
Our board of directors is divided into
three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first
class of directors, consisting of Nathan Gantcher, will expire at our first annual meeting of stockholders. The term of office of the second
class of directors, consisting of Michael Durham and Mitchell Gordon, will expire at the second annual meeting. The term of office of the
third class of directors, consisting of Scott Laurans and Benjamin Gordon, will expire at our third annual meeting of
stockholders.
Special Advisors
We may seek guidance and advice from
the following special advisors. We have no formal arrangement or agreement with these advisors to provide services to us and they have no fiduciary
obligation to present business opportunities to us. These special advisors will simply provide advice, introductions to potential targets, and
assistance to us, at our request, only if they are able to do so. Nevertheless, we believe with their business background and extensive contacts, they
will be helpful to our search for a target business and our consummation of a business combination.
Herb Shear is principal
owner and chairman of GENCO Supply Chain Solutions, North Americas 2nd largest and a Top 50 Global third-party logistics provider based in
Pittsburgh, Pennsylvania. Joining GENCO in 1971, Mr. Shear became the familys third generation involved in the logistics business. Mr. Shear
successfully transformed the company by pioneering supply chain processes, which focused on optimizing the value of customer assets. In the early
1990s he founded the centralized returns process, known today as reverse logistics, through partnership and collaboration with leading retail and
manufacturing companies. GENCOs proprietary reverse logistics software combined with innovative product liquidation solutions is now utilized by
many companies to generate revenue from their returned and overstocked inventory. Mr. Shear is a past recipient of the Council of Supply Chain
Management Professionals Distinguished Service Award, the associations highest honor to an individual who has made significant, career-long
contributions to the supply chain management and logistics professions. He is an active member of the Young Presidents Organization, World Presidents
Organization, Council of Supply Chain Management Professionals and the Warehouse
64
Education and Research Council. He also sits on the board of the University of Pittsburgh and the board of visitors of the Katz School and the Pharmacy School at the University of Pittsburgh.
Sidney R. Brown is the
chief executive officer of NFI Industries, Inc., a comprehensive provider of freight transportation, warehousing, third party
logistics, contract manufacturing and real estate development. He is vice chairman of Sun National Bank, a Nasdaq-listed national bank
operating in New Jersey, Delaware and Pennsylvania. He is also a director of J&J Snack Foods Corp., a Nasdaq-listed manufacturer of nutritional
snack foods and distributor of frozen beverages which it markets nationally to the food service and retail supermarket industries. Mr. Brown has
management experience in running a private company and experience in executing strategic acquisitions. He has broad experience in freight
transportation. He also has a strong background in sales, marketing and finance. He began his career working for Morgan Stanley in New York City as
financial analyst in the corporate finance department of the investment bank.
Bob Hammel is the
chairman and chief executive officer of Keystone Dedicated Logistics (KDL), a non-asset based freight management company. In 2004, Mr. Hammel
became chairman and chief operating officer of KDL, which was originally co-founded in 1999 as a wholly owned subsidiary of Pitt Ohio Express.
In 2003, KDL was spun off and today is a stand-alone organization. In 1979, Mr. Hammel, along with his two brothers, founded Pitt Ohio Express,
a regional less-than-truckload (LTL) company operating in the Mid-Atlantic and Ohio regions. Over the next 24 years, he worked in developing
this start-up into one of the Top 100 carriers in the country as ranked by Transport Topics. Prior to this, Mr. Hammel was a vice president at
large with the American Trucking Association (ATA) serving on the Nominating Committee among others. Additionally, Mr. Hammel has been
involved with various professional associations. In 1998, Mr. Hammel was named the Logistics Person of the Year by the Robert H. Smith School of
Business at the University of Maryland, his alma mater.
Gene Tyndall is
executive vice president, Global Supply Chain Solutions and Marketing, for Tompkins International, Inc., a leading provider of growth and business
strategy, global supply chain services, distribution operations consulting, information technology implementation and material handling
integration. He was formerly president of Supply Chain Executive Advisors, president of Ryder Global Supply Chain Solutions, and senior
partner/leader of the Ernst & Young Global Supply Chain Management Consulting Practice. He has co-authored four books (including
Supercharging Supply Chains: Increasing Shareholder Value), authored dozens of articles and is frequently quoted in business and industry
media, including SCDigest, where he is an associate editor. He is a frequent seminar/conference chairperson, speaker, moderator, and panelist
around the world. He was elected Global Logistics Person of the Year in 2007, and was honored as Innovator of the
Year by Information Management in 2001.
David Brodsky has been
a private investor for the past ten years and served as a director of Southern Union Company, a NYSE-listed company, from October 2002 to March
2012. Mr. Brodsky has also served as a director of Harris Interactive Inc. since November 2001. He previously served as a director of Total
Research Corporation, which merged with Harris Interactive, from June 1998 through November 2001 and as chairman from July 1998 to
November 2001.
Executive Compensation
No executive officer has received any
cash compensation for services rendered to us. Commencing on the date of this prospectus through the acquisition of a target business, we will pay
Cambridge Capital LLC, an affiliate of Benjamin Gordon, a fee of $10,000 per month for providing us with office space and certain office and
secretarial services. However, this arrangement is solely for our benefit and is not intended to provide Mr. Gordon compensation in lieu of a salary.
Other than the $10,000 per month administrative fee, no compensation or fees of any kind, including finders, consulting fees and other similar
fees, will be paid to our sponsors, members of our management team, special advisors or their respective affiliates, for services rendered prior to or
in connection with the consummation of our initial business combination (regardless of the type of transaction that it is). However, such individuals
will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential
target businesses, performing business due diligence on suitable target businesses and business combinations as well
65
as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations.
After our initial business combination,
members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts
being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is unlikely the
amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business combination, as it will be up to
the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly
disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.
Director Independence
Currently Michael Durham, Nathan
Gantcher and Scott Laurans would each be considered an independent director under the Nasdaq listing rules, which is defined generally
as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion
of the companys board of directors would interfere with the directors exercise of independent judgment in carrying out the responsibilities
of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
We will only enter into a business
combination if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and
directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any related-party
transactions must be approved by our audit committee and a majority of disinterested directors.
Audit
Committee
Effective as of the date of this
prospectus, we will establish an audit committee of the board of directors, which will consist of Michael Durham, Nathan Gantcher and Scott
Laurans, each of whom is an independent director. The audit committees duties, which are specified in our Audit Committee Charter, include,
but are not limited to:
|
reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; |
|
discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
|
discussing with management major risk assessment and risk management policies; |
|
monitoring the independence of the independent auditor; |
|
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
|
reviewing and approving all related-party transactions; |
|
inquiring and discussing with management our compliance with applicable laws and regulations; |
|
pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
|
discussing planned audit strategy with the independent auditor; |
|
appointing or replacing the independent auditor; |
|
determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
66
|
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
|
approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
Financial Experts on Audit
Committee
The audit committee will at all times
be composed exclusively of independent directors who are financially literate as defined under the Nasdaq listing standards.
The Nasdaq listing standards define financially literate as being able to read and understand fundamental financial statements, including a
companys balance sheet, income statement and cash flow statement.
In addition, we must certify to Nasdaq
that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or background that results in the individuals financial sophistication.
The board of directors has determined that Michael Durham qualifies as an audit committee financial expert, as defined under rules
and regulations of the SEC.
Nominating
Committee
Effective upon consummation of this
offering, we will establish a nominating committee of the board of directors, which will consist of Michael Durham, Nathan Gantcher and Scott
Laurans, each of whom is an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated
to serve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers
and others.
Guidelines for Selecting Director
Nominees
The guidelines for selecting nominees,
which are specified in our Nominating Committee Charter, generally provide that persons to be nominated:
|
should have demonstrated notable or significant achievements in business, education or public service; |
|
should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
|
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. |
The Nominating Committee will consider
a number of qualifications relating to management and leadership experience, background, integrity and professionalism in evaluating a persons
candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting
experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain
a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by stockholders and other
persons.
Other Board
Committees
Our board of directors intends to
establish a compensation committee upon completion of our initial business combination, or such earlier time as our board of directors may determine or
as required by Nasdaq listing standards. At that time our board of directors expects to adopt a charter for such committee. Prior to such time, we do
not intend to establish such committee. Accordingly, there will not be a separate formal committee to review the reasonableness of expense
reimbursement requests by anyone other than our board of directors, which includes persons who may seek such reimbursements. We do not believe a
compensation
67
committee is necessary prior to a business combination as there will be no salary, fees or other compensation being paid to our officers or directors prior to our business combination other than as disclosed in this prospectus.
Code of Ethics
Effective upon consummation of this
offering, we will adopt a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the
business and ethical principles that govern all aspects of our business.
Conflicts of Interest
Investors should be aware of the
following potential conflicts of interest:
|
None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. |
|
As described below, in the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
|
Certain of our officers and directors are now, and all may in the future become, affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company. |
|
Unless we consummate our initial business combination, our officers, directors and sponsors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the trust account and the amount of interest income from the trust account that may be released to us as working capital. |
|
The insider shares beneficially owned by our officers and directors will be released from escrow only if our initial business combination is successfully completed. Additionally, our officers and directors will not receive liquidation distributions with respect to any of their insider shares or private shares. Furthermore, our sponsors have agreed that the private units (and underlying securities) will not be sold or transferred by them until after we have completed our initial business combination. For the foregoing reasons, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect our initial business combination with. |
In general, officers and directors of a
corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
|
the corporation could financially undertake the opportunity; |
|
the opportunity is within the corporations line of business; and |
|
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple
business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. The above mentioned conflicts may not be resolved in our favor.
68
The following table summarizes the
other relevant pre-existing fiduciary or contractual obligations of our officers and directors:
Name of Affiliated Company |
Name of Individual(s) |
Priority/Preference relative
to Cambridge Capital Acquisition Corporation |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
BG Strategic
Advisors |
Benjamin Gordon |
Mr.
