Table of Contents
As filed with the Securities and Exchange Commission on
August 6, 2014
Registration No. 333-197187
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF
1933
DT Asia Investments Limited
(Exact name of registrant as specified in its
charter)
British Virgin Islands |
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6770 |
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N/A |
(State
or other jurisdiction of incorporation or organization) |
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(Primary Standard Industrial Classification Code Number) |
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(I.R.S. Employer Identification Number) |
Room 1102, 11/F.,
Beautiful Group Tower,
77 Connaught Road Central,
Hong Kong
(852) 2110-0081
(Address, including zip code, and telephone
number,
including area code, of registrants principal executive offices)
Stephen N. Cannon, Chief Executive Officer
100 Park
Avenue, Suite 1600
New York, NY 10017
(212) 880-2677
(Name, address, including zip code, and telephone
number,
including area code, of agent for service
Barry Grossman, Esq. Stuart Neuhauser, Esq.
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, New York, NY10105 (212) 370-1300 (212) 370-7889
Facsimile |
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Simon Schilder Ogier Ritter
House, 6th Floor Wickhams Cay II PO Box 3170 Road Town, Tortola British Virgin Islands, VG1110 |
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David Alan Miller, Esq. Jeffrey M.
Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York10174 (212) 818-8800 (212) 818-8881
Facsimile |
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. x
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 |
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Accelerated filer o |
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Non-accelerated filer o (Do not check if a smaller reporting company) |
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Smaller reporting company x |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Security Being Registered
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Amount Being Registered
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Proposed Maximum Offering Price per
Security(1)
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Proposed Maximum Aggregate Offering
Price(1)(2)
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Amount of Registration Fee
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Units, each
consisting of one ordinary share of no par value, one Right entitling the holder to receive one-tenth (1/10) of one ordinary share, and one
Warrant entitling the holder to purchase one half (1/2) of one ordinary share (2) |
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6,900,000 |
Units |
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$ |
10.00 |
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$ |
69,000,000 |
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$ |
8,887 |
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Ordinary Shares
of no par value, included as part of the Units |
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6,900,000 |
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Rights included
as part of the Units |
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6,900,000 |
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Warrants
included as part of the Units |
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6,900,000 |
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Ordinary Shares
of no par value, underlying Rights included as part of the Units |
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690,000 |
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Total |
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$ |
69,000,000 |
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$ |
8,887 |
(3) |
(1) |
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Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
(2) |
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Includes Units and ordinary shares, Warrants and Rights
underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if
any. |
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, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
Table of Contents
The information in this 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 it is not soliciting an offer to buy these securities in any jurisdiction where the offer or
sale is not permitted.
PRELIMINARY
PROSPECTUS |
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SUBJECT TO COMPLETION, AUGUST
6, 2014 |
DT Asia Investments Limited
DT Asia Investments
Limited is a newly organized blank check company incorporated in the British Virgin Islands as a business company and formed for the purpose of
acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into
contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities, which we refer to
throughout this prospectus as our initial business combination. Although we are not limited to a particular industry or geographic region for purposes
of consummating an initial business combination, we intend to focus on operating businesses that have their primary operations located in Asia (with an
emphasis on China).
This is an initial public offering of
our securities. We are offering 6,000,000 units at an offering price of $10.00. Each unit consists of one ordinary share, one right,
which we refer to throughout this prospectus as rights or the public rights, to receive one-tenth (1/10) of an ordinary
share automatically on the consummation of an initial business combination and one warrant, which we refer to throughout this
prospectus as warrants or the public warrants. Each warrant entitles the holder thereof to purchase one-half of one ordinary
share. We will not issue fractional shares. As a result, you must exercise warrants in multiples of two warrants, at a price of $12.00 per full
share, subject to adjustment as described in this prospectus, to validly exercise your warrants. Each warrant will become exercisable on the
later of the completion of an initial business combination or 12 months from the date of this prospectus, and will expire five years
after the completion of an initial business combination, or earlier upon redemption.
We have also granted EarlyBirdCapital,
Inc., the representative of the underwriters, a 45-day option to purchase up to an additional 900,000 units (over and above the 6,000,000 units
referred to above) solely to cover over-allotments, if any.
We will provide our shareholders with
the opportunity to redeem their ordinary shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account described below, including interest (net of taxes payable) divided by the number of then
outstanding ordinary shares that were sold as part of the units in this offering, which we refer to as our public shares.
We have 18 months from the consummation
of this offering to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial business
combination within 18 months, we may extend the period of time to consummate a business combination twice, each by an additional three months, for an
aggregate of six additional months as described in this prospectus. In order to extend the time available for us to consummate our initial business
combination, our sponsor and/ or designees must deposit an aggregate of $150,000, or $0.025 per public share (or $172,500 if the overallotment is
exercised in full) into the trust account prior to the applicable deadline for each three month extension. Neither our sponsor nor any of its
affiliates or designees is obligated to fund the trust account to extend the time for us to complete our initial business combination. If we are unable
to consummate our initial business combination within the above time periods, we will distribute the aggregate amount then on deposit in the trust
account, pro rata to our public shareholders by way of the redemption of their shares and to cease all operations except for the purposes of winding up
of our affairs, as further described herein. In such event, the public rights will expire and be worthless.
Our sponsor (and/or its designees) and
EarlyBirdCapital, Inc. (and/or its designees) have committed to purchase from us an aggregate of 320,000 (or 353,750 if the overallotment
is exercised in full) units, or private units, at $10.00 per unit, among which 290,000 (or 320,471 if the overallotment is
exercised in full) units, or the insider units, will be purchased by our sponsor (and/or its designees) and 30,000 (or 33,279 if the overallotment is
exercised in full) units, or the EBC units, will be purchased by EarlyBirdCapital (and/or its designees). These purchases will take place on a private
placement basis simultaneously with the consummation of this offering. 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, ordinary shares, rights or warrants. We intend to apply to have our units listed on the Nasdaq Capital Market, or Nasdaq,
under the symbol CADTU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for
listing on Nasdaq. Once the securities comprising the units begin separate trading as described in this prospectus, the ordinary shares,
rights and warrants will be traded on Nasdaq under the symbols CADT, CADTR, and CADTW,
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 19 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.
This prospectus does not constitute,
and there will not be, an offering of securities to the public in the British Virgin Islands.
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Price to Public
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Underwriting Discounts and
Commissions(1)
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Proceeds, Before Expenses, to us
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Per
Unit |
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$ |
10.00 |
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$ |
0.325 |
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$ |
9.675 |
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Total |
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$ |
60,000,000 |
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$ |
1,950,000 |
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$ |
58,050,000 |
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(1) |
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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,
$10.05 per unit sold to the public in this offering (whether or not the over-allotment option has been exercised in full or part) will be
deposited into a United States-based trust account at [], 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 public shares upon our failure to consummate a business combination within the required 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
____________, 2014.
The information in this 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 it is not soliciting an offer to buy these securities in any jurisdiction where the offer or
sale is not
permitted.
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F-1 |
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Table of Contents
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 DT Asia Investments Limited, a BVI business company with limited liability; |
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references to the Companies Act and the
Insolvency Act are to the BVI Business Companies Act, 2004 and the Insolvency Act, 2003 of the British Virgin Islands,
respectively; |
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references in this prospectus to founder shares
refer to the 1,725,000 ordinary shares currently held by the initial shareholders (as defined below), which include up to an aggregate of 225,000
ordinary shares subject to forfeiture by our sponsor to the extent that the underwriters over-allotment option is not exercised in full or in
part; |
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references to our initial shareholders refer to
our sponsor, officers and directors that hold founder shares; |
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references to our EBC units refer to 30,000 (or
33,279 if the overallotment is exercised in full) units we are selling privately to EarlyBirdCapital upon consummation of this
offering; |
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references to our insider units refer to
290,000 (320,471 if the overallotment is exercised in full) units we are selling privately to our sponsor and its designees upon consummation of
this offering; |
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references to private units refer to the insider
units and EBC units; |
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references to ordinary shares refer to the
ordinary shares of no par value in the company; |
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references to private shares,
private rights and private warrants refers to the ordinary shares, rights and warrants included within the
private units; |
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references to our management or our
management team refer to our officers and directors; |
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references to our public shares refer to ordinary
shares 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 shareholders refer to the holders of our public shares, including our initial shareholders to the extent our initial
shareholders purchase public shares, provided that their status as public shareholders shall exist only with respect to such public
shares; |
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references to our rights or public
rights refer to the rights which are being sold as part of the units in this offering; |
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references to our sponsor refer to DeTiger
Holdings Limited, a company incorporated in the British Virgin Islands owned and controlled by Ms. Winnie Lai Ling Ng; and |
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references to our warrants or public
warrants refer to the warrants which are being sold as part of the units in this offering; |
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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
Table of Contents
General
We are a newly organized blank check
company incorporated in the British Virgin Islands as a business company with limited liability (meaning that our public shareholders have no
liability, as members of our company, for the liabilities of our company over and above the amount paid for their shares) and formed for the purpose of
acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into
contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities, which we refer to
throughout this prospectus as our initial business combination. Although we are not limited to a particular industry or geographic region, we intend to
focus on businesses that have their primary operations located in Asia (with an emphasis on China). We have not identified any acquisition target and
we have not, nor has anyone on our behalf, initiated any discussions, research or other measures, directly or indirectly, with respect to identifying
any acquisition target. From the date of our formation through the date of this prospectus, there have been no communications, evaluations or
discussions between any of our officers, directors or our sponsor and any of their potential contacts or relationships regarding a potential initial
business combination with our company. Additionally, we have not engaged or retained any agent or other representative to identify or locate any
suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target
business.
We anticipate structuring our initial
business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure our initial
business combination to acquire less than 100% of such interests or assets of the target business, but we will only consummate such business
combination if we will become the majority shareholder of the target (or control the target through contractual arrangements in limited
circumstances for regulatory compliance purposes) or are otherwise not required to register as an investment company under the
Investment Company Act of 1940, as amended, or the Investment Company Act. We will not consider any transaction that does not meet this criterion. Even
though we will own a majority interest in the target, our shareholders prior to the business combination may collectively own a minority interest in
the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we
could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In
this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our
shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial
business combination.
Our management team has identified the
following general criteria and guidelines, which we believe are important in evaluating prospective target businesses. While we intend to use these
criteria and guidelines in evaluating prospective target businesses, we may deviate from these criteria and guidelines should we see the justifications
to do so.
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Middle-Market Growth Business. We will
primarily seek to acquire one or more growth businesses with a total enterprise value in excess of $300,000,000. We believe that there are a
substantial number of potential target businesses within this valuation range that can benefit from new capital for scalable operations to yield
significant revenue and earnings growth. We do not currently intend to acquire either a start-up company or a company with negative cash
flow. |
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Companies with Opportunity to Strengthen Management and
Add Value. We will seek to acquire one or more businesses that provide a platform for the existing management team to leverage the
experience of our management team. We believe that the operating expertise of our management team is well suited to complement and, if beneficial,
replace the targets management team. |
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Companies in Business Segments that are Strategically
Significant to China. We will seek to acquire those businesses with strong technological know-how, distribution networks and/or business
practices in economic sectors that are currently experiencing significant Asia/China outbound investing. Such sectors include: Energy and resources,
food processing, retail, manufacturing, and high technology business segments. |
2
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Business with Revenue and Earnings Growth
Potential We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a
combination of brand and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in
increased operating leverage. |
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Companies with Potential for Strong Free Cash Flow
Generation We will seek to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash
flow. We intend to focus on one or more businesses that have predictable revenue streams and definable low working capital and capital expenditure
requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value. |
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Benefit from Being a Public Company We intend
to only acquire a business or businesses that will benefit from being publicly traded and which can effectively utilize access to broader sources of
capital and a public profile that are associated with being a publicly traded company. |
These criteria are not intended to be
exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Our management team has a broad range
of operational experience across a variety of economic sectors, including, without limitation, energy and resources, food processing, retail,
manufacturing, and high technology business segments.
Over the course of their careers, the
members of our management team have developed a broad international network of contacts and corporate relationships that we believe will serve as a
useful source of investment opportunities. This network has been developed through our management teams:
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experience in sourcing, acquiring, operating, financing and
selling businesses; |
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reputation for integrity and fair dealing with sellers, capital
providers and target management teams; |
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significant experience as advisors on transactions; |
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experience in executing transactions under varying economic and
financial market conditions; and |
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experience in operating in developing environments around the
world; |
We believe that the network of contacts
and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target
business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity
groups, investment banking firms, consultants, accounting firms and large business enterprises.
In evaluating a prospective target
business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and
employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to
us.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would
obtain an opinion from an independent investment banking firm that our initial business combination is fair to our unaffiliated shareholders from a
financial point of view.
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 relevant pre-existing fiduciary duties or contractual obligations.
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Table of Contents
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 ordinary
shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be
an emerging growth company as of the following fiscal year. As an emerging growth company, we 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 for complying with new or revised accounting
standards.
Private Placements
In June 2014, our initial shareholders
purchased an aggregate of 1,725,000 of our ordinary shares, which we refer to throughout this prospectus as the founder shares, for an
aggregate purchase price of $25,000, or approximately $0.014 per share. The 1,725,000 founder shares held by our initial shareholders include an
aggregate of up to 225,000 shares subject to forfeiture by our sponsor to the extent that the underwriters over-allotment option is not exercised
in full or in part, so that our initial shareholders will collectively own 20.0% of our issued and outstanding shares after this offering (excluding
the sale of the private units and assuming our initial shareholders do not purchase units in this offering). None of our initial shareholders has
indicated any intention to purchase units in this offering.
The founder shares are identical to the
public shares. However, our initial shareholders have agreed (A) to vote their founder shares and any public shares in favor of any proposed business
combination, (B) not to propose an amendment to our Memorandum and Articles of Association with respect to our pre-business combination activities
prior to the consummation of such a business combination, (C) not to redeem any shares (including the founder shares) into the right to receive cash
from the trust account in connection with a shareholder vote to approve our proposed initial business combination or a vote to amend the provisions of
our Memorandum and Articles of Association relating to shareholders rights or pre-business combination activity and (D) that the founder
shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated.
On the date of this prospectus, the
founder shares will be placed into an escrow account maintained by Continental Stock Transfer & Trust Company acting as escrow agent. Subject to
certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) one year after
the date of the consummation of our initial business combination or (ii) the date on which the closing price of our ordinary shares equals or exceeds
$12.50 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 and the remaining 50% of the founder shares will not be transferred, assigned, sold or
released from escrow until one year after the date of the consummation of our initial business combination, 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 shareholders having the right to exchange their ordinary shares for cash, securities or other property. The limited exceptions referred to above
include (1) to any persons (including their affiliates and shareholders) participating in the private placement of the private units, officers,
directors, shareholders, employees and members of our sponsor and its affiliates, (2) amongst initial holders, to our officers, directors and
employees, to a holders affiliates or its members upon its liquidation, (3) to relatives and trusts for estate planning purposes, (4) by virtue
of the laws of descent and distribution upon death, (5) pursuant to a qualified domestic relations order, (6) by certain pledges to secure obligations
incurred in connection with purchases of our securities, (7) 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 (8) to us for no value for cancellation in connection with the
consummation of our initial business combination, in each case (except for clause 8 where the transferee agrees to the terms of the escrow agreement,
but will retain all other rights as our shareholders, including, without limitation, the right to vote their ordinary shares and the right to receive
cash dividends, if declared. If dividends are declared and payable in ordinary shares, such dividends will also be placed in escrow.
4
Table of Contents
In addition, our sponsor (and/or its
designees) and EarlyBirdCapital, Inc. (and/or its designees) have committed to purchase an aggregate of 320,000 private units at a price of
$10.00 per unit ($3,200,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our
sponsor (and/or its designees) and EarlyBirdCapital (and/or its designees) 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 the number of private units (up to a maximum of 33,750 private
units) that is necessary to maintain in the trust account an amount equal to $10.05 per share of ordinary shares sold to the public in this
offering. 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 [], maintained by Continental Stock Transfer & Trust Company, as
trustee. If we do not complete our initial business combination within 18 months from the closing of this offering (or up to 24 if extended), the
proceeds from the sale of the private units will be included in the liquidating distribution to the holders of our public shares.
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. However, the holders have agreed (A) to vote their
private shares and any public shares in favor of any proposed business combination, (B) not to propose an amendment to Memorandum and Articles of
Association with respect to our pre-business combination activities prior to the consummation of such a business combination, (C) not to redeem any
private shares into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business
combination or a vote to amend the provisions of our Memorandum and Articles of Association relating to shareholders 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. Additionally, the holders have agreed not to transfer, assign or sell any of the private units or underlying securities (except to the
same permitted transferees as the founder shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of
the founder shares must agree to, each as described above) until 30 days after the completion of our initial business combination.
We have also agreed to sell to
EarlyBirdCapital (and/or its designees), for $100, an option to purchase up to a total of 600,000 units exercisable at $11.75 per unit (or an aggregate
exercise price of $7,050,000) upon the closing of this offering. Since the option is not exercisable until the earliest on the closing of our initial
business combination and the rights will automatically entitle the holders to receive one-tenth of a share at that time, the option will effectively
represent the right to purchase up to 660,000 ordinary shares (which includes the 60,000 ordinary shares which will be issued for the rights included
in the units) and 600,000 warrants to purchase 300,000 shares at $12.00 per full share for an aggregate maximum amount of
$7,050,000.
Our executive offices are located at
Room 1102, 11/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong, and our telephone number is (852) 2110-0081.
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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
of 1933, as amended, or 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 19 of
this prospectus.
Securities offered |
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6,000,000 units, at $10.00 per unit, each unit consisting of one ordinary share, one right and one warrant. Each right
entitles the holder to automatically receive one-tenth (1/10) of an ordinary share upon consummation of our initial business combination. Each
warrant entitles the holder thereof to purchase one-half of one ordinary share at a price of $12.00 per full share, subject to
adjustment as described in this prospectus. |
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This
is different from other offerings similar to ours whose units include one share and one warrant to purchase one share. Our management
believes that investors in similarly structured blank check offerings, and those likely to invest in this offering, have come to expect the units of
such companies to include one share and one or more other securities which would allow the holders to acquire additional shares. Without the
ability to acquire such additional shares, our management believes that investors would not be willing to purchase units in such companies
initial public offerings. In this offering, by offering rights as part of the units that automatically entitle the holder to receive only one-tenth of
a share and warrants that entitle the holder to purchase one-half of one share, as opposed to warrants included in units of similarly
structured blank check offerings that most often entitle the holder to receive a full share, our management believes we have reduced the number of
shares that we would be obligated to issue after the offering. However, this unit structure may cause our units to be worth less than if they
included a warrant to purchase one full share. Furthermore, no fractional shares will be issued upon exercise of the warrants.
Accordingly, unless you acquire at least two warrants, you will not be able to receive a share upon exercise of your
warrants. |
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Listing of
our securities and proposed symbols |
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We
anticipate the units, and the ordinary shares, rights and warrants once they begin separate trading, will be listed on Nasdaq under the
symbols CADTU, CADT, CADTR, and CADTW, respectively. |
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Each
of the ordinary shares, rights 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 |
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general, and the trading pattern of, and demand for, our securities in particular). In no event will EarlyBirdCapital allow separate trading
of the ordinary shares, rights 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 ordinary shares, rights 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 ordinary
shares, rights 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 ordinary shares, rights and warrants prior to the
90th day after the date of this prospectus. |
Ordinary
shares: |
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Number of
issued and outstanding before this offering |
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1,725,000 shares (includes up to an aggregate of 225,000 founder shares that are subject to forfeiture by our sponsor if the over-allotment
option is not fully exercised by the underwriters) |
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Number to
be issued and outstanding after this offering and sale of private units |
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7,820,000 shares (assumes the over-allotment option has not been exercised and an aggregate of 225,000 founder shares have been
forfeited by our sponsor) |
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Rights: |
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Number
outstanding before this offering |
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0 |
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Number to
be outstanding after this offering and sale of private units |
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6,320,000 rights (assumes the over-allotment option has not been exercised.) |
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Terms of
the Rights |
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Each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon consummation of our initial
business combination. If we are unable to complete an initial business combination within the required time period and we liquidate the funds
held in the trust account, holders of rights will not receive any of such funds for their rights and the rights will expire
worthless. |
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Warrants: |
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Number
outstanding before this offering |
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0
warrants |
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Number
to be outstanding after this offering and sale of private units |
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6,320,000 warrants (assumes the over-allotment option has not been exercised) |
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Exercisability |
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Each warrant is exercisable for one-half of one ordinary share. Because the warrants may only be exercised for whole numbers
of shares, only an even number of warrants may be exercised at any given time. |
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Exercise
price |
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$12.00 per whole share. No public warrants will be exercisable for cash unless we have an effective and current registration
statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares.
It is our current intention to have an effective and current registration statement covering the ordinary shares issuable upon exercise
of the warrants and a current prospectus relating to such ordinary shares in effect promptly following consummation of an initial
business combination. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise
of the public warrants is not effective within 90 days 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 pursuant to an available exemption from registration under
the Securities Act. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary
shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares 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 ordinary shares for the 10 trading days
ending on the day prior to the date of exercise. For example, if a holder held 300 warrants to purchase 150 shares and the fair
market value on the date prior to exercise was $15.00, that holder would receive 30 shares without the payment of any additional cash
consideration. If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless
basis. |
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Exercise
period |
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The warrants will become exercisable on the later of the completion of an initial business combination or 12 months from the
date of this prospectus. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of
an initial business combination, or earlier upon redemption. |
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Redemption |
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We
may redeem the outstanding warrants (excluding the private warrants but including any outstanding warrants issued upon exercise of the
unit purchase option issued to EarlyBirdCapital and/or its designees), 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 ordinary shares equals or exceeds $18.00 per share for any 20
trading days within a 30 trading day period ending three business days before we send the notice of redemption, and |
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if, and only if, there is a current registration statement in effect with respect to the ordinary shares
underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above 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 ordinary shares may fall below the $18.00 trigger price as well as
the $12.00 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 ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares 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 ordinary shares
for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent
to |
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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 ordinary shares at the time the warrants are
called for redemption, our cash needs at such time and concerns regarding dilutive share issuances. |
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Offering proceeds to be held in the trust account |
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$60,300,000 of the net proceeds of this offering (or $69,345,000 if the over-allotment option is exercised in full), taking into
account the $3,200,000 (or $3,537,500 if the over-allotment option is exercised in full), we will receive from the sale of the private
units, or $10.05 per unit sold to the public in this offering, will be placed in a trust account in the United States at [],
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 $550,000 of net proceeds of this offering will not be held in the trust account. |
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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. |
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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 $550,000; 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 initial shareholders, 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, |
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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 (which, for example, would result in the holders being issued 55,000 ordinary
shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 ordinary
shares upon the closing of our business combination as well as 50,000 warrants to purchase 25,000 shares). Our shareholders have approved the
issuance of the ordinary shares and warrants 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 only be repaid with funds not held
in the trust account, to the extent available. |
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Limited
payments to insiders |
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There
will be no fees, reimbursements or other cash payments paid to our initial shareholders, 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: |
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repayment at the closing of this offering of a non-interest bearing loan in an aggregate amount of $125,000 made by our
sponsor; |
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payment to our sponsor (DeTiger Holdings Limited., an entity controlled by Winnie Lai Ling Ng) of a total of $10,000 per
month for office space, utilities and secretarial and administrative services commencing on the date that our securities are first listed on Nasdaq
capital market; |
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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 |
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repayment upon consummation of our initial business combination of any loans which may be made by our initial shareholders
or their affiliates or our officers and directors to finance transaction costs in connection with an intended initial business
combination. |
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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 that may be released to us, such
expenses would not be reimbursed |
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by us
unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made to our 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. |
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Manner of
conducting redemptions |
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We
will provide our shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business
combination either (i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender
offer. |
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In
connection with any proposed initial business combination, we intend to seek shareholder approval of such initial business combination at a meeting
called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business
combination. In such case, 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 ordinary shares voted are voted in favor of the business combination. |
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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 redeem)
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. |
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Our
initial shareholders have agreed (A) to vote their founder shares and any public shares in favor of any proposed business combination, (B) not to
propose an amendment to our Memorandum and Articles of Association with respect to our pre-business combination activities prior to the consummation of
such a business combination, (C) not to redeem any shares (including the |
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founder shares) into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial
business combination or a vote to amend the provisions of our Memorandum and Articles of Association relating to shareholders rights or
pre-business combination activity and (D) that the founder shares shall not participate in any liquidating distribution upon winding up if a business
combination is not consummated. None of our initial shareholders or their affiliates has indicated any intention to purchase units in this offering or
any units or ordinary shares in the open market or in private transactions. However, if a significant number of shareholders vote, or indicate an
intention to vote, against a proposed business combination, our initial shareholders, officers, directors or their affiliates could make such purchases
in the open market or in private transactions in order to influence the vote. Our initial shareholders, officers, directors and their affiliates
could purchase sufficient shares so that the initial business combination may be approved without the majority vote of public shares held by
non-affiliates. Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates will not make purchases of
ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential
manipulation of a companys stock. |
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If a
shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant to our amended
and restated certificate of incorporation: |
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and |
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially
the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies. |
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In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares,
which number will be based on the requirement that we may not redeem public shares in an |
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amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SECs penny
stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial
business combination. |
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Redemption
rights |
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At
any meeting called to approve an initial business combination, any public shareholder voting either for or against such proposed business combination
will be entitled to demand that his ordinary shares be redeemed for a pro rata portion of the amount then in the trust account (initially approximately
$10.05 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). |
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If we
seek shareholder approval in connection with our initial business combination, we will consummate such transaction only if we have net tangible assets
of at least $5,000,001 upon such consummation and a majority of the outstanding ordinary shares voted are voted in favor of the business combination
(if a vote is required or being obtained). 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 redeemed) 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. |
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Notwithstanding the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or
more of the ordinary shares sold in this offering without our prior written consent. We believe this restriction will prevent an individual shareholder
or group from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the
redemption right as a means to |
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force
us or our management to purchase its shares at a significant premium to the then current market price. By limiting a shareholders ability to
redeem no more than 15% of the ordinary shares sold in this offering, we believe we have limited the ability of a small group of shareholders to
unreasonably attempt to block a transaction, which is favored by our other public shareholders. |
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Whether we elect to effectuate our initial business combination via shareholder vote or tender offer, we will require public
shareholders, whether they are a record holder or hold their shares in street name, to either tender their certificates to our transfer
agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using Depository Trust
Companys DWAC (Deposit/Withdrawal At Custodian) System, at the holders option. The requirement for physical or electronic delivery prior to
the meeting ensures that a holders election to redeem his shares is irrevocable once the business combination is approved. 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 redeeming 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 redemption rights. This is because a holder would need to deliver shares to exercise redemption rights regardless of the timing of when such
delivery must be effectuated. However, in the event the proposed business combination is not consummated, this may result in an increased cost to
shareholders. |
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Ability to
extend time to complete business combination |
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If we
anticipate that we may not be able to consummate our initial business combination within 18 months, we may extend the period of time to consummate a
business combination twice, each by an additional three months, for an aggregate of six additional months as described in this prospectus. In order to
extend the time available for us to consummate our initial business combination, our sponsor, or its affiliates or designees, must deposit an aggregate
of $150,000 at $0.025 per public share (or $172,500 at $0.025 per public share if the overallotment is exercised in full) into the trust account prior
to the applicable deadline for each three month extension. Neither our sponsor, nor any of its affiliates or designees, is obligated to fund the trust
account to extend the time for us to complete our initial business combination. |
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Liquidation
if no business combination |
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If we
are unable to complete our initial business combination within 18 months from the closing of this offering (or up to 24 months if extended), we will
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business days thereafter,
redeem 100% of the outstanding public shares which redemption will completely extinguish public shareholders rights as shareholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining holders of ordinary shares and our board of directors, proceed to commence a voluntary liquidation
and thereby a formal dissolution of the company, subject (in the case of (ii) and (iii) above) to our obligations to provide for claims of creditors
and the requirements of applicable law. |
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In
connection with our redemption of 100% of our outstanding public shares for a portion of the funds held in the trust account, each holder will receive
a full pro rata portion of the amount then in the trust account (less up to $20,000 to pay dissolution costs), plus any pro rata interest earned on the
funds held in the trust account and not previously released to us for our working capital requirements or necessary to pay our taxes payable on such
funds. Holders of rights or warrants will receive no proceeds in connection with the liquidation with respect to such rights or warrants,
which will expire worthless. |
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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. |
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The
holders of the founder shares and private units will not participate in any redemption distribution with respect to their founder shares, private
shares, private rights or private warrants. |
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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
$10.05. The proceeds deposited in the |
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trust
account could, however, become subject to claims of our creditors that are in preference to the claims of our shareholders. 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 shareholders. Therefore, the actual per-share redemption price may be less than approximately
$10.05.
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We
will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account together with up to $20,000 of interest earned
on the funds held in the trust account that is available to us for such purposes. If such funds are insufficient, Ms. Winnie Lai Ling Ng, an affiliate
of our sponsor, has agreed to pay the funds necessary to complete such liquidation and has agreed not to seek repayment for such expenses. We currently
do not anticipate that such funds will be insufficient. |
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 19 of this
prospectus.
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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, so only balance sheet data is presented.
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June 10, 2014
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Actual
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As Adjusted(1)(2)(3)
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Balance
Sheet Data:
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Working
capital (deficiency) |
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$ |
(58,012 |
) |
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$60,869,704 |
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Total assets
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$ |
152,555 |
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$60,869,704 |
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Total
liabilities |
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$ |
132,951 |
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$ |
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Value of
ordinary shares which may be redeemed for cash |
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$ |
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$55,299,994 |
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Shareholders equity |
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$ |
19,604 |
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$5,569,710 |
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(1) |
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Includes $3,200,000 we will receive from the sale of the
private units. |
(2) |
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The as adjusted working capital and total assets is
derived by adding total shareholders equity and the value of the ordinary shares, which may be redeemed for cash. |
(3) |
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The as adjusted value of ordinary shares which may be
redeemed for cash is derived by taking 5,502,487 ordinary shares which may be redeemed, representing the maximum number of shares that may be
redeemed while maintaining at least $5,000,001 in net tangible assets after the offering, multiplied by a redemption price of
$10.05. |
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 such that we have at least $5,000,001 of
net tangible assets upon consummation of this offering and upon consummation of our initial business combination.
The as adjusted working
capital and total assets amounts include the $60,300,000 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.
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 ordinary shares voted
are voted in favor of the business combination (if a vote is required or being obtained).
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An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this
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.
We are a newly formed blank check company in the development
stage with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business
objective.
We are a recently formed blank check
company with no operating results, and we will not commence operations until obtaining funding through this offering and consummating our initial
business combination. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of
completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective
target business concerning our initial business combination and may be unable to complete our initial business combination. If we fail to complete our
initial business combination, we will never generate any operating revenues.
Our independent registered public accounting firms
report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going
concern.
As of June 10, 2014, we had $74,914 in
cash and cash equivalents and a working capital deficiency of $58,012. 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.
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 public shareholders may not be afforded an opportunity to
vote on our proposed business combination, which means we may consummate our initial business combination even though a majority of our public
shareholders do not support such a combination.
We intend to hold a shareholder vote
before we consummate our initial business combination. However, if a shareholder vote is not required, for business or legal reasons, we may conduct
redemptions via a tender offer. Accordingly, we may consummate our initial business combination even if holders of a majority of our public shares do
not approve of the business combination.
Your only opportunity to affect the investment decision
regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us,
you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Because our board of directors
may consummate our initial business combination without seeking shareholder approval, public shareholders may not have the right
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or opportunity to vote on the
business combination. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to
exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to
our public shareholders in which we describe our business combination.
The ability of our public shareholders to redeem their shares
for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into our
initial business combination with a target.
We may enter into a transaction
agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many
public shareholders exercise their redemption rights, we may not be able to meet such closing condition, and as a result, would not be able to proceed
with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be
less than $5,000,001. Our memorandum and articles of association requires us to provide all of our public shareholders with an opportunity to redeem
all of their shares in connection with the consummation of any initial business combination. Consequently, if accepting all properly submitted
redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as
described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business
combination. Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our initial business combination transaction
with us.
The ability of a large number of our shareholders to exercise
redemption rights may not allow us to consummate the most desirable business combination or optimize our capital structure.
In connection with the successful
consummation of our business combination, we may redeem pursuant to a tender offer up to that number of ordinary shares that would permit us to
maintain net tangible assets of $5,000,001. If our business combination requires us to use substantially all of our cash to pay the purchase price, the
redemption threshold may be further limited. Alternatively, we may need to arrange third party financing to help fund our business combination in case
a larger percentage of shareholders exercise their redemption rights than we expect. If the acquisition involves the issuance of our shares as
consideration, we may be required to issue a higher percentage of our shares to the target or its shareholders to make up for the failure to satisfy a
minimum cash requirement. 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.
The requirement that we maintain a minimum net worth or retain
a certain amount of cash could increase the probability that our business combination would be unsuccessful and that you would have to wait for
liquidation in order to redeem your shares.
If, pursuant to the terms of our
proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate the
business combination and regardless of whether we proceed with redemptions under the tender or proxy rules, the probability that our business
combination would be unsuccessful is increased. If our business combination is unsuccessful, you would not receive your pro rata portion of the trust
account until we liquidate. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time
our shares may trade at a discount to the pro rata amount in our trust account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open
market.
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The requirement that we complete our initial business
combination within 18 (or 24 if extended) months from the closing of this offering may give potential target businesses leverage over us in negotiating
our initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our
dissolution deadline, which could undermine our ability to consummate our initial business combination on terms that would produce value for our
shareholders.
Any potential target business with
which we enter into negotiations concerning our initial business combination will be aware that we must consummate our initial business combination
within 18 (or 24 if extended) months from the closing of this offering. Consequently, such target businesses may obtain leverage over us in negotiating
our initial business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be
unable to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have
rejected upon a more comprehensive investigation.
We may not be able to consummate our initial business
combination within 18 (or 24 if extended) months from the closing of this offering, in which case we would cease all operations except for the purpose
of winding up and we would redeem our public shares and liquidate.
Our sponsor, officers and directors
have agreed that we must complete our initial business combination within 18 (or 24 if extended) months from the closing of this offering. We may not
be able to find a suitable target business and consummate our initial business combination within such time period. If we are unable to consummate our
initial business combination within 18 (or 24 if extended) months from the closing of this offering, we will, as promptly as reasonably possible but
not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $20,000 of the net
interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the
purposes of winding up of our affairs, as further described herein. This redemption of public shareholders from the trust account shall be done
automatically by function of our memorandum and articles of association and prior to any voluntary winding up.
If we seek shareholder approval of our business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from shareholders, in which case we or they may influence
a vote in favor of a proposed business combination that you do not support.
If we seek shareholder approval of our
business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor,
directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the
consummation of our initial business combination. Such a purchase would include a contractual acknowledgement that such shareholder, although still the
record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our
sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have
already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their
shares.
The purpose of such purchases would be
to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such
requirement would otherwise not be met. This may result in the consummation of an initial business combination that may not otherwise have been
possible.
Purchases of ordinary shares in the open market or in
privately negotiated transactions by our sponsor, directors, officers, advisors or their affiliates may make it difficult for us to list our ordinary
shares on a national securities exchange.
If our sponsor, directors, officers,
advisors or their affiliates purchase ordinary shares in the open market or in privately negotiated transactions, the public float of our
ordinary shares and the number of beneficial holders of our securities would both be reduced, possibly making it difficult to obtain the listing or
trading of
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our securities on a national
securities exchange if we determine to apply for such listing in connection with the business combination.
You will not have any rights or interests in funds from the
trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or
rights, potentially at a loss.
Our public shareholders shall be
entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any winding up in the event we do
not consummate our initial business combination or our liquidation or if they redeem their shares pursuant to a tender offer in connection with an
initial business combination that we consummate. In no other circumstances will a shareholder have any right or interest of any kind to the funds in
the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or rights, potentially at a
loss.
You will not be entitled to protections normally afforded to
investors of many other blank check companies.
Since the net proceeds 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 of $5,000,000 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 in blank check companies, such as Rule 419. Accordingly, investors will not be
afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we may have a longer
period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, offerings subject to Rule 419 would
prohibit the release of any interest earned on funds held in the trust account to us. For a more detailed comparison of our offering to offerings that
comply with Rule 419, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule
419.
If we seek shareholder approval of our business combination
and we do not conduct redemptions pursuant to the tender offer rules, and if you or a group of shareholders are deemed to hold in excess of
15% of our ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our ordinary shares.
If we seek shareholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our
memorandum and articles of association provides that a public shareholder, individually or together with any affiliate of such shareholder or any other
person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted
from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering. Your inability to redeem more than an
aggregate of 15% of the shares sold in this offering will reduce your influence over our ability to consummate our initial business combination and you
could suffer a material loss on your investment in us if you sell such excess shares in open market transactions. As a result, you will continue to
hold that number of shares exceeding 15% and, in order to dispose of such shares, you would be required to sell your shares in open market transaction,
potentially at a loss.
If the net proceeds of this offering not being held in the
trust account, together with the interest in the trust account (net of taxes payable) which may be released to us for working capital purposes, are
insufficient to allow us to operate for at least the next 18 (or 24 if extended) months, we may be unable to complete our initial business
combination.
The funds available to us outside of
the trust account, plus the interest earned on the funds held in the trust account that may be available to us, may not be sufficient to allow us to
operate for at least the next 18 (or 24 if extended) months, assuming that our initial business combination is not consummated during
that
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time. All the interest income (net
of taxes payable) earned on the trust account may be released to us to fund our working capital requirements; however, based on the current interest
rate environment, we anticipate that approximately $72,720 of interest income (net of taxes payable) will be available to us. However, our estimate may
not be accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our
search for a target business. We could also use a portion of the funds as a down payment or to fund a no-shop provision (a provision in
letters of intent designed to keep target businesses from shopping around for transactions with other companies on terms more favorable to
such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we are
unable to fund such down payments or no shop provisions, our ability to close a contemplated transaction could be impaired. Furthermore, if
we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence
with respect to, a target business. If we are unable to complete our initial business combination, our public shareholders may only receive
$10.05 per share (whether or not the underwriters over-allotment option is exercised in full) on our redemption, and our rights and
warrants will expire worthless.