Gordon is managing director of BGSA. BGSA is a leading investment bank in the supply chain industry. Mr. Gordon will be required to present all
business opportunities which are suitable for BGSA to BGSA prior to presenting them to us. However, BGSA primarily focuses on representing shareholders
who seek to sell their company. As a result, we do not believe this pre-existing relationship will negatively impact our ability to locate a target
business. |
||||||||
Cambridge
Capital LLC |
Benjamin Gordon Mitchell Gordon |
Benjamin Gordon is the chief executive officer of Cambridge Capital LLC and Mitchell Gordon is a partner. Cambridge Capital LLC
is the merchant banking investment partner of BGSA. Cambridge Capital LLC regularly receives proposals to acquire companies in its operations. However,
Cambridge Capital LLC typically buys majority stakes in companies with less than $20 million in profitability, whereas we will seek to
acquire companies that tend to generate significantly greater profitability. Furthermore, each of Messrs. Gordon has agreed to present all
suitable opportunities for business combinations to us prior to presenting them to Cambridge Capital LLC. Accordingly, we believe this conflict will
not limit our ability to consummate an initial business combination. |
||||||||
Hertz
Global Holdings, Inc. and The Hertz Corporation |
Michael Durham |
Mr. Durham will be required to present all business opportunities which are suitable for Hertz Global Holdings, Inc. and The Hertz
Corporation to such entities prior to presenting them to us. Hertz Global Holdings, Inc. is principally engaged in the global car rental
industry and in the equipment rental industry through its primary subsidiary, The Hertz Corporation. |
||||||||
EXOP
Capital LLC |
Nathan Gantcher |
Mr. Gantcher will be required to present all business opportunities which are suitable for EXOP Capital LLC to EXOP Capital
LLC prior to presenting them to us. EXOP Capital LLC is an investment firm. |
||||||||
Mack-Cali
Realty Corporation |
Nathan Gantcher |
Mr. Gantcher will be required to present all business opportunities which are suitable for Mack-Cali Realty Corporation to
Mack-Cali Realty Corporation prior to presenting them to us. Mack-Cali Realty Corporation is a real estate investment
trust. |
69
Name of Affiliated Company |
Name of Individual(s) |
Priority/Preference relative
to Cambridge Capital Acquisition Corporation | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Bank of New
York Mellon |
Scott Laurans |
Mr. Laurans will be required to present all business opportunities which are suitable for Bank of New York Mellon to Bank of
New York Mellon prior to presenting them to us. Bank of New York Mellon is a leading investment management and investment services
company. |
||||||||
Lifespan
Health System |
Scott Laurans |
Mr. Laurans will be required to present all business opportunities which are suitable for Lifespan Health System to Lifespan
Health System prior to presenting them to us. Lifespan Health System is Rhode Islands first health system. |
Notwithstanding the foregoing, BGSA, as
a leading investment bank in the supply chain, regularly develops, pursues or is presented with business combination opportunities for or on behalf of
its clients. BGSA cannot commit to make any of these opportunities available to us and will retain total discretion as to whether to present any of
these opportunities to us for consideration as a target for an initial business combination. In most cases, BGSA will become aware of these
opportunities in its capacity as a financial advisor for a particular client or in its capacity as a fiduciary or a manager for an investment vehicle
or an investment account, in all of which cases BGSA will be obligated by a contractual or fiduciary obligation to pursue such opportunities for such
entities. In other cases where BGSA is presented with opportunities during the course of conducting its activities as a diversified financial services
firm (and not as a principal for its own account), BGSA will exercise its sole discretion as to whether to present such opportunity to its clients or
us. Neither BGSA nor members of our management who are also partners of or employed by BGSA have any obligation to present us with any opportunity for
a potential business combination of which they become aware unless such opportunity was expressly offered in writing to our management solely in their
capacity as officers or directors of the company.
Our sponsors, as well as all of our
officers and directors, have agreed to vote any shares of common stock held by them in favor of our initial business combination. In addition, they
have agreed to waive their respective rights to participate in any liquidation distribution with respect to their insider shares and private shares. If
they purchase shares of common stock in this offering or in the open market, however, they would be entitled to participate in any liquidation
distribution in respect of such shares but have agreed not to convert such shares in connection with the consummation of our initial business
combination or an amendment to our amended and restated certificate of incorporation relating to pre-business combination activity.
All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are
available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested
independent directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our
expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our
disinterested independent directors determine that the terms of such transaction are no less favorable to us than those that would be
available to us with respect to such a transaction from unaffiliated third parties.
To further minimize conflicts of
interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or
sponsors, unless we have obtained (i) an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated
stockholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent directors (if we have any at that
time). Furthermore, in no event will any of our sponsors, members of our management team, special advisors or their respective affiliates be paid
any
70
finders fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is).
Limitation on Liability and Indemnification of Directors and
Officers
Our amended and restated certificate of
incorporation provides that our directors and officers will be indemnified by us to the fullest extent authorized by Delaware law as it now exists or
may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally
liable for monetary damages to us for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or
unlawful redemptions, or derived an improper personal benefit from their actions as directors. Notwithstanding the foregoing, such indemnification will
not extend to any claims our executive officers may make to us to cover any loss that they may sustain as a result of their agreement to pay debts and
obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us
as described elsewhere in this prospectus.
Our bylaws also will permit us to
secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law
would permit indemnification. We will purchase a policy of directors and officers liability insurance that insures our directors and
officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the
directors and officers.
These provisions may discourage
stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing
the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our
stockholders. Furthermore, a stockholders investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity
agreements are necessary to attract and retain talented and experienced directors and officers.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
71
The following table sets forth
information regarding the beneficial ownership of our shares of common stock as of the date of this prospectus and as adjusted to reflect the sale of
our shares of common stock included in the units offered by this prospectus (assuming none of the individuals listed purchase units in this offering),
by:
|
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
|
each of our officers and directors; and |
|
all of our officers and directors as a group. |
Unless otherwise indicated, we believe
that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The
following table does not reflect record of beneficial ownership of any shares of common stock issuable upon exercise of outstanding warrants as such
warrants are not exercisable within 60 days of the date of this prospectus.
Prior to Offering |
After Offering (2) |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Address of Beneficial Owner(1) |
Amount and Nature of Beneficial Ownership |
Approximate Percentage of Outstanding Shares of common stock |
Amount and Nature of Beneficial Ownership |
Approximate Percentage of Outstanding Shares of common stock |
|||||||||||||||
Benjamin
Gordon |
0 | 0.0 | % | 52,500 | (3) | * | |||||||||||||
Jonathan
Morris |
1,572,500 | (4) | 78.1 | % | 1,315,000 | (4) | 14.3 | % | |||||||||||
Mitchell
Gordon |
60,000 | (5) | 3.0 | % | 85,000 | (5) | * | ||||||||||||
Michael
Durham |
40,000 | 2.0 | % | 60,000 | * | ||||||||||||||
Nathan
Gantcher |
60,000 | 3.0 | % | 100,000 | 1.0 | % | |||||||||||||
Scott
Laurans |
60,000 | 3.0 | % | 100,000 | 1.0 | % | |||||||||||||
All directors
and executive officers as a group (5 individuals) |
220,000 | (3) | 10.9 | % | 397,500 | 4.3 | % |
* |
Less than 1%. |
(1) |
Unless otherwise indicated, the business address of each of the individuals is 525 South Flagler Drive, Suite 201, West Palm Beach, Florida 33401. |
(2) |
Includes the 427,500 private units to be purchased by the sponsors and EarlyBirdCapital and/or their designees simultaneously with the consummation of this offering. Assumes no exercise of the over-allotment option and, therefore, the forfeiture of an aggregate of 262,500 shares of common stock held by our sponsors. |
(3) |
Represents shares held by Cambridge Capital LLC, an affiliate of Mr. Gordon. Does not include shares held by the Gordon Family 2007 Trust, a trust established for the benefit of Mr. Gordons family. Also does not include shares of common stock he may receive in the event that Mitchell Gordons shares do not vest as described in footnote 5 below, as well as shares that he may receive in the event that Ramon Suazos shares do not vest under similar terms as Mitchell Gordons shares. |
(4) |
Includes 1,567,500 shares held by the Gordon Family 2007 Trust prior to the offering and 1,305,000 shares held by the Gordon Family 2007 Trust after the offering. Mr. Morris is the trustee of the Gordon Family 2007 Trust and exercises voting and dispositive power over the shares held by such entity. |
(5) |
Includes 60,000 shares, 1/2 of which shall vest upon consummation of a business combination and 1/2 of which shall vest after the shares are released from escrow and are no longer subject to any restrictions on transferability imposed in connection with our initial business combination, provided Mr. Gordon is still an employee of our company, Cambridge Capital LLC and BGSA. If Mitchell Gordon is no longer employed by our company, Cambridge Capital LLC or BGSA at such times, shares unvested shall revert to Cambridge Capital LLC. |
72
Immediately after this offering, our
sponsors will beneficially own approximately 23.3% of the then issued and outstanding shares of common stock (assuming they do not purchase any
units offered by this prospectus). None of our sponsors, officers and directors has indicated to us that it or he intends to purchase our units in the
offering. Because of the ownership block held by our sponsors, such individuals may be able to effectively exercise influence over all matters
requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions other than approval of
our initial business combination.
If the underwriters do not exercise all
or a portion of the over-allotment option, an aggregate of up to 262,500 insider shares will be forfeited. Only a number of shares necessary to
maintain our sponsors collective 20% ownership interest (excluding the private units) in our shares of common stock after giving effect to the
offering and the exercise, if any, of the underwriters over-allotment option will be forfeited.