The current low interest rate environment could limit the
amount available to fund our search for a target business or businesses and complete our initial business combination since we will depend on interest
earned on the trust account to fund our search, to pay our taxes and to complete our initial business combination.
Of the net proceeds of this offering,
only $550,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that our offering
expenses exceed our estimate of $400,000, we may fund such excess with funds from the $550,000 not to be held in the trust account. In such case, the
amount of funds we intend to hold outside the trust account would decrease by a corresponding amount. We will depend on sufficient interest being
earned on the proceeds held in the trust account to fund our working capital requirements, which we may need to identify one or more target businesses
and to complete our initial business combination, as well as to pay any taxes that we may owe. Additionally, the current interest rate environment may
make it more difficult for us to generate sufficient interest from the proceeds in the trust account to structure, negotiate or close our initial
business combination. In such event, we would need to borrow funds from our sponsor or management team to operate or may be forced to liquidate.
Neither our sponsor nor our management team is under any obligation to advance funds to us in such circumstances. If we are unable to complete our
initial business combination, our public shareholders may only receive $10.05 per share (whether or not the underwriters over-allotment
option is exercised in full) on our redemption, and our rights and warrants will expire worthless.
Subsequent to our consummation of our initial business
combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a
significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your
investment.
Even if we conduct thorough due
diligence on a target business with which we combine, this diligence may not surface all material issues that may be present inside a particular target
business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target
business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets,
restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk
analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this
nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net
worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining
post-combination debt financing.
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If we liquidate, distributions, or part of them, may be
delayed while the liquidator determines the extent of potential creditor claims.
Pursuant to, among other documents, our
memorandum and articles of association, if we do not complete our initial business combination within 18 (or 24 months if extended) from the closing of
this offering, this will trigger an automatic redemption of our ordinary shares using the available funds in the trust account pursuant to our
memorandum and articles of association, resulting in our repayment of available funds in the trust account. Following which, we will proceed to
commence a voluntary liquidation and thereby a formal dissolution of the company. In connection with such a voluntary liquidation, the liquidator would
give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and
by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating
in the location where the company has its principal place of business, and taking any other steps he considers appropriate, after which our remaining
assets would be distributed.
As soon as our affairs are fully
wound-up, if we were to liquidate, the liquidator must complete his statement of account and will then notify the Registrar of Corporate Affairs in the
British Virgin Islands (the Registrar) that the liquidation has been completed. However, the liquidator may determine that he or she
requires additional time to evaluate creditors claims (particularly if there is uncertainty over the validity or extent of the claims of any
creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands Court, which, if successful, may result in our
liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining
assets.
In any liquidation proceedings of the
company under British Virgin Islands law, the funds held in our trust account may be included in our estate and subject to the claims of third parties
with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we may not be able to return to our public
shareholders the redemption amounts payable to them.
Our directors may decide not to enforce indemnification
obligations against Ms. Winnie Lai Ling Ng, resulting in a reduction in the amount of funds in the trust account available for distribution to our
public shareholders.
In the event that the proceeds in the
trust account are reduced below $10.05 per share (whether or not the underwriters over-allotment option is exercised in full) and Ms.
Winnie Lai Ling Ng asserts that she is unable to satisfy her obligations or that she has no indemnification obligations related to a particular claim,
our independent directors would determine on our behalf whether to take legal action against Ms. Ng to enforce her indemnification obligations. While
we currently expect that our independent directors would take legal action on our behalf against Ms. Ng to enforce her indemnification obligations to
us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our
independent directors choose not to enforce these indemnification obligations on our behalf, the amount of funds in the trust account available for
distribution to our public shareholders may be reduced below $10.05 per share.
If we are deemed to be an investment company under the
Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it
difficult for us to complete our initial business combination.
If we are deemed to be an investment
company under the Investment Company Act, our activities may be restricted, including restrictions on the nature of our investments and restrictions on
the issuance of securities, each of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed
upon us burdensome requirements, including registration as an investment company, adoption of a specific form of corporate structure and reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
If we were deemed to be subject to the
Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and
may hinder our ability to consummate our initial business combination.
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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 also may 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.
We are not subject to the supervision of the Financial
Services Commission of the British Virgin Islands and so our shareholders are not protected by any regulatory inspections in the British Virgin
Islands.
We are not an entity subject to any
regulatory supervision in the British Virgin Islands by the Financial Services Commission. As a result, shareholders are not protected by any
regulatory supervision or inspections by any regulatory agency in the British Virgin Islands and the company is not required to observe any
restrictions in respect of its conduct save as disclosed in this prospectus or its memorandum and articles of association.
If we are unable to consummate our initial business
combination, our public shareholders may be forced to wait up to 18 (or 24 if extended) months before redemption from our trust
account.
If we are unable to consummate our
initial business combination within 18 (or 24 if extended) months from the closing of this offering, we will, as promptly as reasonably possible but
not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $20,000 of the net
interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the
purposes of winding up of our affairs by way of a voluntary liquidation, as further described herein. Any redemption of public shareholders from the
trust account shall be effected automatically by function of our memorandum and articles of association prior to our commencing any voluntary
liquidation. If we are required to liquidate prior to distributing the aggregate amount then on deposit in the trust account (less up to $20,000 of the
net interest earned thereon to pay dissolution expenses) pro rata to our public shareholders, then such winding up, liquidation and distribution must
comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond 18 (or 24 if extended) months before
the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our
trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate our initial
business combination prior thereto and only then in cases where investors have sought to redeem their ordinary shares. Only upon our redemption or any
liquidation will public shareholders be entitled to distributions if we are unable to complete our initial business combination.
If we are deemed to be insolvent, distributions, or part of
them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances, prior payments made by
the company may be deemed voidable transactions.
If we do not complete our initial
business combination within 18 (or 24 if extended) months, this will trigger an automatic redemption of public shareholders from the trust account
pursuant to our memorandum and articles of association.
However, if at any time we are deemed
insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside
under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in
favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the companys liabilities exceeds its
assets, or the company is unable to pay its debts as they fall due), we are required to immediately enter insolvent liquidation. In these
circumstances, a liquidator will be appointed who will give notice to our creditors inviting them to submit their claims for payment, by
notifying
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known creditors (if any) who have
not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least
one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate,
after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete its final report and accounts
and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the Registrar). The liquidator may determine that he
requires additional time to evaluate creditors claims (particularly if there is uncertainty over the validity or extent of the claims of any
creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands Court which, if successful, may result in our
liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public
shareholders. In such liquidation proceedings, the funds held in our trust account may be included in our estate and subject to the claims of third
parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we cannot assure you we will be able
to return to our public shareholders the amounts otherwise payable to them.
If we are deemed insolvent, then there
are also limited circumstances where prior payments made to shareholders or other parties may be deemed to be a voidable transaction for
the purposes of the Insolvency Act. A voidable transaction would be, for these purposes, payments made as unfair preferences or
transactions at an undervalue. Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company
could apply to the British Virgin Islands Court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in
part.
Our initial shareholders have waived
their right to participate in any liquidation distribution with respect to the initial shares. We will pay the costs of our liquidation and
distribution of the trust account from our remaining assets outside of the trust account and may request the trustee to release to us up to $20,000 of
the net interest earned on the trust account to pay dissolution expenses. In addition, Ms Winnie Ng has agreed that she will be liable to us, for all
claims of creditors to the extent that we fail to obtain executed waivers from such entities in order to protect the amounts held in trust, except as
to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.
However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors claims
(particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or
shareholder will not file a petition with the British Virgin Islands Court which, if successful, may result in our liquidation being subject to the
supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders.
If deemed to be insolvent, distributions made to public
shareholders, or part of them, from our trust account may be subject to claw back in certain circumstances.
If we do not complete our initial
business combination within 18 (or 24 if extended) months from the closing of this offering, and instead distribute the aggregate amount then on
deposit in the trust account (less up to $20,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders
by way of redemption, it will be necessary for our directors to pass a board resolution approving the redemption of those ordinary shares and the
payment of the proceeds to public shareholders. Such board resolutions are required to confirm that we satisfy the solvency test prescribed by the
Companies Act, (namely that our assets exceed our liabilities; and that we are able to pay our debts as they fall due). If, after the redemption
proceeds are paid to public shareholders, it transpires that our financial position at the time was such that it did not satisfy the solvency test, the
Companies Act provides a mechanism by which those proceeds could be recovered from public shareholders. However, the Companies Act also provides for
circumstances where such proceeds could not be subject to claw back, namely where (a) the public shareholders received the proceeds in good faith and
without knowledge of our failure to satisfy the solvency test; (b) a public shareholder altered its position in reliance of the validity of the payment
of the proceeds; or (c) it would be unfair to require repayment of the proceeds in full or at all.
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The grant of registration rights to our initial shareholders
may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price
of our ordinary shares.
Pursuant to an agreement to be entered
into on the date of this prospectus, our initial shareholders and their permitted transferees can demand that we register the founder shares, and the
holders of our insider units and their permitted transferees can demand that we register the insider units and the ordinary shares and warrants
included in the insider units (or issuable under the rights or upon exercise of the warrants). We will bear the cost of registering these
securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on
the market price of our ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or
difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the market price of our ordinary shares that is expected when the securities owned by our
sponsor, holders of our insider units or their respective permitted transferees are registered.
Because we have not selected a particular business or specific
geographic location or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits
or risks of any particular target business operations.
We may pursue acquisition opportunities
in any geographic region, but may rely upon our management teams background. While we may pursue an acquisition opportunity in any business
industry or sector, we intend to initially focus on those industries or sectors that complement our management teams background. Except for the
limitations that a target business have a fair market value of at least 80% of the value of the trust account and that we are not permitted to
effectuate our initial business combination with another blank check company or similar company with nominal operations, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Because we have not yet identified or approached any
specific target business with respect to our initial business combination, there is no basis to evaluate the possible merits or risks of any particular
target businesss operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we consummate our
initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we
combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent
in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we may not properly ascertain or assess all of the significant risk factors or that we will have
adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or
reduce the chances that those risks will adversely impact a target business. An investment in our units may not ultimately prove to be more favorable
to investors than a direct investment, if such opportunity were available, in an acquisition target.
We may seek investment opportunities outside of our
managements area of expertise and our management may not be able to adequately ascertain or assess all significant risks associated with the
target company.
There is no limitation on the industry
or business sector we may consider when contemplating our initial business combination. We may therefore be presented with a business combination
candidate in an industry unfamiliar to our management team, but determine that such candidate offers an attractive investment opportunity for our
company. In the event we elect to pursue an investment outside of our managements expertise, our managements experience may not be directly
applicable to the target business or their evaluation of its operations.
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Although we identified general criteria and guidelines that we
believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet
such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes
entirely consistent with our general criteria and guidelines.
Although we have identified specific
criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial
business combination will not have all of these positive attributes. If we consummate our initial business combination with a target that does not meet
some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria
and guidelines. In addition, if we announce our initial business combination with a target that does not meet our general criteria and guidelines, a
greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target
business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required
by law or the Nasdaq Capital Market, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us
to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are
unable to complete our initial business combination, our public shareholders may only receive $10.05 per share (whether or not the
underwriters over-allotment option is exercised in full) on our redemption, and our rights and warrants will expire
worthless.
Managements flexibility in identifying and selecting a
prospective acquisition candidate, along with our managements financial interest in consummating our initial business combination, may lead
management to enter into an acquisition agreement that is not in the best interest of our shareholders.
Subject to the requirement that our
initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of
the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Investors will be relying on managements ability to
identify business combinations, evaluate their merits, conduct or monitor diligence and conduct negotiations. Managements flexibility in
identifying and selecting a prospective acquisition candidate, along with managements financial interest in consummating our initial business
combination, may lead management to enter into an acquisition agreement that is not in the best interest of our shareholders, which would be the case
if the trading price of our ordinary shares after giving effect to such business combination was less than the per-share trust liquidation value that
our shareholders would have received if we had dissolved without consummating our initial business combination.
We are not required to obtain an opinion from an independent
investment banking firm, and consequently, an independent source may not confirm that the price we are paying for the business is fair to our
shareholders from a financial point of view.
Unless we consummate our initial
business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that the price we
are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of
our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business
combination.
We may issue additional ordinary or preferred shares to
complete our initial business combination or under an employee incentive plan after consummation of our initial business combination, which would
dilute the interest of our shareholders and likely present other risks.
Our memorandum and articles of
association authorize the issuance of an unlimited amount of both ordinary shares of no par value and preferred shares of no par value. We may issue a
substantial number of additional ordinary or preferred shares to complete our initial business combination or under an employee
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incentive plan after consummation
of our initial business combination. Although no such issuance of ordinary or preferred shares will affect the per share amount available for
redemption from the trust account, the issuance of additional ordinary or preferred shares:
|
|
may significantly dilute the equity interest of investors in
this offering, who will not have pre-emption rights in respect of such an issuance; |
|
|
may subordinate the rights of holders of ordinary shares if
preferred shares are issued with rights created by amendment of our memorandum and articles of association by resolution of the directors senior to
those afforded our ordinary shares; |
|
|
could cause a change in control if a substantial number of
ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in
the resignation or removal of our present officers and directors; and |
|
|
may adversely affect prevailing market prices for our units,
ordinary shares and/or rights. |
Resources could be wasted in researching acquisitions that are
not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We anticipate that the investigation of
each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will
require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific
initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we
reach an agreement relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons
including those beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect
subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
shareholders may only receive $10.05 per share (whether or not the underwriters over-allotment option is exercised in full) on our
redemption, and our rights and warrants will expire worthless.
We may qualify as a passive foreign investment company, or
PFIC, which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are determined to be a PFIC for
any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of this prospectus captioned
Taxation United States Federal Income Taxation General) of our ordinary shares or rights, the U.S. Holder may be subject to
increased U.S. federal income tax liability and may be subject to additional reporting requirements. Our actual PFIC status for our current taxable
year ending March 31, 2015 may depend on whether we qualify for the PFIC start-up exception (see the section of this prospectus captioned
Taxation United States Federal Income Taxation U.S. Holders Passive Foreign Investment Company Rules). If we do not
complete our initial business combination by the end of our current taxable year ending March 31, 2015, and we have gross income for such taxable year,
we likely will be a PFIC for such taxable year unless we complete our initial business combination before the end of our taxable year ending March 31,
2016 and are not treated as a PFIC for either of our taxable years ending March 31, 2015 or March 31, 2016. Our actual PFIC status for any taxable
year, however, will not be determinable until after the end of such taxable year. In addition, we may not provide timely financial information that
would be required for U.S. investors to make a potentially favorable qualified electing fund election, and such election would be
unavailable with respect to our rights in all cases. We urge U.S. investors to consult their own tax advisors regarding the possible application of the
PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of this prospectus
captioned Taxation United States Federal Income Taxation U.S. Holders Passive Foreign Investment Company
Rules.
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An investor may be subject to adverse U.S. federal income tax
consequences in the event the Internal Revenue Service (IRS) were to disagree with the U.S. federal income tax consequences described
herein.
As described in the section of this
prospectus captioned Taxation United States Federal Income Taxation General, we have not sought a ruling from the IRS as to
any U.S. federal income tax consequences described herein. The IRS may disagree with the descriptions of U.S. federal income tax consequences contained
herein, and its determination may be upheld by a court. Any such determination could subject an investor or our company to adverse U.S. federal income
tax consequences that would be different than those described herein. Accordingly, each prospective investor is urged to consult a tax advisor with
respect to the specific tax consequences of the acquisition, ownership and disposition of our ordinary shares, rights and units, including the
applicability and effect of state, local or non-U.S. tax laws, as well as U.S. federal tax laws.
After our initial business combination, it is likely that a
majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore
investors may not be able to enforce federal securities laws or their other legal rights.
It is likely that after our initial
business combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside
of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal
rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil
liabilities and criminal penalties on our directors and officers under United States laws.
Our ability to successfully effect our initial business
combination and to be successful thereafter will be largely dependent upon the efforts of our officers, directors and key personnel, some of whom may
join us following our initial business combination. The loss of our officers, directors, or key personnel could negatively impact the operations and
profitability of our business.
Our operations are dependent upon a
relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service of
our officers and directors, at least until we have consummated our initial business combination. In addition, our officers and directors are not
required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among
various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an
employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of
our directors or officers could have a detrimental effect on us.
The role of such persons in the target
business, however, cannot presently be ascertained. Although some of such persons may remain with the target business in senior management or advisory
positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place.
While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not
prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to
have to expend time and resources helping them become familiar with such requirements.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business
combination is the most advantageous.
Our key personnel may be able to remain
with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements in
connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could
provide for such individuals to receive compensation in the form of cash
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payments and/or our securities for
services they would render to us 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. However, we believe the ability of such individuals to remain with us 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. There is no certainty, however, that any of our key personnel will remain with us after the consummation of our initial
business combination. Our key personnel may not remain in senior management or advisory positions with us. The determination as to whether any of our
key personnel will remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess the management of a
prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the
skills, qualifications or abilities to manage a public company.
When evaluating the desirability of
effecting our initial business combination with a prospective target business, our ability to assess the target business management may be
limited due to a lack of time, resources or information. Our assessment of the capabilities of the targets management, therefore, may prove to be
incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the targets management not possess the
skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be
negatively impacted.
The officers and directors of an acquisition candidate may
resign upon consummation of our initial business combination. The loss of an acquisition targets key personnel could negatively impact the
operations and profitability of our post-combination business.
The role of an acquisition
candidates key personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate
that certain members of an acquisition candidates management team will remain associated with the acquisition candidate following our initial
business combination, it is possible that some members of the management team of an acquisition candidate will not wish to remain in
place.
Certain of our officers and directors are now, and all of them
may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may
have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be
presented.
Following the completion of this
offering and until we consummate our business combination, we intend to engage in the business of identifying and combining with one or more
businesses. Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar
business.
Our officers may become involved with
subsequent blank check companies similar to our company. Our officers also may become aware of business opportunities, which may be appropriate for
presentation to us and the other entities to which they owe certain fiduciary duties. Accordingly, they may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor or that a potential target
business would not be presented to another entity prior to its presentation to us.
Our officers, directors, security holders and their respective
affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that
expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any
investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into our
initial business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so.
Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by
us.
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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 redeem their founder shares, private shares or any other ordinary shares acquired in this offering or thereafter, or to receive
distributions with respect to their founder 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. Any rights and warrants
they hold, like those held by the public, 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 shareholders best interest.
We may engage in our initial business combination with one or
more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing holders, which
may raise potential conflicts of interest.
In light of the involvement of our
sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers and
directors. Our directors also serve as officers and board members for other entities. Our sponsor, officers and directors are not currently aware of
any specific opportunities for us to consummate our initial business combination with any entities with which they are affiliated, and there have been
no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or
targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our
criteria for our initial business combination as set forth in Proposed Business Effecting our initial business combination
Selection of a target business and structuring of our initial business combination and such transaction was approved by a majority of our
disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our
shareholders from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our
executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business
combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest. Our directors have a fiduciary
duty to act in the best interests of our shareholders, whether or not a conflict of interest may exist.
Since our sponsor will lose its entire investment in us if our
initial business combination is not consummated and our officers and directors have significant financial interests in us, a conflict of interest may
arise in determining whether a particular acquisition target is appropriate for our initial business combination.
In June 2014, our initial shareholders
purchased an aggregate of 1,725,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.014 per share. The founder shares
will be worthless if we do not consummate an initial business combination. In addition, our sponsor (and/or its designees) has committed to purchase an
aggregate of 290,000 (or 320,471 if the overallotment is exercised in full) insider units, each consisting of one ordinary
share, a right to receive 1/10 of an ordinary share, and a warrant to purchase 1/2 of one ordinary share, for an aggregate purchase price
of $3,200,000 (or $3,549,710 if the overallotment is exercised in full), that will also be worthless if we do not consummate our initial business
combination.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete our initial business combination, which may adversely affect our financial condition and thus negatively impact the
value of our shareholders investment in us.
Although we have no commitments as of
the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial
debt to complete our
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initial business combination. We
and our officers and directors have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right,
title, interest or claim of any kind in or to any monies held in the trust account. As such, no issuance of debt will affect the per share amount
available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects,
including:
|
|
default and foreclosure on our assets if our operating revenues
after 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; |
|
|
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; |
|
|
our inability to pay dividends on our ordinary
shares; |
|
|
using a substantial portion of our cash flow to pay principal
and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures,
acquisitions and other general corporate purposes; |
|
|
limitations on our flexibility in planning for and reacting to
changes in our business and in the industry in which we operate; |
|
|
increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in government regulation; and |
|
|
limitations on our ability to borrow additional amounts for
expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared
to our competitors who have less debt. |
We may 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. This lack of diversification may negatively impact our operations and profitability.
The net proceeds from this offering
will provide us with approximately $60,850,000 (or approximately $69,895,000 if the underwriters over-allotment option is exercised
in full) that we may use to complete our initial business combination.
We may effectuate our initial business
combination with a single target business or multiple target businesses simultaneously. However, we may not be able to effectuate our initial business
combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement
that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By consummating our initial business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities, which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
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solely dependent upon the performance of a single business,
property or asset, or |
|
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dependent upon the development or market acceptance of a single
or limited number of products, processes or services. |
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This lack of diversification may
subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously consummate business
combinations with multiple prospective targets, which may hinder our ability to consummate our initial business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is
contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
the initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with
respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to
adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to consummate our initial business combination
with a private company about which little information is available, which may result in our initial business combination with a company that is not as
profitable as we suspected, if at all.
In pursuing our acquisition strategy,
we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information exists about
private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited
information, which may result in our initial business combination with a company that is not as profitable as we suspected, if at all.
We may not be able to maintain control of a target business
after our initial business combination.
We may structure our initial business
combination to acquire less than 100% of the equity interests or assets of a target business, but we will only consummate such business combination if
we will become the majority shareholder of the target (or control the target through contractual arrangements in limited circumstances for
regulatory compliance purposes) or are otherwise not required to register as an investment company under the Investment Company Act. Even though we
may own a majority interest in the target, our shareholders prior to the business combination may collectively own a minority interest in the
post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this
case, we acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our
shareholders immediately prior to such transaction could own less than a majority of our outstanding shares subsequent to such transaction. In
addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the
companys stock than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of the
target business.
Unlike many blank check companies, we do not have a specified
maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate our initial business combination with
which a substantial majority of our shareholders do not agree.
Since we have no specified percentage
threshold for redemption contained in our memorandum and articles of association, our structure is different in this respect from the structure that
has been used by many blank check companies. Many blank check companies would not be able to consummate an initial business combination if the holders
of the companys public shares voted against a proposed business combination and elected to redeem more than a specified percentage of the shares
sold in such companys initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many
blank
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check companies have been unable to
complete business combinations because the amount of shares voted by their public shareholders electing redemption exceeded the maximum redemption
threshold pursuant to which such company could proceed with our initial business combination. As a result, we may be able to consummate our initial
business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or,
if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our business combination pursuant
to the tender offer rules, have entered into privately negotiated agreements to sell their shares to us or our sponsor, officers, directors, advisors
or their affiliates. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial business combination. In such case,
we would not proceed with the redemption of our public shares and the related business combination, and instead may search for an alternate business
combination.
Investors may view our units as less attractive than those
of other blank check companies.
Unlike other blank check companies that
sell units comprised of shares and warrants each to purchase one full share in their initial public offerings, we are selling units comprised of
ordinary shares, warrants to purchase one-half of one ordinary share and rights automatically entitling the holder to receive one-tenth
of a share upon consummation of our initial business combination. Neither the rights nor the warrants will have any voting rights and each will
expire and be worthless if we do not consummate an initial business combination. Furthermore, no fractional shares will be issued upon exercises of
the warrants. As a result, unless you acquire at least two warrants, you will not be able to receive a share upon exercise of your warrants.
Accordingly, investors in this offering will not be issued the same securities as part of their investment as they may have in other
blank check company offerings, which may have the effect of limiting the potential upside value of your investment in our company.
Holders of rights and warrants will not participate in
liquidating distributions if we are unable to complete an initial business combination within the required time period.
If we are unable to complete an
initial business combination within the required time period and we liquidate the funds held in the trust account, the rights and warrants
will expire and holders will not receive any of such proceeds with respect to the rights and warrants. In this case, holders of rights
and warrants are treated in the same manner as holders of rights and warrants of blank check companies whose units are comprised of
shares, rights and warrants, as the rights and warrants in those companies do not participate in liquidating distributions.
Nevertheless, the foregoing may provide a financial incentive to public shareholders to vote in favor of any proposed initial business combination as
their rights would automatically entitle the holder to receive one-tenth of a share of ordinary shares upon consummation of such business
combination or to purchase one-half of one ordinary share, resulting in an increase in their overall economic stake in our company. If a
business combination is not approved, the rights and warrants will expire and will be worthless.
If we do not maintain a current and effective prospectus
relating to the ordinary shares issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a
cashless basis which would result in a fewer number of shares being issued to the holder had such holder exercised the
warrants for cash.
If we do not maintain a current and
effective prospectus relating to the ordinary shares issuable upon exercise of the public warrant at the time that holders wish to exercise such
warrants, they will only be able to exercise them on a cashless basis provided that an exemption from registration is available. As
a result, the number of ordinary shares that a holder will receive upon exercise of its public warrants will be fewer than it would have
been had such holder exercised its warrant for cash. Further, if an exemption from registration is not available, holders would not be able to
exercise their warrants on a cashless basis and would only be able to exercise their warrants for cash if a current and effective prospectus
relating to the ordinary shares issuable upon exercise of the warrants is available. Under the terms of the warrant agreement, we have
agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the ordinary shares
issuable upon exercise of the warrants until the expiration of the
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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 or the warrants may expire
worthless. Notwithstanding the foregoing, the private warrants may be exercisable for unregistered ordinary shares for cash even if the
prospectus relating to the ordinary shares issuable upon exercise of the warrants is not current and effective.
An investor will only be able to exercise a warrant if the
issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state
of residence of the holder of the warrants.
No public warrants will be
exercisable for cash and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such exercise has been
registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time
that the warrants become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an
exemption from registration in every state. However, we cannot assure you of this fact. If the ordinary shares issuable upon exercise of the
warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be
deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
Our managements ability to require holders of our
warrants to exercise such warrants on a cashless basis will cause holders to receive fewer ordinary shares upon their exercise of the
warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for
redemption after the redemption criteria described elsewhere in this prospectus have been satisfied, our management will have the option to
require any holder that wishes to exercise his warrant (including any warrants held by our initial shareholders or their permitted transferees)
to do so on a cashless basis. If our management chooses to require holders to exercise their warrants on a cashless basis,
the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for
cash. This will have the effect of reducing the potential upside of the holders investment in our
company.
We may amend the terms of the warrants in a way that may be
adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants 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.
The ability of our public shareholders to exercise their
redemption 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 shareholders may exercise
redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption, 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.
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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 shareholders may have to remain shareholders 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 shareholders electing to
exercise their redemption 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 shareholders may have to remain shareholders of our company and wait the full 18 (or 24 if extended) in order to be able to receive a portion of
the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than they would have in a
liquidation of the trust account.
We will offer each public shareholder the option to vote in
favor of the proposed business combination and still seek redemption of his, her or its shares.
In connection with any meeting held to
approve an initial business combination, we will offer each public shareholder (but not our initial shareholders, officers or directors) the right to
have his, her or its ordinary shares redeemed for cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such
shareholder votes for or against such proposed business combination; provided that a shareholder must in fact vote for or against a proposed business
combination in order to have his, her or its ordinary shares redeemed for cash. If a shareholder fails to vote for or against a proposed business
combination, that shareholder would not be able to have his ordinary shares so redeemed. 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 ordinary shares voted are voted in favor of
the business combination. This is different than other similarly structured blank check companies where shareholders are offered the right to redeem
their shares only when they vote against a proposed business combination. This threshold and the ability to seek redemption while voting in favor of a
proposed business combination may make it more likely that we will consummate our initial business combination.
A public shareholder that fails to vote either in favor of or
against a proposed business combination will not be able to have his shares redeemed for cash.
In order for a public shareholder to
have his shares redeemed for cash in connection with any proposed business combination, that public shareholder must vote either in favor of or against
a proposed business combination. If a public shareholder fails to vote in favor of or against a proposed business combination, whether that shareholder
abstains from the vote or simply does not vote, that shareholder would not be able to have his ordinary shares so redeemed to cash in connection with
such business combination.
We will require public shareholders who wish to redeem
their ordinary shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more
difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.
We will require public
shareholders who wish to redeem their ordinary shares in connection with a proposed business combination to either tender their certificates to our
transfer agent at any time prior to the vote taken at the shareholder meeting relating to such business combination or to deliver their shares to the
transfer agent electronically using the Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) System, at the holders option. In
order to obtain a physical stock certificate, a shareholders broker and/or clearing broker, DTC and our transfer agent will need to act to
facilitate this request. It is our understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the
transfer
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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. Under our memorandum and
articles of association, we are required to provide at least 10 days advance notice of any shareholder meeting, which would be the minimum amount of
time a shareholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than we anticipate for shareholders
to deliver their shares, shareholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be
unable to redeem their shares.
Redeeming shareholders may be unable to sell their
securities when they wish to in the event that the proposed business combination is not approved.
We will require public
shareholders who wish to redeem their ordinary shares in connection with any proposed business combination to comply with the delivery
requirements discussed above for redemption. If such proposed business combination is not consummated, we will promptly return such certificates
to the tendering public shareholders. Accordingly, investors who attempted to redeem 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 ordinary shares may decline during
this time and you may not be able to sell your securities when you wish to, even while other shareholders that did not seek redemption 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. Therefore, our
ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking shareholder approval of our initial
business combination may delay the consummation of a transaction. Additionally, our rights, and the future dilution they represent (automatically
entitling the holders to receive ordinary shares on consummation of our initial business combination), 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.
The provisions of our memorandum and articles of association
relating to the rights and obligations attaching to our ordinary shares may be amended prior to the consummation of our initial business combination
with the approval of the holders of 65% (or 50% if for the purposes of approving, or in conjunction with, the consummation of our initial business
combination) of our outstanding ordinary shares attending and voting on such amendment at the relevant meeting, which is a lower amendment threshold
than that of many blank check companies. It may be easier for us, therefore, to amend our memorandum and articles of association to facilitate the
consummation of our initial business combination that a significant number of our shareholders may not support.
Many blank check companies have a
provision in their charter, which prohibits the amendment of certain of its provisions, including those, which relate to a companys pre-business
combination activity, without approval by a certain percentage of the companys shareholders. Typically, amendment of these provisions requires
approval by between 90% and 100% of the companys public shareholders. Our memorandum and articles of association provides that, prior to the
consummation of our initial business combination, its provisions related to pre-business combination activity and the rights and obligations attaching
to the ordinary shares, may be amended if approved by holders of 65% (or 50% if approved in connection with our initial business combination) of our
outstanding ordinary shares attending and voting on such amendment. Prior to
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our initial business combination,
if we seek to amend any provisions of our memorandum and articles of association relating to shareholders rights or pre-business combination
activity, we will provide dissenting public shareholders with the opportunity to redeem their public shares in connection with any such vote on any
proposed amendments to our memorandum and articles of association. Other provisions of our memorandum and articles of association may be amended prior
to the consummation of our initial business combination if approved by a majority of the votes of shareholders attending and voting on such amendment
or by resolution of the directors. Following the consummation of our initial business combination, the rights and obligations attaching to our ordinary
shares and other provisions of our memorandum and articles of association may be amended if approved by a majority of the votes of shareholders
attending and voting on such amendment or by resolution of the directors. Our initial shareholders, which will beneficially own 23.18% of our ordinary
shares upon the closing of this offering (assuming they do not purchase any units in this offering, no exercise of the underwriters
over-allotment option and the forfeiture of 225,000 founder shares by our sponsor), will participate in any vote to amend our memorandum and articles
of association and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our memorandum
and articles of association which govern our pre-business combination and the rights and obligations attaching to the ordinary shares behavior more
easily that many blank check companies, and this may increase our ability to consummate our initial business combination with which you do not agree.
However, we and our directors and officers have agreed not to propose any amendment to our memorandum and articles of association that would affect the
substance and timing of our obligation to redeem the public shares of any public shareholder without the consent of that holder, if we are unable to
consummate our initial business combination within 18 (or 24 if extended) from the closing of this offering.
We may be unable to obtain additional financing to complete
our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a
particular business combination. If we are unable to complete our initial business combination, our public shareholders may only receive $10.05
per share (whether or not the underwriters over-allotment option is exercised in full) on our redemption, and the rights and the warrants
will expire worthless.
Although we believe that the net
proceeds of this offering, including the interest earned on the proceeds held in the trust account that may be available to us for our initial business
combination, will be sufficient to allow us to consummate our initial business combination, because we have not yet identified any prospective target
business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering prove to be insufficient,
either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the
obligation to repurchase for cash a significant number of shares from shareholders who elect redemption in connection with our initial business
combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek
additional financing or to abandon the proposed business combination. Financing may not be available on acceptable terms, if at all. The current
economic environment has made it especially difficult for companies to obtain acquisition financing. To the extent that additional financing proves to
be unavailable when needed to consummate our initial business combination, we would be compelled to either restructure the transaction or abandon that
particular initial business combination and seek an alternative target business candidate. If we are unable to complete our initial business
combination, our public shareholders may only receive $10.05 per share (whether or not the underwriters over-allotment option is exercised
in full) on our redemption, and the rights and the warrants will expire worthless. In addition, even if we do not need additional financing to
consummate our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to
secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers,
directors or shareholders is required to provide any financing to us in connection with or after our initial business combination.
Our sponsor controls a substantial interest in us and thus may
exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
Upon closing of this offering, our
initial shareholders will own 23.18% of our issued and outstanding ordinary shares (assuming they do not purchase any units in this offering (assuming
no exercise of the
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underwriters over-allotment
option and the forfeiture of 225,000 founder shares by our sponsor)). Accordingly, they may exert a substantial influence on actions requiring a
shareholder vote, potentially in a manner that you do not support, including amendments to our memorandum and articles of association. If our sponsor
purchases any units in this offering or if we or our sponsor purchase any additional ordinary shares in the aftermarket or in privately negotiated
transactions, this would increase their control. Neither our sponsor nor, to our knowledge, any of our officers or directors, has any current intention
to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current
trading price of our ordinary shares. In addition, our board of directors, 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
shareholders 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. If there is an annual meeting, as a consequence of our
staggered board of directors, only a minority of the board of directors will be considered for election and our sponsor, because of its
ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsor will continue to exert control at least until the
consummation of our initial business combination.
If we do not hold an annual meeting of shareholders until after the consummation of our initial business combination, shareholders will not
be afforded an opportunity to elect directors and to discuss company affairs with management until such time.
Unless otherwise required by law or the
Nasdaq Capital Market, we do not currently intend to call an annual meeting of shareholders until after we consummate our initial business combination.
If our shareholders want us to hold a meeting prior to our consummation of our initial business combination, they may do so by members holding not less
than thirty percent of voting rights in respect of the matter for which the meeting is requested making a request in writing to the directors in
accordance with Section 82(2) of the Companies Act. Under British Virgin Islands law, we may not increase the required percentage to call a meeting
above thirty percent. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to elect directors and
to discuss company affairs with management.
Our sponsor paid an aggregate of $25,000, or approximately $0.014 per founder share (assuming no exercise of the over-allotment option)
and, accordingly, you will experience immediate and substantial dilution from the purchase of our ordinary shares.
The difference between the public
offering price per share (allocating all of the unit purchase price to the ordinary shares and none to the right and warrants included in the
unit) and the pro forma net tangible book value per ordinary share after this offering constitutes the dilution to you and the other investors in this
offering. Our initial shareholders acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon closing of this
offering, and assuming issuance of 0.1 of an ordinary share for each right included in the units, you and the other public shareholders will incur an
immediate and substantial dilution of approximately 79.2% or $7.20 per share (the difference between the pro forma net tangible book
value per share of $1.89 and the initial offering price of $9.09 per ordinary share).
The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and
size of an offering of 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 and the terms of the rights and warrants were negotiated
between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of
the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters
believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units,
including the ordinary shares, rights and warrants underlying the units, include:
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the history and prospects of companies whose principal business
is the acquisition of other 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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a review of debt to equity ratios in leveraged
transactions; |
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an assessment of our management and their experience in
identifying operating companies; |
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general conditions of the securities markets at the time of this
offering; and |
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other factors as were deemed relevant. |
Although these factors were considered,
the determination of our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have
no historical operations or financial results.
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.
Although we have applied to list our
securities on the Nasdaq Capital Market, as of the date of this prospectus there is currently no market for our securities. Prospective shareholders
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. Once listed on the
Nasdaq Capital Market, an active trading market for our securities may never develop or, if developed, it may not be sustained. Additionally, if our
securities become delisted from the Nasdaq Capital Market for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation
system for equity securities not listed on a national exchange, the liquidity and price of our securities may be more limited than if we were listed on
the Nasdaq Capital Market or another national exchange. You may be unable to sell your securities unless a market can be established and
sustained.
Once initially listed on the Nasdaq Capital Market, our
securities may not continue to be listed on the Nasdaq Capital Market in the future, 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 initially listed on the Nasdaq Capital Market upon consummation of this offering. However, we cannot assure you of this or that our securities will
continue to be listed on the Nasdaq Capital Market in the future. Additionally, in connection with our business combination, the Nasdaq Capital Market
will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing
requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the Nasdaq Capital Market 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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a reduced liquidity with respect to our securities; |
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a determination that our ordinary shares are a penny
stock which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of
trading activity in the secondary trading market for our ordinary shares; |
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a limited amount of news and analyst coverage for our company;
and |
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a decreased ability to issue additional securities or obtain
additional financing in the future. |
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Because we must furnish our shareholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target
businesses.
The United States federal proxy rules
require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or
pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender
offer documents, whether or not they are required under the tender offer rules. These financial statements must be prepared in accordance with, or be
reconciled to, accounting principles generally accepted in the United States of America, or GAAP, and the historical financial statements must be
audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for
us to disclose such statements in accordance with federal proxy rules and consummate our initial business combination within our 18 (or 24 if extended)
month time frame.
Compliance obligations under the Sarbanes-Oxley Act of 2002
may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase
the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act
of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form
10-K for the year ending March 31, 2016. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome on us as compared to all public companies because a target company with which we seek to complete our initial business
combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the
internal 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 may re-incorporate in another jurisdiction in connection
with our initial business combination, and the laws of such jurisdiction will likely govern all of our material agreements and we may not be able to
enforce our legal rights.
In connection with our initial business
combination, we may relocate the home jurisdiction of our business from the British Virgin Islands to another jurisdiction. If we determine to do this,
the laws of such jurisdiction would likely govern all of our material agreements. The system of laws and the enforcement of existing laws in such
jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any
of our future agreements could result in a significant loss of business, business opportunities or capital. Any such reincorporation and the
international nature of our business will likely subject us to foreign regulation.
You may face difficulties in protecting your interests, and
your ability to protect your rights through the U.S. federal courts may be limited, because we are incorporated under British Virgin Islands
law.
We are a company incorporated under the
laws of the British Virgin Islands. As a result, it may be difficult for investors to enforce judgments obtained in the United States courts against
our directors or officers.
Our corporate affairs will be governed
by our memorandum and articles of association, the Companies Act and the common law of the British Virgin Islands. The rights of shareholders to take
action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands
law are governed by the Companies Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived from
English common law, and whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the British Virgin
Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly
established as they would be under statutes or judicial precedent in
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some jurisdictions in the United
States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states, such
as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in British
Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders in BVI companies may not have standing to initiate a
shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures
and defenses that may be available in respect to any such action, may result in the rights of shareholders of a BVI company being more limited than
those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they
believe that corporate wrongdoing has occurred.
The British Virgin Islands Courts are
also unlikely:
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to recognize or enforce against us judgments of courts of the
United States based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or
similar fiscal or revenue obligations of the company; and |
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to impose liabilities against us, in original actions brought in
the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature. |
There is no statutory recognition in
the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will in certain circumstances
recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the
issues would be necessary provided that the U.S. judgment:
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the U.S. court issuing the judgment had jurisdiction in the
matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with
process; |
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is final and for a liquidated sum; |
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the judgment given by the U.S. court was not in respect of
penalties, taxes, fines or similar fiscal or revenue obligations of the company; |
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in obtaining judgment there was no fraud on the part of the
person in whose favor judgment was given or on the part of the court; |
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recognition or enforcement of the judgment would not be contrary
to public policy in the British Virgin Islands; and |
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the proceedings pursuant to which judgment was obtained were not
contrary to natural justice. |
In appropriate circumstances, a British
Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders for
performance of contracts and injunctions.
As a result of all of the above, public
shareholders may have more difficulty in protecting their interests in the face of actions taken by management or controlling shareholders than they
would as public shareholders of a U.S. company. For a discussion of certain differences between the provisions of the Companies Act, remedies available
to shareholders and the laws applicable to companies incorporated in the United States and their shareholders, see British Virgin Islands Company
Considerations.
Our memorandum and articles of association permit the board of
directors by resolution to amend our memorandum and articles of association, including to create additional classes of securities, including shares
with rights, preferences, designations and limitations as they determine which may have an anti-takeover effect.
Our memorandum and articles of
association permits the board of directors by resolution to amend the memorandum and articles of association including to designate rights,
preferences, designations and limitations attaching to the preferred shares as they determine in their discretion, without shareholder approval
with
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respect the terms or the issuance.
If issued, the rights, preferences, designations and limitations of the preferred shares would be set by the board of directors and could operate to
the disadvantage of the outstanding ordinary shares the holders of which would not have any pre-emption rights in respect of such an issue of preferred
shares. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible
corporate takeovers. We may issue some or all of such preferred shares in connection with our initial business combination. Notwithstanding the
foregoing, we and our directors and officers have agreed not to propose any amendment to our memorandum and articles of association that would affect
the substance and timing of our obligation to redeem our public shares if we are unable to consummate our initial business combination within 18 (or 24
if extended) from the closing of this offering.
We are an emerging growth company and we cannot be
certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to
investors.
We are an emerging growth
company, as defined in the JOBS Act. We will remain an emerging growth company for up to five years. However, if our non-convertible
debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our ordinary shares that are held by non-affiliates
exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the
following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of
the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we
are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved.
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. We cannot predict if investors will find our ordinary shares
less attractive because we may rely on these provisions. If some investors find our ordinary shares less attractive as a result, there may be a less
active trading market for our shares and our share price may be more volatile.
Risks Associated with Acquiring and Operating a Business
outside of the United States
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.
If we effect our initial business
combination with a company located outside of the United States, 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 redemption or corporate
withholding taxes on individuals; |
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laws governing the manner in which future business combinations
may be effected; |
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exchange listing and/or delisting requirements; |
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tariffs and trade barriers; |
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regulations related to customs and import/export
matters; |
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tax issues, such as tax law changes and variations in tax laws
as compared to the United States; |
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currency fluctuations and exchange controls; |
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challenges in collecting accounts receivable; |
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cultural and language differences; |
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employment regulations; |
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crime, strikes, riots, civil disturbances, terrorist attacks and
wars; and |
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deterioration of political relations with the United States. We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer. |
Because of the costs and difficulties inherent in managing
cross-border business operations, our results of operations may be negatively impacted.
Managing a business, operations,
personnel or assets in another country is challenging and costly. Any management that we may have (whether based abroad or in the U.S.) may be
inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labor practices. Even
with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border business operations, personnel and assets
can be significant (and much higher than in a purely domestic business) and may negatively impact our financial and operational
performance.
If social unrest, acts of terrorism, regime changes, changes
in laws and regulations, political upheaval, or policy changes or enactments occur in a country in which we may operate after we effect our initial
business combination, it may result in a negative impact on our business.
Political events in another country may
significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime changes, changes in laws and regulations, political
upheaval, and policy changes or enactments could negatively impact our business in a particular country.
Many countries have difficult and unpredictable legal systems
and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience, which may adversely impact our results of
operations and financial condition.
Our ability to seek and enforce legal
protections, including with respect to intellectual property and other property rights, or to defend ourselves with regard to legal actions taken
against us in a given country, may be difficult or impossible, which could adversely impact our operations, assets or financial
condition.
Rules and regulations in many countries
are often ambiguous or open to differing interpretation by responsible individuals and agencies at the municipal, state, regional and federal levels.
The attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent.
Delay with respect to the enforcement
of particular rules and regulations, including those relating to customs, tax, environmental and labor, could cause serious disruption to operations
abroad and negatively impact our results.
If relations between the United States and foreign governments
deteriorate, it could cause potential target businesses or their goods and services to become less attractive.
The relationship between the United
States and foreign governments could be subject to sudden fluctuation and periodic tension. For instance, the United States may announce its intention
to impose quotas on certain imports. Such import quotas may adversely affect political relations between the two countries and
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result in retaliatory
countermeasures by the foreign government in industries that may affect our ultimate target business. Changes in political conditions in foreign
countries and changes in the state of U.S. relations with such countries are difficult to predict and could adversely affect our operations or cause
potential target businesses or their goods and services to become less attractive. Because we are not limited to any specific industry, there is no
basis for investors in this offering to evaluate the possible extent of any impact on our ultimate operations if relations are strained between the
United States and a foreign country in which we acquire a target business or move our principal manufacturing or service operations.
If any dividend is declared in the future and paid in a
foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately
receive.
If you are a U.S. holder of our
ordinary shares, you will be taxed on the U.S. dollar value of your dividends, if any, at the time you receive them, even if you actually receive a
smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign
currency, the amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the payments
made in the foreign currency, determined at the spot rate of the foreign currency to the U.S. dollar on the date the dividend distribution is
includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency
decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount
that you will actually ultimately receive.
If our management following our initial business combination
is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to
various regulatory issues.
Following our initial business
combination, our management will likely resign from their positions as officers or directors of the company and the management of the target
business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States
securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar with such laws. This could
be expensive and time-consuming and could lead to various regulatory issues, which may adversely affect our operations.
After our initial business combination, substantially all of
our assets will likely be located in a foreign country and substantially all of our revenue will be derived from our operations in such country.
Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies,
developments and conditions in the country in which we operate.
The economic, political and social
conditions, as well as government policies, of the country in which our operations are located could affect our business. The economies in Asia differ
from the economies of most developed countries in many respects. For the most part, such economies have grown at a rate in excess of the United States;
however, (1) such economic growth has been uneven, both geographically and among various sectors of the economy and (2) such growth may not be
sustained in the future. If in the future such countrys economy experiences a downturn or grows at a slower rate than expected, there may be less
demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to
find an attractive target business with which to consummate our initial business combination and if we effect our initial business combination, the
ability of that target business to become profitable.
Currency policies may cause a target business ability to
succeed in the international markets to be diminished.
In the event we acquire a non-U.S.
target, all revenues and income would likely be received in a foreign currency, the dollar equivalent of our net assets and distributions, if any,
could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are
affected by, among other things, changes in political and economic conditions. Any change in the relative
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value of such currency against our
reporting currency may affect the attractiveness of any target business or, following consummation of our initial business combination, our financial
condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial
business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate
such transaction.
Because foreign law could govern almost all of our material
agreements, we may not be able to enforce our rights within such jurisdiction or elsewhere, which could result in a significant loss of business,
business opportunities or capital.
Foreign law could govern almost all of
our material agreements. The target business may not be able to enforce any of its material agreements or that remedies will be available outside of
such foreign jurisdictions legal system. The system of laws and the enforcement of existing laws and contracts in such jurisdiction may not be as
certain in implementation and interpretation as in the United States. The judiciaries in Asia are relatively inexperienced in enforcing corporate and
commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. As a result, the inability to enforce or
obtain a remedy under any of our future agreements could result in a significant loss of business and business opportunities.
Many of the economies in Asia are experiencing substantial
inflationary pressures which may prompt the governments to take action to control the growth of the economy and inflation that could lead to a
significant decrease in our profitability following our initial business combination.
While many of the economies in Asia
have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures. As governments take steps to address
the current inflationary pressures, there may be significant changes in the availability of bank credits, interest rates, limitations on loans,
restrictions on currency conversions and foreign investment. There also may be imposition of price controls. If prices for the products of our ultimate
target business rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on our
profitability. If these or other similar restrictions are imposed by a government to influence the economy, it may lead to a slowing of economic
growth. Because we are not limited to any specific industry, the ultimate industry that we operate in may be affected more severely by such a slowing
of economic growth.
Many industries in Asia are subject to government regulations
that limit or prohibit foreign investments in such industries, which may limit the potential number of acquisition candidates.
Governments in many Asian countries
have imposed regulations that limit foreign investors equity ownership or prohibit foreign investments altogether in companies that operate in
certain industries. As a result, the number of potential acquisition candidates available to us may be limited or our ability to grow and sustain the
business, which we ultimately acquire will be limited.
If a country in Asia enacts regulations in industry segments
that forbid or restrict foreign investment, our ability to consummate our initial business combination could be severely impaired.
Many of the rules and regulations that
companies face concerning foreign ownership are not explicitly communicated. If new laws or regulations forbid or limit foreign investment in
industries in which we want to complete our initial business combination, they could severely impair our candidate pool of potential target businesses.
Additionally, if the relevant central and local authorities find us or the target business with which we ultimately complete our initial business
combination to be in violation of any existing or future laws or regulations, they would have broad discretion in dealing with such a violation,
including, without limitation:
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revoking our business and other licenses; |
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requiring that we restructure our ownership or operations;
and |
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requiring that we discontinue any portion or all of our
business. |
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Any of the above could have an adverse
effect on our company post-business combination and could materially reduce the value of your investment.
Corporate governance standards in Asia may not be as strict or
developed as in the United States and such weakness may hide issues and operational practices that are detrimental to a target
business.
General corporate governance standards
in some countries are weak in that they do not prevent business practices that cause unfavorable related party transactions, over-leveraging, improper
accounting, family company interconnectivity and poor management. Local laws often do not go far enough to prevent improper business practices.
Therefore, shareholders may not be treated impartially and equally as a result of poor management practices, asset shifting, conglomerate structures
that result in preferential treatment to some parts of the overall company, and cronyism. The lack of transparency and ambiguity in the regulatory
process also may result in inadequate credit evaluation and weakness that may precipitate or encourage financial crisis. In our evaluation of a
business combination we will have to evaluate the corporate governance of a target and the business environment, and in accordance with United States
laws for reporting companies take steps to implement practices that will cause compliance with all applicable rules and accounting practices.
Notwithstanding these intended efforts, there may be endemic practices and local laws that could add risk to an investment we ultimately make and that
result in an adverse effect on our operations and financial results.
Risks Associated With Acquiring and Operating a Target
Business with its Primary Operation in China
As set forth herein, our efforts in
identifying a prospective target business will not be limited to a particular country, although we intend to focus initially on companies
located in Asia, with an emphasis in the Peoples Republic of China (PRC). Accordingly, in addition to the risk factors referred above, we
have set forth some of the primary risks we have identified in seeking to consummate our initial business combination with a company
having its primary operations in the PRC.
As a result of merger and acquisition regulations
implemented on September 8, 2006, or M&A Rules, relating to acquisitions of assets and equity interests of Chinese companies by foreign
persons, it is expected that acquisitions will take longer and be subject to economic scrutiny by the PRC government authorities such
that we may not be able to complete a transaction.
On September 8, 2006, the Ministry
of Commerce, together with several other government agencies, implemented a comprehensive set of regulations governing the approval process by
which a Chinese company may participate in an acquisition of its assets or its equity interests and by which a Chinese company may obtain
public trading of its securities on a securities exchange outside the PRC. Although there was a complex series of regulations in place prior to
September 8, 2006 for approval of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the new
regulations have largely centralized and expanded the approval process to the Ministry of Commerce, the State Administration of Industry
and Commerce (SAIC), the State Administration of Foreign Exchange (SAFE) or its branch offices, the State Asset Supervision and Administration
Commission (SASAC), and the China Securities Regulatory Commission (CSRC). Depending on the structure of the transaction, these M&A Rules
will require the Chinese parties to make a series of applications and supplemental applications to the aforementioned agencies, some of
which must be made within strict time limits and depending on approvals from one or the other of the aforementioned agencies. The application
process has been supplemented to require the presentation of economic data concerning a transaction, including appraisals of the business to be
acquired and evaluations of the acquirer which will permit the government to assess the economics of a transaction in addition to the
compliance with legal requirements. If obtained, approvals will have expiration dates by which a transaction must be completed. Also,
completed transactions must be reported to the Ministry of Commerce and some of the other agencies within a short period after closing or be
subject to an unwinding of the transaction. Therefore, acquisitions in China may not be able to be completed because the terms of the
transaction may not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated
within the time permitted by the approvals granted.
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Compliance with the PRC Antitrust law may limit our ability
to effect our initial business combination.
The PRC Antitrust Law became
effective on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust Commission and other antitrust
authorities under the State Council. The PRC Antitrust Law regulates (1) monopoly agreements, including decisions or actions in concert that
preclude or impede competition, entered into by business operators; (2) abuse of dominant market position by business operators; and (3)
concentration of business operators that may have the effect of precluding or impeding competition. The concentration of business operators
refers to (1) merger with other business operators; (2) gaining control over other business operators through acquisition of equity interest or
assets of other business operators; and (3) gaining control over other business operators through exerting influence on other business
operators through contracts or other means. The business combination we contemplate may be considered the concentration of business operators,
and to the extent required by the Antitrust Law, we must file with the antitrust authority under the PRC State Council prior to conducting the
contemplated business combination. If the antitrust authority decides not to further investigate whether the contemplated business
combination has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt of relevant
materials, we may proceed to consummate the contemplated business combination. If antitrust authority decides to prohibit the contemplated
business combination after further investigation, we must terminate such business combination and would then be forced to either attempt to
complete a new business combination if it was prior to 24 months from the consummation of this offering or we would be required to return
any amounts which were held in the trust account to our shareholders. When we evaluate a potential business combination, we will consider the
need to comply with the Antitrust Law and other relevant regulations which may limit our ability to effect an acquisition or may result in our
modifying or not pursuing a particular transaction.
If, due to restrictions on foreign investment in a target
business, we have to acquire the business through the use of contractual arrangements and the PRC government determines that such
contractual arrangements do not comply with foreign investment regulations, or if these regulations or the interpretation of existing
regulations in the PRC change in the future, we could be subject to significant penalties or be forced to relinquish our interests in those
operations.
Because of the above mentioned
industrial restrictions, foreign investors often acquire control of PRC business through the use of contractual arrangements pursuant to which
they effectively control the PRC business. There are uncertainties as to whether such contractual arrangements comply with the regulations
prohibiting or restricting foreign ownership in certain industries. In addition, even if such arrangements are not in violation of current
regulations, such regulations are subject to change in the future and may be broadened to further restrict foreign investments in new industries
or new category of assets.
If we or any of our potential future
target businesses are found to be in violation of any existing or future local laws or regulations with respect to foreign investment in local
entities (for example, if we are deemed to be holding equity interests in certain of our affiliated entities in which direct foreign ownership
is prohibited), the relevant regulatory authorities might have the discretion to:
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revoke the business and operating licenses of the potential
future target business; |
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confiscate relevant income and impose fines and other
penalties; |
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discontinue or restrict the operations of the potential
future target business; |
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require us or potential future target business to restructure
the relevant ownership structure or operations; |
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restrict or prohibit our use of the proceeds of this offering
to finance the target businesses and its operations; |
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impose conditions or requirements with which we or potential
future target business may not be able to comply; or |
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require us to discontinue a portion or all of our
business. |
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The imposition of any of the above
penalties could result in a material and adverse effect on our ability to conduct our business as well as our financial situation and we might
be forced to relinquish our interests in operations.
If we have to acquire a target business through contractual
arrangements with, or which results in, one or more operating businesses in China, such contracts may not be as effective in providing
operational control as direct ownership of such businesses.
The government of the PRC has
restricted or limited foreign ownership of certain kinds of assets and companies operating in certain industries. The industry groups that are
restricted are wide ranging, including certain aspects of telecommunications, advertising, food production and heavy equipment manufacturers,
for example. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in
important industries that may affect the national economic security or having famous Chinese brand names or well
established Chinese brand names. Subject to the review and approval requirements of the Ministry of Commerce and other relevant agencies
as discussed elsewhere for acquisitions of assets and companies in the PRC and subject to the various percentage ownership limitations that
exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and
industries may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties. To the extent such agreements
are employed, they may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of
a company which may provide exceptions to the merger and acquisition regulations mentioned above since these types of arrangements
typically do not involve a change of equity ownership in PRC operating company. The agreements would be designed to provide our company with the
economic benefits of and control over the subject assets or equity interests similar to the rights of full ownership, while leaving the
technical ownership in the hands of Chinese parties who would be our nominees and, therefore, may exempt the transaction from the merger
and acquisition regulations, including the application process required thereunder. However, there has been limited implementation guidance
provided with respect to the merger and acquisition regulations. There can be no assurance the relevant government agencies would not apply them
to a business combination effected through contractual arrangements. If such an agency determines such an application should have made,
consequences may include levying fines, revoking business and other licenses, requiring restructure of ownership or operations and requiring
discontinuation of any portion of all of the acquired business. These agreements likely also would provide for increased ownership or full
ownership and control by us when and if permitted under PRC law and regulation. If we choose to effect our initial business combination that
employs the use of these types of control arrangements, we may have difficulty in enforcing our rights. Therefore, these contractual
arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business
as would direct ownership. For example, if the target business or any other entity fails to perform its obligations under these contractual
arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal
remedies under Chinese law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be
sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the business
combination.
Regulations relating to the transfer of state-owned
property rights in enterprises may increase the cost of our acquisitions and impose an additional administrative burden on
us.
The legislation governing the
acquisition of a China state-owned company contains stringent governmental regulations. The transfer of state-owned property rights in
enterprises must take place through a government approved state-owned asset exchange, and the value of the transferred property
rights must be evaluated by those Chinese appraisal firms qualified to do state-owned assets evaluation. The final price must
not be less than 90% of the appraisal price. Additionally, bidding/auction procedures are essential in the event that there is more than one
potential transferee. In the case of an acquisition by foreign investors of state-owned enterprises, the acquirer and the seller must make a
resettlement plan to properly resettle the employees, and the resettlement plan must be approved by the Employees Representative Congress.
The seller must pay all unpaid wages and social welfare payments from the existing assets of the target company
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to the employees. These regulations may adversely effect our ability to acquire
a state-owned business or assets.
Exchange controls that exist in the PRC may limit our
ability to utilize our cash flow effectively following our initial business combination.
Following our initial business
combination with a PRC target company, we will be subject to the PRCs rules and regulations on currency conversion. In the PRC, the SAFE
regulates the conversion of the Renminbi into foreign currencies. Currently, (FIEs are required to apply to the SAFE for Foreign Exchange
Registration Certificates for FIEs. Following our initial business combination, we will likely be an FIE as a result of our
ownership structure. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency
accounts including a basic account and capital account. Currency conversion within the scope of the basic
account, such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE.
However, conversion of currency in the capital account, including capital items such as direct investment, loans and securities,
still require approval of the SAFE. We cannot assure you the PRC regulatory authorities will not impose further restrictions on the
convertibility of the Renminbi. Any future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution
of dividends to our shareholders or to fund operations we may have outside of the PRC.
Our initial business combination may be subject to national
security review by the PRC government and we may have to spend additional resources and incur additional time delays to complete any such
business combination or be prevented from pursuing certain investment opportunities.
On February 3, 2011, the PRC
government issued a Notice Concerning the Establishment of Security Review Procedure on Mergers and Acquisitions of Domestic Enterprises by
Foreign Investors, or Security Review Regulations, which became effective on March 5. The Security Review Regulations cover acquisitions
by foreign investors of a broad range of PRC enterprises if such acquisitions could result in de facto control by foreign investors and the
enterprises are relating to military, national defense, important agriculture products, important energy and natural resources, important
infrastructures, important transportation services, key technologies and important equipment manufacturing. The scope of the review includes
whether the acquisition will impact the national security, economic and social stability, and the research and development capabilities
on key national security related technologies. Foreign investors should submit a security review application to the Department of Commerce for
its initial review for contemplated acquisition. If the acquisition is considered to be within the scope of the Security Review Regulations, the
Department of Commerce will transfer the application to a joint security review committee within five business days for further review.
The joint security review committee, consisting of members from various PRC government agencies, will conduct a general review and seek comments
from relevant government agencies. The joint security review committee may initiate a further special review and request the termination or
restructuring of the contemplated acquisition if it determines that the acquisition will result in significant national security
issue.
The Security Review Regulations will
potentially subject a large number of mergers and acquisitions transactions by foreign investors in China to an additional layer of regulatory
review. Currently, there is significant uncertainty as to the implication of the Security Review Regulations. Neither the Department of
Commerce nor other PRC government agencies have issued any detailed rules for the implementation of the Security Review Regulations. If, for
example, our potential initial business combination is with a target company operating in the PRC in any of the sensitive sectors identified
above, the transaction will be subject to the Security Review Regulations, and we may have to spend additional resources and incur additional
time delays to complete any such acquisition. We may also be prevented from pursuing certain investment opportunities if the PRC
government considers that the potential investments will result in a significant national security issue.
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In the event we successfully consummated business
combination with a target business with primary operation in PRC, we will be subject to restrictions on dividend payments following consummation
of our initial business combination.
After we consummate our initial
business combination, we may rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our
other obligations. Current regulations in China would permit our operating company in China to pay dividends to us only out of its
accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our
operating company in China will be required to set aside at least 10% (up to an aggregate amount equal to half of its registered capital) of its
accumulated profits each year. Such cash reserve may not be distributed as cash dividends. In addition, if our operating company in China incurs
debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments
to us.
If we make equity compensation grants to persons who are
PRC citizens, they may be required to register with the State Administration of Foreign Exchange of the PRC (SAFE). We may also
face regulatory uncertainties that could restrict our ability to adopt equity compensation plans for our directors and employees and
other parties under PRC laws.
On April 6, 2007, SAFE issued the
Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of
An Overseas Listed Company, also know as Circular 78. It is not clear whether Circular 78 covers all forms of equity compensation
plans or only those which provide for the granting of shares options. For any plans which are so covered and are adopted by a non-PRC
listed company, such as our company, after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain
approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make
the necessary applications and filings if they participated in an overseas listed companys covered equity compensation plan prior
to April 6, 2007. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time
consuming.
Upon consummation of business
combination with a target business with primary operations in PRC, we may adopt an equity incentive plan and make shares option grants under the
plan to our officers, directors and employees, whom may be PRC citizens and be required to register with SAFE. If it is determined that any
of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of
our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our
PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our
business operations may be adversely affected.
52
Table of Contents
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements contained in this
prospectus, which reflect our current views with respect to future events and financial performance, and any other statements of a future or
forward-looking nature, constitute forward-looking statements for the purpose of the federal securities laws. 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, intends, 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 ability to complete our initial business
combination; |
|
|
our success in retaining or recruiting, or changes required in,
our officers, key employees or directors following our initial business combination; |
|
|
our 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; |
|
|
our potential ability to obtain additional financing to complete
our initial business combination; |
|
|
our pool of prospective target businesses; |
|
|
the ability of our officers and directors to generate a number
of potential investment opportunities; |
|
|
failure to list or delisting of our securities from the Nasdaq
Capital Market or an inability to have our securities listed on the Nasdaq Capital Market following a business combination; |
|
|
our public securities potential liquidity and
trading; |
|
|
the lack of a market for our securities; or |
|
|
our 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 beginning on page 19. 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.
53
Table of Contents
We are offering 6,000,000 units at an
offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the
insider 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
|
|
|
|
$ |
60,000,000 |
|
|
$ |
69,000,000 |
|
From private
placement |
|
|
|
|
3,200,000 |
|
|
|
3,537,500 |
|
Total gross
proceeds |
|
|
|
|
63,200,000 |
|
|
|
72,537,500 |
|
Offering
expenses(1)
|
|
|
|
|
|
|
|
|
|
|
Underwriting
discount (3.25% of gross proceeds from offering) |
|
|
|
|
1,950,000 |
(2) |
|
|
2,242,500 |
(2) |
Legal fees
and expenses(3) |
|
|
|
|
170,000 |
|
|
|
170,000 |
|
Nasdaq
listing fee |
|
|
|
|
50,000 |
|
|
|
50,000 |
|
Printing and
engraving expenses |
|
|
|
|
45,000 |
|
|
|
45,000 |
|
Accounting
fees and expenses |
|
|
|
|
30,000 |
|
|
|
30,000 |
|
FINRA filing
fee |
|
|
|
|
14,990 |
|
|
|
14,990 |
|
D&O
insurance |
|
|
|
|
75,000 |
|
|
|
75,000 |
|
SEC
registration fee |
|
|
|
|
8,887 |
|
|
|
8,887 |
|
Miscellaneous
expenses |
|
|
|
|
6,123 |
|
|
|
6,123 |
|
Total
offering expenses |
|
|
|
|
2,350,000 |
|
|
|
2,642,500 |
|
Net
proceeds
|
|
|
|
|
|
|
|
|
|
|
Held in the
trust account(4) |
|
|
|
|
60,300,000 |
|
|
|
69,345,000 |
|
Not held in
the trust account |
|
|
|
|
550,000 |
|
|
|
550,000 |
|
Total net
proceeds |
|
|
|
|
$60,850,000 |
|
|
|
$69,895,000 |
|
Use of net
proceeds not held in the trust account(4)(5)
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
$ |
150,000 |
|
|
|
27.3 |
% |
Legal and
accounting fees relating to SEC reporting obligations |
|
|
|
|
100,000 |
|
|
|
18.2 |
% |
Nasdaq
continued listing fees |
|
|
|
|
55,000 |
|
|
|
10 |
% |
Payment of
administrative fee ($10,000 per month for up to 18 months) |
|
|
|
|
180,000 |
|
|
|
32.7 |
% |
Working
capital to cover miscellaneous expenses, general corporate purposes, liquidation obligations and reserves |
|
|
|
|
65,000 |
|
|
|
11.8 |
% |
Total
|
|
|
|
$ |
550,000 |
|
|
|
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 the sponsor. 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. |
(3) |
|
Our counsel has agreed to defer legal fees for services provided
in connection with the offering in the amount of $100,000. Such deferred legal fees will be payable by us only upon the successful completion of our
initial business combination. In the event we do not consummate our initial business combination the deferred legal fee will not be paid. Accordingly,
the deferred legal fee is not reflected as a cost of this offering in the above Estimated Offering Expenses |
54
Table of Contents
(4) |
|
Upon closing of the initial business combination, the
funds held in the trust account may, but need not, be used to pay our expenses relating to acquiring a target business, including a fee payable to
EarlyBirdCapital in an amount equal to 4.0% of the total gross proceeds raised in the offering described below. |
(5) |
|
Does not include any interest earned on the funds held in the
trust account that may be available to us as described in this prospectus. |
A total of $60,300,000 (or
$69,345,000 if the underwriters over-allotment option is exercised in full) of the net proceeds from this offering and the sale of the
private units described in this prospectus will be placed in a trust account in the United States at [], maintained by Continental Stock
Transfer & Trust Company acting as trustee and will be invested only in U.S. government treasury bills, notes and bonds with a maturity of 180 days
or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act and which invest solely in U.S.
Treasuries. Except for all interest income that may be released to us (net of taxes payable) to fund our working capital requirements, as discussed
below, none of the funds held in the trust account will be released from the trust account until the earlier of: (i) the consummation of our initial
business combination within 18 (or 24 if extended) from the closing of this offering and (ii) a redemption to public shareholders prior to any
voluntary winding-up in the event we do not consummate our initial business combination within the applicable period.
The net proceeds held in the trust
account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination. If our
initial business combination is paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment
of the purchase price in connection with our business combination, we may apply the cash released from the trust account that is not applied to the
purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or
interest due on indebtedness incurred in consummating the initial business combination, to fund the purchase of other companies or for working
capital.
We believe that amounts not held in
trust, as well as the interest income that may be released to fund our working capital requirements will be sufficient to pay the costs and expenses to
which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in
connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective
acquisition, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of our initial
business combination. However, 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 to use from the trust account is minimal as a result of the current
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.
Commencing on the date that our
securities are first listed on the Nasdaq Capital Market, we have agreed to pay our sponsor, an entity controlled by Ms. Winnie Lai Ling Ng, a total of
$10,000 per month for office space, utilities and secretarial and administrative services. Upon completion of our initial business combination or our
liquidation, we will cease paying these monthly fees.
As of the date of this prospectus, our
sponsor has advanced to us a total of $125,000 to be used for a portion of the expenses of this offering. These advances are non-interest bearing,
unsecured and are due on demand.
In addition, in order to finance
transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or our officers and directors
may, but are not obligated to, loan us funds as may be required. If we consummate our initial business combination, we would repay such loaned amounts.
In the event that the initial business combination does not close, we may use a portion of the offering proceeds held outside the trust account to
repay such loaned amounts but no proceeds from our
55
Table of Contents
trust account would be used to
repay such loaned amounts. Up to $500,000 of such loans may be convertible into additional private units at a price of $10.00 per unit (which, for
example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the
private units would result in the issuance of 5,000 ordinary shares upon the closing of our business combination, as well as 50,000 warrants to
purchase 25,000 shares).
In no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited
by the terms and conditions of our initial business combination. In such case, we would not proceed with the redemption of our public shares or the
business combination, and instead may search for an alternate business combination.
A public shareholder will be entitled
to receive funds from the trust account only upon the earlier to occur of: (i) our consummation of our initial business combination, and then only in
connection with those ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein or (ii) the
redemption of our public shares if we are unable to consummate our initial business combination within 18 (or 24 if extended) following the closing of
this offering, subject to applicable law. In no other circumstances will a public shareholder have any right or interest of any kind to or in the trust
account.
Our initial shareholders have agreed to
waive their redemption rights with respect to their founder shares and public shares in connection with the consummation of our initial business
combination. Our initial shareholders have also agreed to waive their redemption rights with respect to any public shares purchased during or after the
offering in connection with the consummation of our initial business combination. In addition, our initial shareholders have agreed to waive their
rights to liquidating distributions with respect to its founder shares if we fail to consummate our initial business combination within 18 (or 24 if
extended) from the closing of this offering. However, if our initial shareholders acquire public shares in or after this offering, they will be
entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the
required time period.
56
Table of Contents
We have not paid any cash dividends on
our ordinary shares 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 cash dividends subsequent to our initial business combination will be within the
discretion of our board of directors at such time and subject to the Companies Act. In addition, our board of directors is not currently contemplating
and does not anticipate declaring any share 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 share dividend immediately prior to the consummation of the offering in such amount as to
maintain our initial shareholders ownership at 20% of the issued and outstanding ordinary shares upon the consummation of this offering (assuming
no purchase in this offering and not taking into account 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.
57
Table of Contents
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 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 ordinary shares which may be redeemed for cash), by the number of outstanding ordinary shares. For the purposes of the dilution
calculation, in order to present the maximum estimated dilution as a result of this offering, we have assumed the issuance of 0.1 of an ordinary share
for each right outstanding, as such issuance will occur automatically upon a business combination without the payment of additional consideration.
Accordingly, for the purposes of the dilution calculation, the number of shares included in the units offered hereby will be deemed to be 6,600,000,
the price per share in this offering will be deemed to be $9.09 and the number of shares included in the private units will be deemed to be
352,000.
At June 10, 2014, our net tangible book
value was a deficiency of $58,012, or approximately $(0.03) per share. After giving effect to the sale of 6,000,000 ordinary shares 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, and assuming the issuance of 632,000 ordinary shares for the outstanding rights, our pro forma net tangible book value at June
10, 2014 would have been $5,569,710 or $1.89 per share, representing an immediate increase in net tangible book value of $1.92 per
share to the initial shareholders and an immediate dilution of 79.2% per share or $7.20 to new investors not exercising their redemption
rights. For purposes of presentation, our pro forma net tangible book value after this offering is $1.89 less than it otherwise would have been
because if we effect our initial business combination, the redemption rights of the public shareholders (but not our initial shareholders) may result
in the redemption of up to 5,502,487 shares sold in this offering.
The following table illustrates the
dilution to our public shareholders on a per-share basis, assuming no value is attributed to the warrants included in the units and the private
warrants.