All of the insider shares outstanding
prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent. Subject to certain
limited exceptions, these shares will not be transferred, assigned, sold or released from escrow until (1) the earlier of one year after the date of
the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $13.00 per share (as
adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing
after our initial business combination with respect to 50% of the insider shares and (2) one year after the date of the consummation of our initial
business combination with respect to the remaining 50% of the insider shares, or earlier, in either case, if, subsequent to our initial business
combination, we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders
having the right to exchange their shares of common stock for cash, securities or other property. Up to 262,500 of the insider shares may also be
released from escrow earlier than this date for cancellation if the over-allotment option is not exercised in full as described above.
During the escrow period, the holders
of these shares will not be able to sell or transfer their securities except (1) amongst themselves, to our officers, directors and employees, to a
holders affiliates or its members upon its liquidation, (2) to relatives and trusts for estate planning purposes, (3) by virtue of the laws of
descent and distribution upon death, (4) pursuant to a qualified domestic relations order, (5) by certain pledges to secure obligations incurred in
connection with purchases of our securities, (6) by private sales made at or prior to the consummation of our initial business combination at prices no
greater than the price at which the shares were originally purchased or (7) to us for no value for cancellation in connection with the consummation of
our initial business combination, in each case (except for clause 7) where the transferee agrees to the terms of the escrow agreement, but will retain
all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash
dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable
to effect a business combination and liquidate, there will be no liquidation distribution with respect to the insider shares.
Our sponsors and EarlyBirdCapital
(and/or their designees) have committed that they and/or their designees will purchase the private units (for an aggregate purchase price of
$4,275,000) from us. These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our
sponsors and EarlyBirdCapital have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a
price of $10.00 per unit an additional number of private units (up to a maximum of 44,625 private units) pro rata with the amount of
the over-allotment option exercised so that at least $ 10.10 per share sold to the public in this offering is held in trust if the
over-allotment option is exercised in full. These additional private units will be purchased in a private placement that will occur simultaneously
with the purchase of units resulting from the exercise of the over-allotment option. The private units are identical to the units sold in this offering
except the private warrants will be non-redeemable and may be exercised on a cashless basis so long as they continue to be held by the initial
purchasers or their permitted transferees. Additionally, the holders have agreed (A) to vote their private shares in favor of any proposed business
combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of incorporation with respect to our
pre-business combination activities prior to the
73
consummation of such a business combination, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity, (D) not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination and (E) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated.
In order to meet our working capital
needs following the consummation of this offering, our sponsors, officers and directors, special advisors or their affiliates may, but are not
obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be
evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the
lenders discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a
price of $10.00 per unit. Our stockholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the
extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business
combination, the loans will not be repaid.
Benjamin Gordon and the Gordon Family
2007 Trust are our promoters, as that term is defined under the Federal securities laws.
74
In October 2013, we issued 2,012,500
shares of common stock to our sponsors for $25,000 in cash, at a purchase price of approximately $0.01 share, in connection with our organization, as
follows:
Name |
Number of Shares |
Relationship to Us |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gordon
Family 2007 Trust |
1,610,000 | Affiliate of Chief Executive Officer |
||||||||
Cambridge Capital LLC |
402,500 | Affiliate of Chief Executive Officer |
In November 2013, Cambridge Capital
LLC and the Gordon Family 2007 Trust transferred an aggregate of 445,000 insider shares to the individuals and entities as set forth below at
the same purchase price originally paid for such shares by Cambridge Capital LLC and the Gordon Family 2007 Trust:
Name |
Number of Shares |
Relationship to Us |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mitchell Gordon |
60,000 | President, Chief Financial Officer and Director |
||||||||
Michael Durham |
40,000 | Director |
||||||||
Nathan Gantcher |
60,000 | Director |
||||||||
Scott Laurans |
60,000 | Director |
||||||||
Sidney Brown |
10,000 | Special Advisor |
||||||||
David Brodsky |
25,000 | Special Advisor |
||||||||
Herb
Shear |
25,000 | Special Advisor |
||||||||
Bob
Hammel |
50,000 | Special Advisor |
||||||||
Jonathan Morris |
5,000 | Stockholder and Trustee of the Gordon Family 2007 Trust |
||||||||
Elliott Brodsky |
10,000 | Stockholder |
||||||||
Alex
Sagan |
10,000 | Stockholder |
||||||||
Ramon Suazo |
15,000 | Stockholder |
||||||||
Raymond Avon Ventures, LLC |
25,000 | Stockholder |
||||||||
Jonathan Meeks |
50,000 | Stockholder |
If the underwriters do not exercise all
or a portion of their over-allotment option, our sponsors will forfeit up to an aggregate of 262,500 insider shares in proportion to the portion of the
over-allotment option that was not exercised. If such shares are forfeited, we will record the forfeited shares as treasury stock and simultaneously
retire the shares. Upon receipt, such forfeited shares would then be immediately cancelled which would result in the retirement of the treasury shares
and a corresponding charge to additional paid-in capital.
If the underwriters determine the size
of the offering should be increased (including pursuant to Rule 462(b) under the Securities Act) or decreased, a share dividend or a contribution back
to capital, as applicable, would be effectuated in order to maintain our sponsors ownership at a percentage of the number of shares of common
stock to be sold in this offering. An increase in offering size of up to 20% could result in the per-share conversion or liquidation price decreasing
by as much as $0.07.
Our sponsors and EarlyBirdCapital
(and/or their designees) have committed that they and/or their designees will purchase, pursuant to written subscription agreements with us and
Graubard Miller, as escrow agent, the 427,500 private units (392,500 units by our sponsors and 35,000 units by EarlyBirdCapital),
for a total purchase price of $4,275,000, from us. These purchases will take place on a private placement basis simultaneously with the
consummation of this offering. Our sponsors and EarlyBirdCapital have also agreed that if the over-allotment option is exercised by the underwriters,
they will purchase from us at a price of $10.00 per unit an additional number of private units (up to a maximum of 44,625 private units)
pro rata with the amount of the over-allotment option exercised so that at least $ 10.10 per share sold to the public in this offering
is held in trust if the over-allotment option is exercised in full. These additional private units will be purchased in a private placement that
will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The purchase price for the private units
has been delivered to Graubard Miller, our counsel in connection with this offering, who is also acting solely as escrow agent in
connection
75
with the private sale of private units, to hold in an interest bearing account until we consummate this offering. Graubard Miller will deposit the purchase price into the trust account simultaneously with the consummation of the offering or the over-allotment option, as the case may be. The private units are identical to the units sold in this offering except the private warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, the holders have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of incorporation with respect to our pre-business combination activities prior to the consummation of such a business combination, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity, (D) not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination and (E) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated.
In order to meet our working capital
needs following the consummation of this offering, our sponsors, officers and directors, special advisors and their respective affiliates may, but are
not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be
evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the
lenders discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private units at a
price of $10.00 per unit. Our stockholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the
extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business
combination, the loans will not be repaid.
The holders of our insider shares
issued and outstanding on the date of this prospectus, as well as the holders of the private units (and underlying securities) and any securities our
sponsors, officers, directors, special advisors or their respective affiliates may be issued in payment of working capital loans made to us, will be
entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of a majority of
these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the insider shares can elect
to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released
from escrow. The holders of a majority of the private units or securities issued in payment of working capital loans made to us can elect to exercise
these registration rights at any time after we consummate a business combination. In addition, the holders have certain piggy-back
registration rights with respect to registration statements filed subsequent to our consummation of our initial business combination. We will bear the
expenses incurred in connection with the filing of any such registration statements.
As of October 8, 2013, Cambridge
Capital LLC, an affiliate of Benjamin Gordon, loaned to us an aggregate of $100,000 to cover expenses related to this offering. The loan is payable
without interest on the earlier of (i) October 2, 2014, (ii) the date on which we consummate our initial public offering or (iii) the date on which we
determine to not proceed with our initial public offering. We intend to repay this loan from the proceeds of this offering not being placed in the
trust account.
Cambridge Capital LLC has agreed that,
commencing on the date of this prospectus through the earlier of our consummation of our initial business combination or our liquidation, it will make
available to us certain general and administrative services, including office space, utilities and administrative support, as we may require from time
to time. We have agreed to pay Cambridge Capital LLC $10,000 per month for these services. Mr. Gordon is the majority holder of Cambridge Capital LLC.
Accordingly, Mr. Gordon will benefit from the transaction to the extent of his interest in Cambridge Capital LLC. However, this arrangement
is
76
solely for our benefit and is not intended to provide Mr. Gordon compensation in lieu of a salary. We believe, based on rents and fees for similar services in West Palm Beach, Florida, that the fee charged by Cambridge Capital LLC is at least as favorable as we could have obtained from an unaffiliated person.
Other than the fees described above, no
compensation or fees of any kind, including finders fees, consulting fees or other similar compensation, will be paid to any of our sponsors,
officers, directors, special advisors or their respective affiliates, for services rendered to us prior to, or in connection with the consummation of
our initial business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any
out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing
business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar
locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us;
provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account and the interest income earned on
the amounts held in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business
combination.
After our initial business combination,
members of our management team who remain with us may be paid consulting, board, management or other fees from the combined company with any and all
amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is
unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business combination, as it
will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be
publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.
All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are
available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested
independent directors, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such
transaction unless our audit committee and a majority of our disinterested independent directors determine that the terms of such transaction are no
less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
Related Party Policy
Our Code of Ethics requires us to
avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines
approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount
involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive
officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family
member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of
being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has
interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a
member of his or her family, receives improper personal benefits as a result of his or her position.
We also require each of our directors
and executive officers to annually complete a directors and officers questionnaire that elicits information about related party
transactions.
These procedures are intended to
determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a
director, employee or officer.
To further minimize conflicts of
interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our sponsors, officers or
directors unless we have
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obtained an opinion from an independent investment banking firm and the approval of a majority of our disinterested and independent directors (if we have any at that time) that the business combination is fair to our unaffiliated stockholders from a financial point of view. Furthermore, in no event will any of our sponsors, officers, directors or their respective affiliates be paid any finders fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is).
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General
Our certificate of incorporation
currently authorizes the issuance of 40,000,000 shares of common stock, par value $0.0001, and 1,000,000 shares of preferred stock, par value $0.0001.
As of the date of this prospectus, 2,012,500 shares of common stock are outstanding, held by 16 stockholders of record. No shares of preferred
stock are currently outstanding. The following description summarizes all of the material terms of our securities. Because it is only a summary, it may
not contain all the information that is important to you. For a complete description you should refer to our amended and restated certificate of
incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Common stock
Our holders of record of our common
stock are entitled to one vote for each share held on all matters to be voted on by stockholders. In connection with any vote held to approve our
initial business combination, our sponsors, as well as all of our officers and directors, have agreed to vote their respective shares of common stock
owned by them immediately prior to this offering, including both the insider shares and the private shares, and any shares acquired in this offering or
following this offering in the open market, in favor of the proposed business combination.
We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock
voted are voted in favor of the business combination.
Our board of directors is divided into
three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no
cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares eligible to vote for the
election of directors can elect all of the directors.
Pursuant to our amended and restated
certificate of incorporation, if we do not consummate our initial business combination within 18 months from the closing of this offering (or 24
months from the closing of this offering if the extension criteria described elsewhere in this prospectus is met), we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the
outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our sponsors have agreed to waive their
rights to share in any distribution with respect to their insider shares and private shares.
Our stockholders have no conversion,
preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the shares of common stock, except that
public stockholders have the right to have their shares of common stock converted to cash equal to their pro rata share of the trust account if they
vote on the proposed business combination and the business combination is completed.
Preferred Stock
There are no shares of preferred stock
outstanding. Our amended and restated certificate of incorporation authorizes the issuance of 1,000,000 shares of preferred stock with such
designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock are being issued or
registered in this offering. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. However,
the underwriting agreement prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds
of the trust account, or which votes as a class with the common stock on our initial business
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combination. We may issue some or all of the preferred stock to effect our initial business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we reserve the right to do so in the future.
Warrants
No warrants are currently outstanding.
Each public warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as
discussed below, at any time commencing upon the completion of a business combination. However, no public warrants will be exercisable for cash unless
we have an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current
prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock
issuable upon exercise of the public warrants is not effective within a specified period following the consummation of our initial business
combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to
maintain an effective registration statement, exercise warrants on a cashless basis in the same manner as if we called the warrants for redemption and
required all holders to exercise their warrants on a cashless basis. In such event, each holder would pay the exercise price by
surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares
of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value
(defined below) by (y) the fair market value. The fair market value for this purpose will mean the average reported last sale price of the
shares of common stock for the 10 trading days ending on the trading day prior to the date of exercise. The warrants will expire five years from the
date of this prospectus at 5:00 p.m., New York City time.
The private warrants will be identical
to the public warrants underlying the units being offered by this prospectus except that such warrants will be exercisable for cash (even if a
registration statement covering the shares of common stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the
holders option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their
affiliates.
We may call the warrants for redemption
(excluding the private warrants but including any warrants issued upon exercise of the unit purchase option granted to EarlyBirdCapital), in whole and
not in part, at a price of $0.01 per warrant,
|
at any time while the warrants are exercisable; |
|
upon not less than 30 days prior written notice of redemption to each warrant holder; |
|
if, and only if, the reported last sale price of the shares of common stock equals or exceeds $14.50 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders; and |
|
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
The right to exercise will be forfeited
unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a
warrant will have no further rights except to receive the redemption price for such holders warrant upon surrender of such
warrant.
The redemption criteria for our
warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a
sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our
redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
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If we call the warrants for redemption
as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis.
In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient
obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise
price of the warrants and the fair market value (defined below) by (y) the fair market value. In this case, the fair market
value shall mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the third trading day prior
to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to
exercise their warrants on a cashless basis will depend on a variety of factors including the price of our shares of common stock at the
time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances.
The warrants will be issued in
registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but
requires the approval, by written consent or vote, of the holders of a majority of the then outstanding warrants in order to make any change that
adversely affects the interests of the registered holders.
The exercise price and number of shares
of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary
dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of common
stock at a price below their respective exercise prices.
The warrants may be exercised upon
surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side
of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check
payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of common
stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon
exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by
stockholders.
Except as described above, no public
warrants will be exercisable and we will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the shares of common stock issuable upon exercise of the warrants is current and the shares of common stock have been registered
or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant
agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock
issuable upon exercise of the warrants until the expiration of the warrants.
Warrant holders may elect to be subject
to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent
that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the shares of common stock
outstanding.
No fractional shares will be issued
upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon
exercise, round up or down to the nearest whole number the number of shares of common stock to be issued to the warrant holder.
Purchase Option
We have agreed to sell to
EarlyBirdCapital an option to purchase up to a total of 420,000 units at $10.00 per unit. The units issuable upon exercise of this option are identical
to those offered by this prospectus.
Dividends
We have not paid any cash dividends on
our shares of common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of
cash dividends in
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the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.
Our Transfer Agent and Warrant Agent
The transfer agent for our securities
and warrant agent for our warrants is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004.
Certain Anti-Takeover Provisions of Delaware Law and our
Amended and Restated Certificate of Incorporation and By-Laws
Staggered Board of
Directors
Our amended and restated certificate of
incorporation provides that our board of directors will be classified into three classes of directors of approximately equal size. As a result, in most
circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
Special Meeting of
Stockholders
Our bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our board of directors, by our president or by our chairman or by our secretary
at the request in writing of stockholders owning a majority of our issued and outstanding capital stock entitled to vote.
Advance Notice
Requirements for Stockholder Proposals and Director Nominations
Our bylaws provide that stockholders
seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of
stockholders must provide timely notice of their intent in writing. To be timely, a stockholders notice will need to be delivered to our
principal executive offices not later than the close of business on the 60th day nor earlier than the close of business on the
90th day prior to the scheduled date of the annual meeting of stockholders. In the event that less than 70 days notice or prior public
disclosure of the date of the annual meeting of stockholders is given, a stockholders notice shall be timely if delivered to our principal
executive offices not later than the 10th day following the day on which public announcement of the date of our annual meeting of
stockholders is first made or sent by us. Our bylaws also specify certain requirements as to the form and content of a stockholders meeting.
These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors
at our annual meeting of stockholders.
Authorized but Unissued
Shares
Our authorized but unissued shares of
common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate
purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and
unreserved shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy
contest, tender offer, merger or otherwise.
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Immediately after this offering, we
will have 10,534,625 shares of common stock outstanding, or 10,489,625 shares of common stock if the over-allotment option is exercised
in full. Of these shares, the 7,000,000 shares of common stock sold in this offering, or 8,050,000 shares of common stock if the over-allotment option
is exercised in full, will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by
one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining shares are restricted securities under Rule 144, in
that they were issued in private transactions not involving a public offering.
Rule 144
A person who has beneficially owned
restricted shares of common stock for at least six months would be entitled to sell their shares provided that (1) such person is not deemed to have
been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (2) we are subject to the Exchange Act periodic
reporting requirements for at least three months before the sale. Persons who have beneficially owned restricted shares of common stock for at least
six months but who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to additional
restrictions, by which such person would be entitled to sell within any three-month period a number of shares that does not exceed the greater of
either of the following:
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1% of the number of shares then outstanding, which will equal 91,775 shares of common stock immediately after this offering (or 105,346 shares of common stock if the over-allotment option is exercised in full); and |
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the average weekly trading volume of the shares of common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
Sales under Rule 144 are also limited
by manner of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144 by Shell Companies or
Former Shell Companies
Historically, the SEC staff had taken
the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check
companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of
securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a
shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
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the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
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at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
As a result, it is likely that pursuant
to Rule 144, our sponsors will be able to sell their insider shares and private units freely without registration one year after we have completed our
initial business combination assuming they are not an affiliate of ours at that time.
Registration
Rights
The holders of our insider shares
issued and outstanding on the date of this prospectus, as well as the holders of the private units and any securities our sponsors, officers,
directors, special advisors or their respective affiliates may be issued in payment of working capital loans made to us, will be entitled
to
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registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the private units or securities issued in payment of working capital loans made to us can elect to exercise these registration rights at any time commencing on the date that we consummate our initial business combination. In addition, the holders have certain piggy-back registration rights with respect to registration statements filed subsequent to our consummation of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
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We intend to offer our securities
described in this prospectus through the underwriters named below. Subject to the terms and conditions of the underwriting agreement, the underwriters,
through their representative EarlyBirdCapital, Inc., have severally agreed to purchase from us on a firm commitment basis the following respective
number of units at a public offering price less the underwriting discounts and commissions set forth on the cover page of this
prospectus:
Underwriter |
Number of Units |
|||||
---|---|---|---|---|---|---|
EarlyBirdCapital, Inc. |
||||||
Sidoti &
Company, LLC |
||||||
Total
|
7,000,000 |
A copy of the underwriting agreement
has been filed as an exhibit to the registration statement of which this prospectus forms a part.
Listing of our Securities
We expect our units, common stock and
warrants to be quoted on Nasdaq under the symbols CAMBU, CAMB, and CAMBW, respectively. We
anticipate that our units will be listed on Nasdaq on or promptly after the effective date of the registration statement. Following the date the shares
of our common stock and warrants are eligible to trade separately, we anticipate that the shares of our common stock and warrants will be listed
separately and as a unit on Nasdaq. We cannot guarantee that our securities will be approved for listing on Nasdaq or that they will continue to be
listed on Nasdaq after this offering.