Public
offering price |
|
|
|
|
|
|
|
$ |
9.09 |
|
Net tangible
book value before this offering |
|
|
|
$ |
(0.03 |
) |
|
|
|
|
Increase
attributable to new investors and private sales |
|
|
|
|
1.92 |
|
|
|
|
|
Pro forma net
tangible book value after this offering |
|
|
|
|
|
|
|
|
1.89 |
|
Dilution to
new investors |
|
|
|
|
|
|
|
|
$7.20 |
|
Percentage of
dilution to new investors |
|
|
|
|
|
|
|
|
79.2 |
% |
The following table sets forth
information with respect to our initial shareholders and the new investors:
|
|
|
|
Shares Purchased
|
|
Total Consideration
|
|
Average Price per Share
|
|
|
|
|
|
Number
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|
|
Initial
stockholders (founder shares) |
|
|
|
|
1,500,000 |
(1) |
|
|
17.75 |
% |
|
$ |
25,000 |
|
|
|
0.04 |
% |
|
$ |
0.02 |
|
Placement
shares |
|
|
|
|
352,000 (2 |
) |
|
|
4.16 |
% |
|
|
3,200,000 |
|
|
|
5.06 |
% |
|
$ |
9.09 |
|
Public
stockholders |
|
|
|
|
6,600,000 |
(3) |
|
|
78.09 |
% |
|
|
60,000,000 |
|
|
|
94.90 |
% |
|
$ |
9.09 |
|
Total
|
|
|
|
|
8,452,000 |
|
|
|
100.00 |
% |
|
|
$63,225,000 |
|
|
|
100.00 |
% |
|
|
|
|
(1) |
|
Assumes the over-allotment option has not been exercised and an
aggregate of 225,000 founder shares have been forfeited by our sponsor as a result thereof. |
(2) |
|
Assumes the issuance of an additional 32,000 shares
underlying the private rights. |
(3) |
|
Assumes the issuance of an additional 600,000 public shares
underlying the public rights. |
58
Table of Contents
The pro forma net tangible book value
per share after the offering is calculated as follows:
Numerator:
|
|
|
|
|
|
|
Net tangible
book value before the offering |
|
|
|
$ |
(58,012 |
) |
Net proceeds
from this offering and private placement of private units |
|
|
|
|
60,850,000 |
|
Plus:
Offering costs accrued for and paid in advance, excluded from tangible book value before this offering |
|
|
|
|
77,616 |
|
Plus:
Proceeds from sale of unit purchase option to underwriters |
|
|
|
|
100 |
|
Less:
Proceeds held in the trust account subject to redemption |
|
|
|
|
(55,299,994 |
) |
|
|
|
|
|
$5,569,710 |
|
Denominator:
|
|
|
|
|
|
|
Ordinary
shares outstanding prior to this offering |
|
|
|
|
1,500,000 |
(1) |
Ordinary
shares to be sold in this offering |
|
|
|
|
6,000,000 |
|
Ordinary
shares underlying the rights to be sold in this offering |
|
|
|
|
600,000 |
|
Ordinary
shares to be sold in private placement |
|
|
|
|
320,000 |
|
Ordinary
shares underlying the rights to be sold in private placement |
|
|
|
|
32,000 |
|
Less: Shares
subject to redemption |
|
|
|
|
(5,502,487 |
) |
|
|
|
|
|
2,949,513 |
|
(1) |
|
Assumes that the underwriters over-allotment option has
not been exercised and an aggregate of 225,000 founder shares have been forfeited by our sponsor as a result thereof. |
59
Table of Contents
The following table sets forth our
capitalization at June 10, 2014 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:
|
|
|
|
As at June 10, 2014
|
|
|
|
|
|
Actual
|
|
As Adjusted(1)
|
Amount
payable to related party(2) |
|
|
|
$ |
125,000 |
|
|
$ |
|
|
Ordinary
share, no par value, -0- and 5,502,487 shares which are subject to possible redemption |
|
|
|
|
|
|
|
|
55,299,994 (4 |
) |
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
Ordinary
share, no par value, unlimited shares authorized; 1,725,000 shares issued and outstanding, actual; 2,317,513 shares(3) issued and
outstanding (excluding 5,502,487 shares subject to possible redemption), as adjusted |
|
|
|
|
25,000 |
|
|
|
5,575,106 |
|
Additional
paid-in capital |
|
|
|
|
|
|
|
|
|
|
Deficit
accumulated during the development stage |
|
|
|
|
(5,396 |
) |
|
|
(5,396 |
) |
Total
shareholders equity: |
|
|
|
$ |
19,604 |
|
|
|
$5,569,710 |
|
Total
capitalization |
|
|
|
$ |
144,604 |
|
|
|
$60,869,704 (5 |
) |
(1) |
|
Includes $3,200,000 we will receive from the sale of the
private units. Assumes the over-allotment option has not been exercised. |
(2) |
|
Payable to related party is an advance of $125,000. The advance
is non-interest bearing and is payable on demand. |
(3) |
|
Assumes the over-allotment option has not been exercised and an
aggregate of 225,000 founder shares have been forfeited by our sponsor as a result thereof. |
(4) |
|
Derived by taking 5,502,487 ordinary shares, which
may be redeemed, representing the maximum number of shares that may be redeemed while maintaining at least $5,000,001 in net tangible assets after the
offering, multiplied by a redemption price of $10.05. |
(5) |
|
Derived by adding total shareholders equity and the value
of the ordinary share, which may be redeemed for cash. |
60
Table of Contents
MANAGEMENTS DISCUSSION AND
ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a blank check company
incorporated in the British Virgin Islands with limited liability (meaning our public shareholders have no liability, as members of the Company, for
the liabilities of the Company over and above the amount paid for their shares) formed for the purpose of acquiring, engaging in a share exchange,
share reconstruction and amalgamation, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with
one or more businesses or entities. We have not identified an acquisition target and we have not, nor has anyone on our behalf, initiated any
discussions, research or other measures, directly or indirectly, with respect to identifying any acquisition target. We intend to effectuate our
initial business combination using cash from the proceeds of this offering and the private placement of the private units, our shares, debt or a
combination of cash, shares and debt.
The issuance of additional shares in
our initial business combination:
|
|
may significantly dilute the equity interest of investors in
this offering who would not have pre-emption rights in respect of any such issue; |
|
|
may subordinate the rights of holders of ordinary shares if the
rights, preferences, designations and limitations attaching to the preferred shares are created by amendment of our memorandum and articles of
association by resolution of the board of directors and preferred shares are issued with rights senior to those afforded our ordinary
shares; |
|
|
could cause a change in control if a substantial number of
ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in
the resignation or removal of our present officers and directors; |
|
|
may have the effect of delaying or preventing a change of
control of us by diluting the share ownership or voting rights or a person seeking to obtain control of us; and |
|
|
may adversely affect prevailing market prices for our ordinary
shares and/or rights. |
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 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; |
|
|
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; |
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our inability to pay dividends on our ordinary
shares; |
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using a substantial portion of our cash flow to pay principal
and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures,
acquisitions and other general corporate purposes; |
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limitations on our flexibility in planning for and reacting to
changes in our business and in the industry in which we operate; |
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increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in government regulation; and |
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limitations on our ability to borrow additional amounts for
expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared
to our competitors who have less debt. |
As indicated in the accompanying
financial statements, at June 10, 2014, we had $74,914 in cash and deferred offering costs of $77,616. Further, we expect to continue to incur
significant costs in the pursuit of our acquisition plans. Our plans to raise capital or to consummate our initial business combination may not be
successful.
Results of Operations and Known Trends or Future
Events
We have neither engaged in any
operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare
for this offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We
will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant
change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this
offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of this
offering.
Liquidity and Capital Resources
Our liquidity needs have been satisfied
to date through receipt of $25,000 from the sale of the founder shares and a loan from our sponsor in an aggregate amount of $125,000 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 $400,000 and underwriting discounts and commissions of $1,950,000 (or $2,242,000 if the over-allotment option is exercised in full) and
(2) the sale of the private units for a purchase price of $3,200,000, will be $60,850,000 (or $69,895,000 if the over-allotment
option is exercised in full), of which amount $60,300,000 (or $69,345,000 if the over-allotment is exercised in full) will be held in
trust account. The remaining $550,000 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 for its services in connection with the our initial business combination upon the
consummation of such combination in an amount equal to 4% of the total gross proceeds raised in the offering. The Company will have the option to pay
up to 25% of the aforementioned fee in ordinary shares at $10.00 per share. 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 $550,000 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, will be sufficient to allow us to operate for at least the
next 18 (or 24 if extended), 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
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structuring, negotiating and
consummating the business combination. We anticipate that we will incur approximately:
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$150,000 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; |
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$180,000 (or $240,000 if the time to complete a business
combination has been extended) to our sponsor or an affiliate of our sponsor for office space, utilities and secretarial and administrative services
commencing on the date that our securities are first listed on Nasdaq capital market; |
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$100,000 of expenses in legal and accounting fees relating to
our SEC reporting obligations; |
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$55,000 of expenses in continued Nasdaq listing
fees; |
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$65,000 (or $5,000 if the time to complete a business
combination has been extended) 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 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.
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 March 31, 2016. As of the date of this prospectus, we have not completed an
assessment 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. Many small and mid-sized target businesses we may consider for our initial business combination may have internal
controls that need improvement in areas such as:
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staffing for financial, accounting and external reporting areas,
including segregation of duties; |
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reconciliation of accounts; |
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proper recording of expenses and liabilities in the period to
which they relate; |
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evidence of internal review and approval of accounting
transactions; |
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documentation of processes, assumptions and conclusions
underlying significant estimates; and |
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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
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controls. Doing so effectively also
may take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Related Party
Transactions
As of June 10, 2014, our sponsor loaned
an aggregate of $125,000 to us, on a non-interest bearing basis, for payment of offering expenses on our behalf.
We are obligated, commencing on the
date that our securities are listed on Nasdaq capital market, to pay $10,000 per month to our sponsor for office space, utilities and secretarial and
administrative services.
Our sponsor and EarlyBirdCapital have
committed that they and/or their respective designees will purchase an aggregate of 320,000 (or 353,750 if the overallotment is exercised
in full) private units at $10.00 per unit, among which 290,000 (or 320,471 if the overallotment is exercised in full) units will be
purchased by our sponsor (and/or its designees) and 30,000 (or 33,279 if the overallotment is exercised in full) units will be purchased by
EarlyBirdCapital (and/or its designees). These purchases will take place on a private placement basis simultaneously with the consummation of this
offering.
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 initial shareholders, 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 (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000
of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 ordinary shares upon the closing
of our business combination as well as 50,000 warrants to purchase 25,000 shares).
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.
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Introduction
We are a blank check company
incorporated in the British Virgin Islands as a business company with limited liability. This means that our shareholders have no additional liability
for the companys liabilities over and above the amount paid for their shares. We were formed for the purpose of acquiring, engaging in a share
exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing all or substantially all of the assets of, or
engaging in any other similar business combination with one or more businesses or entities. We have not yet identified any acquisition targets and we
have not, nor has anyone on our behalf, initiated any discussions, research or other measures, directly or indirectly, with respect to identifying any
acquisition target.
Business Strategy
Our efforts in identifying prospective
target businesses will not be limited to a particular country, although we intend to focus on operating businesses that have their primary operations
located in Asia (with an emphasis on China). We believe that we will add value to these businesses primarily by providing them with access to the U.S.
capital markets. In addition, we believe the target business will benefit from our involvement and increase growth through potential strategic
relationships we can introduce, as well as assisting the target in areas such as intellectual property and international joint
ventures.
We will seek to capitalize on the
strength of our experienced, Asia-focused international management team. Our team consists of experienced financial services professionals, senior
operating executives, directors of Asian companies, and specifically a Certified Public Accountant (CPA) and a China Certified Tax
Accountant (CTA). Our Chairman, Chief Executive Officer (CEO), and directors have decades of experience in mergers,
acquisitions and divestures of privately and publicly-held companies. Both our Chairman and CEO have been actively engaged in cross-border
investments/divestments between the U.S. and Asia (with an emphasis on China) for several decades, while also assisting U.S. companies with expansion
in China and vice versa since the early 1990s. In addition, our CEO has had significant prior experience with China-focused blank check companies, from
2005 to 2010. Our independent directors are Chinese and Hong Kong natives who have decades of experience in entrepreneurship, asset management/advisory
services, and accounting & tax practices in Mainland China and Hong Kong. We believe we will benefit from their accomplishments in Asia, and
specifically their current activities in China, in identifying attractive acquisition opportunities. However, there is no assurance that we will
complete a business combination.
There is no restriction in the
geographic location of targets we can pursue, however we will prioritize geographic locations in Asia, and specifically China initially. We will seek
to identify targets that are likely to provide attractive financial returns through business combinations. While it is possible that during our
research for business opportunities we may come across a target business located outside of Asia which we believe may yield a more attractive return
for our shareholders. We have yet to determine a time frame, an investment amount or any other criteria, which would trigger our search for business
opportunities outside of Asia.
Investment Criteria
Our management team intends to focus on
creating shareholder value by leveraging its experience in the management, operation and financing of businesses to improve the efficiency of
operations while implement strategies to scale revenue organically and/or through acquisitions. We have identified the following general criteria and
guidelines, which we believe are important in evaluating prospective target businesses. While we intend to use these criteria and guidelines in
evaluating prospective businesses, we may deviate from these criteria and guidelines should we see the justifications to do so.
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Middle-Market Growth Business. We will
primarily seek to acquire one or more growth businesses with a total enterprise value in excess of $300,000,000. We believe that there are a
substantial number of potential target businesses within this valuation range that can benefit from new capital for scalable operations to yield
significant revenue and earnings growth. We currently do not intend to acquire either a start-up company or a company with negative cash
flow. |
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Companies with Opportunity to Strengthen Management and
Add Value. We will seek to acquire one or more businesses that provide a platform for the existing management team to leverage the
experience of our management team. We believe that the operating expertise of our management team is well suited to complement and, if beneficial,
replace the targets management team. |
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Companies in Business Segments that are Strategically
Significant to China. We will seek to acquire those businesses with strong technological know-how, distribution networks and/or business
practices in economic sectors that are currently experiencing significant Asia/China outbound investing. Such sectors include: Energy and resources,
food processing, retail, manufacturing, and high technology business segments. |
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Business with Revenue and Earnings Growth
Potential We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a
combination of brand and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in
increased operating leverage. |
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Companies with Potential for Strong Free Cash Flow
Generation We will seek to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash
flow. We intend to focus on one or more businesses that have predictable revenue streams and definable low working capital and capital expenditure
requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value. |
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Benefit from Being a Public Company We intend
to only acquire a business or businesses that will benefit from being publicly traded and which can effectively utilize access to broader sources of
capital and a public profile that are associated with being a publicly traded company. |
These criteria are not intended to be
exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Our Competitive Advantages
We believe the experience and contacts
of our management team will give us distinct advantages in sourcing, structuring and consummating business combinations. However, none of our
management team is obligated to remain with the company after a business combination, and we cannot provide assurance that the resignation or retention
of our current management will be a term or condition in any agreement relating to a business combination. Moreover, despite the competitive advantages
we believe we have, we remain subject to significant competition with respect to identifying and executing a business combination.
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Established Deal Sourcing Network |
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Through our management team, we believe we have contacts and
sources from which to generate acquisition opportunities and possibly seek complimentary follow-on business arrangements. These contacts and sources
include those in government, private and public companies around the world, private equity and venture capital funds, investment bankers, attorneys and
accountants. |
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We are a management team with significant experience in
cross-border business between Asia (with an emphasis on China) and the U.S. We understand the cultural, business and economic differences and
opportunities that will allow us to negotiate a transaction. For Asia, and more specifically China, based companies, we provide the ability to help
them bridge their overseas expansion in term of both capital raising and business activity. In addition, if we find a very attractive acquisition
target outside of the Asia/China region, we believe our deep experience and relationships in Asia/China would enhance the value of such a business
through our introductions to identified Asian/Chinese business partners. |
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Status as a Public Company |
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We believe our structure will make us an attractive business
combination partner to prospective target businesses. As a public company, we will offer a target business an alternative to the traditional initial
public offering. We believe that target businesses will favor this alternative, which we believe is less expensive, while offering greater certainty of
execution than the traditional initial public offering. During an initial public offering, there are typically expenses incurred in marketing, which
would be costlier than a business combination with us. Furthermore, once a proposed business combination is approved by our shareholders and the
transaction 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 have greater access to capital and additional means of creating management incentives that are better aligned with
shareholders interests than it would as a private company. It can offer further benefits by augmenting a companys profile among potential
new customers and vendors and aid in attracting talented management staffs. |
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Strong Financial Position and
Flexibility |
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With a trust account initially in the amount of
$60,300,000 (or $69,345,000 if the over-allotment option is exercised in full) and a public market for our ordinary shares, we can offer
a target business a variety of options to facilitate a business combination and fund future expansion and growth of its business. Because we are able
to consummate a business combination using the cash proceeds from this offering, our share capital, debt or a combination of the foregoing, we have the
flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address the needs of the
parties. However, if a business combination requires us to use substantially all of our cash to pay for the purchase price, we may need to arrange
third party financing to help fund our business combination. Since we have no specific business combination under consideration, we have not taken any
steps to secure third party financing. Accordingly, our flexibility in structuring a business combination may be subject to these
constraints. |
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Unlike other blank check companies that sell units comprised
of shares and warrants each to purchase a full share in their initial public offerings, we are selling units comprised of shares, warrants to
purchase one-half of one share and rights automatically entitling the holder to receive one-tenth of a share upon consummation of our
initial business combination. Our management believes that investors in similarly structured blank check offerings, and those likely to invest
in this offering, have come to expect the units of such companies to include one share and another security which would allow the holders to
acquire additional shares. Without the ability to acquire such additional shares, our management believes the investors would not be
willing to purchase units in such companies initial public offerings. Accordingly, because the number of shares ordinarily issuable upon
exercise of the warrants found in the typical structure of other blank check initial public offerings is lessened in our case (since such
warrants most often entitle the holder to receive a full share as opposed to the one-tenth of a share the rights entitle a holder to receive and
the one-half of one share that each warrantholder is entitled to purchase), although not completely eliminated, our management believes
we will be viewed more favorably by potential target companies when determining which company to engage in a business combination with. However,
our management may be incorrect in this belief. |
Effecting our initial business
combination
General
We are not presently engaged in, and we
will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination
using cash from the proceeds of this offering and the private placement of the private units, our shares, new debt, or a
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combination of these, as the
consideration to be paid in our initial business combination. We may seek to consummate our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such
companies and businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a
similar company with nominal operations.
If our initial business combination is
paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in
connection with our business combination or used for redemptions of purchases of our ordinary shares, we may apply the cash released to us from the
trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of
acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the
purchase of other companies or for working capital.
We have not identified any acquisition
target and we have not, nor has anyone on our behalf, initiated any discussions, research or other measures, with respect to identifying any
acquisition target. From the period prior to our formation through the date of this prospectus, there have been no communications, evaluations or
discussions between any of our officers, directors or our sponsor and any of their potential contacts or relationships regarding a potential initial
business combination. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition
candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target business. Subject to the requirement
that our initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the
value of the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination, we have virtually
unrestricted flexibility in identifying and selecting one or more prospective target businesses. Accordingly, there is no current basis for investors
in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business
combination. Although our management will assess the risks inherent in a particular target business with which we may combine, this assessment may not
result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that
we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
We may seek to raise additional funds
through a private offering of debt or equity securities in connection with the consummation of our initial business combination, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance
with applicable securities laws, we would consummate such financing only simultaneously with the consummation of our business combination. In the case
of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the
business combination would disclose the terms of the financing and, only if required by law or the Nasdaq Capital Market, we would seek shareholder
approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business
combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds
through the sale of securities or otherwise.
Sources of target
businesses
We anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity
groups, 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 also may 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, also may bring to our attention target business candidates that
they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions. In
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addition, we expect to receive a
number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our
officers and directors. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in
business acquisitions on any formal basis, 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. We will engage a
finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or
if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment
of finders fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust
account. Although some of our officers and directors may enter into employment or consulting agreements with the acquired business following our
initial business combination, the presence or absence of any such arrangements will not be used as a criterion in our selection process of an
acquisition candidate.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking
firm that such an initial business combination is fair to our unaffiliated shareholders from a financial point of view.
Selection of a target business and
structuring of our initial business combination
Subject to the requirement that our
initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of
the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination, our management will have
virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to
effectuate our initial business combination with another blank check company or a similar company with nominal operations. In any case, we will only
consummate an initial business combination in which we become the majority shareholder of the target (or control the target through
contractual arrangements in limited circumstances for regulatory compliance purposes as discussed below) or are otherwise not required to
register as an investment company under the Investment Company Act. There is no basis for investors in this offering to evaluate the possible merits or
risks of any target business with which we may ultimately complete our initial business combination. To the extent we effect our initial business
combination with a company or business that may be financially unstable or in its early stages of development or growth, we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we
may not properly ascertain or assess all significant risk factors.
In evaluating a prospective target
business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and
employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information
which will be made available to us.
The time required to select and
evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not
currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to
complete another business combination. We will not pay any finders or consulting fees to members of our management team, or any of their respective
affiliates, for services rendered to or in connection with our initial business combination.
Alternative structures to comply
with regulations in certain Chinese industries
We may need to adopt alternative
structures in the event that we elect to acquire a target company in certain Chinese industries. The Chinese government has restricted or
limited direct foreign ownership of certain kinds of assets and companies operating in a wide variety of industries, including certain aspects
of
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telecommunications, advertising, food production, and heavy equipment
manufacturers. The Chinese government may apply these restrictions in other industries in the future. In addition, there can be restrictions
on the foreign ownership of businesses that are determined from time to time to be in important industries that may affect the
national economic security or having famous Chinese brand names or well established Chinese brand names. Subject to the
review requirements of the Ministry of Commerce and other relevant agencies as discussed elsewhere for acquisitions of assets and companies in
China and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and
parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements
with permitted Chinese parties which could, for example, result in a structure where, in exchange for our payment of the acquisition
consideration, the target business would be majority or wholly owned by Chinese residents whom we designate, and the target business would
continue to hold the requisite licenses necessary to operate its business. To the extent such agreements are employed, they may be for
control of specific assets such as intellectual property or control of blocks of the equity ownership interests of a company. The agreements
would be designed to secure for us economic benefits and to assume risk of losses and control over the subject assets or equity interests
similar to the rights of full ownership, while leaving the technical ownership in the hands of Chinese parties.
For example, these contracts could
result in a structure where, in exchange for our payment of the acquisition consideration: (i) the target company would be majority owned by
Chinese residents whom would be likely designated by us and the target company would continue to hold the requisite licenses for the target
business and (ii) we would establish a new subsidiary in China which would provide technology, technical support, consulting and related
services to the target company in exchange for fees, which would transfer to us substantially all of the economic benefits of ownership of the
target company.
These contractual arrangements would
be designed to provide the following:
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Our exercise of effective control over the target
company; |
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We will assume economic benefits and risk of losses of
the target company that are substantially similar to full ownership; |
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The shareholders of the target company would grant us a
pledged interest in all of the issued and outstanding interests of the target company, including the right to vote such shares, as
security for the performance of the target companys obligations under the contractual arrangements; |
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The shareholders of the target company would grant us an
irrevocable proxy for the maximum period permitted by law, to vote the shareholders shares in the target company in such manner
and for or against such proposals as we may determine; and |
|
|
We, or our designee, would have an exclusive option to
purchase all or part of the equity interests in the target company owned by the Chinese residents whom we designate, or all or part of
the assets of the target company, in each case when and to the extent permitted by Chinese regulations. |
While we cannot predict the terms of
any such contract that we will be able to negotiate, at a minimum, any contractual arrangement would need to provide us with effective control
over the targets operations and management either directly through board control or through affirmative and/or negative covenants and
veto rights with respect to matters such as entry into material agreements, management changes and issuance of debt or equity securities,
among other potential control provisions. We have not, however, established specific provisions which must be in an agreement in order to meet
the definition of business combination.
These agreements likely also would
provide for increased ownership or full ownership and control by us when and if permitted under Chinese law and regulation. If we choose to
effect our initial business combination that employs the use of these types of control arrangements, we may have difficulty in enforcing
our rights. Therefore, these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting
consolidation or control over a target business as would direct ownership through a merger or shares exchange. For example, if the target
business or any other entity fails to perform its obligations under these contractual arrangements, we may have to incur substantial costs and
expend
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substantial resources to enforce such arrangements, and rely on legal remedies
under Chinese law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be
sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the business
combination.
While we believe under such
contractual arrangement, we will be considered the primary beneficiary and be able to consolidate financial results of the target company in our
consolidated financial statements. In the event that in the future generally accepted accounting policies in the United States and the SEC
accounting regulations change and we are deemed not to be the primary beneficiary by controlling the target company through such
contractual arrangement, we would not be able to consolidate line by line the target companys financial results in our consolidated
financial statements.
Moreover, we expect that the
contractual arrangements upon which we would be relying would be governed by Chinese law and would be the only basis of providing resolution of
disputes which may arise through either arbitration or litigation in China. Accordingly, these contracts would be interpreted in
accordance with Chinese law and any disputes would be resolved in accordance with Chinese legal procedures. Uncertainties in the Chinese
legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual
arrangements, we may not be able to exert the effective level of control over the target business.
We have not selected any target
business or target industry on which to concentrate our search for our initial business combination and we are, therefore, unable to determine
at this time what form an acquisition of a target business will take.
Fair market value of target business
or businesses
The target business or businesses or
assets with which we effect our initial business combination must have a collective fair market value equal to at least 80% of the value of the trust
account (excluding taxes) at the time of the agreement to enter into such initial business combination. If we acquire less than 100% of one or more
target businesses in our initial business combination, the aggregate fair market value of the portion or portions we acquire must equal at least 80% of
the value of the trust account at the time of the agreement to enter into such initial business combination. However, we will always acquire at least a
controlling interest in a target business. The fair market value of a portion of a target business or assets will likely be calculated by multiplying
the fair market value of the entire business by the percentage of the target we acquire. We may seek to consummate our initial business combination
with an initial target business or businesses with a collective fair market value in excess of the balance in the trust account. In order to consummate
such an initial business combination, we may issue a significant amount of debt, equity or other securities to the sellers of such business and/or seek
to raise additional funds through a private offering of debt, equity or other securities. If we issue securities in order to consummate such an initial
business combination, our shareholders could end up owning a minority of the combined companys voting securities as there is no requirement that
our shareholders own a certain percentage of our company (or, depending on the structure of the initial business combination, an ultimate parent
company that may be formed) after our business combination. Since we have no specific business combination under consideration, we have not entered
into any such arrangement to issue our debt or equity securities and have no current intention of doing so.
The fair market value of a target
business or businesses or assets will be determined by our board of directors based upon standards generally accepted by the financial community, such
as actual and potential gross margins, the values of comparable businesses, earnings and cash flow, book value and, where appropriate, upon the advice
of appraisers or other professional consultants. If our board of directors is not able to independently determine that the target business or assets
has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from an unaffiliated, independent investment banking firm
with respect to the satisfaction of such criterion. Notwithstanding the foregoing, unless we consummate a business combination with an affiliated
entity, we are not required to obtain an opinion from an independent investment banking firm that the price we are paying is fair to our
shareholders.
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Lack of business
diversification
For an indefinite period of time after
consummation of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable
that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By consummating our
initial business combination with only a single entity, our lack of diversification may:
|
|
subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business
combination, and |
|
|
cause us to depend on the marketing and sale of a single product
or limited number of products or services. |
Limited ability to evaluate the
targets management team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business management may not prove to be correct. The future role of members of our management team, if
any, in the target business cannot presently be stated with any certainty. Consequently, members of our management team may not become a part of the
targets management team, and the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Further, it is also not certain whether one or more of our directors will remain associated in some capacity with us following our initial business
combination. Moreover, members of our management team may not have significant experience or knowledge relating to the operations of the particular
target business. Our key personnel may not remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following 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 additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent
management.
Shareholders may not have the
ability to approve our initial business combination
Although we intend to seek shareholder
approval before we effect our initial business combination, we may not do so for business or legal reasons (so long as such transaction does not
require shareholder approval under the Companies Act or the Nasdaq Capital Market rules). Presented in the table below is a graphic explanation of the
types of initial business combinations we may consider and whether we expect shareholder approval would be required under the Companies Act for each
such transaction.
Type of Transaction
|
|
|
|
Whether Shareholder Approval is Required
|
Purchase of
assets |
|
|
|
No |
Purchase of
stock of target not involving a merger with the company |
|
|
|
No |
Merger of
target with a subsidiary of the company |
|
|
|
No |
Merger of the
company with a target |
|
|
|
Yes |
Entering
into contractual agreements with a target to obtain control |
|
|
|
No |
We also may be required to obtain
shareholder approval if we wish to take certain actions in connection with our initial business combination such as adopting an incentive stock plan or
amending our charter.
Redemption rights for public
shareholders upon consummation of our initial business combination
We will provide our shareholders with
the opportunity to redeem their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then
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outstanding public shares, subject
to the limitations described herein. The amount in the trust account is initially anticipated to be $10.05 per share, whether or not the
underwriters over-allotment option is exercised in full. Our sponsor has agreed to waive its right to receive liquidating distributions if we
fail to consummate our initial business combination within the requisite time period. However, if our sponsor or any of our officers, directors or
affiliates acquires public shares in or after this offering, they will be entitled to receive liquidating distributions with respect to such public
shares if we fail to consummate our initial business combination within the required time period
Manner of Conducting
Redemptions
We will provide our shareholders with
the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with
a shareholder meeting called to approve the business combination or (ii) by means of a tender offer.
We intend to hold a shareholder vote in
connection with our business combination. In such case, we will:
|
|
conduct the redemptions in conjunction with a proxy solicitation
pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules,
and |
|
|
file proxy materials with the SEC. |
In the event that we seek shareholder
approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public shareholders with the
redemption rights described above upon consummation of the initial business combination.
If we seek shareholder approval, we
will consummate our initial business combination only if a majority of the outstanding ordinary shares voted are voted in favor of the business
combination. In such case, our sponsor has agreed to vote its founder shares and any public shares purchased during or after the offering in favor of
our initial business combination and our officers and directors have also agreed to vote any public shares purchased during or after the offering in
favor of our initial business combination. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or
against the proposed transaction. In addition, our sponsor has agreed to waive its redemption rights with respect to its founder shares and public
shares in connection with the consummation of our initial business combination.
Many blank check companies would not be
able to consummate our initial business combination if the holders of the companys public shares voted against a proposed business combination
and elected to redeem more than a specified maximum percentage of the shares sold in such companys initial public offering, which percentage
threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations
because the amount of shares voted by their public shareholders electing redemption exceeded the maximum redemption threshold pursuant to which such
company could proceed with our initial business combination. Since we have no such specified maximum redemption threshold, our structure is different
in this respect from the structure that has been used by many blank check companies. However, in no event will we redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and
conditions of our initial business combination. In such case, we would not proceed with the redemption of our public shares and the related business
combination, and instead may search for an alternate business combination.
Notwithstanding the foregoing, if we do
not decide to hold a shareholder vote in conjunction with their initial business combination for business or other legal reasons (so long as
shareholder approval is not required by the Companies Act or the Nasdaq Capital Market, we will conduct redemptions pursuant to the tender offer rules
of the SEC and our memorandum and articles of association. In such case, we will:
|
|
offer to redeem our public shares pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
|
|
file tender offer documents with the SEC prior to consummating
our initial business combination which will contain substantially the same financial and other information about the initial business |
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|
|
combination and the redemption rights as is required under
Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and we will not be permitted to consummate our initial business
combination until the expiration of the tender offer period. |
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the
Exchange Act.
In connection with the successful
consummation of our business combination, we may redeem pursuant to a tender offer up to that number of ordinary shares that would permit us to
maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited by the terms and conditions of our proposed
initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of
its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash
to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would
be required to pay for all shares that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
business combination exceed the aggregate amount of cash available to us, we will not consummate the business combination, we will not purchase any
shares pursuant to the tender offer and all shares will be returned to the holders thereof following the expiration of the tender offer. Additionally,
since we are required to maintain net tangible assets of at least $5,000,001 (which may be substantially higher depending on the terms of our potential
business combination), the chance that the holders of our ordinary shares electing to redeem in connection with a redemption conducted pursuant to the
proxy rules will cause us to fall below such minimum requirement is increased.
When we conduct a tender offer to
redeem our public shares upon consummation of our initial business combination, in order to comply with the tender offer rules, the offer will be made
to all of our shareholders, not just our public shareholders. Our sponsor has agreed to waive its redemption rights with respect to its founder shares
and public shares in connection with any such tender offer.
Limitation on redemption rights upon
consummation of our initial business combination if we seek shareholder approval
If we seek shareholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our
memorandum and articles of association provides that a public shareholder, individually or together with any affiliate of such shareholder or any other
person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted
from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering. We believe this restriction will
discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their
redemption rights as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on
other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 15% of the shares sold in this offering could
threaten to exercise its redemption rights if such holders shares are not purchased by us or our management at a premium to the then-current
market price or on other undesirable terms. By limiting our shareholders ability to redeem no more than 15% of the shares sold in this offering,
we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to consummate our initial business
combination, particularly in connection with our initial business combination with a target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. We will resolve any disputes relating to whether a public shareholder is acting in concert or as a
group either by requiring certifications under the penalty of perjury to such effect by public shareholders or via adjudication in
court.
Permitted purchases of our securities by our
affiliates
If we seek shareholder approval of our
business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor,
directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or
following
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the consummation of our initial
business combination. Such a purchase would include a contractual acknowledgement that such shareholder, although still the record holder of our shares
is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to
exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. Although very
unlikely, our initial shareholders, officers, directors and their affiliates could purchase sufficient shares so that the initial business
combination may be approved without the majority vote of public shares held by non-affiliates. It is intended that purchases will comply with
Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing
and volume of purchases.
The purpose of such purchases would be
to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) to satisfy a closing condition in an agreement with
a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that
such requirement would otherwise not be met. This may result in the consummation of an initial business combination that may not otherwise have been
possible.
As a consequence of any such purchases,
the public float of our ordinary shares may be reduced and the number of beneficial holders of our securities may be reduced, which may
make it difficult to obtain the listing or trading of our securities on a national securities exchange.
Tendering share certificates in
connection with a tender offer or redemption rights
We will require our public
shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name, to either
tender their certificates to our transfer agent prior to the expiration date set forth in the tender offer documents or proxy materials mailed to such
holders, or in the event we distribute proxy materials, up to two business days prior to the vote on the proposal to approve the business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust Companys DWAC
(Deposit/Withdrawal At Custodian) System, at the holders option. Accordingly, a public shareholder would have from the time we send out our
tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise
period, it is advisable for shareholders to use electronic delivery of their public shares.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However,
this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to
deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the
procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check
companies would distribute proxy materials for the shareholders vote on our 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 redemption rights. After the
business combination was approved, the company would contact such shareholder to arrange for him to deliver his certificate to verify ownership. As a
result, the shareholder then had an option window after the consummation of the business combination during which he could monitor the
price of the companys shares in the market. If the price rose above the redemption price, he could sell his shares in the open market before
actually delivering his shares to the company for cancellation. As a result, the redemption rights, to which shareholders were aware they needed to
commit before the shareholder meeting, would become option rights surviving past the consummation of the business combination until the
redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming
holders election to redeem is irrevocable once the business combination is approved.
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Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the shareholder meeting set forth in our proxy
materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and
subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return
the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of our initial business combination.
If the initial business combination is
not approved or completed for any reason, then our public shareholders who elected to exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders
who elected to redeem their shares.
If our initial proposed business
combination is not consummated, we may continue to try to consummate our initial business combination with a different target until 18 (or 24 if
extended) from the closing of this offering.
Redemption of public shares and
liquidation if no initial business combination
Our sponsor, officers and directors
have agreed that we must complete our initial business combination within 18 (or 24 if extended) from the closing of this offering. We may not be able
to find a suitable target business and consummate our initial business combination within such time period. If we are unable to consummate our initial
business combination within 18 (or 24 if extended) from the closing of this offering, we will, as promptly as reasonably possible but not more than
five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $20,000 of the net interest earned
thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of
winding up of our affairs. This redemption of public shareholders from the trust account shall be done automatically by function of our memorandum and
articles of association and prior to any voluntary winding up, although at all times subject to the Companies Act.
Following the redemption of public
shares, we intend to enter voluntary liquidation which is the statutory process for formally closing and dissolving a company under
the laws of the British Virgin Islands. Given that we intend to enter voluntary liquidation following the redemption of public shareholders from the
trust account, we do not expect that the voluntary liquidation process will cause any delay to the payment of redemption proceeds from our trust
account. In connection with such a voluntary liquidation, the liquidator would give notice to creditors inviting them to submit their claims for
payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published
in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of
business, and taking any other steps he considers appropriate to identify the companys creditors, after which our remaining assets would be
distributed. As soon as the affairs of the company are fully wound-up, the liquidator must complete his statement of account and make a notificational
filing with the Registrar. We would be dissolved once the Registrar issues a Certificate of Dissolution.
Our sponsor has agreed to waive its
redemption rights with respect to its founder shares if we fail to consummate our initial business combination within the applicable period from the
closing of this offering.
However, if our sponsor, or any
of our officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to redemption rights with respect to
such public shares if we fail to consummate our initial business combination within the required time period. There will be no redemption rights or
liquidating distributions with respect to our rights or warrants, which will expire worthless in the event we do not consummate our initial
business combination within the 18 (or 24, if extended) month time period. We will pay the costs of our liquidation from our remaining assets outside
of the trust account. However, if those funds are not sufficient to cover these costs and expenses, we may request the trustee to release to us an
amount of up to $20,000 of such accrued interest to pay those costs and expenses. However, the liquidator may determine that he or she requires
additional time to evaluate creditors claims (particularly if there is
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uncertainty over the validity or
extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the BVI court which, if successful, may result in our
liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining
assets.
Additionally, in any liquidation
proceedings of the company under British Virgin Islands law, the funds held in our trust account may be included in our estate and subject to the
claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we may not be able
to return to our public shareholders the liquidation amounts payable to them.
If we were to expend all of the net
proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the
trust account, the per-share redemption amount received by shareholders upon our dissolution would be $10.05 (whether or not the
underwriters over-allotment option is exercised in full). The proceeds deposited in the trust account could, however, become subject to the
claims of our creditors, which would have higher priority than the claims of our public shareholders. The actual per-share redemption amount received
by shareholders may be less than $10.05, plus interest (net of any taxes payable).
Although we will seek to have all
vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust
account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in
the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will
perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third partys engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in
cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will
agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not
seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, Ms. Winnie Lai Ling Ng agreed that
she will be liable to us, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business
with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.05 per share (whether
or not the underwriters over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and
all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party,
Ms. Ng will not be responsible to the extent of any liability for such third party claims. However, Ms. Ng may not be able to satisfy those
obligations. None of our other officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and
prospective target businesses. We have not independently verified whether Ms. Ng. has sufficient funds to satisfy her indemnity obligations. We believe
the likelihood of Ms. Ng having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target
businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the
trust account.
In the event that the proceeds in the
trust account are reduced below $10.05 per share (whether or not the underwriters over-allotment option is exercised in full) and Ms. Ng
asserts that she is unable to satisfy any applicable obligations or that she has no indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action against Ms. Ng to enforce her indemnification obligations. While we currently expect
that our independent directors would take legal action
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on our behalf against Ms. Ng to
enforce her indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do
so in any particular instance. Accordingly, due to claims of creditors, the actual value of the per-share redemption price may be less than
$10.05 per share (whether or not the underwriters over-allotment option is exercised in full).
We will seek to reduce the possibility
that Ms. Ng will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective
target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or
to monies held in the trust account. Ms. Ng will also not be liable as to any claims under our indemnity of the underwriters of this offering against
certain liabilities, including liabilities under the Securities Act. We will have access to up to $550,000 not placed in the trust account, and the
interest income earned on the balance of the trust account (net of taxes payable) with which to pay any such potential claims (including costs and
expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $20,000). In the event that we liquidate and
it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could
be liable for claims made by creditors. In the event that our offering expenses exceed our estimate of $400,000, we may fund such excess with funds
from the $550,000 not to be held in the trust account. In such case, the amount of funds we intend to hold outside the trust account would decrease by
a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $400,000 the amount of funds we intend to
hold outside the trust account would increase by a corresponding amount.