Pricing of this Offering
We have been advised by the
representative that the underwriters propose to offer the units to the public at the offering price set forth on the cover page of this prospectus.
They may allow some dealers concessions not in excess of $0.__ per unit and the dealers may reallow a concession not in excess of $0.__ per unit to
other dealers.
Prior to this offering there has been
no public market for our securities. The public offering price of the units was negotiated between us and the representative of the underwriters.
Factors considered in determining the prices and terms of the shares include:
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the history of other similarly structured blank check companies; |
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prior offerings of those companies; |
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our prospects for acquiring an operating business at attractive values; |
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our capital structure; |
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securities exchange listing requirements; |
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market demand; |
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expected liquidity of our securities; and |
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general conditions of the securities markets at the time of the offering. |
However, although these factors were
considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry
since the underwriters are unable to compare our financial results and prospects with those of public companies operating in the same
industry.
Over-allotment Option
We have granted the underwriters an
option to buy up to 1,050,000 additional units. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any,
made in connection with
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this offering. The underwriters have 45 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional units approximately in proportion to the amounts specified in the table above.
Commissions and Discounts
The following table shows the public
offering price, underwriting discount to be paid by us to the underwriters and the proceeds, before expenses, to us. This information assumes either no
exercise or full exercise by the representative of the underwriters of its over-allotment option.
Per Unit |
Without Over-allotment |
With Over-allotment |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Public
offering price |
$ | 10.00 | $ | 70,000,000 | $ | 80,500,000 | ||||||||
Discount
|
$ | 0.325 | $ | 2,275,000 | $ | 2,616,250 | ||||||||
Proceeds
before expenses(1) |
$ | 9.675 | $ | 67,725,000 | $ | 77,883,750 |
(1) |
The offering expenses are estimated at $500,000. |
No discounts or
commissions will be paid on the sale of the private units.
Merger/Acquisition Fee
We have engaged EarlyBirdCapital as an
investment banker to provide us with merger and acquisition services in connection with our initial business combination. Pursuant to this arrangement,
we anticipate EarlyBirdCapital will assist us in negotiating and structuring the terms of our initial business combination, valuing and structuring any
proposed offer to be made to a target business and negotiating a letter of intent and/or definitive agreement with any potential target business. We
will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount equal to 3.0% of the
total gross proceeds raised in the offering (exclusive of any applicable finders fees which might become payable).
Private Units
EarlyBirdCapital has committed to
purchase 35,000 private units for an aggregate purchase price of $350,000, or $10.00 per unit. EarlyBirdCapital has also agreed that if
the over-allotment option is exercised by the underwriters in full or in part, it will purchase from us at a price of $10.00 per unit an
additional number of private units (up to a maximum of 5,250 private units) pro rata with the amount of the over-allotment option
exercised so that at least $ 10.10 per share of common stock sold to the public in this offering is held in trust if the over-allotment
option is exercised in full. The private units are identical to the units being sold in this offering except as described elsewhere in this
prospectus. The private units and underlying shares of common stock and warrants have been deemed compensation by FINRA and are therefore subject to a
180-day lock-up pursuant to Rule 5110(g)(1) of the FINRA Manual. Additionally, the private units purchased by EarlyBirdCapital may not be sold,
transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the effective date of
this prospectus except to any selected dealer participating in the offering and the bona fide officers or partners of the underwriter and any such
participating selected dealer. EarlyBirdCapital has agreed that the private units it purchases will not be sold or transferred by it (except to certain
permitted transferees) until after we have completed an initial business combination. We have granted the holders of private units, including
EarlyBirdCapital, the registration rights as described under the section Shares Eligible for Future Sale Registration
Rights.
Purchase Option
We have agreed to sell to
EarlyBirdCapital (and/or its designees), for $100, an option to purchase up to a total of 420,000 units exercisable at $10.00 per unit (or an aggregate
exercise price of $4,200,000) commencing on the later of the consummation of a business combination and one year from the date of this
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prospectus. The purchase option may be exercised for cash or on a cashless basis, at the holders option, and expires five years from the date of this prospectus. The option and the 420,000 units, the 420,000 shares of common stock and the 420,000 warrants underlying such units, and the 420,000 shares of common stock underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up following the effective date of this prospectus pursuant to Rule 5110(g)(1) of FINRAs NASD Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the effective date of this prospectus except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The option grants to holders demand and piggy back rights for periods of five and seven years, respectively, from the effective date of this prospectus with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price.
Reimbursement of Expenses
We will reimburse the underwriters
for certain expenses related to the offering up to a maximum of $36,000 for the costs of their due diligence expenses, including fees and
expenses of underwriter counsel, and commemorative deal lucites.
Regulatory Restrictions on Purchase of
Securities
Rules of the SEC may limit the ability
of the underwriters to bid for or purchase our units before the distribution of the units is completed. However, the underwriters may engage in the
following activities in accordance with the rules:
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Stabilizing Transactions. The underwriters may make bids or purchases for the purpose of preventing or retarding a decline in the price of our units, as long as stabilizing bids do not exceed the offering price of $10.00 and the underwriters comply with all other applicable rules. |
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Over-Allotments and Syndicate Coverage Transactions. The underwriters may create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus up to the amount of the over-allotment option. This is known as a covered short position. The underwriters may also create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus and the units allowed by the over-allotment option. This is known as a naked short position. If the underwriters create a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our units in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option. Determining what method to use in reducing the short position depends on how the units trade in the aftermarket following the offering. If the unit price drops following the offering, the short position is usually covered with shares purchased by the underwriters in the aftermarket. However, the underwriters may cover a short position by exercising the over-allotment option even if the unit price drops following the offering. If the unit price rises after the offering, then the over-allotment option is used to cover the short position. If the short position is more than the over-allotment option, the naked short must be covered by purchases in the aftermarket, which could be at prices above the offering price. |
|
Penalty Bids. The representative may reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
Stabilization and syndicate covering
transactions may cause the price of our securities to be higher than they would be in the absence of these transactions. The imposition of a penalty
bid might also have an effect on the prices of our securities if it discourages resales of our securities.
87
Neither we nor the underwriters make
any representation or prediction as to the effect that the transactions described above may have on the price of our securities. These transactions may
occur on Nasdaq, in the over-the-counter market or on any trading market. If any of these transactions are commenced, they may be discontinued without
notice at any time.
Other Terms
Except as set forth above, we are not
under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do
so. However, any of the underwriters may, among other things, introduce us to potential target businesses or assist us in raising additional capital,
as needs may arise in the future. If any underwriter provides services to us after this offering, we may pay the underwriter fair and reasonable fees
that would be determined at that time in an arms length negotiation; provided that no agreement will be entered into with the underwriter and no
fees for such services will be paid to the underwriter prior to the date which is 90 days after the date of this prospectus, unless FINRA determines
that such payment would not be deemed underwriters compensation in connection with this offering.
Indemnification
We have agreed to indemnify the
underwriters against some liabilities, including civil liabilities under the Securities Act, or to contribute to payments the underwriters may be
required to make in this respect.
Selling Restrictions
Canada
Resale Restrictions
We intend to distribute our securities
in the Province of Ontario, Canada (the Canadian Offering Jurisdiction) by way of a private placement and exempt from the requirement that
we prepare and file a prospectus with the securities regulatory authorities in such Canadian Offering Jurisdiction. Any resale of our securities in
Canada must be made under applicable securities laws that will vary depending on the relevant jurisdiction, and which may require resales to be made
under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Canadian
resale restrictions in some circumstances may apply to resales of interests made outside of Canada. Canadian purchasers are advised to seek legal
advice prior to any resale of our securities. We may never be a reporting issuer, as such term is defined under applicable Canadian
securities legislation, in any province or territory of Canada in which our securities will be offered and there currently is no public market for any
of the securities in Canada, and one may never develop. Canadian investors are advised that we have no intention to file a prospectus or similar
document with any securities regulatory authority in Canada qualifying the resale of the securities to the public in any province or territory in
Canada.
Representations of Purchasers
A Canadian purchaser will be required
to represent to us and the dealer from whom the purchase confirmation is received that:
|
the purchaser is entitled under applicable provincial securities laws to purchase our securities without the benefit of a prospectus qualified under those securities laws; |
|
where required by law, that the purchaser is purchasing as principal and not as agent; |
|
the purchaser has reviewed the text above under Resale Restrictions; and |
|
the purchaser acknowledges and consents to the provision of specified information concerning its purchase of our securities to the regulatory authority that by law is entitled to collect the information. |
88
Rights of Action Ontario Purchasers
Only
Under Ontario securities legislation,
certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for
damages, or while still the owner of our securities, for rescission against us in the event that this prospectus contains a misrepresentation without
regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days
from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made
for our securities. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for our
securities. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In
no case will the amount recoverable in any action exceed the price at which our securities were offered to the purchaser and if the purchaser is shown
to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not
be liable for all or any portion of the damages that are proven to not represent the depreciation in value of our securities as a result of the
misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an
Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of
the relevant statutory provisions.
Enforcement of Legal Rights
All of our directors and officers as
well as the experts named herein are located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon us or those persons. All of our assets and the assets of those persons are located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or
those persons outside of Canada.
Collection of Personal Information
If a Canadian purchaser is resident in
or otherwise subject to the securities laws of the Province of Ontario, the Purchaser authorizes the indirect collection of personal information
pertaining to the Canadian purchaser by the Ontario Securities Commission (the OSC) and each Canadian purchaser will be required to
acknowledge and agree that the Canadian purchaser has been notified by us (i) of the delivery to the OSC of personal information pertaining to the
Canadian purchaser, including, without limitation, the full name, residential address and telephone number of the Canadian purchaser, the number and
type of securities purchased and the total purchase price paid in respect of the securities, (ii) that this information is being collected indirectly
by the OSC under the authority granted to it in securities legislation, (iii) that this information is being collected for the purposes of the
administration and enforcement of the securities legislation of Ontario, and (iv) that the title, business address and business telephone number of the
public official in Ontario who can answer questions about the OSCs indirect collection of the information is the Administrative Assistant to the
Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto, Ontario, M5H 3S8, Telephone: (416)
593-8086, Facsimile: (416) 593-8252.