If we are deemed insolvent for the
purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of
the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in favor of a creditor of
the company is returned wholly or partly unsatisfied; or (iii) either the value of the companys liabilities exceeds its assets, or the company is
unable to pay its debts as they fall due), then there are very limited circumstances where prior payments made to shareholders or other parties may be
deemed to be a voidable transaction for the purposes of the Insolvency Act. A voidable transaction would include, for these purposes,
payments made as unfair preferences or transactions at an undervalue. A liquidator appointed over an insolvent company who
considers that a particular transaction or payment is a voidable transaction under the Insolvency Act could apply to the British Virgin Islands Courts
for an order setting aside that payment or transaction in whole or in part.
Additionally, if we enter insolvent
liquidation under the Insolvency Act, the funds held in our trust account will likely be included in our estate and subject to the claims of third
parties with priority over the claims of our shareholders. To the extent any insolvency claims deplete the trust account you may not be able to return
to our public shareholders the liquidation amounts due them.
Our public shareholders will be
entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any winding up in the event we do
not consummate our initial business combination or our liquidation or if they redeem their shares in connection with an initial business combination
that we consummate. In no other circumstances shall a shareholder have any right or interest of any kind to or in the trust account. In the event we
seek shareholder approval in connection with our initial business combination, a shareholders voting in connection with the business combination
alone will not result in a shareholders redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must
have also exercised its redemption rights described above.
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Comparison of redemption or purchase prices in connection with
our initial business combination and if we fail to consummate our initial business combination.
The following table compares the
redemptions and other permitted purchases of public shares that may take place in connection with the consummation of our initial business combination
and if we are unable to consummate our initial business combination within 18 (or 24 if extended) months from the closing of this
offering.
|
|
|
|
Redemptions in Connection with our
Initial Business Combination
|
|
Redemptions if we fail to Consummate our
Initial Business Combination
|
Calculation
of redemption price |
|
|
|
Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a shareholder vote.
The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a shareholder vote. In either
case, our public shareholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account (which is
initially anticipated to be $10.05 per share, whether or not the underwriters over-allotment option is exercised in full), including
interest less taxes payable, divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if
all of the redemptions would cause our net tangible assets to be less than $5,000,001 and any limitations (including but not limited to cash
requirements) agreed to in connection with the negotiation of terms of a proposed business combination. |
|
If we
are unable to consummate our initial business combination within 18 (or 24 if extended) months from the closing of this offering, we will redeem all
public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (which is initially anticipated
to be $10.05 per share, whether or not the underwriters over-allotment option is exercised in full), including interest less taxes payable
and less up to $20,000of such net interest to pay dissolution expenses, divided by the number of then outstanding public shares. |
|
Impact to
remaining shareholders |
|
|
|
The
redemptions in connection with our initial business combination will reduce the book value per share for our remaining shareholders, who will bear the
burden of the deferred underwriting commissions and taxes payable. |
|
The
redemption of our public shares if we fail to consummate our initial business combination will reduce the book value per share for the shares held by
our sponsor, who will be our only remaining shareholders after such redemptions. |
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Comparison of This Offering to Those of Blank Check Companies
Subject to Rule 419
The following table compares the terms
of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross
proceeds, underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject
to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our
offering.
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
Escrow of
offering proceeds |
|
|
|
$60,300,000 of the net offering proceeds, which includes the $3,200,000 net proceeds from the sale of the private units
($69,345,000, including $3,537,500 net proceeds from the sale of the private units, if the underwriters over-allotment option is
exercised in full), will be deposited into a trust account in the United States at [], maintained by Continental Stock Transfer &
Trust Company acting as trustee. |
|
Approximately $52,245,000 of the offering proceeds, representing the gross proceeds of this offering, less allowable underwriting commissions,
expenses and company deductions under Rule 419 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 |
|
|
|
$60,300,000 of the net offering proceeds, which includes the $3,200,000 net proceeds from the sale of the private units
($69,345,000, including $3,537,500 net proceeds from the sale of the private units, if the underwriters over-allotment option is
exercised in full) held in trust will be invested only in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in
money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act and which 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 or in
securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States. |
|
Receipt of
interest on escrowed funds |
|
|
|
Interest on proceeds from the trust account to be paid to shareholders is reduced by (i) any taxes paid or payable and then (ii) any interest,
that can be used for working capital purposes, and (iii) in the event of our liquidation for failure to consummate our initial business combination
within the allotted time, up to $20,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs
and expenses of our dissolution and liquidation. |
|
Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were
released to us in connection with our consummation of a business combination. |
|
Limitation
on fair value or net assets of target business |
|
|
|
Our
initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of
the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination. |
|
The
fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds. |
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Table of Contents
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
Trading of
securities issued |
|
|
|
The
units will begin trading on or promptly after the date of this prospectus. The ordinary shares, rights 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 units or the underlying ordinary shares, warrants or rights would be permitted until the completion of a business combination.
During this period, the securities would be held in the escrow or trust account. |
|
Exercise
of the warrants |
|
|
|
The warrants cannot be exercised until the completion of a business combination and, accordingly, will be exercised only
after the trust account has been terminated and distributed. |
|
The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in
connection with the exercise would be deposited in the escrow or trust account. |
|
Election to
remain an investor |
|
|
|
We
will provide our public shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount
then on deposit in the trust account, including interest less taxes payable, upon the consummation of our initial business combination, subject to the
limitations described herein and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms
of a proposed business combination. If we seek shareholder approval, we will consummate our initial business combination only if a majority of the
outstanding ordinary shares voted are voted in favor of the business combination. Each public shareholder may elect to redeem their public shares
irrespective of whether they vote for or against the proposed transaction. In such case, we will, like many blank check companies, offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.
|
|
A
prospectus containing information pertaining to the business combination 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 a post-effective amendment to the companys registration statement, to decide if he, she or it elects to remain a shareholder of
the company or require the return of his, her or its 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 are automatically returned to the shareholder. Unless a
sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none
of the securities are issued. |
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|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
Election to
remain an investor (continued) |
|
|
|
If we
do not decide to hold a shareholder vote (so long as it is not required by the Companies Act or Nasdaq Capital Market), we will, pursuant to our
memorandum and articles of association, offer to redeem our public shares pursuant to the tender offer rules of the SEC and the terms of the proposed
business combination and file tender offer documents with the SEC which will contain substantially the same financial and other information about the
initial business combination and the redemption rights as is required under the SECs proxy rules. |
|
|
|
|
|
Business
combination deadline |
|
|
|
If we
are unable to complete our initial business combination by 18 (or 24 if extended) months from the closing of this offering, we will, as soon as
reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to
$20,000of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all
operations except for the purposes of winding up of our affairs. This redemption of public shareholders from the trust account shall be done
automatically by function of our memorandum and articles of association and prior to any voluntary winding up. |
|
If an
acquisition has not been consummated within 18 months after the effective date of the companys registration statement, funds held in the trust or
escrow account are returned to investors. |
|
Release of
funds |
|
|
|
Except for interest earned on the funds in the trust account that may be released to us to pay our tax obligations or 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 the redemption of public shareholders upon failure to
effect our initial business combination within the allotted time. |
|
The
proceeds held in the escrow account are not released until the earlier of the completion of a business combination and the failure to effect our
initial business combination within the allotted time. |
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|
|
|
|
Terms of Our Offering
|
|
Terms of Many Blank Check Offerings
|
|
Impact on Whether a Particular
Business Combination is Completed
|
Requirement
to conduct a tender offer or hold a shareholder vote |
|
|
|
We
will provide our shareholders with the opportunity to redeem their ordinary shares upon the consummation of our initial business combination on the
terms described in this prospectus. We intend to seek shareholder approval in connection with our initial business combination. In such case, we will
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of
proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If shareholder approval is not required by the
Companies Act or Nasdaq Capital Market in connection with our initial business combination, we may, for business or legal reasons, decide to conduct
these redemptions pursuant to the tender offer rules without filing a proxy statement with the SEC and without conducting a shareholder vote to approve
our initial business combination. |
|
Many
blank check companies are required to file a proxy statement with the SEC and hold a shareholder vote to approve their initial business combination
regardless of whether such a vote is required by law. These blank check companies may not consummate our initial business combination if the majority
of the companys public shares voted are voted against a proposed business combination. |
|
Our
ability to consummate our initial business combination without conducting a shareholder vote in the event that a shareholder vote is not required by
law may increase the likelihood that we will be able to complete our initial business combination and decrease the ability of public shareholders to
affect whether or not a particular business combination is completed. |
|
Required
shareholder vote if we hold a shareholder vote |
|
|
|
If we
seek shareholder approval in conjunction with the consummation of our initial business combination, a majority of all shares voted that are entitled to
vote are required to approve the business combination. |
|
Many
blank check companies require that majority of the public shares that are voted and entitled to vote approve the business
combination. |
|
Our
ability to consummate our initial business combination by allowing all of our shareholders to vote in connection with our business combination will
increase the likelihood that we will be able to complete our initial business combination. |
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Table of Contents
|
|
|
|
Terms of Our Offering
|
|
Terms of Many Blank Check Offerings
|
|
Impact on Whether a Particular
Business Combination is Completed
|
Requirement
to vote against a business combination in order to redeem |
|
|
|
If we
seek shareholder approval in conjunction with the consummation of our initial business combination, each public shareholder may elect to redeem their
public shares irrespective of whether they vote for or against the proposed transaction. |
|
Many
blank check companies require public shareholders to vote against the proposed business combination in order to redeem their shares. |
|
The
ability of our public shareholders to vote in favor of a business combination and redeem their shares may increase the likelihood that we will be able
to complete our initial business combination and decrease the ability of public shareholders to affect whether or not a particular business combination
is completed. |
|
Limited
Redemption Rights of 15% Public Shareholders |
|
|
|
If we
seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to
the tender offer rules, our memorandum and articles of association provides that a public shareholder, individually or together with any affiliate of
such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the
Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this
offering. |
|
Many
blank check companies limit the redemption rights of 10% 20% public shareholders and limit the voting rights of such public
shareholders. |
|
We
believe this restriction will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their
ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. |
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Table of Contents
|
|
|
|
Terms of Our Offering
|
|
Terms of Many Blank Check Offerings
|
|
Impact on Whether a Particular
Business Combination is Completed
|
Redemption
threshold |
|
|
|
We do
not have a specified maximum redemption threshold apart from the limitation that we will not redeem our public shares in an amount that would cause our
net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial
business combination. In such case, we would not proceed with the redemption of our public shares and the related business combination, and instead may
search for an alternate business combination. |
|
Many
blank check companies are not permitted to consummate our initial business combination if more than a specified percentage of the shares sold in such
companys initial public offering, which percentage threshold has typically been between 19.99% and 39.99%, elect to redeem or redeem their shares
in connection with the shareholder vote. |
|
The
absence of a redemption threshold in our offering will make it easier for us to consummate our initial business combination even if a substantial
majority of our shareholders do not agree. |
Competition
In identifying, evaluating and
selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic
acquisitions. Many of these entities are well established and have significant experience identifying and effecting business combinations directly or
through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire
larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the
acquisition of a target business. Furthermore, the requirement that we acquire a target business or businesses having a fair market value equal to at
least 80% of the value of the trust account at the time of the agreement to enter into the business combination, our obligation to pay cash in
connection with our public shareholders who exercise their redemption rights and the number of our outstanding rights and the future dilution they
potentially represent, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive disadvantage in
successfully negotiating our initial business combination.
Facilities
We currently maintain our executive
offices at Room 1102, 11/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong. The cost for this space is included in the $10,000 per month
fee that we pay our sponsor for office space, utilities and secretarial and administrative services. We believe, based on rents and fees for similar
services in the Hong Kong area that this amount is at least as favorable as we could have obtained from an unaffiliated person. We consider our current
office space adequate for our current operations.
Employees
We currently have two executive
officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as
they deem necessary to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period
will vary based on whether a target business has been selected for our initial business combination
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Table of Contents
and the stage of the business
combination process we are in. We do not intend to have any full time employees prior to the consummation of our initial business
combination.
Periodic Reporting and Financial
Information
We will register our units, ordinary
shares, rights 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 reports will contain financial
statements audited and reported on by our independent registered public accountants.
We will provide shareholders with
audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to
shareholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with
GAAP. A particular target business identified by us as a potential acquisition candidate may not have financial statements prepared in accordance with
GAAP or that the potential target business will be able to prepare its financial statements in accordance with GAAP. To the extent that this
requirement cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation will be material.
We will be required to have our
internal control procedures evaluated for the fiscal year ending March 31, 2016 required by the Sarbanes-Oxley Act. 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 we may take advantage of certain exemptions from various reporting requirements that are applicable to
other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. We will remain an emerging growth company for up to five years, although
if our non-convertible debt issued within a three year period or revenues exceeds $1 billion, or if the market value of our ordinary shares that are
held by non-affiliates exceeds $700 million on the last day of our second fiscal quarter, we would cease to be an emerging growth company
as of the following fiscal year.
Legal Proceedings
There is no material litigation,
arbitration or governmental proceeding currently pending 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 12 months preceding the date of this prospectus.
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Table of Contents
Directors and Executive Officers
Our current directors, officers and
director nominees are listed below.
Name
|
|
|
|
Age
|
|
Position
|
Emily
Chui-Hung Tong |
|
|
|
|
60 |
|
|
Chairwoman |
Stephen N.
Cannon |
|
|
|
|
46 |
|
|
President/CEO/Director |
Haibin Wang
|
|
|
|
|
48 |
|
|
Director nominee* |
Foelan Wong
|
|
|
|
|
44 |
|
|
Director nominee* |
Hai Wang
|
|
|
|
|
37 |
|
|
Director nominee* |
Jason Kon Man
Wong |
|
|
|
|
50 |
|
|
Director nominee* |
* |
|
This individual has indicated his assent to occupy such position
upon the effective date of the registration statement of which this prospectus forms part. |
Ms. Emily Tong, 60, has
been our Chairwoman since June 2014.
Ms. Tong has served as the President of
Method Investments & Advisory, LLC in New York since January 2012. She was the Managing Director of Kildare Capital, Inc. from June 2010 to June
2011. She was the co-founder and President of EastGate Securities, LLC from 2008 to March 2010. During her tenure with Method, Kildare and EastGate
Securities, all of which are U.S. securities firms, Ms. Tong was responsible for those firms China related transactions. In addition, Ms. Tong
was the co-founder and President of EastGate Financial, Inc. (from 2006 to December 2013) and was the co-founder and President of The Jade Cricket
Company Inc. (from 1993 to 2006), both of which were U.S. financial advisory firms specializing in China related transactions. She holds Series 7, 24,
63, 79, and 99 licenses. In the 1990s, Ms. Tong was the co-founder and President of a joint venture between The Jade Cricket Company, Inc. and
Lenovo Computers, a Chinese multinational computer technology company with headquarters in China and United States. Ms. Tong worked for IBM, an
American multinational technology and consulting corporation, between 1978 and 1993. Her last position at IBM was in its Wall Street office leading its
sales and marketing efforts from 1988 to 1993. Ms. Tong graduated from the University of Illinois at Urbana-Champaign with a Master degree in Computer
Science and from Hunter College, City University of New York, with a Bachelor degree in Computer Science.
We believe Ms. Tong is well-qualified
to serve as a member of the board due to her in-depth knowledge and experience in the U.S. and China capital markets and her experience in the field of
financial services in the U.S. for over 20 years.
Mr. Stephen N. Cannon,
46, has been our President, CEO and director since June 2014.
Since April 2010, Mr. Cannon has been a
Partner and Head of China for RedBridge Group Ltd, a boutique merchant banking firm focused on Chinese and Arabian Gulf cross-border investments, and
since June 2009, Mr. Cannon has been a senior advisor at Ackrell & Co, a U.S. broker-dealer. From 2007 until April 2010, Mr. Cannon served in
various capacities with Hambrecht Asia Acquisition Corp., a Nasdaq-listed SPAC. Mr. Cannon was a co-founder, initial CFO and director, and then VP of
Acquisitions, for the SPAC. In addition to having responsibility for the formation and IPO process of the SPAC, Mr. Cannon identified the SPACs
ultimate acquisition target (SGOCO Group Limited (NASD: SGOC) and negotiated a transaction with that company. In addition, in 2008, Mr. Cannon was a
co-founder and CFO of Ruslan Acquisition Corp, a Russia-focused SPAC that filed a $300 million IPO with Euronext regulators that was never funded due
to market conditions. The committed underwriters of the offering, Credit Suisse & Morgan Stanley postponed the offering as a result of the global
financial crisis. From 2005 until 2008, Mr. Cannon served as a Managing Director of Asian investment banking for WR Hambrecht & Co. In addition to
founding and heading the firms Shanghai office, he had overall responsibility for corporate finance transactions for Asian clients. During his
tenure, WR Hambrecht& Co grew to be one of the most active U.S.-based investment banks of U.S. public offerings for private Chinese middle market
companies. Through a combination of underwriting IPOs, providing M&A advisory services, and fairness opinions, the firm was involved with a
significant portion of
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the Chinese-focused SPACs
consummated during this period. Prior to WR Hambrecht & Co, Mr. Cannon worked at the following investment banking firms: Ackrell & Co
(2003-2005); ABN-Amro Securities (2000-2002); Donaldson Lufkin & Jenrette (1994-2000); Smith Barney (1993-1994); and Salomon Brothers (1991-1993).
Mr. Cannons career has spanned several industry and product groups, including M&A, public equity and debt, private equity and debt, high
yield financings, leveraged buy-outs and restructurings. He holds Series 7, 63, and 24 licenses with FINRA. Mr. Cannon graduated from the University of
Notre Dame with a Bachelor degree in Mechanical Engineering and a Bachelor degree in Economics.
We believe Mr. Cannon is well-qualified
to serve as a member of the board due to his in depth knowledge and experience in the U.S. and-China capital markets and his prior experience with
SPACs.
Mr. Haibin Wang, 48, will
be one of our independent directors as of the effective date of the registration statement of which this prospectus forms a part.
Mr. Wang is the founder of San Glory
International Hotel, Beijing, and has been its Director and the majority shareholder since May 2009. San Glory International Hotel is a four-star
business hotel located in Daxing District, Beijing, China. He has also served as the Executive Director of the Star Group, China, since 2005. The Star
Group is a conglomerate engaged in businesses involving hotels, golf courses, real estate developments, direct investments, fund management, and
manufacturing. The Star Group has 11 subsidiaries and over 1,600 employees. One of its subsidiaries, Xing Pai Sports Goods Co. Ltd., is the largest
billiard table manufacturer in China and the official table supplier to ‘World Snooker. He has also served as the General Manager of the
Star Group Investment Holdings Limited since 2005. Star Group Investment Holdings Limited is a direct investment company that focuses on financial and
mining sectors in China. From August 2009 to August 2010, he was an independent non-executive Director of Bo Ying Investment Co., Ltd. headquartered in
Hubei, China, which is a public company (SZSE: 000760) listed on the Shenzhen Stock Exchange, China. From 2006 to 2008, he served as Chairman of the
Investment Committee of CITIC Star Group Fund, a China based investment company. From 2003 to 2005, Mr. Wang founded Beijing Day Skandia Technology Co,
a company engaged in the distribution of electronic tax machines, certified by the Beijing tax authority. Between 1999 and 2005, he founded several tax
accounting firms, including: Beijing Sino CTA Firm, Beijing Capital CTA Firm, Beijing China Water Valuation Firm, and Beijing Guang Zhang CTA Firm.
Among those firms, the Beijing Sino CTA Firm merged with Unitax Certified Tax Agent Co. Ltd. in 2009, which has become one of the largest tax
accounting firms in China with over one thousand employees. He was a tax officer in the Beijing Tax Bureau of China from 1994 to 1999. He has been a
Certified Tax Accountant of China since 2002.
We believe Mr. Wang is well-qualified
to serve as a member of the board due to his entrepreneurship and his financial expertise as a Certified Tax Accountant (CTA).
Dr. Foelan Wong, 44, will
be one of our independent directors as of the effective date of the registration statement of which this prospectus forms a part, and will serve as the
chairman of our compensation committee.
Mr. Wong has served as the Managing
Director of Great Wall Pan Asia International Investment Company Limited since October 2013, which is a wholly owned subsidiary of China Great Wall
Asset Management Corporation Limited. The China Great Wall Asset Management Corporation is one of the four largest state owned asset management
companies in China. His responsibility includes assisting corporations, state owned enterprises and multi-national companies across Asia in executing
direct capital market transactions involving bonds, syndicated debt, mezzanine debt, liability management, leveraged buyouts, private placements, and
structured high-yield credits. His role involves end-to-end deal origination, structuring, pitching, and execution. From December 2012 to July 2013,
Mr. Wong was the Director of ABCI Asset Management Limited, a subsidiary of Agricultural Bank of China Limited (HKSE: 1288), which is one of the four
largest banks in China. From February 2010 to July 2012 and June 2007 to July2008, he was the Managing Director of HEC Group Ltd., which was registered
with the Hong Kong Securities and Futures Commission and had subsidiaries including Enerchine Investment Management Limited, formerly known as CU
Investment Management Ltd., Enerchine Securities Limited, formerly known as Radland International Limited, and HEC Commodities Limited, formerly known
as Chung Nam Commodities Limited. During this
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period, he served as investment
manager for three Hong Kong public listed companies. Between 2008 and 2009, he was Senior Executive of Total Securities (HK) Limited and Qi Yuan Asset
Management (H.K.) Limited, both of which are well known regional investment boutiques registered with Hong Kong Securities and Futures Commission. From
2004 to 2007, he was a Manager of Okasan International (Asia) Limited, which was a subsidiary of Okasan Securities Group (8609.JP). The Group is a
well-known financial institution in Tokyo, Japan. He was awarded the Executive Financial Professional Award in 2007 by the Society of International
Registered Financial Practitioner. Mr. Wong is registered with the Hong Kong Securities & Futures Commission and holds licenses of RA1 Dealing in
Securities (responsible officer), RA2 Dealing in Futures Contracts (responsible officer), RA4 Advising on Securities (responsible officer), RA5
Advising on Futures Contracts (responsible officer) and RA9 Asset Management (responsible officer). He also obtained a license from the Chinese Gold
& Silver Exchange Society of Hong Kong. He is a member of the China Business Manager Association and fellow member of The Hong Kong Institute of
Directors. Mr. Wong graduated from the International American University in the U.S. with a Doctorate degree in Business Administration (finance), from
the Edith Cowan University in Australia with a Master Degree of Management Information System, and from the Hong Kong Institute of Director with the
Professional Diploma in Corporate Governance.
We believe Dr. Wong is well-qualified
to serve as a member of the board because of his experience in Asian financial advisory and asset management activities.
Mr. Hai Wang, 37,will be
one of our independent directors as of the effective date of the registration statement of which this prospectus forms a part.
Mr. Wang founded Top (HK) Investment
& Development Ltd. in December 2009 and currently serves as its Executive Director. The company manages a private equity fund focused on emerging
market sectors involving the online business, online video and online gaming, green energy, and financial industry sectors. From April 2008 to June
2009, Mr. Wang was the Chief Operating Officer of MTV China, one of the largest subsidiaries of MTV, the worlds largest music television network
and owned by Viacom. Mr. Wang was responsible for MTV Chinas overall operations, as well as Viacoms investments and M&A activities in
China. From November 2006 to March 2008, Mr. Wang was the Senior Vice President of PPLIVE, one of the largest point-to-point (P2P) technology based
online video companies in China with over 90 million users globally and over 700 distribution channels featuring movies, TV drama, sports, and cartoon,
which founded in 2005. From September 2005 to October 2006, Mr. Wang was the Head of Strategy and Investment Development of BESTV in China. From
September 2003 to March 2005, he was the Director of Digital Media Investment, Family Fund of Bertalsmann, Austria, a joint venture company of
Bertalsmann and Orf in Austria specialized in investing, promoting, and operating digital media, interactive media and mobile TV. From December 1997 to
September 2001, he worked as a producer for Zhejiang Television Station, Hangzhou, China. Mr. Wang graduated from the Peking (Beijing) University with
an Executive Master of Business Administration degree, from the University of ART Linz, Austria with a Master degree in Business Administration and
Director of Movie, and from Media College of Zhejiang in China with a Bachelor degree.
We believe Mr. Wang is well-qualified
to serve as a member of the board due to his wide range of experience in investing, managing, and assisting Chinese companies with their offshore
IPOs.
Mr. Jason Kon Man Wong,
50, will be one of our independent directors as of the effective date of the registration statement of which this prospectus forms a part, and will
serve as the chairman of our audit committee.
Mr. Wong has served as a member of
the board of directors of Whiz Partners Asia Ltd., an investment advisory company focused on assisting Japanese companies expand their business
operations in Asia, since April 2013. He has also served as a member of the board of directors of Fortune Capital Group Ltd., an
investment company, since 2000. Mr. Wong has been an independent and Non-Executive Director of Group Sense International Limited (HKSE: 601), a
manufacturer of electronic dictionaries and other handheld information devices, since 2004. He has been the independent and Non-Executive Director and
Chairman of Audit Committee of Neo-Neon Holdings Limited (HKSE: 1868), a decorative lighting company based in Hong Kong since November 2011. From May
2010 to November 2013, Mr. Wong was the Independent and
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Non-Executive director and Chairman
of the Audit Committee of Polyard Petroleum International Group Limited (Hong Kong Stock Exchange Listed: 8011.hk), which mainly engages in the
exploration, development and production of oil and gas, provision of professional technical services, and trading of petroleum-related products. From
July 2009 to December 2011, he was the Independent Director and Chairman of Audit Committee of China Shen Zhou Mining & Resources, Inc. (American
Stock Exchange Listed: SHZ). Prior to that, he was a financial consultant of Transpac Capital Limited, one of the largest and oldest private equity
funds and venture capital funds in Asia, from 1993 to 2000. From 1992 to 1993, Mr. Wong was an auditor for Ernst & Young CPA, Hong Kong and was an
auditor for Clay & Co. in the USA from 1989 to 1992. He has been a member of AICPA and HKICPA since 1992 and 1993, respectively. Mr. Wong graduated
from the University of Hawaii at Manoa with a Bachelor degree in Accounting.
We believe Mr. Wong is well-qualified
to serve as a member of the board due to his listed company experience and experience as a fund manager, investment adviser as well as a member of
American Institute of CPA (AICPA).
Prior Involvement of Management in Blank Check
Companies
Among our management team, only Stephen
N. Cannon has previous experience with other blank check companies. The following list contains those transactions which Mr. Cannon involvement was
publicly disclosed.
Blank Check Company
|
|
|
|
Business Combination Facts
|
|
Role
|
China Unistone
Acquisition Corp. (Currently listed on Nasdaq under the symbol YTEC) |
|
|
|
Target: Yucheng Technologies |
|
Mr.
Cannon provided advisory services during the acquisition process and prepared and presented a fairness opinion to the board of directors of China
Unistone Acquisition Corp. |
IPO: $20.7
million |
|
|
|
(Closed Dec. 2006) |
|
|
|
|
|
|
Nasdaq GM:YTEC |
|
|
Great Wall
Acquisition Corp. (Currently quoted on OTC markets and has discontinued reporting) |
|
|
|
Target: ChinaCast Education |
|
Mr.
Cannon provided advisory services during the acquisition process. |
IPO: $27.1
million |
|
|
|
(Closed Dec. 2006) |
|
|
|
|
|
|
OTC:CEUC |
|
|
Hambrecht Asia
Acquisition Corp (Currently listed on Nasdaq under the symbol SGOC) |
|
|
|
Target: SGOCO |
|
Mr.
Cannon was a co-founder, initial CFO and director from the companys formation through its initial public offering, and thereafter
served as vice president of target acquisitions; identified the ultimate target and negotiated the successful acquisition
transaction. |
IPO: $33.5
million |
|
|
|
(Closed Apr. 2010) |
|
|
|
|
|
|
OTC:SGOC |
|
|
Jaguar
Acquisition Corp. (Registration of its securities revoked in 2014 pursuant to Section 12(j) of the Exchange Act) |
|
|
|
Target: China CableCom Ltd. |
|
Mr.
Cannon provided advisory services during the acquisition process. |
IPO: $24.0
million |
|
|
|
(Closed April 2008) |
|
|
|
|
|
|
OTC:JGAC |
|
|
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Table of Contents
Blank Check Company
|
|
|
|
Business Combination Facts
|
|
Role
|
Ruslan
Acquisition Corp. (IPO not consummated) |
|
|
|
N/A |
|
Mr.
Cannon was a co-founder and CFO of Ruslan Acquisition Corp, a proposed Russia-focused SPAC that filed to do a $300 million IPO with Euronext
regulators. The committed underwriters of the offering, Credit Suisse & Morgan Stanley, postponed the offering as a result of the global financial
crisis late 2008. |
Proposed IPO: $300 million |
|
|
|
|
|
|
Shanghai
Century Acquisition Corp. (Liquidated due to lack of requisite shareholder vote for the initial business combination) |
|
|
|
Target: Asia Leader Investments Limited |
|
Mr.
Cannon was involved in the underwriting process and provided advisory services during the acquisition process. |
IPO: $115.0
million |
|
|
|
(Voted down) |
|
|
|
|
|
|
AMEX:SHA |
|
|
Director Independence
The Nasdaq Capital Market requires that
a majority of our board must be composed of independent directors, 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.
Upon the effective date of the
registration statement of which this prospectus forms a part, Messrs. Jason Kon Man Wong, Foelan Wong, Haibin Wang, Hai Wang will be our independent
directors. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Any affiliated transactions will be on
terms no less favorable to us than could be obtained from independent parties. Any affiliated transactions must be approved by a majority of our
independent and disinterested directors.
Executive Officer and Director
Compensation
None of our executive officers or
directors received any cash compensation for services rendered. Commencing on the date that our securities are first listed on the Nasdaq Capital
Market through the earlier of consummation of our initial business combination and our liquidation, we will pay our sponsor, an entity controlled by
Ms. Winnie Lai Ling Ng, a total of $10,000 per month for office space, utilities and secretarial and administrative services. This arrangement is being
agreed to by our sponsor for our benefit and is not intended to provide our sponsor compensation in lieu of a salary. We believe that such fees are at
least as favorable as we could have obtained from an unaffiliated third party for such services. No compensation will be paid to our sponsor, executive
officers and directors, or any of their respective affiliates, prior to or in connection with the consummation of our initial business combination.
Additionally, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable business combinations. Our independent directors will review on a
quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates.
After the completion of 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 shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials
furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the
time, as it will be up to the directors of the
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post-combination business to
determine executive and director compensation. Any compensation to be paid to our officers will be determined, or recommenced, to the board of
directors for determination, either by a committee constituted solely by independent directors or by a majority of the independent directors on our
board of directors.
We do not intend to take any action to
ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is
possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the
initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence
our managements motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with
us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business
combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of
employment.
Audit Committee
Upon the effectiveness of the
registration statement of which this prospectus forms a part, we will establish an audit committee of the board of directors. Messrs. Jason Kon Man
Wong, Foelan Wong, and Haibin Wang will serve as members of our audit committee. Mr. Jason Kon Man Wong will serve as chairman of the audit committee.
Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must be
independent. Messrs. Jason Kon Man Wong, Foelan Wong, and Haibin Wang are independent.
Each member of the audit committee is
financially literate and our board of directors has determined that Mr. Jason Kon Man Wong qualifies as an audit committee financial expert
as defined in applicable SEC rules.
Responsibilities of the audit committee
include:
|
|
the appointment, compensation, retention, replacement, and
oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; |
|
|
pre-approving all audit and non-audit services to be provided by
the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and
procedures; |
|
|
reviewing and discussing with the independent auditors all
relationships the auditors have with us in order to evaluate their continued independence; |
|
|
setting clear hiring policies for employees or former employees
of the independent auditors; |
|
|
setting clear policies for audit partner rotation in compliance
with applicable laws and regulations; |
|
|
obtaining and reviewing a report, at least annually, from the
independent auditors describing (i) the independent auditors internal quality-control procedures and (ii) any material issues raised by the most
recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such
issues; |
|
|
reviewing and approving any related party transaction required
to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
|
|
reviewing with management, the independent auditors, and our
legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and
any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant
changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
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Compensation Committee
Upon the effectiveness of the
registration statement of which this prospectus forms a part, we will establish a compensation committee of the board of directors. The members of our
Compensation Committee will be Messrs. Foelan Wong, Hai Wang and Haibin Wang. Mr. Foelan Wong will serve as chairman of the compensation committee. We
will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:
|
|
reviewing and approving on an annual basis the corporate goals
and objectives relevant to our Chief Executive Officers compensation, evaluating our Chief Executive Officers performance in light of such
goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officers based on such
evaluation; |
|
|
reviewing and approving the compensation of all of our other
executive officers; |
|
|
reviewing our executive compensation policies and
plans; |
|
|
implementing and administering our incentive compensation
equity-based remuneration plans; |
|
|
assisting management in complying with our proxy statement and
annual report disclosure requirements; |
|
|
approving all special perquisites, special cash payments and
other special compensation and benefit arrangements for our executive officers and employees; |
|
|
producing a report on executive compensation to be included in
our annual proxy statement; and |
|
|
reviewing, evaluating and recommending changes, if appropriate,
to the remuneration for directors. |
The charter will also provide that the
compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will
be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice
from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such
adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
We do not have a standing nominating
committee, though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules. In accordance
with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board of
directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or
approving director nominees without the formation of a standing nominating committee. The directors who shall participate in the consideration and
recommendation of director nominees are Jason Kon Man Wong, Foelan Wong, Haibin Wang and Hai Wang. In accordance with Rule 5605(e)(1)(A) of the Nasdaq
rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in
place.
The board of directors will also
consider director candidates recommended for nomination by our shareholders during such times as they are seeking proposed nominees to stand for
election at the next annual meeting of shareholders (or, if applicable, a special meeting of shareholders). Our shareholders that wish to nominate a
director for election to the Board should follow the procedures set forth in our bylaws.
We have not formally established any
specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating
nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business,
integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
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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 Foelan Wong and Hai Wang, will expire at our first annual meeting of shareholders. The term of
office of the second class of directors, consisting of Jason Kon Man Wong and Haibin Wang, will expire at the second annual meeting. The term of
office of the third class of directors, consisting of Emily Chui-Hung Tong and Stephen N. Cannon, will expire at the third annual
meeting.
Code of Conduct and Ethics
We have adopted a code of conduct and
ethics applicable to our directors, officers and employees in accordance with applicable federal securities laws.
Conflicts of Interest
Under British Virgin Islands law, the
directors owe fiduciary duties at both common law and under statute, including a statutory duty to act honestly, in good faith and with a view to the
companys best interests. When exercising powers or performing duties as a director, the director shall exercise the care, diligence and skill
that a reasonable director would exercise in the circumstances taking into account, without limitation the nature of the company; the nature of the
decision; and the position of the director and the nature of the responsibilities undertaken by him. In exercising the powers of a director, the
directors shall exercise their powers for a proper purpose and shall not act or agree to the company acting in a manner that contravenes our memorandum
and articles of association or the Companies Act.
In certain limited circumstances, a
shareholder has the right to seek various remedies against the company in the event the directors are in breach of their duties under the Companies
Act. Pursuant to Section 184B of the Companies Act, if a company or director of a company engages in, or proposes to engage in or has engaged in,
conduct that contravenes the provisions of the Companies Act or the memorandum or articles of association of the company, the British Virgin Islands
Court may, on application of a shareholder or director of the company, make an order directing the company or director to comply with, or restraining
the company or director from engaging in conduct that contravenes the Companies Act or the memorandum or articles of association. Furthermore, pursuant
to section 184I(1) of the Companies Act a shareholder of a company who considers that the affairs of the company have been, are being or likely to be,
conducted in a manner that is, or any acts of the company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial
to him in that capacity, may apply to the British Virgin Islands court for an order that the Court considers just and equitable which, inter alia, can
require the company or any other person to pay compensation to the shareholders.
Subject to the foregoing fiduciary
duties or contractual obligations, each of our officers and directors has agreed that until the earliest of our initial business combination, our
liquidation or such time as he ceases to be an officer or director, to present to us for our consideration, prior to presentation to any other entity,
any business where the total consideration to be paid by us (either in ordinary shares, cash or otherwise) is expected to be at least $48,000,000.
However, 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 or she will be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us or, in the case of a non-compete obligation, possibly
prohibited from referring such opportunity to us. All of our officers and directors currently have fiduciary duties that take priority over their
duties to us. In addition, none of the other firms that our officers and directors are affiliated with, has any obligation to present any business
combination opportunities to us.
Our officers and directors may become
involved with subsequent blank check companies similar to our company, but will not become involved with another publicly listed blank check company
prior to us announcing an agreement to acquire our initial business combination, or the expiration of the period for us to announce and/or complete our
initial business combination. Potential investors should also be aware of the following other potential conflicts of interest:
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|
|
None of our officers or directors is required to commit his or
her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business
activities. |
|
|
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 us as well as the other entities
with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should
be presented. |
|
|
Our initial shareholders purchased founder shares prior to the
date of this prospectus and our sponsors will purchase the insider units in a transaction that will close simultaneously with the closing of this
offering. Our initial shareholders have agreed to waive their right to liquidating distributions with respect to its founder shares if we fail to
consummate our initial business combination within 18 (or 24) months. However, if our initial shareholders acquire public shares in or after this
offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business
combination within the required time period. If we do not complete our initial business combination within such applicable time period, the proceeds of
the sale of the insider units will be used to fund the redemption of our public shares, and the insider units will expire worthless. On the date of
this prospectus, the founder shares will be placed into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as
escrow agent. Subject to certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the
earlier of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which the closing price of our
ordinary shares equals or exceeds $12.50 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 and the remaining 50% of the founder shares will not be
transferred, assigned, sold or released from escrow until one year after the date of the consummation of our initial business combination, 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 shareholders having the right to exchange their ordinary shares for cash, securities or other property. With
certain limited exceptions, the insider units will not be transferable, assignable or salable by our initial shareholders until after the completion of
our initial business combination. |
|
|
Our officers and directors may have a conflict of interest with
respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target
business as a condition to any agreement with respect to our initial business combination. |
A description of the specific potential
conflicts for our officers and directors is contained in the table below, which summarizes the companies to which our officers and directors owe
fiduciary obligations or have contractual obligations that would conflict with their fiduciary obligations to us.