89
Graubard Miller, New York, New York, is
acting as our counsel in connection with the registration of our securities under the Securities Act of 1933, and as such, will pass upon the validity
of the securities offered in this offering. Ellenoff Grossman & Schole LLP, New York, New York, is acting as counsel to the
underwriters.
The financial statements of Cambridge
Capital Acquisition Corporation (a company in the development stage) as of October 8, 2013 and for the period from October 1, 2013 (inception) through
October 8, 2013 appearing in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their
report, thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of Cambridge Capital Acquisition Corporation
(a company in the development stage) to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this
prospectus, and are included in reliance on such report given on the authority of such firm as an experts in auditing and accounting.
We have filed with the SEC a
registration statement on Form S-1 under the Securities Act with respect to the units we are offering by this prospectus. This prospectus does not
contain all of the information included in the registration statement. For further information about us and our shares, you should refer to the
registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of
our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such
contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual
contract, agreement or other document.
Upon completion of this offering, we
will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and
other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SECs website at
www.sec.gov . You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington,
D.C. 20549.
You may also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
90
Cambridge Capital Acquisition Corporation
(A Company in the Development Stage)
(A Company in the Development Stage)
Page |
||||||
---|---|---|---|---|---|---|
Report of
Independent Registered Public Accounting Firm |
F-2 |
|||||
Financial
Statements |
||||||
Balance Sheet
|
F-3 |
|||||
Statement of
Operations |
F-4 |
|||||
Statement of
Changes in Stockholders Equity |
F-5 |
|||||
Statement of
Cash Flows |
F-6 |
|||||
Notes to
Financial Statements |
F-7
F-12 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Shareholders of Cambridge Capital
Acquisition Corporation
We have audited the accompanying
balance sheet of Cambridge Capital Acquisition Corporation (a company in the development stage) (the Company) as of October 8, 2013 and the
related statements of operations, changes in stockholders equity, and cash flows for the period from October 1, 2013 (inception) through October
8, 2013. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial position of Cambridge Capital Acquisition Corporation (a company
in the development stage), as of October 8, 2013, and the results of its operations and its cash flows for the period from October 1, 2013 (inception)
through October 8, 2013 in conformity with United States generally accepted accounting principles.
The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has no
present revenue, its business plan is dependent on the completion of a financing and the Companys cash and working capital as of October 8, 2013
are not sufficient to complete its planned activities for the upcoming year. These conditions raise substantial doubt about the Companys ability
to continue as a going concern. Managements plans regarding these matters are also described in Notes 1 and 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Marcum LLP
Marcum LLP
New York, NY
October 23, 2013
New York, NY
October 23, 2013
F-2
Cambridge Capital Acquisition Corporation
(A Company in the Development Stage)
(A Company in the Development Stage)
Balance Sheet
October 8, 2013
October 8, 2013
ASSETS |
||||||
Current Asset
Cash and cash equivalents |
$ | 89,000 | ||||
Deferred
offering costs associated with proposed public offering |
34,250 | |||||
Total
assets |
$ | 123,250 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||
Current
Liabilities: |
||||||
Note payable
to stockholder |
$ | 100,000 | ||||
Total
current liabilities |
100,000 | |||||
Commitments |
||||||
Shareholders Equity: |
||||||
Preferred
stock, $.0001 par value; 1,000,000 shares authorized; none issued and outstanding |
| |||||
Common stock,
$.0001 par value; 40,000,000 shares authorized; 2,012,500 shares issued and outstanding(1) |
201 | |||||
Additional
paid-in capital |
24,799 | |||||
Deficit
accumulated during the Development Stage |
(1,750 | ) | ||||
Total
Stockholders Equity |
23,250 | |||||
Total
Liabilities and Stockholders Equity |
$ | 123,250 |
(1) |
This number includes an aggregate of 262,500 shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. |
The Accompanying Notes are an Integral Part of these
Financial Statements.
F-3
Cambridge Capital Acquisition Corporation
(A Company in the Development Stage)
(A Company in the Development Stage)
Statement of Operations
For The Period From October 1, 2013 (Inception) to October 8, 2013
For The Period From October 1, 2013 (Inception) to October 8, 2013
Formation and
operating costs |
$ | 1,750 | ||||
Net
Loss |
$ | (1,750 | ) | |||
Weighted
average shares outstanding, basic and diluted(1) |
1,750,000 | |||||
Basic and
diluted net loss per common share |
$ | (0.00 | ) |
(1) |
This number excludes an aggregate of 262,500 shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. |
The Accompanying Notes are an Integral Part of these
Financial Statements.
F-4
Cambridge Capital Acquisition Corporation
(A Company in the Development Stage)
(A Company in the Development Stage)
Statement of Changes in Stockholders Equity
For The Period From October 1, 2013 (Inception) to October 8, 2013
For The Period From October 1, 2013 (Inception) to October 8, 2013
Common Stock(1) |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Amount |
Additional Paid-In Capital |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
||||||||||||||||||
Balance
October 1, 2013 (Inception) |
| $ | | $ | | $ | | $ | | |||||||||||||
Common stock
issued at approximately $0.01 per share to initial stockholders on October 7, 2013 |
2,012,500 | 201 | 24,799 | | 25,000 | |||||||||||||||||
Net loss
|
| | | (1,750 | ) | (1,750 | ) | |||||||||||||||
Balance
October 8, 2013 |
2,012,500 | $ | 201 | $ | 24,799 | $ | (1,750 | ) | $ | 23,250 |
(1) |
This number includes an aggregate of 262,500 shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. |
The Accompanying Notes are an Integral Part of these
Financial Statements.
F-5
Cambridge Capital Acquisition Corporation
(A Company in the Development Stage)
(A Company in the Development Stage)
Statement of Cash Flows
For The Period From October 1, 2013 (Inception) to October 8, 2013
For The Period From October 1, 2013 (Inception) to October 8, 2013
Operating
Activities |
||||||
Net loss
|
$ | (1,750 | ) | |||
Net Cash
Used in Operating Activities |
(1,750 | ) | ||||
Financing
Activities |
||||||
Proceeds from
note payable to stockholder |
100,000 | |||||
Proceeds from
issuance of common stock to initial stockholders |
25,000 | |||||
Payment of
deferred offering costs |
(34,250 | ) | ||||
Net Cash
Provided by Financing Activities |
90,750 | |||||
Net
increase in cash and cash equivalents |
89,000 | |||||
Cash and cash
equivalents beginning |
| |||||
Cash and
cash equivalents ending |
$ | 89,000 |
The Accompanying Notes are an Integral Part of these
Financial Statements.
F-6
Note 1 Organization, Plan of Business Operations and
Going Concern Consideration
Cambridge Capital Acquisition
Corporation (a company in the development stage) (the Company) was incorporated in Delaware on October 1, 2013 as a blank check company
whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar
business combination, one or more businesses or entities (a Business Combination). The Companys efforts to identify a target business
will not be limited to a particular industry or geographic region, although the Company intends to focus its search for target businesses that operate
in the supply chain industry, with an emphasis on target businesses that operate in the traditional transportation and logistics end of the supply
chain industry.
At October 8, 2013, the Company had not
yet commenced any operations. All activity through October 8, 2013 relates to the Companys formation and the proposed public offering described
below. The Company has selected December 31 as its fiscal year-end. The Company is considered to be a development stage company and, as such, the
Companys financial statements are prepared in accordance with the Accounting Standards Codification (ASC) topic 915 Development
Stage Entities. The Company is subject to all of the risks associated with development stage companies.
The Companys ability to commence
operations is contingent upon obtaining adequate financial resources through a proposed public offering of 7,000,000 units (or 8,050,000 units if the
underwriters over-allotment option is exercised in full) (Units), at $10.00 per Unit which is discussed in Note 3 (the Proposed
Public Offering), and the sale of an aggregate of 427,500 units (the Private Units) (or 472,125 Private Units if the
underwriters over-allotment option is exercised in full) at $10.00 per unit to the Companys initial stockholders (collectively, the
Sponsors) and the underwriters (the Private Placement). The Companys management has broad discretion with respect
to the specific application of the net proceeds of this Proposed Public Offering and the Private Placement, although substantially all of the net
proceeds are intended to be applied generally toward consummating a Business Combination. Furthermore, there is no assurance that the Company will be
able to effect a Business Combination successfully. Upon the closing of the Proposed Public Offering and Private Placement, management has agreed that
at least $10.15, or $10.10 if the over-allotment option is exercised in full, per Unit sold in the Proposed Public Offering, including
the Private Placement, will be held in a trust account (Trust Account). The terms of the Proposed Public Offering, including the amount
that will be held in the Trust Account, are set forth in a non-binding letter of intent that is merely a statement of intent and is subject to change
and further negotiation between the parties and may be adjusted prior to the execution of the Underwriting Agreement (see Note 6). The funds to be held
in the Trust Account will be invested in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money
market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, until the earlier of
the consummation of its first Business Combination and the Companys failure to consummate a Business Combination within the prescribed time.
Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all
vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any
kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Companys executive
officers will agree that they will be jointly and severally liable under certain circumstances to ensure that the proceeds in the Trust Account are not
reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for service rendered, contracted for or
products sold to the Company. However, they may not be able to satisfy those obligations should they arise. The remaining net proceeds (not held in the
Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and
administrative expenses. The amount of proceeds not held in trust will remain constant at approximately $450,000, or $ 800,000 if the
over-allotment is exercised in full. In addition, (i) interest income on the funds held in the Trust Account can be released to the Company to
pay its income and other tax obligations and (ii) interest income on the funds held in the Trust Account can be released to the Company to pay for its
working capital requirements in connection with searching for a Business Combination.