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Table of Contents
Name
|
|
|
|
Entity (Role)
|
|
Industry
|
|
Pre-existing Fiduciary or Contractual
Obligations
|
Emily
Chui-Hung Tong |
|
|
|
Method Investments & Advisory, LLC (CEO/President) |
|
U.S.
registered broker-dealer |
|
Ms.
Tong, in her capacity with Method Investments & Advisory LLC, regularly develops, pursues or is presented with business investment and combination
opportunities regarding its general advisory business for its clients. Ms. Tong is required to present all business opportunities which are
suitable for Method Investments & Advisory LLC prior to presenting them to us. Notwithstanding the above, Ms. Tong believes
that Method Investments & Advisory LLC generally does not have clients that seek similar investments as us, and thus she believes there will be
limited conflicts with our company. |
|
Stephen N.
Cannon |
|
|
|
RedBridge Group Ltd. (Partner/Head of China) |
|
Dubai
merchant banking firm |
|
Mr.
Cannon, in his capacity with RedBridge Group Ltd, regularly develops, pursues or is presented with investment opportunities in China for gulf-based
investors. Mr. Cannon is required to present all business opportunities which are suitable for RedBridge Group Ltd prior to presenting
them to us. However, Mr. Cannon believes that Redbridge Group Ltd generally works with clients seeking investments and not business
combination opportunities, and thus he believes there will be limited conflicts with our company. |
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Table of Contents
Name
|
|
|
|
Entity (Role)
|
|
Industry
|
|
Pre-existing Fiduciary or Contractual
Obligations
|
|
|
|
|
|
Ackrell & Co (Sr. Advisor) |
|
U.S.
registered broker-dealer |
|
Mr. Cannon is required to present all business opportunities which are suitable for Ackrell& Co prior to presenting them
to us. However, Mr. Cannon, in his capacity with Ackrell& Co, does not encounter business combination opportunities suitable to
us, as the firm focuses primarily on technology companies located generally in Silicon Valley area of California. Therefore he does not believe there
will be significant conflicts with us. |
|
Haibin
Wang |
|
|
|
Star
Group Investment Holdings Limited (General Manager) |
|
Investment Company |
|
Mr. Wang is required to present all business opportunities which are suitable for Star Group Investment Holdings Limited
prior to presenting them to us. However, Star Group Investment Holdings Limited makes direct investments focused in the financial and mining
sectors in China. In addition, the firm is generally pursuing investments of less than $10 million in size, and thus significantly less than our
company. Therefore, Mr. Wang believes he will be able to minimize potential conflicts. |
|
Foelan
Wong |
|
|
|
Great
Wall Pan Asia International Investment Company Limited (Managing Director) |
|
Asset
Management Firm |
|
Great
Wall Pan Asia International Investment Company Limited is one of the largest investment company in China and is engaged in wide variety of investments.
Mr. Wong has a pre-existing duty to present appropriate investments to Great Wall Pan Asia prior to presenting them to us. However, Mr. Wong
believes that his firm does not generally engage in business combinations in a similar manner as us, and believes he will be able to minimize any
potential conflict he encounters. |
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Table of Contents
Name
|
|
|
|
Entity (Role)
|
|
Industry
|
|
Pre-existing Fiduciary or Contractual
Obligations
|
|
Hai
Wang |
|
|
|
Top
(HK) Investment & Development Ltd. (Board member) |
|
Private Equity Fund |
|
Mr. Wang is required to present all business opportunities which are suitable for Top (HK) Investment & Development Ltd.
prior to presenting them to us. Top (HK) Investment & Development Ltd. manages a private equity fund focused on emerging market sectors
involving online business, online video and online gaming, green energy, and financial industry. In addition, the firm is generally pursuing
investments of less than $20 million in size, and thus significantly less than our company. Therefore, Mr. Wang believes he will be able to minimize
potential conflicts. |
|
Jason Kon
Man Wong |
|
|
|
Whiz
Partners Asia Ltd (Board member) |
|
Investment Advisory Management |
|
Mr. Wong is required to present all business opportunities which are suitable for Whiz Partners Asia Ltd. (WPA)
prior to presenting them to us. WPA is an investment advisory company focused on assisting Japanese companies with expanding their business
operation in Asia. Mr. Wong also act as an investment committee member of Whiz Asia Evolution Fund (WAEF). The core business of WAEF is to
invest into Asia companies and it is under the management of Whiz Partners Inc. (WPI) of Japan and WPA. Therefore, Mr. Wong believes
that his firms do not seek similar investments as us, and thus he believes there will be limited conflicts with our company. |
Notwithstanding the foregoing, the
above mentioned conflicts may not be resolved in our favor. In the event that we submit our initial business combination to our public shareholders for
a vote, our sponsor has agreed to vote its founder shares and any public shares purchased during or after the offering in favor of our initial business
combination and our officers and directors have also agreed to vote any public shares purchased during or after the offering in favor of our initial
business combination.
Limitation on Liability and Indemnification of Officers and
Directors
Our memorandum and articles of
association provide that, subject to certain limitations, the company shall indemnify its directors and officers against all expenses, including legal
fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative
proceedings. Such indemnity only applies if the person acted honestly and in good faith with a
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view to the best interests of the
company and, in the case of criminal proceedings, the person had no reasonable cause to believe that their conduct was unlawful. The decision of the
directors as to whether the person acted honestly and in good faith and with a view to the best interests of the company and as to whether the person
had no reasonable cause to believe that his conduct was unlawful and is, in the absence of fraud, sufficient for the purposes of the memorandum and
articles of association, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the
entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the
best interests of the company or that the person had reasonable cause to believe that his conduct was unlawful.
We will enter into agreements with our
officers and directors to provide contractual indemnification in addition to the indemnification provided for in our memorandum and articles of
association. Our memorandum and articles of association also will permit us to purchase and maintain insurance on behalf of any officer or director who
at the request of the Company is or was serving as a director or officer of, or in any other capacity is or was acting for, another company or a
partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity,
whether or not the company has or would have had the power to indemnify the person against the liability as provided in the memorandum and articles of
association. We will purchase a policy of directors and officers liability insurance that insures our officers and directors against the
cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and
directors.
These provisions may discourage
shareholders 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 officers and directors, even though such an action, if successful, might otherwise benefit us and our
shareholders. Furthermore, a shareholders investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against officers and directors 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 officers and directors.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we
have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is theretofore
unenforceable.
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The following table sets forth
information regarding the beneficial ownership of our ordinary shares as of the date of this prospectus, and as adjusted to reflect the sale of our
ordinary shares included in the units offered by this prospectus and private units, and assuming no purchase of units in this offering,
by:
|
|
each person known by us to be the beneficial owner of more than
5% of our outstanding ordinary shares; |
|
|
each of our officers, directors and director nominees that
beneficially owns ordinary shares; and |
|
|
all 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 ordinary shares beneficially owned by them. The following
table does not reflect record or beneficial ownership of any ordinary shares issuable upon exercise of warrants or rights as these warrants
or rights 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 (4)
|
|
Amount and Nature of Beneficial Ownership
|
|
Approximate Percentage of Outstanding Shares
of common stock (5)
|
DeTiger
Holdings Limited |
|
|
|
|
1,525,000 |
|
|
|
88.4 |
% |
|
|
1,590,000 |
|
|
|
20.33 |
% |
Winnie Ng
|
|
|
|
|
1,525,000 |
(3) |
|
|
88.4 |
% |
|
|
1,590,000 (3 |
) |
|
|
20.33 |
% |
Stephen N.
Cannon |
|
|
|
|
50,000 |
|
|
|
2.90 |
% |
|
|
50,000 |
|
|
|
* |
|
Emily
Chui-Hung Tong |
|
|
|
|
50,000 |
|
|
|
2.90 |
% |
|
|
50,000 |
|
|
|
* |
|
Jason Kon Man
Wong |
|
|
|
|
25,000 |
|
|
|
1.45 |
% |
|
|
25,000 |
|
|
|
* |
|
Haibin Wang
|
|
|
|
|
25,000 |
|
|
|
1.45 |
% |
|
|
25,000 |
|
|
|
* |
|
Foelan Wong
|
|
|
|
|
25,000 |
|
|
|
1.45 |
% |
|
|
25,000 |
|
|
|
* |
|
Hai Wang
|
|
|
|
|
25,000 |
|
|
|
1.45 |
% |
|
|
25,000 |
|
|
|
* |
|
All directors
and executive officers as a group (6 individuals) |
|
|
|
|
200,000 |
|
|
|
11.6 |
% |
|
|
200,000 |
|
|
|
2.54 |
% |
(1) |
|
Unless otherwise indicated, the business address of each of the
individuals is Room 1102, 11/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong. |
(2) |
|
Includes the 320,000 private units to be purchased by our
sponsor 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 225,000 ordinary shares held by our sponsor. |
(3) |
|
Includes 1,525,000 shares held by DeTiger Holdings Limited prior
to the offering and 1,620,000 shares held by DeTiger Holdings Limited after the offering. Ms. Winnie Lai Ling Ng is the sole director and 100% owner of
DeTiger Holdings Limited and exercises voting and dispositive power over the shares held by such entity. |
(4) |
|
Based on 1,725,000 ordinary shares immediately prior
to this offering. |
(5) |
|
Based on 7,820,000 ordinary shares immediately after
this offering (assumes the over-allotment option has not been exercised and an aggregate of 225,000 founder shares have been forfeited by
our sponsor). |
Immediately after this offering
(without the exercise of the underwriters over-allotment option), our initial shareholders will beneficially own 23.18% of the then issued and
outstanding ordinary shares (assuming they do not purchase any units in this offering without giving effect to private placement).
Because of this ownership block, our
initial shareholders may be able to effectively influence the outcome of all matters requiring approval by our shareholders, including the election of
directors, amendments
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to our memorandum and articles of
association and approval of significant corporate transactions other than approval of our initial business combination.
To the extent the underwriters do not
exercise the over-allotment option, up to an aggregate of 225,000 founder shares held by our sponsor will be subject to forfeiture. Our sponsor will be
required to forfeit only a number of founder shares necessary to maintain our initial shareholders20% ownership interest in our ordinary shares
(assuming they do not purchase any units in this offering and without giving effect to private placement) after giving effect to the offering and
without giving effect to the exercise, if any, of the underwriters over-allotment option.
All of the founder shares outstanding
prior to the date of this prospectus will be placed in escrow at [], maintained by Continental Stock Transfer & Trust Company, as
escrow agent. Subject to certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the
earlier of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which the closing price of our
ordinary shares equals or exceeds $12.50 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 and the remaining 50% of the founder shares will not be
transferred, assigned, sold or released from escrow until one year after the date of the consummation of our initial business combination, 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 shareholders having the right to exchange their ordinary shares for cash, securities or other property. Up to
225,000 of the founder 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) to any persons (including their affiliates and shareholders)
participating in the private placement of the private units, officers, directors, shareholders, employees and members of our sponsor and its
affiliates, (2) amongst initial holders, to our officers, directors and employees, to a holders affiliates or its members upon its liquidation,
(3) to relatives and trusts for estate planning purposes, (4) by virtue of the laws of descent and distribution upon death, (5) pursuant to a qualified
domestic relations order, (6) by certain pledges to secure obligations incurred in connection with purchases of our securities, (7) 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 (8) to us for no value for cancellation in connection with the consummation of our initial business combination, in each case (except for
clause 8 where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without
limitation, the right to vote their ordinary shares and the right to receive cash dividends, if declared. If dividends are declared and payable in
ordinary shares, 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 founder shares.
Our sponsor and EarlyBirdCapital have
committed that they and/or their respective designees will purchase an aggregate of 320,000 private units at $10.00 per unit, among which
290,000 units will be purchased by our sponsor (and/or its designees) and 30,000 units will be purchased by EarlyBirdCapital (and/or its
designees). These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our sponsor (and/or its
designees) and EarlyBirdCapital (and/or its designees) 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 the number of private units (up to a maximum of 33,750 private units) that is
necessary to maintain in the trust account an amount equal to $10.05 per share sold to the public in this offering. 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, in each case so long as they continue to be held by the initial purchasers or their permitted
transferees. However, the holders have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose an
amendment to our memorandum and articles of association with respect to our pre-business combination activities prior to the consummation
of
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such a business combination, (C)
not to redeem any private shares in connection with a shareholder vote to approve our proposed initial business combination and (D) that such private
shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the purchasers
of the private units have agreed not to transfer, assign or sell any of the private units until 30 days after the completion of our initial business
combination.
Registration Rights
The Initial Shareholders will be
entitled to registration rights with respect to their initial shares and the purchasers of the Private Units will be entitled to
registration rights with respect to the Private Units (and underlying securities), 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 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 Units (or underlying securities) are entitled to demand that the Company register these securities
at any time after the Company consummates a Business Combination. In addition, the holders have certain piggy-back
registration rights on registration statements filed after the Companys consummation of a Business Combination.
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CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS
In June, 2014 we issued an aggregate of
1,725,000 founder shares to our initial shareholders for an aggregate purchase price of $25,000 in cash, or approximately $0.014 per share. If the
underwriters determine the size of the offering should be increased, a share dividend would be effectuated in order to maintain the ownership
represented by the founder shares at the same percentage, as was the case before the share dividend 225,000 founder shares will be subject to
forfeiture by our sponsor if the underwriters over-allotment option is exercised in full. On or about June 9, 2014, our sponsor transferred
25,000 ordinary shares to each of our independent directors.
Our initial shareholders have agreed
not to transfer, assign or sell any of the founder shares (except to certain permitted transferees as described below) until, with respect to 50% of
the founder shares, the earlier of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which the
closing price of our ordinary shares equals or exceeds $12.50 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 the
remaining 50% of the founder shares, upon one year after the date of the consummation of our initial business combination, 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 shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Our sponsor (and/or its designees) has
committed to purchase an aggregate of 290,000 (or 320,471 if the overallotment is exercised in full) insider units in a private placement
that will occur simultaneously with the closing of this offering. Our sponsor (and/or its designees) has agreed not to transfer, assign or sell any of
the shares included in the insider units and the respective ordinary shares underlying the rights and the warrants included in the insider units
until 30 days after the completion of our initial business combination.
Our sponsor (or an affiliate of our
sponsor) agreed, from the date that our securities are first listed on the Nasdaq Capital Market through the earlier of our consummation of our initial
business combination and our liquidation, to make available to us office space, utilities and secretarial and administrative services, as we may
require from time to time. We have agreed to pay our sponsor $10,000 per month for these services. However, this arrangement is solely for our benefit
and is not intended to provide our sponsor with compensation in lieu of salary. We believe, based on rents and fees for similar services in the Hong
Kong metropolitan area, that the fee charged by our sponsor is at least as favorable as we could have obtained from an unaffiliated
person.
Other than the $10,000 per-month
administrative fee as described above, reimbursement of any out-of-pocket expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable business combinations, no compensation or fees of any kind, including
finders fees, consulting fees or other similar compensation, will be paid to our sponsor, officers or directors, or to any of their respective
affiliates, prior to or with respect to our initial business combination (regardless of the type of transaction that it is). Our independent directors
will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will be responsible for
reviewing and approving all related party transactions as defined under Item 404 of Regulation S-K, after reviewing each such transaction for potential
conflicts of interests and other improprieties.
As of the date of this prospectus, our
sponsor has also advanced to us an aggregate of $125,000 to cover expenses related to this offering. This loan will be payable without interest on
demand. We intend to repay this loan from the proceeds of this offering not placed in the trust account.
In addition, in order to finance
transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or our officers and directors
may, but are not obligated to, loan us funds as may be required. If we consummate our initial business combination, we would repay such loaned amounts.
In the event that the initial business combination does not close, we may use a portion of the offering proceeds held outside the trust account to
repay such loaned amounts but no proceeds from our
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trust account would be used for
such repayment, other than the interest on such proceeds that may be released to us for working capital purposes. 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 (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the
50,000 rights included in the private units would result in the issuance of 5,000 ordinary shares upon the closing of our business combination as
well as 50,000 warrants to purchase 25,000 shares).
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 our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to
our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the
time of a shareholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the
post-combination business to determine executive and director compensation.
All ongoing and future transactions
between us and any member of our management team or his or her respective affiliates will be on terms believed by us at that time, based upon other
similar arrangements known to us, to be no less favorable to us than are available from unaffiliated third parties. It is our intention to obtain
estimates from unaffiliated third parties for similar goods or services to ascertain whether such transactions with affiliates are on terms that are no
less favorable to us than are otherwise available from such unaffiliated third parties. If a transaction with an affiliated third party were found to
be on terms less favorable to us than with an unaffiliated third party, we would not engage in such transaction.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would
obtain an opinion from an independent investment banking firm that our initial business combination is fair to our shareholders from a financial point
of view.
We have entered into a registration
rights agreement with respect to the founder shares and insider units, which is described under the heading Principal Shareholders
Registration Rights.
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DESCRIPTION OF
SECURITIES
We are a company incorporated in the
British Virgin Islands as a BVI business company (company number 1819503) and our affairs are governed by our memorandum and articles of association,
the Companies Act and the common law of the British Virgin Islands. We are authorized to issue an unlimited number of both ordinary shares of no par
value and preferred shares of no par value. The following description summarizes certain terms of our shares as set out more particularly in our
memorandum and articles of association. Because it is only a summary, it may not contain all the information that is important to you.
Units
Each unit consists of one ordinary
share, one right and one warrant. Each right entitles the holder to automatically receive one-tenth (1/10) of an ordinary share
upon consummation of our initial business combination. Each warrant entitles the holder to purchase one half of one ordinary share exercisable at
$12.00 per whole share. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares.
This means that only an even number of warrants may be exercised at any given time by a warrantholder. For example, if a warrant holder holds
one warrant to purchase one-half of one share, such warrant shall not be exercisable. If a warrantholder holds two warrants, such warrants will
be exercisable for one share.
In no event will the ordinary
shares, rights and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited
balance sheet reflecting our receipt of the gross proceeds of this offering. We will file a Current Report on Form 8-K which includes this audited
balance sheet upon the consummation of this offering, which is anticipated to take place three business days after the date of this prospectus. The
audited balance sheet will include proceeds we received from the exercise of the over-allotment option if such option is exercised prior to the filing
of the Current Report on Form 8-K. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on
Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the
underwriters over-allotment option.
Ordinary Shares
As of the date of this prospectus,
there were 1,725,000 ordinary shares outstanding, all of which were held of record by our initial shareholders. This includes an aggregate of 225,000
ordinary shares subject to forfeiture by our sponsor to the extent that the underwriters over-allotment option is not exercised in full so that
our initial shareholders will own 20.0% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this
offering and without giving effect to the private placement). Upon closing of this offering, 7,820,000 ordinary shares will be outstanding
(assuming no exercise of the underwriters over-allotment option).
Under the Companies Act, the ordinary
shares are deemed to be issued when the name of the shareholder is entered in our register of members. Our register of members will be maintained by
our transfer agent Continental Stock Transfer & Trust Company, which will enter the name of Cede & Co. in our register of members on the
closing of this offering as nominee for each of the respective shareholders. If (a) information that is required to be entered in the register of
members is omitted from the register or is inaccurately entered in the register, or (b) there is unreasonable delay in entering information in the
register, a shareholder of the company, or any person who is aggrieved by the omission, inaccuracy or delay, may apply to the British Virgin Islands
Courts for an order that the register be rectified, and the court may either refuse the application or order the rectification of the register, and may
direct the company to pay all costs of the application and any damages the applicant may have sustained.
At any general meeting on a show of
hands every ordinary shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative)
or by proxy will have one vote for each share held on all matters to be voted on by shareholders. Voting at any meeting of the ordinary shareholders is
by show of hands unless a poll is demanded. A poll may be demanded by shareholders present
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in person or by proxy if the
shareholder disputes the outcome of the vote on a proposed resolution and the chairman shall cause a poll to be taken. Prior to the consummation of our
initial business combination, the rights attaching to ordinary shares (including those provisions designed to provide certain rights and protections to
our ordinary shareholders) may only be amended by a resolution of persons holding 65% (or 50% if approved in connection with our initial business
combination) of our outstanding ordinary shares attending and voting on such amendment. Other provisions of our memorandum and articles of association
may be amended prior to the consummation of our initial business combination if approved by a majority of the votes of shareholders attending and
voting on such amendment or by resolution of the directors. Following the consummation of, or in connection with, our initial business combination, the
rights and obligations attaching to our ordinary shares and other provisions of our memorandum and articles of association may be amended if approved
by a majority of the votes of shareholders attending and voting on such amendment or by resolution of the directors. 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 voted for the election
of directors can elect all of the directors. Our shareholders are entitled to receive ratable dividends when, as and if declared by the board of
directors out of funds legally available therefore.
We may not currently intend to hold an
annual meeting of shareholders until after we consummate our initial business combination. Therefore, if our shareholders want us to hold a meeting
prior to such consummation, they may requisition the directors to hold one upon the written request of members entitled to exercise at least 30 percent
of the voting rights in respect of the matter for which the meeting is requested. Under British Virgin Islands law, we may not increase the required
percentage to call a meeting above such 30 percent level.
Our memorandum and articles of
association will provide our shareholders with the opportunity to redeem their shares upon the consummation of our initial business combination at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable),
divided by the number of then outstanding public shares, subject to the limitations described herein and any limitations (including but not limited to
cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination. The amount in the trust account is
initially anticipated to be $10.05 per share, whether or not the underwriters over-allotment option is exercised in full. Our initial
shareholders have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the consummation of
our initial business combination. We intend to obtain shareholder approval in connection with our initial business combination. If we so decide, we
will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. If we seek shareholder approval, we will consummate our initial business combination only if a majority of the votes of
ordinary shareholders who being so entitled attend and vote at the general meeting are voted in favor of the business combination. However, the
participation of our sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as described in this prospectus),
if any, could result in the approval of our initial business combination even if a majority of our public shareholders vote, or indicate their
intention to vote, against such business combination. For purposes of seeking approval of the majority of our outstanding ordinary shares, non-votes
will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not
less than 10 days nor more than 60 days) prior written notice of any such meeting, if held, at which a vote shall be taken to approve our initial
business combination.
If we seek shareholder approval in
connection with our initial business combination, our initial shareholders have agreed to vote their founder shares and any public shares purchased
during or after the offering in favor of our initial business combination. Each public shareholder may elect to redeem their public shares irrespective
of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if a
shareholder vote is not required for business or other legal reasons, we will, pursuant to our memorandum and articles of association, offer to redeem
our public shares pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to consummating
our
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initial business combination. Our
memorandum and articles of association requires these tender offer documents to contain substantially the same financial and other information about
the initial business combination and the redemption rights as is required under the SECs proxy rules.
Pursuant to our memorandum and articles
of association, if we are unable to consummate our initial business combination within 18 (or 24 if extended) from the closing of this offering, we
will, as promptly as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust
account (less up to $20,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption
and cease all operations except for the purposes of winding up of our affairs. This redemption of public shareholders from the trust account will be
done automatically by function of our memorandum and articles of association and prior to any formal voluntary liquidation of the company. Our sponsor
has agreed to waive its right to receive liquidating distributions with respect to its founder shares if we fail to consummate our initial business
combination within 18 (or 24 if extended) from the closing of this offering. However, if our sponsor or any of our officers, directors or affiliates
acquire public shares in or after this offering, they will be entitled to receive liquidating distributions with respect to such public shares if we
fail to consummate our initial business combination within the required time period.
Our shareholders are entitled to
receive ratable dividends when, as and if declared by the board of directors out of legally available funds. In the event of a liquidation or winding
up of the company after our initial business combination, our shareholders are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the ordinary
shares. Our shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares,
except that we will provide our shareholders with the redemption rights set forth above.
Founder Shares
The founder shares are identical to the
other ordinary shares included in the units being sold in this offering, and holders of founder shares have the same shareholder rights as public
shareholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more detail below, and (ii) our initial
shareholders agreed (A) to waive their rights to liquidating distribution with respect to their founder shares and public shares in connection with the
consummation of our initial business combination and (B) to waive their redemption rights with respect to their founder shares if we fail to consummate
our initial business combination within 18 (or 24 if extended) from the closing of this offering, although they will be entitled to redemption rights
with respect to any public shares they hold if we fail to consummate our initial business combination within such time period. Our initial shareholders
have agreed to vote their founder shares and any public shares purchased during or after the offering in favor of our initial business combination and
our officers and directors have also agreed to vote any public shares purchased during or after the offering in favor of our initial business
combination.
Our initial shareholders have agreed
not to transfer, assign or sell any of the founder shares (except to certain permitted transferees as described below) until, with respect to 50% of
the founder shares, the earlier of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which the
closing price of our ordinary shares equals or exceeds $12.50 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 the
remaining 50% of the founder shares, upon one year after the date of the consummation of our initial business combination, 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 shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Preferred
shares
Our memorandum and articles of
association authorizes the creation and issuance without shareholder approval of an unlimited number of preferred shares divided into five classes,
Class A through Class E each with such designation, rights and preferences as may be determined by a resolution of our board of
directors
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to amend the memorandum and
articles of association to create such designations, rights and preferences. We have five classes of preferred shares to give us flexibility as to the
terms on which each Class is issued. Unlike Delaware law, all shares of a single class must be issued with the same rights and obligations.
Accordingly, starting with five classes of preference shares will allow us to issue shares at different times on different terms. No preferred shares
are currently issued or outstanding. Accordingly, our board of directors is empowered, without shareholder approval, to issue preferred shares with
dividend, liquidation, redemption, voting or other rights, which could adversely affect the voting power or other rights of the holders of ordinary
shares. However, the underwriting agreement prohibits us, prior to our initial business combination, from issuing preferred shares which participate in
any manner in the proceeds of the trust account, or which vote as a class with the ordinary shares on our initial business combination. We may issue
some or all of the preferred shares to effect our initial business combination. In addition, the preferred shares 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 preferred shares, we may do so in the
future.
The rights of preferred shareholders,
once the preferred shares are in issue, may only be amended by a resolution to amend our memorandum and articles of association provided such amendment
is also approved by a separate resolution of a majority of the votes of preferred shareholders who being so entitled attend and vote at the class
meeting of the relevant preferred class. If our preferred shareholders want us to hold a meeting of preferred shareholders (or of a class of preferred
shareholders), they may requisition the directors to hold one upon the written request of preferred shareholders entitled to exercise at least 30
percent of the voting rights in respect of the matter (or class) for which the meeting is requested. Under British Virgin Islands law, we may not
increase the required percentage to call a meeting above 30 percent.
Warrants
No warrants are currently
outstanding. Each public warrant entitles the registered holder to purchase one half of one ordinary share at a price of $12.00 per full share,
subject to adjustment as discussed below, at any time commencing on the later of the completion of an initial business combination or 12 months
from the date of this prospectus. Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of
shares. This means that only an even number of warrants may be exercised at any given time by a warrantholder. However, no public warrants will
be exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of
the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement
covering the ordinary shares issuable upon exercise of the public warrants is not effective within 90 days from 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 pursuant to an available exemption
from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise
their warrants on a cashless basis. The warrants will expire five years from the consummation of our initial business combination 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 private warrants will be exercisable for
cash (even if a registration statement covering the ordinary shares 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 outstanding warrants issued upon exercise of the unit purchase option issued to
EarlyBirdCapital and/or its designees), in whole and not in part, at a price of $.01 per warrant:
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at any time while the warrants are
exercisable, |
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upon not less than 30 days prior written notice of
redemption to each warrant holder, |
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if, and only if, the reported last sale price of the
ordinary shares equals or exceeds $18.00 per share, for any 20 trading days within a 30 trading day period ending on the third
business day prior to the notice of redemption to warrant holders, and |
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if, and only if, there is a current registration statement in
effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred
to above 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.
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 ordinary
shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares 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 ordinary shares 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 ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive share
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
ordinary shares 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 ordinary shares 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 ordinary shares and any voting rights until they exercise their warrants and receive ordinary shares. After the
issuance of ordinary shares 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 shareholders.
Except as described above, no public
warrants will be exercisable and we will not be obligated to issue ordinary shares unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the ordinary shares issuable upon exercise of the warrants is current and the ordinary shares 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 ordinary
shares issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do
so and, if we do not maintain a current prospectus relating to the ordinary shares issuable upon exercise of the warrants, holders will
be unable to exercise their warrants and we will not be required to settle any such warrant exercise. If the prospectus relating to the ordinary
shares issuable upon the exercise of the warrants is not current or if the ordinary shares is not qualified or exempt from qualification in the
jurisdictions in which
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the holders of the warrants reside, we will not be required to net cash settle
or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may
expire worthless.
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 ordinary shares
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 ordinary shares to be issued to the warrant
holder.
Rights
Each holder of a right will
automatically receive one-tenth (1/10) of one ordinary share upon consummation of our initial business combination, even if the holder of such right
redeemed all ordinary shares held by him, her or it in connection with the initial business combination or an amendment to our Memorandum and Articles
of Association with respect to our pre-business combination activities. No additional consideration will be required to be paid by a holder of rights
in order to receive his, her or its additional ordinary shares upon consummation of an initial business combination as the consideration related
thereto has been included in the unit purchase price paid for by investors in this offering. The shares issuable upon exchange of the rights will be
freely tradable (except to the extent held by affiliates of ours). If we enter into a definitive agreement for a business combination in which we will
not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of
the ordinary share will receive in the transaction on an as-converted into ordinary share basis. If we are unable to complete an initial business
combination within the required time period and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds
with respect to their rights, nor will they receive any distribution from our assets held outside of the trust account with respect to such rights, and
the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon
consummation of an initial business combination. Additionally, in no event will we be required to net cash settle the rights. Accordingly, the rights
may expire worthless. Although a company incorporated in the British Virgin Islands may issue fractional shares, it is not our intention to
issue any fractional shares. In the event that any holder would otherwise be entitled to any fractional share upon exchange of his, her or its
rights, we will reserve the option, to the fullest extent permitted by the Memorandum and Articles of Association, the Act and other applicable
law, to deal with any such fractional entitlement at the relevant time as we see fit, which would include the rounding down of any
entitlement to receive ordinary shares to the nearest whole share (and in effect extinguishing any fractional entitlement), or the holder
being entitled to hold any remaining fractional entitlement (without any share being issued) and to aggregate the same with any future
fractional entitlement to receive shares in the Company until the holder is entitled to receive a whole number. Any rounding down and
extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant
rights, such that value received on exchange of the rights may be considered less than the value that the holder would otherwise expect to
receive.
Purchase Option
We have agreed to sell to
EarlyBirdCapital (and/or its designees) an option to purchase up to 600,000 units at $11.75 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 ordinary share 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
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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.
Insider units
The insider units (including the
warrants or ordinary shares issuable underlying the rights or upon exercise of the warrants) will not be transferable, assignable or
salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under
Principal Shareholders , to our officers and directors and other persons or entities affiliated with the sponsor) and they will not be
redeemable by us so long as they are held by members of the sponsor or their permitted transferees. Otherwise, the insider units have terms and
provisions that are identical the units sold in this offering except the warrants included in the insider 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. If the warrants included in the insider units are held by holders other than the holders who purchased insider units or their
permitted transferees, the warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in
the units being sold in this offering. The price of the insider units was determined in negotiations between our sponsor and the underwriter for this
offering, with reference to the prices paid by initial shareholders for such rights and warrants in special purpose acquisition companies, which
have recently consummated their initial public offerings.
Our Transfer Agent, Warrant
Agent, and Right Agent
The transfer agent for our ordinary
shares, warrant agent for our warrants, and right agent for our rights is Continental Stock Transfer & Trust Company.
Memorandum and Articles of Association
Our memorandum and articles of
association became effective under the laws of the British Virgin Islands on 8 April, 2014. As set forth in the memorandum of association, the objects
for which are established are unrestricted and we shall have full power and authority to carry out any object not prohibited by the Companies Act or as
the same may be revised from time to time, or any other law of the British Virgin Islands.
Our memorandum and articles of
association contains provisions designed to provide certain rights and protections to our ordinary shareholders prior to the consummation of our
initial business combination. These provisions cannot be amended without the approval of 65% (or 50% if approved in connection with our initial
business combination) of our outstanding ordinary shares attending and voting on such amendment. Our initial shareholders, who will beneficially own
20.0% of our ordinary shares upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote
to amend our memorandum and articles of association and will have the discretion to vote in any manner they choose. Prior to our initial business
combination, if we seek to amend any provisions of our memorandum and articles of association relating to shareholders rights or pre-business
combination activity, we will provide dissenting public shareholders with the opportunity to redeem their public shares in connection with any such
vote on any proposed amendments to our memorandum and articles of association. We and our directors and officers have agreed not to propose any
amendment to our memorandum and articles of association that would affect the substance and timing of our obligation to redeem our public shares if we
are unable to consummate our initial business combination within 18 (or 24 if extended) from the closing of this offering. Our initial shareholders
have agreed to waive any redemption rights with respect to any founder shares and any public shares they may hold in connection with any vote to amend
our memorandum and articles of association prior to our initial business combination.
Specifically, our memorandum and
articles of association provide, among other things, that:
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If we are unable to consummate our initial business combination
within 18 (or 24 if extended) from the closing of this offering, we will, as promptly as reasonably possible but not more than five |
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business days thereafter, distribute the aggregate amount then
on deposit in the trust account (less up to $20,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public
shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs. This redemption of public shareholders
from the trust account shall be done automatically by function of our memorandum and articles of association and prior to commencing any voluntary
liquidation; and |
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except in connection with the consummation of our initial
business combination, prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i)
receive funds from the trust account or (ii) vote on any initial business combination; |
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although we do not intend to enter into our initial business
combination with a target business that is affiliated with our sponsor, our directors or officers, we are not prohibited from doing so. In the event we
enter into such a transaction, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is
a member of FINRA that such our initial business combination is fair to our shareholders from a financial point of view; and |
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we will not effectuate our initial business combination with
another blank check company or a similar company with nominal operations. |
In addition, our memorandum and
articles of association provide that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to
be less than $5,000,001.
Changes in Authorized Shares
We are authorized to issue an unlimited
number of shares, which will have rights, privileges, restrictions and conditions attaching to them as the shares in issue. We may by resolution of
directors or shareholders:
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consolidate and divide all or any of our unissued authorized
shares into shares of larger or smaller amount than our existing shares; |
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cancel any ordinary shares which, at the date of the passing of
the resolution, have not been taken or agreed to be taken by any person; or |
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create new classes of shares with preferences to be determined
by resolution of the board of directors to amend the memorandum and articles of association to create new classes of shares with such preferences at
the time of authorization, although any such new classes of shares, with the exception of the preferred shares, may only be created with prior
shareholder approval. |
Pre-emption Rights
There are no pre-emption rights
applicable to the issuance of new shares under our memorandum and articles of association.
Variation of Rights of Shares
As permitted by the Companies Act and
our memorandum of association, we may vary the rights attached to any class of shares only with: (i) in the case of the ordinary shares prior to our
initial business combination, the consent of not less than 65% (or 50% if for the purposes of approving, or in connection with, the consummation of our
initial business combination) of the votes who are in attendance and vote at a meeting, or (ii) in the case of the preferred shares, 50% of the votes
of shareholders who being so entitled attend and vote at a meeting of such shares, except, in each case where a greater majority is required under our
memorandum and articles of association or the Companies Act, provided that that for these purposes the creation, designation or issue of preferred
shares with rights and privileges ranking in priority to an existing class of shares is deemed not to be a variation of the rights of such existing
class and may in accordance with our memorandum and articles of association be effected by resolution of directors without shareholder
approval.
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BRITISH VIRGIN ISLANDS COMPANY
CONSIDERATIONS
Our corporate affairs are governed by
our memorandum and articles of association and the provisions of applicable British Virgin Islands law, including the Companies Act. The Companies Act
differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some significant differences between
the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders. A
brief discussion of certain other provisions of the Companies Act and British Virgin Islands law also follows.
We cannot predict whether British
Virgin Islands Courts would reach the same conclusions based on a particular set of facts as the U.S. courts would be expected to reach. Thus, you may
have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would
shareholders of a corporation incorporated in a United States jurisdiction, which has developed a substantial body of case law. The following table
provides a comparison between the statutory provisions of the Companies Act together with the provisions of our memorandum and articles of association)
and the Delaware General Corporation Law relating to shareholders rights.