F-7
The Company will seek shareholder
approval of any Business Combination at a meeting called for such purpose at which shareholders may seek to convert their shares into their pro rata
share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. The Company will proceed with a Business
Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and a majority of the outstanding
shares of common stock of the Company voted are voted in favor of the Business Combination. In connection with any shareholder vote required to approve
any Business Combination, the Sponsors will agree (i) to vote any of their respective shares, including the 2,012,500 shares of common stock sold to
the Sponsors in connection with the organization of the Company (the Sponsors Shares), shares of common stock sold to Sponsors in
connection with the Private Placement, and any shares of common stock which were initially issued in connection with the Proposed Public Offering,
whether acquired in or after the effective date of the Proposed Public Offering, in favor of the initial Business Combination and (ii) not to convert
such respective shares into a pro rata portion of the Trust Account.
The Companys Certificate of
Incorporation will be amended prior to the Proposed Public Offering to provide that the Company will continue in existence only until 18 months
from the closing of the Proposed Public Offering (or 24 months from the closing of the Proposed Public Offering if the Company has executed a
definitive agreement for an initial Business Combination within 18 months from the closing of the Proposed Public Offering but have not
completed the initial Business Combination within such 18-month period). If the Company has not completed a Business Combination by such date,
the Company will, as promptly as possible but not more than ten business days thereafter, redeem from holders of the outstanding shares sold in the
Proposed Public Offering (Public Stockholders) 100% of such shares for a pro rata portion of the funds held in the Trust Account and then
seek to dissolve and liquidate. In the event of a liquidation, the Public Stockholders will be entitled to receive a full pro rata interest in the
Trust Account (initially anticipated to be $10.15 per share (or $10.10 if the over-allotment option is exercised in full), plus any pro
rata interest earned on the Trust Fund not previously released to the Company). The Companys Sponsors have agreed not to participate in
such redemption, except to the extent that the Sponsors, at the time of such redemption, held shares of common stock which were issued in connection
with the Proposed Public Offering.
Going Concern Consideration
At October 8, 2013, the Company had
$89,000 in cash and a working capital deficit of $11,000. Further, the Company has incurred and expects to continue to incur significant costs in
pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Companys ability to continue as a going
concern. Management plans to address this uncertainty through a Proposed Offering as discussed in Note 3. There is no assurance that the Companys
plans to raise capital or to consummate a business combination will be successful or successful within the target business acquisition period. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 Significant Accounting
Policies
Cash and Cash
Equivalents
The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents.
Loss per
Share
Loss per share is computed by dividing
net loss by the weighted-average number of shares of common stock outstanding during the period excluding common stock subject to forfeiture. Weighted
average shares was reduced for the effect of an aggregate of 262,500 shares that are subject to forfeiture if the over-allotment option is not
exercised by the underwriters.
Use of
Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
F-8
statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Income
Taxes
The Company accounts for income taxes
under ASC Topic 740 Income Taxes (ASC 740). ASC 740 requires the recognition of deferred tax assets and liabilities for both
the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to
be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely
than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting
for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be
recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company is required to file income
tax returns in the United States (federal) and in various state and local jurisdictions. Based on the Companys evaluation, it has been concluded
that there are no significant uncertain tax positions requiring recognition in the Companys financial statements. Since the Company was
incorporated on October 1, 2013, the evaluation was performed for the upcoming 2013 tax year, which will be the only period subject to examination. The
Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in
a material changes to its financial position.
The Companys policy for recording
interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for
penalties or interest as of or during the period from October 1, 2013 (inception) through October 8, 2013. Management is currently unaware of any
issues under review that could result in significant payments, accruals or material deviations from its position.
Recent Accounting
Pronouncements
Management does not believe that any
recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial
statements.
Subsequent
Events
The Company evaluates events that have
occurred after the balance sheet date through the date which these financial statements were issued.
Note 3 Proposed Public Offering
The Proposed Public Offering calls for
the Company to offer for public sale 7,000,000 Units at a proposed offering price of $10.00 per Unit (plus up to an additional 1,050,000 Units solely
to cover over-allotments, if any, pursuant to a 45 day over-allotment option granted to the underwriter). Each Unit consists of one share of common
stock in the Company and one Warrant to purchase one share of common stock of the Company (Warrant). Each Warrant entitles the holder to
purchase one share of common stock at a price of $11.50 upon the Companys completion of its initial Business Combination and expiring five years
from the effective date of the registration statement relating to the Proposed Public Offering. The Company may redeem the Warrants at a price of $0.01
per Warrant upon 30 days notice, only in the event that the last sale price of the shares of common stock is at least $14.50 per share for any 20
trading days within a 30-trading day period (30-Day Trading Period) ending on the third day prior to the date on which notice of redemption
is given, provided there is a current registration statement in effect with respect to the shares of common stock underlying such Warrants commencing
five business days prior to the 30-Day Trading Period and continuing each day thereafter until the date of redemption. If the Company redeems the
Warrants as described above, management will have the option to require all holders that wish to exercise Warrants to do so on a
cashless
F-9
basis. In accordance with the warrant agreement relating to the Warrants to be sold and issued in the Proposed Public Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not effective within a specified period following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis. In the event that a registration statement is not effective at the time of exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant exercise.
Note 4 Deferred Offering Costs
Deferred offering costs consist
principally of legal, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Proposed Public
Offering and that will be charged to stockholders equity upon the receipt of the capital raised. Should the Proposed Public Offering prove to be
unsuccessful, these deferred costs as well as additional expenses to be incurred will be charged to operations.
Note 5 Note Payable to Stockholder Related
Party
The Company issued a $100,000 principal
amount unsecured promissory note to Cambridge Capital LLC (Affiliate), an affiliate of the Companys Chief Executive Officer. The note
is non-interest bearing and payable on (i) October 2, 2014, (ii) the consummation of the Proposed Public Offering or (iii) the date on which the
Company determines not to proceed with the Proposed Public Offering. Due to the short-term nature of the notes, the fair value of the notes
approximates the carrying amount.
Note 6 Commitments and
Contingencies
The Company will enter into an
agreement with the underwriters of the Proposed Public Offering (Underwriting Agreement). The terms of the Proposed Public Offering are set
forth in a non-binding letter of intent that is merely a statement of intent and is subject to change and further negotiation between the parties and
may be adjusted prior to the execution of the Underwriting Agreement. The Underwriting Agreement will require the Company to pay an underwriting
discount of 3.25% of the gross proceeds of the Proposed Public Offering as an underwriting discount. The Company has further engaged the underwriter as
an investment banker to provide the Company with merger and acquisition services in connection with its initial Business Combination. Pursuant to this
arrangement, the Company anticipates that the underwriter will assist the Company in negotiating and structuring the terms of its initial Business
Combination, valuing and structuring any proposed offer to be made to a target business and negotiating a letter of intent and/or definitive agreement
with any potential target business. The Company will pay the underwriter a cash fee for such services upon the consummation of its initial Business
Combination in an amount equal to 3.0% of the total gross proceeds raised in the Proposed Public Offering (exclusive of any applicable finders
fees which might become payable).
Private
Units
The Sponsors and the underwriter have
committed to purchase 427,500 Private Units at $10.00 per unit. The Sponsors and the underwriter have also agreed that if the over-allotment
option is exercised by the underwriters, they will purchase from the Company at a price of $10.00 per Private Unit an additional 44,625 Private
Units pro rata with the amount of the over-allotment option exercised so that at least $10.10 per share of common stock sold to the public in
the Proposed Public Offering is held in the Trust Account if the over-allotment option is exercised in full.
The Private Units are identical to the
Units sold in the Proposed Public Offering except the warrants included in the Private Units will be non-redeemable and may be exercised on a cashless
basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, the holders of the
Private Units have agreed (A) to vote the shares underlying their Private Units in favor of any
F-10
proposed business combination, (B) not to propose, or vote in favor of, an amendment to the Companys amended and restated certificate of incorporation with respect to the Companys pre-Business Combination activities prior to the consummation of such a Business Combination, (C) not to convert any shares underlying the Private Units into the right to receive cash from the trust account in connection with a stockholder vote to approve an initial Business Combination or a vote to amend the provisions of the Companys amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity and (D) that the shares underlying the Private Units shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial Business Combination.
Purchase
Option
The Company has agreed to sell to the
underwriter, for $100, a unit purchase option to purchase up to a total of 420,000 units exercisable at $10.00 per unit (or an aggregate exercise price
of $4,200,000) commencing on the later of the consummation of a Business Combination and one year from the effective date of the registration statement
relating to the Proposed Public Offering. The unit purchase option expires five years from the effective date of the registration statement relating to
the Proposed Public Offering. The units issuable upon exercise of this option are identical to the Units being offered in the Proposed Public Offering.
The Company has agreed to grant to the holders of the unit purchase option, demand and piggy back registration rights for periods of five
and seven years, respectively, from the effective date of this Proposed Public Offering, including securities directly and indirectly issuable upon
exercise of the unit purchase option.
The Company intends to account for the
fair value of the unit purchase option, inclusive of the receipt of a $100 cash payment, as an expense of the Proposed Public Offering resulting in a
charge directly to stockholders equity. The Company estimates that the fair value of this unit purchase option is approximately $1,383,921 (or
$3.30 per unit) using the Black-Scholes option-pricing model. The fair value of the unit purchase option to be granted to the underwriter is estimated
as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.43% and (3) expected life of
five years. The unit purchase option may be exercised for cash or on a cashless basis, at the holders option (except in the case of a
forced cashless exercise upon the Companys redemption of the Warrants, as described above), such that the holder may use the appreciated value of
the unit purchase option (the difference between the exercise prices of the unit purchase option and the underlying Warrants and the market price of
the Units and underlying shares of common stock) to exercise the unit purchase option without the payment of any cash. The Company will have no
obligation to net cash settle the exercise of the unit purchase option or the Warrants underlying the unit purchase option. The holder of the unit
purchase option will not be entitled to exercise the unit purchase option or the Warrants underlying the unit purchase option unless a registration
statement covering the securities underlying the unit purchase option is effective or an exemption from registration is available. If the holder is
unable to exercise the unit purchase option or underlying Warrants, the unit purchase option or Warrants, as applicable, will expire
worthless.
Office
Space
The Company presently occupies office
space provided by the Affiliate. Such Affiliate has agreed that, until the Company consummates a Business Combination, it will make such office space,
as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has
agreed to pay such affiliate $10,000 per month for such services commencing on the effective date of the Proposed Public Offering.
Sponsor Registration
Rights
The Sponsors will be entitled to
registration rights with respect to their initial shares and the shares purchased in connection with the Private Placement, pursuant to an agreement to
be signed prior to or on the effective date of the Proposed Public Offering. The holders of the majority of the initial shares are
entitled
F-11
to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Placement shares (or underlying shares of common stock) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the Sponsors have certain piggy-back registration rights on registration statements filed after the Companys consummation of a Business Combination.
Note 7 Stockholder Equity
Preferred
Stock
The Company is authorized to issue
1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time
to time by the Companys board of directors.
As of October 8, 2013, there are no
shares of preferred stock issued or outstanding.
Common
Stock
The Company is authorized to issue
40,000,000 shares of common stock with a par value of $0.0001 per share.
In connection with the organization of
the Company, on October 7, 2013, the Sponsors Shares, consisting of a total of 2,012,500 shares of the Companys common stock were sold to the
Sponsors at a price of approximately $0.01 per share for an aggregate of $25,000. This number includes an aggregate of 262,500 shares that are subject
to forfeiture if the over-allotment option is not exercised by the underwriters.
F-12
Until ____________, 2013, all dealers
that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in
addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions.
No dealer, salesperson or any other
person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus
and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a
solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is
unlawful.
$70,000,000
Cambridge Capital Acquisition
Corporation
7,000,000 Units
PROSPECTUS
EarlyBirdCapital, Inc.
Sidoti & Company, LLC
Sidoti & Company, LLC
____________, 2013
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13. Other Expenses of Issuance and
Distribution.
The estimated expenses payable by us in
connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as
follows:
Initial
Trustees fee |
$ | 500 | (1) | |||
SEC
registration fee |
23,607 | |||||
FINRA filing
fee |
26,461 | |||||
Accounting
fees and expenses |
30,000 | |||||
Nasdaq listing
fees |
50,000 | |||||
Printing and
engraving expenses |
55,000 | |||||
Directors
& Officers liability insurance premiums |
75,000 | (2) | ||||
Legal fees and
expenses |
250,000 | |||||
Miscellaneous
|
64,432 | (3) | ||||
Total
|
$ | 575,000 |
(1) |
In addition to the initial acceptance fee that is charged by Continental Stock Transfer & Trust Company, as trustee, the registrant will be required to pay to Continental Stock Transfer & Trust Company fees for acting as trustee, as transfer agent of the registrants shares of common stock, as warrant agent for the registrants warrants and as escrow agent. |
(2) |
This amount represents the approximate amount of director and officer liability insurance premiums the registrant anticipates paying following the consummation of its initial public offering and until it consummates a business combination. |
(3) |
This amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those specifically listed above, including distribution and mailing costs. |
Item 14. Indemnification of Directors and
Officers.
Our amended and restated certificate of
incorporation provides that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by us to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law.
Section 145 of the Delaware General
Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of
officers, directors, employees and agents; insurance.
(a) A corporation shall have
power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact
that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the persons conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the
persons conduct was unlawful.
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(b) A corporation shall have
power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses (including attorneys fees) actually and reasonably incurred by the person
in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a
present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys fees) actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification
under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon
a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person
has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a
person who is a director or officer of the corporation at the time of such determination, (1) by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders.
(e) Expenses (including
attorneys fees) incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses (including attorneys fees) incurred by former directors and officers
or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of
another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation
deems appropriate.
(f) The indemnification and
advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such persons official capacity and as to action in another capacity while holding such office. A
right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated
or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or
investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of
such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g) A corporation shall have
power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred by such person in any such
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capacity, or arising out of such persons status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.
(h) For purposes of this
section, references to the corporation shall include, in addition to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting
or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this
section, references to other enterprises shall include employee benefit plans; references to fines shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and references to serving at the request of the corporation shall
include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner not opposed to the best interests of the corporation as referred to in this section.
(j) The indemnification and
advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such
a person.
(k) The Court of Chancery is
hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section
or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a
corporations obligation to advance expenses (including attorneys fees).
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions,
or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred
or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such issue.
Paragraph B of Article Eighth of our
amended and restated certificate of incorporation provides:
The Corporation, to the full
extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses
(including attorneys fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or
proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.
Pursuant to the Underwriting Agreement
filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the Underwriters and the Underwriters have agreed to indemnify us
against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities
Act.
II-3
Item 15. Recent Sales of Unregistered
Securities.
(a) |
During the past three years, we sold the following shares of common stock without registration under the Securities Act: |
Name |
Number of Shares |
|||||
---|---|---|---|---|---|---|
Gordon Family
2007 Trust |
1,610,000 | |||||
Cambridge
Capital LLC |
402,500 |
All such shares were issued in October
2013 in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold
to accredited investors. The shares issued to the individuals and entities above were sold for an aggregate offering price of $25,000 at an average
purchase price of approximately $0.01 per share.
In addition, the Companys
sponsors and EarlyBirdCapital, Inc. have committed to purchase a mutually agreed upon number private units from us on a private placement basis
simultaneously with the consummation of this offering. These purchases will take place on a private placement basis simultaneously with the
consummation of our initial public offering. Our sponsors and EarlyBirdCapital, Inc. have also agreed that if the over-allotment option is exercised by
the underwriters in full or in part, they will purchase from us at a price of $10.00 per unit an additional number of private units as may be mutually
agreed upon. These issuances will be made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act.
No underwriting discounts or
commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement
Schedules.
(a) |
The following exhibits are filed as part of this Registration Statement: |
Exhibit No. |
Description |
|||||
---|---|---|---|---|---|---|
1.1 | Form
of Underwriting Agreement.* |
|||||
1.2 | Merger and Acquisition Agreement.* |
|||||
3.1 | Certificate of Incorporation.** |
|||||
3.2 | Amended and Restated Certificate of incorporation. |
|||||
3.3 | Bylaws.** |
|||||
4.1 | Specimen Unit Certificate. |
|||||
4.2 | Specimen common stock Certificate. |
|||||
4.3 | Specimen Warrant Certificate. |
|||||
4.4 | Form
of Unit Purchase Option to be issued to EarlyBirdCapital, Inc.* |
|||||
4.5 | Form
of Warrant Agreement among the Registrant and Continental Stock Transfer & Trust Company. |
|||||
5.1 | Opinion of Graubard Miller. |
|||||
10.1 | Form
of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and each of the Registrants Officers, Directors and Sponsors. |
|||||
10.2 | Form
of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant. |
|||||
10.3 | Form
of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders. |
|||||
10.4 | Form
of Letter Agreement between Cambridge Capital LLC and Registrant regarding administrative support. |
|||||
10.5 | Promissory Note issued to Cambridge Capital LLC.** |
II-4
Exhibit No. |
Description | |||||
---|---|---|---|---|---|---|
10.6 | Form
of Registration Rights Agreement among the Registrant and the Sponsors and EarlyBirdCapital, Inc. |
|||||
10.7 | Form
of Subscription Agreements among the Registrant, Graubard Miller and the Purchasers of Private Units. |
|||||
14 | Code
of Ethics. |
|||||
23.1 | Consent of Marcum LLP. |
|||||
23.2 | Consent of Graubard Miller (included in Exhibit 5.1). |
|||||
24 | Power
of Attorney (included on signature page of this Registration Statement). |
|||||
99.1 | Form
of Audit Committee Charter. |
|||||
99.2 | Form
of Nominating Committee Charter. |
* |
To be filed by amendment. |
** |
Previously filed. |
Item 17. Undertakings.
(a) The undersigned
registrant hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933;
ii. To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement;
iii. To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the
offering.
(4) That for the purpose of
determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:
i. Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
II-5
ii. Any free writing
prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
iii. The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by
or on behalf of the undersigned registrant; and
iv. Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
(5) That for the purpose of
determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or
made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first
use.
(b) The undersigned
hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(c) Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(d) The undersigned
registrant hereby undertakes that:
(1) For purposes of
determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of
determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in West Palm Beach, Florida, on the 27th day of November, 2013.
CAMBRIDGE CAPITAL ACQUISITION CORPORATION |
||||||||||||||
By: |
/s/ Benjamin Gordon |
|||||||||||||
Name: |
Benjamin Gordon |
|||||||||||||
Title: |
Chief
Executive Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Benjamin Gordon his true and lawful attorney-in-fact, with full power of
substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments including
post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting alone, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the
Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates
indicated.
Name |
Position |
Date |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/
Benjamin Gordon Benjamin Gordon |
Chief
Executive Officer (Principal executive officer), Secretary, Treasurer and Director |
November 27, 2013 |
||||||||
/s/
Mitchell Gordon Mitchell Gordon |
President, Chief Financial Officer (Principal financial and accounting officer) and Director |
November 27, 2013 |
||||||||
/s/
Michael Durham Michael Durham |
Director |
November 27, 2013 |
||||||||
/s/
Nathan Gantcher Nathan Gantcher |
Director |
November 27, 2013 |
||||||||
/s/
Scott Laurans Scott Laurans |
Director |
November 27, 2013 |
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