British Virgin Islands
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Delaware
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Shareholder Meetings
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Held at a time and place as determined by the directors May be held within or outside the British Virgin
Islands Notice: Under our memorandum and articles of association, a copy of the notice of any meeting shall be given not fewer than
ten (10) days before the date of the proposed meeting to those persons whose names appear in the register of members on the date the notice is given
and are entitled to vote at the meeting. |
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May be held at such time or place as designated in the charter or the by-laws, or if not so designated, as determined by the
board of directors May be held within or without Delaware Notice: Whenever shareholders are required to take any
action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of
remote communication, if any |
Shareholders Voting Rights
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Any person authorized to vote may be represented at a meeting by a proxy who may speak and vote on behalf of the member
Quorum is fixed by our memorandum and articles of association, to consist of the holder or holders present in person or by proxy entitled
to exercise at least 35 percent of the voting rights of the shares of each class or series of shares entitled to vote as a class or series
thereon |
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Any person authorized to vote may authorize another person or persons to act for him by proxy For stock
corporations, the charter or by-laws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of
shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares shall constitute a quorum |
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British Virgin Islands
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Delaware
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Under our
memorandum and articles of association, subject to any rights or restrictions attached to any shares, at any general meeting on a show of hands every
shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy shall
have one vote and on a poll every shareholder present in person (or, in the case of a shareholder being a corporation, by its duly appointed
representative) or by proxy shall have one vote for each share which such shareholder is the holder. Voting at any meeting of the shareholders is by
show of hands unless a poll is demanded. A poll may be demanded by shareholders present in person or by proxy if the shareholder disputes the outcome
of the vote on a proposed resolution and the chairman shall cause a poll to be taken. |
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For
non-stock companies, the charter or by-laws may specify the number of shareholders to constitute a quorum. In the absence of this, one-third of the
shareholders shall constitute a quorum |
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Changes in the
rights attaching to shares as set forth in the memorandum and articles of association require approval of not less than 65% (or 50% if for the purposes
of approving, or in connection with, the consummation of our initial business combination) of our outstanding ordinary shares attending and voting on
such amendment prior to the consummation of our initial business combination and a majority of our outstanding ordinary shares attending and voting at
the general meeting following the consummation of our initial business combination, in the case of the ordinary shares, or 50% in the case of the
preferred shares of the votes of shareholders who being so entitled attend and vote at a meeting of such class, except, in each case, where a greater
majority is required under our memorandum and articles of association or the Companies Act, provided that that for these purposes the creation,
designation or issue of preferred shares with rights and privileges ranking in priority to an existing class of shares shall be deemed not to be a
variation of the rights of such existing class. |
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Except as provided in the charter documents, changes in the rights of shareholders as set forth in the charter documents require approval of a
majority of its shareholders |
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The memorandum
and articles of association do not provide for cumulative voting in the election of directors |
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The
memorandum and articles of association may provide for cumulative voting |
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If we decide to
seek shareholder approval in respect of the consummation of our initial business combination, such approval may be by a majority vote of shareholders
who being so entitled attend and vote at the general meeting |
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Approval of our initial business combination may be by a majority of outstanding shares if such transaction involves the merger of such
entity |
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British Virgin Islands
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Delaware
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All other matters
to be decided upon by the shareholders require a majority vote of shareholders who being so entitled attend and vote at the general meeting, unless the
Companies Act requires a higher majority. Our memorandum and articles of association also may be amended by resolution of directors, including to
create the rights, preferences, designations and limitations attaching to any blank check preferred shares. |
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Directors
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Board must
consist of at least one director |
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Board
must consist of at least one member |
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Maximum and
minimum number of directors can be changed by an amendment to the articles of association, with such amendment being passed by a resolution of
shareholders or a resolution of directors |
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Number of board members shall be fixed by the by-laws, unless the charter fixes the number of directors, in which case a change in the number
shall be made only by amendment of the charter |
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Directors are
appointed for three year staggered terms by the shareholders (as described under Directors below). However, the directors may by resolution
appoint a replacement director to fill a casual vacancy arising on the resignation, disqualification or death of a director. The replacement director
will then hold office until the next annual general meeting at which the director he replaces would have been subject to retirement by
rotation. |
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Directors do not
have to be independent Under our memorandum and articles of association, a director may not be removed from office by a resolution of our
shareholders prior to the consummation of our business combination. |
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Directors do not have to be independent |
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Fiduciary Duties
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Directors and
officers owe fiduciary duties at both common law and under statute as follows: |
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Directors and officers must act in good faith, with the care of a prudent person, and in the best interest of the
corporation. |
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Duty to
act honestly and in good faith in what the directors believe to be in the best interests of the company;
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Directors and officers must refrain from self-dealing, usurping corporate opportunities and receiving improper personal benefits.
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Duty to
exercise powers for a proper purpose and directors shall not act, or agree to act, in a matter that contravenes the Companies Act or the memorandum and
articles of association;
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Decisions made by directors and officers on an informed basis, in good faith and in the honest belief that the action was taken in the best interest of
the corporation will be protected by the business judgment rule.
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British Virgin Islands
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Delaware
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Duty to exercise
the care, diligence and skill that a reasonable director would exercise in the circumstances taking into account, without limitation: |
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(a) the nature of the company; (b) the nature of the decision; and (c) the position of the director and the nature of the
responsibilities undertaken by him.
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The Companies Act
provides that, a director of a company shall, immediately after becoming aware of the fact that he is interested in a transaction entered into, or to
be entered into, by the company, disclose the interest to the board of the company. However, the failure of a director to disclose that interest does
not affect the validity of a transaction entered into by the director or the company, so long as the transaction was not required to be disclosed
because the transaction is between the company and the director himself and is in the ordinary course of business and on usual terms and conditions.
Additionally, the failure of a director to disclose an interest does not affect the validity of the transaction entered into by the company if (a) the
material facts of the interest of the director in the transaction are known by the shareholders and the transaction is approved or ratified by a
resolution of shareholders entitled to vote at a meeting of shareholders or (b) the company received fair value for the transaction. |
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Directors may vote on a matter in which they have an interest so long as the director has disclosed any interests in the
transaction. |
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Pursuant to the
Companies Act, the companys memorandum and articles of association, so long as a director has disclosed any interests in a transaction entered
into or to be entered into by the company to the board he/she may: |
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vote on a
matter relating to the transaction;
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attend a
meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes
of a quorum; and
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sign a
document on behalf of the company, or do any other thing in his capacity as a director, that relates to the transaction.
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British Virgin Islands
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Delaware
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Shareholders Derivative Actions
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Generally
speaking, the company is the proper plaintiff in any action. A shareholder may, with the permission of the British Virgin Islands Court, bring an
action or intervene in a matter in the name of the company, in certain circumstances. Such actions are known as derivative actions. The British Virgin
Islands Court may only grant permission to bring a derivative action where the following circumstances apply: |
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In
any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the
corporation at the time of the transaction of which he complains or that such shareholders stock thereafter devolved upon such shareholder by
operation of law. |
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the
company does not intend to bring, diligently continue or defend or discontinue the proceedings; and
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Complaint shall set forth with particularity the efforts of the plaintiff to obtain the action by the board or the reasons for not making such
effort.
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it is in
the interests of the company that the conduct of the proceedings not be left to the directors or to the determination of the shareholders as a
whole.
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Such action shall not be dismissed or compromised without the approval of the Chancery Court.
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When considering
whether to grant leave, the British Virgin Islands Court is also required to have regard to the following matters: |
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whether the shareholder is acting in good faith; whether a derivative action is in the interests of the company,
taking into account the directors views on commercial matters; whether the action is likely to succeed; the costs
of the proceedings in relation to the relief likely to be obtained; and whether another alternative remedy to the derivative action is
available.
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If we were a Delaware corporation, a shareholder whose shares were canceled in connection with our dissolution, would not be able to bring a derivative
action against us after the ordinary shares have been canceled.
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As noted above, the Companies Act
differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some of the significant provisions
of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar
Arrangements. The Companies Act provides for mergers as that expression is understood under United States corporate law. Under the Companies Act,
two or more companies may either merge into one of such existing companies (the surviving company) or consolidate with both existing
companies ceasing to exist and forming a new company (the consolidated company). The procedure for a merger or consolidation between the
company and another company (which need not be a BVI company, and which may be the companys parent or subsidiary, but need not be) is set out in
the Companies Act. The directors of the BVI company or BVI companies which are to merge or consolidate must approve a written plan of merger or
consolidation which., with the exception of a merger between a parent company and its subsidiary, must also be approved by a resolution of a majority
of the shareholders who are entitled to vote and actually vote at a quorate meeting of shareholders or by written resolution of the shareholders of the
BVI company or BVI companies which are to merge. A foreign company which is able under the laws of its foreign jurisdiction to participate in the
merger or consolidation is required by the Companies Act to comply with the laws of that foreign jurisdiction in relation to the merger or
consolidation. The company must then execute articles of merger or consolidation, containing certain prescribed details. The plan and articles of
merger or consolidation are then filed with the Registrar of Corporate Affairs in the British Virgin Islands. The
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Registrar then registers the
articles of merger or consolidation and any amendment to the memorandum and articles of the surviving company in a merger or the memorandum and
articles of association of the new consolidated company in a consolidation and issue a certificate of merger or consolidation (which is conclusive
evidence of compliance with all requirements of the Companies Act in respect of the merger or consolidation). The merger is effective on the date that
the articles of merger are registered with the Registrar or on such subsequent date, not exceeding thirty days, as is stated in the articles of merger
or consolidation.
As soon as a merger becomes effective:
(a) the surviving company or consolidated company (so far as is consistent with its memorandum and articles of association, , as amended or established
by the articles of merger or consolidation) has all rights, privileges, immunities, powers, objects and purposes of each of the constituent companies;
(b) in the case of a merger, the memorandum and articles of association of any surviving company are automatically amended to the extent, if any, that
changes to its amended memorandum and articles of association are contained in the articles of merger or, in the case of a consolidation, the
memorandum and articles of association filed with the articles of consolidation are the memorandum and articles of the consolidated company; (c) assets
of every description, including choses-in-action and the business of each of the constituent companies, immediately vest in the surviving company or
consolidated company; (d) the surviving company or consolidated company is liable for all claims, debts, liabilities and obligations of each of the
constituent companies; (e) no conviction, judgment, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing,
against a constituent company or against any member, director, officer or agent thereof, is released or impaired by the merger or consolidation; and
(f) no proceedings, whether civil or criminal, pending at the time of a merger by or against a constituent company, or against any member, director,
officer or agent thereof, are abated or discontinued by the merger or consolidation; but: (i) the proceedings may be enforced, prosecuted, settled or
compromised by or against the surviving company or consolidated company or against the member, director, officer or agent thereof; as the case may be;
or (ii) the surviving company or consolidated company may be substituted in the proceedings for a constituent company. The Registrar shall strike off
the register of companies each constituent company that is not the surviving company in the case of a merger and all constituent companies in the case
of a consolidation.
If the directors determine it to be in
the best interests of the company, it is also possible for a merger to be approved as a Court approved plan of arrangement or scheme of arrangement in
accordance with the Companies Act.. However, we do not anticipate the use of such statutory provisions because we expect the required terms of the
initial business combination will be capable of being achieved through other means, such as a merger or consolidation (as described above), a share
exchange, asset acquisition or control, through contractual arrangements, of an operating business.
Poison Pill Defenses. Under the
Companies Act there are no provisions, which specifically prevent the issuance of preferred shares or any such other ‘poison pill measures.
The memorandum and articles of association of the company also do not contain any express prohibitions on the issuance of any preferred shares.
Therefore, the directors without the approval of the holders of ordinary shares may issue preferred shares that have characteristics that may be deemed
to be anti-takeover. Additionally, such a designation of shares may be used in connection with plans that are poison pill plans. However, as noted
above under the Companies Act, a director in the exercise of his powers and performance of his duties is required to act honestly and in good faith in
what the director believes to be the best interests of the company.
Directors: Our directors are
appointed by our shareholders and are subject to rotational retirement every three years. The initial terms of office of the Class I, Class II and
Class III directors have been staggered over a period of three years to ensure that all directors of the company do not face reelection in the same
year. However, the directors may by resolution appoint a replacement director to fill a casual vacancy arising on the resignation, disqualification or
death of a director. The replacement director will then hold office until the next annual general meeting at which the director he replaces would have
been subject to retirement by rotation. Under our memorandum and articles of association, a director may not be removed from office by a resolution of
our shareholders prior to the consummation of our business combination. There is nothing under the laws of the British Virgin Islands, which
specifically prohibits or restricts the creation of cumulative voting rights for the election of our directors. Our memorandum and articles of
association do not provide for cumulative voting for such elections.
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There are no share ownership
qualifications for directors.
Meetings of our board of directors may
be convened at any time by any of our directors.
A meeting of our board of directors
will be quorate if at least a majority of the directors are present or represented by an alternate director. At any meeting of our directors, each
director, whether by his or her presence or by his or her alternate, is entitled to one vote. Questions arising at a meeting of our board of directors
are required to be decided by simple majority votes of the directors present or represented at the meeting. In the case of an equality of votes, the
chairman of the meeting shall have a second or deciding vote. Our board of directors also may pass resolutions without a meeting by unanimous written
consent.
Indemnification of Directors:
Our memorandum and articles of association provide that, subject to certain limitations, the company shall indemnify its directors and officers against
all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings. Such indemnity only applies if the person acted honestly and in good faith with a view to the best
interests of the company and, in the case of criminal proceedings, the person had no reasonable cause to believe that their conduct was unlawful. The
decision of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the company and as to
whether the person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the
memorandum and articles of association, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and
with a view to the best interests of the company or that the person had reasonable cause to believe that his conduct was unlawful.
Directors and Conflicts of
Interest. As noted in the table above, pursuant to the Companies Act and the companys memorandum and articles of association, a director of a
company who has an interest in a transaction and who has declared such interest to the other directors, may:
(a) |
|
vote on a matter relating to the transaction; |
(b) |
|
attend a meeting of directors at which a matter relating to the
transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and |
(c) |
|
sign a document on behalf of the company, or do any other thing
in his capacity as a director, that relates to the transaction. |
Shareholders Suits. Our
British Virgin Islands counsel is not aware of any reported class action having been brought in a British Virgin Islands court. The enforcement of the
companys rights will ordinarily be a matter for its directors.
In certain limited circumstances, a
shareholder has the right to seek various remedies against the company in the event the directors are in breach of their duties under the Companies
Act. Pursuant to Section 184B of the Companies Act, if a company or director of a company engages in, or proposes to engage in or has engaged in,
conduct that contravenes the provisions of the Companies Act or the memorandum or articles of association of the company, the British Virgin Islands
Court may, on application of a shareholder or director of the company, make an order directing the company or director to comply with, or restraining
the company or director from engaging in conduct that contravenes the Companies Act or the memorandum or articles. Furthermore, pursuant to section
184I(1) of the Companies Act a shareholder of a company who considers that the affairs of the company have been, are being or likely to be, conducted
in a manner that is, or any acts of the company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in
that capacity, may apply to the British Virgin Islands Court for an order which, inter alia, can require the company or any other person to pay
compensation to the shareholders.
The Companies Act provides for a series
of remedies available to shareholders. Where a company incorporated under the Companies Act conducts some activity, which breaches the Act or the
companys memorandum and articles of association, the court can issue a restraining or compliance order. Under the Companies Act, a shareholder of
a company may bring an action against the company for breach of a duty
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owed by the company to him as a
member. A shareholder also may, with the permission of the British Virgin Islands Court, bring an action or intervene in a matter in the name of the
company, in certain circumstances. Such actions are known as derivative actions. As noted above, the British Virgin Islands Court may only grant
permission to bring a derivative action where the following circumstances apply:
|
|
the company does not intend to bring, diligently continue or
defend or discontinue proceedings; and |
|
|
it is in the interests of the company that the conduct of the
proceedings not be left to the directors or to the determination of the shareholders as a whole. |
|
|
When considering whether to grant leave, the British Virgin
Islands Court is also required to have regard to the following matters: |
|
|
whether the shareholder is acting in good faith; |
|
|
whether a derivative action is in the companys best
interests, taking into account the directors views on commercial matters; |
|
|
whether the action is likely to proceed; |
|
|
the costs of the proceedings; and |
|
|
whether an alternative remedy is available. |
Any member of a company may apply to
the British Virgin Islands Court under the Insolvency Act for the appointment of a liquidator to liquidate the company and the court may appoint a
liquidator for the company if it is of the opinion that it is just and equitable to do so.
The Companies Act provides that any
shareholder of a company is entitled to payment of the fair value of his shares upon dissenting from any of the following: (a) a merger if the company
is a constituent company, unless the company is the surviving company and the member continues to hold the same or similar shares; (b) a consolidation
if the company is a constituent company; (c) any sale, transfer, lease, exchange or other disposition of more than 50 per cent in value of the assets
or business of the company if not made in the usual or regular course of the business carried on by the company but not including: (i) a disposition
pursuant to an order of the court having jurisdiction in the matter, (ii) a disposition for money on terms requiring all or substantially all net
proceeds to be distributed to the members in accordance with their respective interest within one year after the date of disposition, or (iii) a
transfer pursuant to the power of the directors to transfer assets for the protection thereof; (d) a compulsory redemption of 10 per cent, or fewer of
the issued shares of the company required by the holders of 90 percent, or more of the shares of the company pursuant to the terms of the Act; and (e)
a plan of arrangement, if permitted by the British Virgin Islands Court.
Generally any other claims against a
company by its shareholders must be based on the general laws of contract or tort applicable in the British Virgin Islands or their individual rights
as shareholders as established by the companys memorandum and articles of association. There are common law rights for the protection of
shareholders that may be invoked, largely derived from English common law. Under the general English company law known as the rule in Foss v.
Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express
dissatisfaction with the conduct of the companys affairs by the majority or the board of directors. However, every shareholder is entitled to
seek to have the affairs of the company conducted properly according to law and the constituent documents of the corporation. As such, if those who
control the company have persistently disregarded the requirements of company law or the provisions of the companys memorandum and articles of
association, then the courts may grant relief. Generally, the areas in which the courts will intervene are the following:
|
|
a company is acting or proposing to act illegally or beyond the
scope of its authority; |
|
|
the act complained of, although not beyond the scope of the
authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; |
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|
|
the individual rights of the plaintiff shareholder have been
infringed or are about to be infringed; or |
|
|
those who control the company are perpetrating a fraud on
the minority. |
Under the law of Delaware, the rights
of minority shareholders are similar to that which will be applicable to the shareholders of the company.
Compulsory Acquisition: Under
the Companies Act, subject to any limitations in a companys memorandum or articles, members holding 90% of the votes of the outstanding shares
entitled to vote, and members holding 90% of the votes of the outstanding shares of each class of shares entitled to vote, may give a written
instruction to the company directing the company to redeem the shares held by the remaining members. Upon receipt of such written instruction, the
company shall redeem the shares specified in the written instruction, irrespective of whether or not the shares are by their terms redeemable. The
company shall give written notice to each member whose shares are to be redeemed stating the redemption price and the manner in which the redemption is
to be effected. A member whose shares are to be so redeemed is entitled to dissent from such redemption, and to be paid the fair value of his shares,
as described under Shareholders Suits above.
Share Repurchases and
Redemptions: As permitted by the Companies Act and our memorandum and articles of association, shares may be repurchased, redeemed or otherwise
acquired by us. Depending on the circumstances of the redemption or repurchase, our directors may need to determine that immediately following the
redemption or repurchase we will be able to satisfy our debts as they fall due and the value of our assets exceeds our liabilities. Our directors may
only exercise this power on our behalf, subject to the Companies Act, our memorandum and articles of association and to any applicable requirements
imposed from time to time by the SEC, the Nasdaq Capital Market or any other stock exchange on which our securities are listed.
Dividends: Subject to the
Companies Act and our memorandum and articles of association, our directors may declare dividends at a time and amount they think fit if they are
satisfied, on reasonable grounds, that, immediately after distribution of the dividend, the value of our assets will exceed our liabilities and we will
be able to pay our debts as they fall due. No dividend shall carry interest against us.
Rights of Non-resident or Foreign
Shareholders and Disclosure of Substantial Shareholdings: There are no limitations imposed by our memorandum and articles of association on the
rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum
and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
Untraceable Shareholders: Under
our memorandum and articles of association, we are entitled to sell any shares of a shareholder who is untraceable, as long as: (a) all checks, not
being less than three in total number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (b)
we have not during that time or before the expiry of the three-month period referred to in (c) below received any indication of the existence of the
shareholder or person entitled to such shares by death, bankruptcy or operation of law; and (c) upon expiration of the 12-year period, we have caused
an advertisement to be published in newspapers, giving notice of our intention to sell these shares, and a period of three months or such shorter
period has elapsed since the date of such advertisement. The net proceeds of any such sale shall belong to us, and when we receive these net proceeds
we shall become indebted to the former shareholder for an amount equal to such net proceeds.
Transfer of Shares: Subject to
any applicable restrictions set forth in our memorandum and articles of association, any of our shareholders may transfer all or any of his or her
shares by an instrument of transfer in the usual or common form or in any other form which our directors may approve.
Inspection of Books and Records:
Under the Companies Act, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company available at
the office of the Registrar which will include the companys certificate of incorporation, its memorandum and articles of association (with any
amendments) and records of license fees paid to date and will also disclose any articles of dissolution, articles of merger and a register of charges
if the company has elected to file such a register.
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A member of a company is entitled, on
giving written notice to the company, to inspect:
(a) |
|
the memorandum and articles; |
(b) |
|
the register of members; |
(c) |
|
the register of directors; and |
(d) |
|
the minutes of meetings and resolutions of members and of those
classes of members of which he is a member; and to make copies of or take extracts from the documents and records referred to in (a) to (d)
above. |
Subject to the memorandum and articles
of association, the directors may, if they are satisfied that it would be contrary to the companys interests to allow a member to inspect any
document, or part of a document, specified in (b), (c) or (d) above, refuse to permit the member to inspect the document or limit the inspection of the
document, including limiting the making of copies or the taking of extracts from the records.
Where a company fails or refuses to
permit a member to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the British Virgin
Islands Court for an order that he should be permitted to inspect the document or to inspect the document without limitation.
Dissolution; Winding Up: As
permitted by the Companies Act and our memorandum and articles of association, we may be voluntarily liquidated under Part XII of the Companies Act by
resolution of directors and resolution of shareholders if we have no liabilities or we are able to pay our debts as they fall due.
We also may be wound up in
circumstances where we are insolvent in accordance with the terms of the Insolvency Act.
Anti-Money Laundering Laws
In order to comply with legislation or
regulations aimed at the prevention of money laundering we are required to adopt and maintain anti-money laundering procedures, and may require
subscribers to provide evidence to verify their identity. Where permitted, and subject to certain conditions, we also may delegate the maintenance of
our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.
We reserve the right to request such
information as is necessary to verify the identity of a subscriber. In the event of delay or failure on the part of the subscriber in producing any
information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without
interest to the account from which they were originally debited.
If any person resident in the British
Virgin Islands knows or suspects that another person is engaged in money laundering or terrorist financing and the information for that knowledge or
suspicion came to their attention in the course of their business the person will be required to report his belief or suspicion to the Financial
Investigation Agency of the British Virgin Islands, pursuant to the Proceeds of Criminal Conduct Act 1997 (as amended). Such a report shall not be
treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.
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SECURITIES ELIGIBLE FOR FUTURE
SALE
Immediately after this offering we will
have 7,820,000 (or 8,983,250 if the over-allotment is exercised in full) ordinary shares outstanding. Of these shares, the 6,000,000
shares sold in this offering 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 1,500,000 shares and all
320,000 insider units are restricted securities under Rule 144, in that they were issued in private transactions not involving a public
offering.
Rule 144
Pursuant to Rule 144, a person who has
beneficially owned restricted ordinary shares or rights for at least six months would be entitled to sell their securities provided that (i) 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 (ii) we are
subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section
13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.
Persons who have beneficially owned
restricted ordinary shares, rights or warrants for at least six months but who are our affiliates at the time of, or at 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 only a number of securities that does not exceed the greater of:
|
|
1% of the total number of ordinary shares then outstanding,
which will equal 78,500 shares immediately after this offering (or 90,133 if the underwriters exercise their over-allotment option); or |
|
|
the average weekly reported trading volume of the ordinary
shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
Sales by our affiliates 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
Rule 144 is not available for the
resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any
time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are
met:
|
|
the issuer of the securities that was formerly a shell company
has ceased to be a shell company; |
|
|
the issuer of the securities is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act; |
|
|
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 |
|
|
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, our sponsor will be able
to sell its founder shares and insider units, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial
business combination.
Registration Rights
The holders of the founder shares and
private units (and underlying securities) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior
to or on the effective date of this offering. The holders of 25% of these securities are entitled to make up to three demands, excluding
short
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form demands, that we register such
securities. 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. However, the registration rights agreement provides that we will not permit any registration
statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the
founder shares, upon the earlier of (1) one year after the completion of our initial business combination or (2) the date on which we consummate a
liquidation, merger, share exchange or other similar transaction after our initial business combination that results in all of our shareholders having
the right to exchange their ordinary shares for cash, securities or other property, and (ii) in the case of the insider units, including the
warrants and the respective ordinary shares underlying the rights and warrants, 30 days after the completion of our initial business
combination. Notwithstanding the foregoing, in the event the closing price of our ordinary shares equals or exceeds $12.50 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, 50% of the founder shares shall be released from the lock-up, and the remaining 50% of the founder shares shall be
released from the lock-up one year after the completion of our initial business combination. In addition, our sponsor (and/or its designees) and
EarlyBirdCapital (and/or its designees) have agreed not to, subject to certain limited exceptions, transfer, assign or sell any of the private units
and warrants until 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Listing of Securities
We have applied to list our units,
ordinary shares, rights and warrants on the Nasdaq Capital Market under the symbols CADTU, CADT,
CADTR, and CADTW, respectively. We anticipate that our units will be listed on the Nasdaq Capital Market on or promptly
after the effective date of the registration statement. Following the date the ordinary shares, rights and warrants are eligible to trade
separately, we anticipate that the ordinary shares, rights, and warrants will be listed separately and as a unit on the Nasdaq Capital
Market.
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The following summary of the
material British Virgin Islands and U.S. federal income tax consequences of an investment in our units, ordinary shares, rights and
warrants to acquire our ordinary shares, sometimes referred to collectively in the summary as our securities, is based upon laws and
relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all
possible tax consequences relating to an investment in our securities, such as the tax consequences under state, local and other tax
laws.
British Virgin Islands Taxation
The Government of the British Virgin
Islands does not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding
tax upon the company or its securityholders who are not tax resident in the British Virgin Islands.
The company and all distributions,
interest and other amounts paid by the company to persons who are not tax resident in the British Virgin Islands will not be subject to any income,
withholding or capital gains taxes in the British Virgin Islands, with respect to the shares in the company owned by them and dividends received on
such shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands.
No estate, inheritance, succession or
gift tax, rate, duty, levy or other charge is payable by persons who are not tax resident in the British Virgin Islands with respect to any shares,
debt obligations or other securities of the company.
Except to the extent that we have any
interest in real property in the British Virgin Islands, all instruments relating to transactions in respect of the shares, debt obligations or other
securities of the company and all instruments relating to other transactions relating to the business of the company are exempt from the payment of
stamp duty in the British Virgin Islands.
There are currently no withholding
taxes or exchange control regulations in the British Virgin Islands applicable to the company or its securityholders.
United States Federal Income Taxation
The following are the material U.S.
federal income tax consequences to an investor of the acquisition, ownership and disposition of our securities issued pursuant to this offering. The
discussion below of the U.S. federal income tax consequences with respect to actual holders of ordinary shares, rights and warrants
should also apply to holders of units (as the deemed owners of the underlying ordinary shares, rights and warrants that comprise the
units).
The discussion below of the U.S.
federal income tax consequences to U.S. Holders will apply to a beneficial owner of our securities that is for U.S. federal income tax
purposes:
|
|
an individual citizen or resident of the United
States; |
|
|
a corporation (or other entity treated as a corporation) that is
created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of
Columbia; |
|
|
an estate whose income is includible in gross income for U.S.
federal income tax purposes regardless of its source; or |
|
|
a trust if (i) a U.S. court can exercise primary supervision
over the trusts administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a
valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
If a beneficial owner of our securities
is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such
owner will be considered a
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Non-U.S. Holder. The material U.S. federal income tax consequences applicable specifically to Non-U.S. Holders are described below under
the heading Non-U.S. Holders.
This discussion is based on the
Internal Revenue Code of 1986, as amended (the Code), its legislative history, Treasury regulations promulgated thereunder, published
rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a
retroactive basis.
This discussion assumes that the
ordinary shares, rights and warrants will trade separately and does not address all aspects of U.S. federal income taxation that may be
relevant to any particular holder based on such holders individual circumstances. In particular, this discussion considers only holders that own
our securities as capital assets within the meaning of Section 1221 of the Code, and does not address the potential application of the alternative
minimum tax. In addition, this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules,
including:
|
|
financial institutions or financial services
entities; |
|
|
taxpayers that are subject to the mark-to-market accounting
rules under Section 475 of the Code; |
|
|
governments or agencies or instrumentalities
thereof; |
|
|
regulated investment companies; |
|
|
real estate investment trusts; |
|
|
expatriates or former long-term residents of the United
States; |
|
|
persons that actually or constructively own 5 percent or more of
our voting shares; |
|
|
persons that acquired our securities pursuant to an exercise of
employee share options, in connection with employee share incentive plans or otherwise as compensation; |
|
|
persons that hold our securities as part of a straddle,
constructive sale, hedging, redemption or other integrated transaction; or |
|
|
persons whose functional currency is not the U.S.
dollar. |
This discussion does not address any
aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed herein, any tax
reporting obligations of a holder of our securities. Additionally, this discussion does not consider the tax treatment of partnerships or other
pass-through entities or persons who hold our securities through such entities. If a partnership (or other entity classified as a partnership for U.S.
federal income tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment of a partner in the partnership generally
will depend on the status of the partner and the activities of the partnership. This discussion also assumes that any distributions made (or deemed
made) by us on our ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition
of our securities will be in U.S. dollars.
We have not sought, and will not seek,
a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the descriptions herein, and its
determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court
decisions will not adversely affect the accuracy of the statements in this discussion.
THIS DISCUSSION IS ONLY A SUMMARY OF
THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. EACH PROSPECTIVE INVESTOR IN OUR
SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF OUR
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SECURITIES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.
Allocation of Purchase Price and Characterization of a
Unit
There is no authority addressing the
treatment, for U.S. federal income tax purposes, of securities with terms substantially the same as the units, and, therefore, that treatment is not
entirely clear. Each unit may be treated for U.S. federal income tax purposes as an investment unit consisting of one ordinary share, one right
to receive one-tenth (1/10) of an ordinary share automatically on the consummation of an initial business combination and one warrant to acquire one
half ordinary share. If this is the case, then for U.S. federal income tax purposes, each holder of a unit may be required to allocate the purchase
price of a unit among the ordinary share, the right and warrant that comprise the unit based on the relative fair market value of
each at the time of issuance. The price allocated to each ordinary share, right or warrant generally will be the holders tax basis
in such share, right or warrant, as the case may be.
The foregoing treatment of our ordinary
shares, rights and warrants and a holders purchase price allocation are not binding on the IRS or the courts. Because there are no
authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the
characterization described above or the discussion below. Accordingly, each holder is advised to consult its own tax advisor regarding the risks
associated with an investment in a unit (including alternative characterizations of a unit) and regarding an allocation of the purchase price
among the ordinary share, the right and the warrant that comprise a unit. The balance of this discussion generally assumes that
the characterization of the units described above is respected for U.S. federal income tax purposes.
U.S. Holders
Certain U.S. Holders may be required to
file an IRS Form 926 (Return of a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of property (including cash) to us.
Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement. Each U.S. Holder is urged to consult with
its own tax advisor regarding this reporting obligation.
Taxation of Distributions Paid on Ordinary
Shares
Subject to the passive foreign
investment company (PFIC) rules discussed below, a U.S. Holder generally will be required to include in gross income as dividends the
amount of any cash distribution paid on our ordinary shares. A cash distribution on such shares generally will be treated as a dividend for U.S.
federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S.
federal income tax principles). Such dividends paid by us will be taxable to a corporate U.S. holder at regular rates and will not be eligible for the
dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic
corporations.
Distributions in excess of such
earnings and profits generally will be applied against and reduce the U.S. Holders basis in its ordinary shares (but not below zero) and, to the
extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares.
With respect to non-corporate U.S.
Holders, under tax law currently in effect, for taxable years beginning before January 1, 2013, dividends will be taxed at the lower applicable
long-term capital gains rate (see Taxation on the Disposition of Ordinary Shares and Rights below) only if our ordinary shares are
readily tradable on an established securities market in the United States and certain other requirements are met. U.S. Holders should consult their own
tax advisors regarding the availability of the lower rate for any dividends paid with respect to our ordinary shares.
Possible Constructive
Distributions
The terms of each warrant provide
for an adjustment to the number of shares for which the warrant may be exercised or to the exercise price of the warrant in certain events. An
adjustment which has the effect of
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preventing dilution generally is not taxable. However, the U.S. Holders of the warrants would be treated as
receiving a constructive distribution
from us if, for example, the adjustment increases the warrant holders
proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of ordinary
shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of our
ordinary shares which is taxable to the U.S. Holders of such ordinary shares as described under Taxation
of Distributions Paid on Ordinary Shares above. Such constructive distribution would be subject to tax as
described under that section in the same manner as if the U.S. Holders of the warrants received a cash
distribution from us equal to the fair market value of such increased interest.
Taxation on the Disposition of Ordinary Shares,
Rights and Warrants
Subject to the PFIC rules discussed
below, upon a sale or other taxable disposition of our ordinary shares, rights or warrants which, in general, would include a redemption
of ordinary shares as described below, and including as a result of a dissolution and liquidation in the event we do not consummate an in
initial business combination within the required time period, and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize
capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holders adjusted tax basis in the ordinary
shares, rights or warrants. See Acquisition of Ordinary Shares Pursuant to a Right or Warrant below for a discussion
regarding a U.S. Holders basis in an ordinary share acquired pursuant to a right or a warrant.
The regular U.S. federal income tax
rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income, except that
under tax law currently in effect long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at
a maximum regular rate of 15%. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holders holding period for the
ordinary shares, rights or warrants exceeds one year. It is unclear whether the redemption rights with respect to the ordinary shares
described in this prospectus may prevent a U.S. Holder from satisfying the applicable holding period requirements for this purpose. The deductibility
of capital losses is subject to various limitations that are not described herein because a discussion of such limitations depends on each U.S.
Holders particular facts and circumstances. Among such limitations is the deduction for losses upon a taxable disposition by a U.S. Holder of
an ordinary share, a right or a warrant (whether or not held as part of a unit) if, within a period beginning 30 days before the
date of such disposition and ending 30 days after such date, such U.S. Holder has acquired (by purchase or by an exchange on which the entire amount of
gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical shares or securities. U.S. Holders
who recognize losses with respect to a disposition of our ordinary share, rights, or warrants should consult their own tax advisors
regarding the tax treatment of such losses.
Redemption of Ordinary Shares
Subject to the PFIC rules discussed
below, if a U.S. Holder redeems ordinary shares for the right to receive cash pursuant to the exercise of a shareholder redemption right or if we
purchase a U.S. Holders ordinary shares in an open market transaction, for U.S. federal income tax purposes, such redemption will be subject to
the following rules. If the redemption qualifies as a sale of the ordinary shares under Section 302 of the Code, the tax treatment of such redemption
will be as described under Taxation on the Disposition of Ordinary Shares, Rights and Warrants above. If the
redemption does not qualify as a sale of ordinary shares under Section 302 of the Code, a U.S. Holder will be treated as receiving a distribution with
the tax consequences described below. Whether a redemption of our shares qualifies for sale treatment will depend largely on the total number of our
ordinary shares treated as held by such U.S. Holder (including any shares constructively owned as a result of, among other things, owning rights or
warrants). The redemption of ordinary shares generally will be treated as a sale or exchange of the ordinary shares (rather than as a distribution)
if the receipt of cash upon the redemption (i) is substantially disproportionate with respect to a U.S. Holder, (ii) results in a
complete termination of such holders interest in us or (iii) is not essentially equivalent to a dividend with respect to
such holder. These tests are explained more fully below.
In determining whether any of the
foregoing tests are satisfied, a U.S. Holder must take into account not only our ordinary shares actually owned by such holder, but also our ordinary
shares that are constructively
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owned by such holder. A U.S. Holder
may constructively own, in addition to our ordinary shares owned directly, ordinary shares owned by related individuals and entities in which such
holder has an interest or that have an interest in such holder, as well as any ordinary shares such holder has a right to acquire by exercise of an
option, which would generally include ordinary shares which could be acquired pursuant to the rights or pursuant to the exercise of the warrant.
In order to meet the substantially disproportionate test, the percentage of our outstanding voting shares actually and constructively owned by a U.S.
Holder immediately following the redemption of our ordinary shares must, among other requirements, be less than 80% of the percentage of our
outstanding voting and ordinary shares actually and constructively owned by such holder immediately before the redemption. There will be a complete
termination of a U.S. Holders interest if either (i) all of our ordinary shares actually and constructively owned by such U.S. Holder are
redeemed or (ii) all of our ordinary shares actually owned by such U.S. Holder are redeemed and such holder is eligible to waive, and effectively
waives, in accordance with specific rules, the attribution of shares owned by family members and such holder does not constructively own any other
shares. The redemption of the ordinary shares will not be essentially equivalent to a dividend if such redemption results in a meaningful
reduction of a U.S. Holders proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S.
Holders proportionate interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling
that even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no control over
corporate affairs may constitute such a meaningful reduction. U.S. Holders should consult with their own tax advisors as to the tax
consequences of an exercise of the redemption right.
If none of the foregoing tests are
satisfied, then the redemption may be treated as a distribution and the tax effects will be as described under Taxation of Distributions
Paid on Ordinary Shares, above. After the application of those rules, any remaining tax basis a U.S. Holder has in the redeemed ordinary shares
will be added to the adjusted tax basis in such holders remaining ordinary shares. If there are no remaining ordinary shares, a U.S. Holder
should consult its own tax advisors as to the allocation of any remaining basis.
U.S. Holders who actually or
constructively own one percent or more of our shares (by vote or value) may be subject to special reporting requirements with respect to a redemption
of ordinary shares, and such holders should consult with their own tax advisors with respect to their reporting requirements.
Acquisition of Ordinary Shares Pursuant to a Right or
Warrant
Subject to the PFIC rules discussed
below, a U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary share pursuant to the right or on the
exercise of a warrant for cash. An ordinary share received pursuant to a right or acquired pursuant to the exercise of a warrant for cash
generally will have a tax basis equal to the U.S. Holders tax basis in the right or warrant, increased by the amount paid to exercise the
warrant. The holding period of such ordinary share generally would begin on the day after the date of receipt of shares from the right or
exercise of the warrant and will not include the period during which the U.S. Holder held the right or warrant. If a warrant is allowed to
lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holders tax basis in the
warrant.
The tax consequences of a cashless
exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a gain
realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a
U.S. Holders basis in the ordinary shares received would equal the holders basis in the warrant. If the cashless exercise
were treated as not being a gain realization event, a U.S. Holders holding period in the ordinary shares would be treated as commencing
on the date following the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of
the ordinary shares would include the holding period of the warrant. It is also possible that a cashless exercise could be treated as a taxable
exchange in which gain or loss would be recognized. In such event, a U.S. Holder could be deemed to have surrendered warrants equal to
the number of ordinary shares having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would
recognize capital gain or loss in an amount equal to the difference between the fair market value of the ordinary shares represented by the
warrants deemed surrendered and the U.S. Holders tax basis in the warrants deemed surrendered. In this case, a U.S.
Holders
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tax basis in the ordinary shares received would equal the sum of the fair market
value of the ordinary shares represented by the warrants deemed surrendered and the U.S. Holders tax basis in the warrants exercised.
A U.S. Holders holding period for the ordinary shares would commence on the date following the date of exercise of the warrant. Due
to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, there can be no assurance which, if any, of the
alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should
consult their tax advisors regarding the tax consequences of a cashless exercise.
Additional Medicare Taxes
U.S. Holders that are individuals,
estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned income,
including, among other things, dividends on, and capital gains from the sale or other taxable disposition of, our securities, subject to certain
limitations and exceptions. U.S. Holders should consult their own tax advisors regarding the effect, if any, of such tax on their ownership and
disposition of our securities.
Passive Foreign Investment Company Rules
A foreign (i.e., non-U.S.) corporation
will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any
corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a
PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged
quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by
value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other
than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
Because we are a blank check company,
with no current active business, we believe that it is likely that we will meet the PFIC asset or income test for our current taxable year ending March
31, 2015. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if
(1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable
years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception
to us will not be known until after the close of our current taxable year ending March 31, 2015. After the acquisition of a company or assets in a
business combination, we may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of our passive income and
assets as well as the passive income and assets of the acquired business. If the company that we acquire in a business combination is a PFIC, then we
will likely not qualify for the start-up exception and will be a PFIC for our current taxable year ending March 31, 2015. Our actual PFIC status for
our current taxable year or any subsequent taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there
can be no assurance with respect to our status as a PFIC for our current taxable year ending March 31, 2015or any future taxable year.
If we are determined to be a PFIC for
any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ordinary shares, rights or warrants
and, in the case of our ordinary shares, the U.S. Holder did not make either a timely qualified electing fund (QEF) election for our first
taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares, as described below, such holder generally will be subject
to special rules with respect to:
|
|
any gain recognized by the U.S. Holder on the sale or other
disposition of its ordinary shares, rights or warrant; and |
|
|
any excess distribution made to the U.S. Holder
(generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual
distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if
shorter, such U.S. Holders holding period for the ordinary shares). |
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Under these rules,
|
|
the U.S. Holders gain or excess distribution will be
allocated ratably over the U.S. Holders holding period for the ordinary shares, rights or warrants; |
|
|
the amount allocated to the U.S. Holders taxable year in
which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holders holding period before the
first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income; |
|
|
the amount allocated to other taxable years (or portions
thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S.
Holder; and |
|
|
the interest charge generally applicable to underpayments of tax
will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder. |
In general, if we are determined to be
a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares (but not our warrants) by making a
timely QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other
earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which
or with which our taxable year ends. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under
the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
The application of the PFIC rules to
the rights to acquire our ordinary shares is unclear. For example, the right may be viewed as equity in our company from the time the rights are
received. On the other hand, the right may be viewed as a derivative security or similar interest in our company (analogous to a warrant or option with
no exercise price), and thus the holder of the right would not be viewed as owning the ordinary shares issuable the rights until such shares are
actually issued. There may be other alternative characterizations of the rights that the IRS may successfully assert that would reach different
conclusions regarding the tax treatment of the rights under the PFIC rules. In any case, depending on which characterization is successfully applied to
the rights, different PFIC consequences may result for U.S. Holders of the rights. Because of the uncertainty regarding the characterization of the
rights for PFIC purposes, this discussion of the PFIC rules does not assert which of the varying theories of the characterization of the rights will
ultimately be upheld under U.S. federal income tax law. Therefore, potential investors are strongly urged to consult with their own tax advisors
regarding an investment in the rights offered hereunder as part of units offering.
A U.S. Holder may be permitted to make
a QEF election with respect to its rights to acquire our ordinary shares (but not our warrants). As a result, if a U.S. Holder sells or
otherwise disposes of such rights (other than pursuant to the terms of such rights), any gain recognized generally will be subject to the
special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period
the U.S. Holder held the rights. If a U.S. Holder that receives ordinary shares pursuant to such rights properly makes a QEF election with
respect to the newly acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the QEF election will apply
to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income
inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed
to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the rights), unless the U.S. Holder makes a
purging election under the PFIC rules. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the
purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a
result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired pursuant to the terms
of rights for purposes of the PFIC rules.
The QEF election is made on a
shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A QEF election may not be made with respect to our
warrants. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a
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Passive Foreign investment Company
or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax
return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such
return and if certain other conditions are met or with the consent of the IRS. U.S. Holders should consult their own tax advisors regarding the
availability and tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the
requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any taxable
year, we will endeavor to provide to a U.S. Holder such information as the IRS may require, including a PFIC annual information statement, in order to
enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as a PFIC
in the future or of the required information to be provided.
If a U.S. Holder has made a QEF
election with respect to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF
election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant
to a purging election, as described above), any gain recognized on the sale of our ordinary shares generally will be taxable as capital gain and no
interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of its earnings and profits,
whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally
should not be taxable as a dividend to such U.S. Holders. The tax basis of a U.S. Holders shares in a QEF will be increased by amounts that are
included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property
if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.
Although a determination as to our PFIC
status will be made annually, an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held
ordinary shares, rights or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A
U.S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) our
ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such
U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of us that ends within or with a taxable
year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which
we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such
shares unless the holder makes a purging election, as described above, and pays the tax and interest charge with respect to the gain inherent in such
shares attributable to the pre-QEF election period.
Alternatively, if a U.S. Holder, at the
close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect
to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which
the U.S. Holder holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, such holder generally will not be
subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each
year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares.
The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the
fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a
result of the mark-to-market election). The U.S. Holders basis in its ordinary shares will be adjusted to reflect any such income or loss
amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income. A U.S.
holder may not be allowed to make a mark-to-market election with respect to the rights to acquire our ordinary shares. Currently, a mark-to-market
election may not be made with respect to our warrants.
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The mark-to-market election is
available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission,
including the Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price
represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences
of a mark-to-market election in respect to our ordinary shares under their particular circumstances.
If we are a PFIC and, at any time, have
a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and
generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part
of our interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. We will
endeavor to cause any lower-tier PFIC to provide to a U.S. Holder the information that may be required to make or maintain a QEF election with respect
to the lower- tier PFIC. However, there is no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition, we
may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower-tier PFIC to
provide the required information. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier
PFICs.
A U.S. Holder that owns (or is deemed
to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621(whether or not a QEF or market-to-market
election is made) and such other information as may be required by the U.S. Treasury Department.
The rules dealing with PFICs and with
the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S.
Holders of our ordinary shares, rights and warrants should consult their own tax advisors concerning the application of the PFIC rules to
our ordinary shares, rights and warrants under their particular circumstances.
Non-U.S. Holders
Dividends (including constructive
dividends) paid or deemed paid to a Non-U.S. Holder in respect to its ordinary shares generally will not be subject to U.S. federal income tax, unless
the dividends are effectively connected with the Non-U.S. Holders conduct of a trade or business within the United States (and, if required by an
applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United
States).
In addition, a Non-U.S. Holder
generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our ordinary shares,
rights or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by
an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States) or the
Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain
other conditions are met (in which case, such gain from United States sources generally is subject to tax at a 30% rate or a lower applicable tax
treaty rate).
Dividends and gains that are
effectively connected with the Non-U.S. Holders conduct of a trade or business in the United States (and, if required by an applicable income tax
treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to U.S. federal income tax (but not
the Medicare contribution tax) at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S.
Holder that is a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower
applicable tax treaty rate.
The U.S. federal income tax
treatment of a Non-U.S. Holders receipt of an ordinary share pursuant to the terms of a right or upon the exercise of a warrant held by a
Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the receipt of a share or exercise of a warrant by a U.S.
Holder, as described under U.S. Holders Acquisition of Ordinary Shares Pursuant to Right or Warrant, above, although to the
extent a cashless exercise results in a taxable exchange, the consequences would be similar to
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those described in the preceding
paragraphs above for a Non-U.S. Holders gain on the sale or other disposition of our ordinary shares, rights and
warrants.
Backup Withholding and Information
Reporting
In general, information reporting for
U.S. federal income tax purposes should apply to distributions made on our ordinary shares within the United States to a U.S. Holder, subject to
certain exceptions, and to the proceeds from sales and other dispositions of our ordinary shares, rights or warrants by a U.S. Holder to
or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject
to information reporting in limited circumstances.
In addition, backup withholding of U.S.
federal income tax, currently at a rate of 28%, generally will apply to dividends paid on our ordinary shares to a U.S. Holder and the proceeds from
sales and other dispositions of shares, rights or warrants by a U.S. Holder, in each case who:
|
|
fails to provide an accurate taxpayer identification
number; |
|
|
is notified by the IRS that backup withholding is required;
or |
|
|
fails to comply with applicable certification
requirements. |
A Non-U.S. Holder generally will
eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of
perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
We will withhold all taxes required to
be withheld by law from any amounts otherwise payable to any holder of our ordinary shares or securities, including tax withholding required by the
backup withholding rules. Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against
a U.S. Holders or a Non-U.S. Holders U.S. federal income tax liability and may entitle such holder to a refund, provided that the requisite
information is timely furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the
availability of and procedure for obtaining an exemption from backup withholding in their particular circumstances.
Recently enacted legislation imposes
withholding at a rate of 30% on payments to certain foreign entities, of dividends on and the gross proceeds of dispositions of U.S.
equity interests, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of
interests in or accounts with those entities) have been satisfied. Non-U.S. Holders should consult their tax advisors regarding the possible
implications of this legislation on their investment in the units.
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NOTES REGARDING OUR CHOICE OF BRITISH
VIRGIN ISLANDS AND THE
ENFORCEABILITY OF CIVIL LIABILITIES
Reasons for our Choice of Incorporating in the British Virgin
Islands
We are incorporated in the British
Virgin Islands because of the following benefits found there:
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|
political and economic stability; |
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|
an effective and sophisticated judicial system with a dedicated
Commercial Court; |
|
|
tax neutral treatment, with no tax levied against companies
incorporated in the British Virgin Islands by the local tax authorities; |
|
|
the absence of exchange control or currency restrictions;
and |
|
|
the availability of professional and support
services. |
|
|
In addition to the benefits listed above, incorporation in the
British Virgin Islands offers investors the following benefits: |
|
|
commitment of the British Virgin Islands to implement best
international practice and to comply with the requirements of the Organization of Economic Cooperation and Development (OECD) and the Financial Action
Taskforce (FATF); |
|
|
the adoption of the English law concept of corporate
separateness to mitigate the risk of the assets of a shareholder being used to satisfy the liabilities of the company; and |
|
|
confidentiality for shareholders. |
|
|
However, there are certain disadvantages accompanying
incorporation in the British Virgin Islands. These disadvantages include: |
|
|
the British Virgin Islands has a less developed body of
securities laws as compared to the United States and provides significantly less protection to investors; and |
|
|
British Virgin Islands companies may not have standing to sue
before the federal courts of the United States. |
We believe the disadvantages of
incorporating in the British Virgin Islands are outweighed by the benefits to us and our investors of such incorporation.
Enforceability of Civil Liabilities
We are a BVI business company
incorporated in the British Virgin Islands and therefore, located outside of the United States. The proceeds we receive from this offering will be held
in U.S. Dollars and deposited in a trust account at [] in the United States maintained by Continental Stock Transfer & Trust Company,
as trustee. The trust account will be governed by an Investment Management Trust Agreement between us and Continental Stock Transfer & Trust
Company.
The courts of the British Virgin
Islands will not necessarily enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws.
Additionally, there is no statutory enforcement in the British Virgin Islands of judgments obtained in the United States, however, the courts of the
British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued
upon as a debt at common law so that no retrial of the issues would be necessary provided that the U.S. judgment:
provided that:
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|
the U.S. court issuing the judgment had jurisdiction in the
matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with
process; |
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|
|
is final and for a liquidated sum; |
|
|
the judgment given by the U.S. court was not in respect of
penalties, taxes, fines or similar fiscal or revenue obligations of the company; |
|
|
in obtaining judgment there was no fraud on the part of the
person in whose favor judgment was given or on the part of the court; |
|
|
recognition or enforcement of the judgment in the BVI would not
be contrary to public policy; and |
|
|
the proceedings pursuant to which judgment was obtained were not
contrary to natural justice. |
In appropriate circumstances, the
British Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders
for performance of contracts and injunctions.
We expect that in the event of a
voluntary liquidation of the company, after payment of the liquidation costs and any sums then due to creditors, that the liquidator would distribute
our remaining assets on a pari passu basis.
Although we will seek to have all third
parties such as vendors and prospective target businesses enter into agreements with us waiving any interest to any assets held in the trust account,
there is no guarantee that they will execute such agreements. Ms. Winnie Lai Ling Ng agreed that she will be liable to us, if and to the extent any
claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a
transaction agreement reduce the amounts in the trust account to below $10.05 per share, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering
against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against
a third party, such persons will not be responsible to the extent of any liability for such third party claims. We have not independently verified
whether Ms. Ng has sufficient funds to satisfy their indemnity obligations and, therefore, our existing shareholders may not be able to satisfy those
obligations. We believe the likelihood of Ms. Ng having to indemnify the trust account is limited because we will endeavor to have all vendors and
prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to
monies held in the trust account.
Our initial shareholders have agreed to
waive its redemption rights with respect to its founder shares if we fail to consummate our initial business combination within 18 (or 24 if extended)
months from the closing of this offering. However, if any of our sponsor, officers, directors or affiliates acquire public shares in or after this
offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business
combination within the required time period.
We will pay the costs of our
liquidation of the trust account from our remaining assets outside of the trust account. However, if those funds are not sufficient to cover these
costs and expenses, we may request the trustee to release to us an amount of up to $20,000 of such accrued interest to pay those costs and expenses. In
addition, Ms. Winnie Lai Ling Ng has agreed to indemnify us for all claims of creditors to the extent that we fail to obtain executed waivers from such
entities in order to protect the amounts held in trust and except as to any claims under our indemnity of the underwriters of this offering against
certain liabilities, including liabilities under the Securities Act.
Under British Virgin Islands law, the
directors owe fiduciary duties at both common law and under statute, including a statutory duty to act honestly, in good faith and with a view to our
best interests. When exercising powers or performing duties as a director, the director is required to exercise the care, diligence and skill that a
reasonable director would exercise in the circumstances taking into account, without limitation the nature of the company, the nature of the decision
and the position of the director and the nature of the responsibilities undertaken by him. In exercising the powers of a director, the directors must
exercise their powers for a proper purpose and shall not act or agree to the company acting in a manner that contravenes our memorandum and articles of
association or the Companies Act.
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In certain limited circumstances, a
shareholder has the right to seek various remedies against the company in the event the directors are in breach of their duties under the Companies
Act. Pursuant to Section 184B of the Companies Act, if a company or director of a company engages in, proposes to engage in or has engaged in, conduct
that contravenes the provisions of the Companies Act or the memorandum or articles of association of the company, the courts of the British Virgin
Islands may, on application of a shareholder or director of the company, make an order directing the company or director to comply with, or restraining
the company or director from engaging in conduct that contravenes the Companies Act or the memorandum or articles. Furthermore, pursuant to section
184I(1) of the Companies Act a shareholder of a company who considers that the affairs of the company have been, are being or likely to be, conducted
in a manner that is, or any acts of the company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in
that capacity, may apply to the courts of the British Virgin Islands for an order which, inter alia, can require the company or any other person to pay
compensation to the shareholders.
If we are deemed insolvent for the
purposes of the Insolvency Act (i.e. (i) it fails to comply with the requirements of a statutory demand that has not been set aside under section 157
of the Insolvency Act; (ii) the execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in favor of a
creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the companys liabilities exceeds its assets, or
the company is unable to pay its debts as they fall due), there are very limited circumstances where prior payments made to shareholders or other
parties may be deemed to be a voidable transaction for the purposes of the Insolvency Act. A voidable transaction would include, for these
purposes, payments made as unfair preferences or transactions at an undervalue. A liquidator appointed over an insolvent
company who considers that a particular transaction or payment is a voidable transaction under the Insolvency Act could apply to the British Virgin
Islands Courts for an order setting aside that payment or transaction in whole or in part.
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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. |
|
|
|
|
|
|
Total
|
|
|
|
|
6,000,000 |
|
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, ordinary
shares, rights and warrants to be quoted on Nasdaq under the symbols CADTU, CADT, CADTW and
CADTR, 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 ordinary shares, rights and warrants are eligible to trade separately, we anticipate that
our ordinary shares, rights 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 reallow some dealers concessions not in excess of $0.__ per unit and the dealers may allow 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 and the terms of the rights and warrants was negotiated between us
and the representative of the underwriters. Factors considered in determining the prices and terms of the units include:
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|
the history of other similarly structured blank check
companies; |
|
|
prior offerings of those companies; |
|
|
our prospects for acquiring an operating business at attractive
values; |
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|
securities exchange listing requirements; |
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|
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 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 900,000 additional units. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any,
made in connection with this offering. The underwriters have 45 days from the date of this prospectus to exercise this option. If the
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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 |
|
|
$ |
60,000,000 |
|
|
$ |
69,000,000 |
|
Discount
|
|
|
|
$ |
0.325 |
|
|
$ |
1,950,000 |
|
|
$ |
2,242,500 |
|
Proceeds
before expenses(1) |
|
|
|
$ |
9.675 |
|
|
$ |
58,050,000 |
|
|
$ |
66,757,500 |
|
(1) |
|
The offering expenses are estimated at $400,000. |
In addition, we have agreed to pay for
the FINRA-related fees and expenses of the underwriters legal counsel and certain diligence and other fees.
No discounts or commissions will be
paid on the sale of the private units.
Business Combination Marketing Agreement
We have engaged EarlyBirdCapital as an
advisor in connection with our business combination to assist us in holding meetings with our shareholders to discuss the potential business
combination and the target business attributes, introduce us to potential investors that are interested in purchasing our securities, assist us
in obtaining shareholder approval for the business combination and assist us with our press releases and public filings in connection with the business
combination. We will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount equal to
4% of the total gross proceeds raised in the offering (exclusive of any applicable finders fees which might become payable) and we have the
option to pay up to 25% of the 4% fee with our ordinary shares priced at $10.00 per share.
EBC Units
EarlyBirdCapital (and/or its designees)
has committed to purchase 30,000 private units for an aggregate purchase price of $300,000, 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 the number of
private units (up to a maximum of 1,022 private units) that is necessary to maintain in the trust account an amount equal to $10.05 per ordinary
share sold to the public in this offering. The private units are identical to the units being sold in this offering. The private units, and
underlying ordinary shares, rights 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 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
30 days 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 600,000 units exercisable at $11.75 per unit (or an aggregate
exercise price of $7,050,000) upon the closing of this offering. Since the option is not exercisable until at the earliest the consummation of a
business
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combination, and the rights will
automatically result in the offering of ordinary shares upon consummation of a business combination, the option will effectively represent the right to
purchase up to 660,000 ordinary shares (which includes the 60,000 ordinary shares issuable for the rights included in the units) and 600,000
warrants to purchase 300,000 full shares. The purchase option may be exercised for cash or on a cashless basis, at the holders option, at any
time during the period commencing on the later of the first anniversary of the effective date of the registration statement of which this prospectus
forms a part and the closing of our initial business combination and terminating on the fifth anniversary of such effectiveness date.
Notwithstanding anything to the contrary, neither the option nor the warrants underlying the option shall be exercisable after the five year
anniversary of the effective date of the registration statement of which this prospectus forms a part. The option and such units purchased
pursuant to the option, as well as the ordinary shares underlying such units, the rights included in such units, the ordinary shares that are
issuable for the rights included in such units, the warrants included in such units, and the shares underlying such warrants, have been deemed
compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the
registration statement of which this prospectus forms a part 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 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 the registration
statement of which this prospectus forms a part 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 ordinary shares at a price below its exercise price. We will have no obligation to net cash settle the
exercise of the purchase option or the rights or warrants underlying the purchase option. The holder of the purchase option will not be entitled
to exercise the purchase option or the warrants underlying the purchase option unless a registration statement covering the securities
underlying the purchase option is effective or an exemption from registration is available. If the holder is unable to exercise the
purchase option or underlying warrants, the purchase option or warrants, as applicable, will expire worthless.
The exercise price and number of units
issuable upon exercise of the option (and the underlying securities) 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 ordinary shares
at a price below its exercise price.
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 solely 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- |
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|
|
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.
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
We are obligated to reimburse the
underwriters for (i) the costs of any due diligence meetings; (ii) filing fees, costs and expenses, including fees and disbursements of
underwriters counsel of up to $15,000, incurred in registering the offering with FINRA; (iii) preparation of transaction bibles and
lucite cube mementos up to a maximum of $3,000 and (iv) the costs of an investigative search firm to conduct background checks on our
principals, up to $3,000 per individual.
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.
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
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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. |
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
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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.
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The validity of the securities offered
in this prospectus is being passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York with respect to the units,
rights and warrants and Ogier, British Virgin Islands, with respect to the ordinary shares and matters of British Virgin Islands law. Graubard
Miller, is acting as counsel to the underwriters in connection with this offering.
The financial statements of DT Asia
Investments Limited as of June 10, 2014 for the period April 8, 2014 (date of inception) through June 10, 2014 have been included herein in reliance
upon the report of UHY, LLP, independent registered public accounting firm, appearing elsewhere herein and are included in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
We have filed with the SEC a
registration statement on Form S-1 under the Securities Act with respect to the securities 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 securities, 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 also may 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 also may 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.
144
Table of Contents
DT Asia Investments Limited
INDEX TO FINANCIAL STATEMENTS
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F-2 |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
DT Asia
Investments Limited
We have audited the accompanying
balance sheet of DT Asia Investments Limited (the Company) as of June 10, 2014, and the related statements of operations,
stockholders equity, and cash flows for period from April 8, 2014 to June 10, 2014. The Companys management is responsible for these
financial statements. 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 DT Asia Investments Limited as of June 10, 2014, and
the results of its operations and its cash flows for period from April 8, 2014 to June 10, 2014 in conformity with accounting principles generally
accepted in the United States of America.
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 transaction and the Companys cash and working capital as of June
10, 2014 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.
New York, New York
June 25, 2014 except for Note 1, Note 3
and Note 6, as to which the date is August 5, 2014
F-2
Table of Contents
DT Asia Investments
Limited
BALANCE SHEET
June 10,
2014
ASSETS
|
|
|
|
|
|
|
|
Current
Asset
|
|
|
|
|
|
|
Cash
|
|
|
|
$ |
74,914 |
|
Prepaid
assets |
|
|
|
|
25 |
|
Deferred
offering costs associated with proposed public offering |
|
|
|
|
77,616 |
|
Total
Assets |
|
|
|
$ |
152,555 |
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accrued
expenses |
|
|
|
$ |
7,951 |
|
Amount due to
Sponsor |
|
|
|
|
125,000 |
|
Total
Liabilities |
|
|
|
|
132,951 |
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
Shareholders Equity
|
|
|
|
|
|
|
Preferred
shares, no par value, unlimited shares authorized; none issued |
|
|
|
|
|
|
Ordinary
shares, no par value, unlimited shares authorized; 1,725,000 shares issued and outstanding |
|
|
|
|
25,000 |
|
Accumulated
deficit |
|
|
|
|
(5,396 |
) |
Total
Shareholders Equity |
|
|
|
|
19,604 |
|
Total
Liabilities and Shareholders Equity |
|
|
|
$ |
152,555 |
|
See notes to financial statements
F-3
Table of Contents
DT Asia Investments Limited
STATEMENT OF OPERATIONS
For the
period from April 8, 2014 (Date of Inception) to June 10, 2014
Formation
costs |
|
|
|
$ |
(2,128 |
) |
General and
administrative expenses |
|
|
|
|
(3,268 |
) |
Net
loss |
|
|
|
$ |
(5,396 |
) |
Basic and
diluted weighted average shares outstanding |
|
|
|
|
49,593 |
|
Basic and
diluted net loss per share |
|
|
|
$ |
(0.11 |
) |
See notes to financial statements
F-4
Table of Contents
DT Asia Investments Limited
STATEMENT OF CHANGES IN
STOCKHOLDEDRS EQUITY
For the period from April 8, 2014 (Date of Inception) to June 10, 2014
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|
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Ordinary Shares
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Accumulated Deficit During the Development
Stage
|
|
Shareholders Equity
|
Ordinary
shares issued |
|
|
|
|
1,725,000 |
|
|
$ |
25,000 |
|
|
$ |
|
|
|
$ |
25,000 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,396 |
) |
|
$ |
(5,396 |
) |
Balance as of
June 10, 2014 |
|
|
|
|
1,725,000 |
|
|
$ |
25,000 |
|
|
$ |
(5,396 |
) |
|
$ |
19,604 |
|
See notes to financial statements
F-5
Table of Contents
DT Asia Investments Limited
STATEMENT OF CASH FLOWS
For the
period from April 8, 2014 (Date of Inception) to June 10, 2014
Operating
Activities
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|
|
|
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|
Net Loss
|
|
|
|
$ |
(5,396 |
) |
Changes in
current assets and current liabilities
|
|
|
|
|
|
|
Change in
prepaid assets |
|
|
|
|
(25 |
) |
Net cash used
in operating activities |
|
|
|
|
(5,421 |
) |
|
Financing
Activities
|
|
|
|
|
|
|
Proceeds from
sale of ordinary shares to initial shareholders |
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|
1,450 |
|
Proceeds from
Sponsor |
|
|
|
|
148,550 |
|
Payment of
deferred offering costs |
|
|
|
|
(69,665 |
) |
Net cash
provided by financing activities |
|
|
|
|
80,335 |
|
|
Net
increase in cash and cash equivalents |
|
|
|
|
74,914 |
|
Cash and cash
equivalents, beginning |
|
|
|
|
|
|
Cash and cash
equivalents, ending |
|
|
|
$ |
74,914 |
|
|
Supplemental schedule of non-cash financing activities:
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|
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Increase in
accrued expenses for deferred offering costs |
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|
|
$ |
7,951 |
|
Ordinary
shares issued for repayment of payable to Sponsor |
|
|
|
$ |
23,550 |
|
See notes to financial statements
F-6
Table of Contents
DT Asia Investments Limited
NOTES TO FINANCIAL STATEMENTS
Note 1 Organization, Business Operations and Going
Concern Consideration
DT Asia Investments Limited (the
Company, we, us and our) is a newly organized blank check company incorporated on April 8, 2014,
under the laws of the British Virgin Islands for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation,
purchasing all or substantially all of the assets of, entering into contractual arrangements, or engaging in any other similar business
combination with one or more businesses or entities (an initial business combination). Although the Company is not limited to a particular
geographic region, the Company intends to focus on operating businesses with primary operations in Asia (with an emphasis in China). The Companys
efforts to identify a prospective target business will not be limited to a particular industry or geographic location.
The accompanying financial statements
are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America
(US GAAP) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the
SEC).
As of June 10, 2014, the Company had
not commenced any operations. All activity through June 10, 2014 relates to the Companys formation and the proposed public offering as described
below. The Company has selected March 31 as its fiscal year end and tax year end.
The Companys ability to commence
operations is contingent upon obtaining adequate financial resources through a proposed public offering of 6,000,000 units (Units) (or
6,900,000 Units if the underwriters over-allotment option is exercised in full), at $10.00 per Unit, which is discussed in Note 3 (the
Proposed Public Offering), and the sale of 320,000 Units at a price of $10.00 per Unit in a private placement to DeTiger Holdings
Limited (the Sponsor) and EarlyBirdCapital, Inc. (EBC) (and/or their designees) simultaneously with the consummation of the
Proposed Public Offering, including 290,000 Units (or 320,471 if the overallotment is exercised in full) to the Sponsor (and/or its
designees) (the Insider Units) and 30,000 Units (or 33,279 if the overallotment is exercised in full) to EBC (the EBC Units and
together with the Insider Units, the Private Units), respectively which is described in Note 6. The Companys management has broad
discretion with respect to the specific application of the net proceeds of the Proposed Public Offering and the Private Units, although substantially
all of the net proceeds are intended to be generally applied toward consummating an initial business combination. Furthermore, there is no assurance
that the Company will be able to successfully effect an initial business combination. Upon the closing of the Proposed Public Offering, management has
agreed that at least $10.05 per Unit, or $60,300,000 in the aggregate (or $69,345,000 in the aggregate if the underwriters
over-allotment option is exercised in full) of the proceeds of the Proposed Public Offering and the Private Units will be held in a trust account
(Trust Account) and invested only in U.S. government treasury bills, notes and bonds with a maturity of 180 days or less or in money market
funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and which invest solely in U.S. Treasuries. Except for all
interest income that may be released to the Company (net of taxes payable) to fund its working capital requirements, none of the funds held in the
Trust Account will be released from the Trust Account, until the earlier of: (1) the completion of an initial business combination within the required
time period and (2) the redemption of 100% of the outstanding public shares if the Company has not completed an initial business combination in the
required time period. Therefore, unless and until an initial business combination is consummated, the proceeds held in the Trust Account will not be
available for the Companys use for any expenses related to the Proposed Public Offering or expenses which the Company may incur related to the
investigation and selection of a target business and the negotiation of an agreement to acquire a target business. All expenses incurred by the Company
may be paid prior to an initial business combination only from the net proceeds of the offering not held in the Trust Account (approximately $550,000);
provided, however, that in order to meet the Companys working capital needs following the consummation of the Proposed Public Offering if the
funds not held in the Trust Account and interest earned on the funds held in the Trust Account available to the Company are insufficient, the Sponsor,
an affiliate of the Sponsor or the Companys officers and directors may, but are not obligated to, loan
F-7
Table of Contents
Note 1 Organization, Business Operations and Going
Concern Consideration (Continued)
the Company 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 an initial business combination, without interest, or, at the lenders discretion, up to $500,000 of the
notes may be converted upon consummation of an business combination into additional Insider Units at a price of $10.00 per unit (which, for example,
would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the Insider
Units would result in the issuance of 5,000 ordinary shares upon the closing of an initial business combination as well as 50,000 warrants to
purchase 25,000 shares). The Companys shareholders have approved the issuance of the ordinary shares upon conversion of such notes, to the
extent the holder wishes to so convert them at the time of the consummation of an initial business combination. If we do not complete an initial
business combination, the loans will only be repaid with funds not held in the Trust Account, to the extent available.
The placing of the 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, prospective target
businesses or other entities it engages, execute agreements with the Company 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. Ms. Winnie Lai Ling Ng, the major shareholder of the
Sponsor, agreed that she will be 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 services rendered, contracted for or products sold to the
Company. However, there can be no assurance that she will be able to satisfy those obligations should they arise. The remaining proceeds (not held in
the Trust Account) may be used for paying business, legal and accounting, due diligence on prospective acquisitions and continuing general and
administrative expenses. 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 the Company to fund its working capital requirements in searching for an initial business combination and to pay its tax
obligations.
The Company, after signing a definitive
agreement for the acquisition of a target business, is required to provide shareholders who acquired shares in the Proposed Public Offering
(Public Shareholders) with the opportunity to redeem their Units for a pro rata share of the Trust Account.
In connection with any proposed initial
business combination, the Company intends to seek shareholder approval of such initial business combination at a meeting called for such purpose at
which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination. In such case, the
Company will consummate an initial business combination only if it has net tangible assets of at least $5,000,001 upon such consummation and a majority
of the outstanding ordinary shares voted are voted in favor of the business combination. The Companys Sponsor, officers and directors that hold
founder shares (Initial Shareholders) have waived any redemption rights they may have in connection with the initial business
combination.
With respect to an initial business
combination which is consummated, any Public Shareholder can demand that the Company redeem his or her Units.
|
|
If the Company holds a shareholder vote to approve an initial
business combination, any Public Shareholder seeking redemption will have his or her Unit redeemed for a full pro rata portion of the Trust Account
(initially expected to be $10.05 per Unit) net of (i) taxes payable and (ii) interest income earned on the Trust Account previously released to
the Company for working capital requirements. |
|
|
If the Company commences a tender offer in connection with an
initial business combination, Public Shareholders seeking redemption will have his or her Units redeemed for a pro rata portion of the Trust Account
(initially expected to be $10.05 per Unit) net of (i) taxes payable and (ii) interest income earned on the Trust Account previously released to
the Company for working capital requirements. |
F-8
Table of Contents
Note 1 Organization, Business Operations and Going
Concern Consideration (Continued)
The Companys Memorandum and
Articles of Association will be amended prior to the Proposed Public Offering to provide that if the Company is unable to complete an initial business
combination within 18 months from the closing of the Proposed Public Offering (or up to 24 months if extended), it will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business days thereafter, redeem 100% of the outstanding
public shares which redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of the Companys remaining holders of ordinary shares and its board of directors, proceed to commence a voluntary liquidation and thereby
a formal dissolution of the Company, subject (in the case of (ii) and (iii) above) to our obligations to provide for claims of creditors and the
requirements of applicable law.
In connection with the redemption of
100% of the Companys outstanding public shares for a portion of the funds held in the Trust Account, each shareholder will receive a full pro
rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not previously
released to the Company for its working capital requirements or necessary to pay its taxes payable on such funds. Holders of rights will receive no
proceeds in connection with the liquidation with respect to such rights, which will expire worthless.
The holders of the founder shares and
Private Units will not participate in any redemption distribution with respect to their securities.
If the Company is unable to conclude an
initial business combination and it expends all of the net proceeds of the Proposed Public Offering not deposited in the Trust Account, without taking
into account any interest earned on the funds held in the Trust Account, the initial per-share redemption price is expected to be $10.05. The
proceeds deposited in the Trust Account could, however, become subject to claims of creditors that are in preference to the claims of shareholders. In
addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against the Company that is not dismissed, the
proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in the Companys bankruptcy estate and
subject to the claims of third parties with priority over the claims of shareholders. Therefore, the actual per-share redemption price may be less than
$10.05.
The Company will pay the costs of any
subsequent liquidation from the remaining assets outside of the Trust Account together with up to $20,000 of interest earned on the funds held in the
Trust Account and available for such use. If such funds are insufficient, Ms. Lai Ling Winnie Ng has agreed to pay the funds necessary to complete such
liquidation and has agreed not to seek repayment for such expenses.
F-9
Table of Contents
Note 2 Significant Accounting
Policies
Loss per share
Loss per share is computed by dividing
net loss by the weighted-average number of ordinary shares outstanding during the period excluding an aggregate of 225,000 ordinary shares subject to
forfeiture by the Sponsor to the extent that the underwriters over-allotment option is not exercised in full.
|
|
|
|
For the period from April 8, 2014 (Date of
Inception) to June 10, 2014
|
Numerator:
|
|
|
|
|
|
|
Net loss
|
|
|
|
$ |
(5,396 |
) |
|
Denominator:
|
|
|
|
|
|
|
Denominator
for basic earnings per share Weighted-average Ordinary Shares outstanding during the year |
|
|
|
|
49,593 |
|
Denominator
for diluted earnings per share |
|
|
|
|
49,593 |
|
Basic loss
per share |
|
|
|
$ |
(0.11 |
) |
Diluted loss
per share |
|
|
|
$ |
(0.11 |
) |
Use of estimates
The preparation of financial statements
in conformity with US GAAP 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 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 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 has identified the British
Virgin Islands as its only major tax jurisdiction, as defined. 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 April 8,
2014, the evaluation was performed for upcoming 2014 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 items as a component of
income tax expense.
Recent Accounting Pronouncements
In June 2014, the FASB issued
Accounting Standards Update 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the
elimination of inception-to-date information on the statements of operations, cash flows and stockholders
F-10
Table of Contents
Note 2 Significant Accounting Policies
(Continued)
equity. The amendments in ASU
2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual
periods, however early adoption is permitted. The Company adopted this ASU as of April 8, 2014 and the impacts of this adoption are reflected in this
report.
Management does not believe that any
recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Companys financial
statements.
Note 3 Proposed Public Offering
The Proposed Public Offering calls for
the Company to offer for sale up to 6,000,000 Units at a proposed offering price of $10.00 per Unit (plus up to an additional 900,000 Units solely to
cover overallotments, if any). Each Unit consists of one ordinary share (Share), one right (Right(s)), and one
warrant (Warrant). Each Right entitling the holder to automatically receive one-tenth (1/10) of a Share upon consummation of an initial
business combination. Each Warrant entitles the holder to purchase one-half of one ordinary share at a price of $12.00 per full share
commencing on the later of the Companys completion of its initial Business Combination or 12 months from the effective date of the
registration statement relating to the Proposed Public Offering, and expiring five years from the completion of the Companys initial
Business Combination. As a result, investors must exercise Warrants in multiples of two Warrants, at a price of $12.00 per full share,
subject to adjustment, to validly exercise the Warrants. 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 ordinary shares is at least $18.00 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 ordinary shares 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
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 90 days 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.
The Units to be sold in the Proposed
Public Offering will begin trading on or promptly after the effective date of the registration statement relating to the Proposed Public Offering
(Effective Date). Each of the Shares and Rights may trade separately on the 90th day after the Effective Date unless EBC 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, the Companys securities in particular). In no event will EBC allow separate
trading of the Shares and Rights until the Company files an audited balance sheet reflecting the receipt of the gross proceeds of the Proposed Public
Offering.
Once the Shares, Rights and
Warrants commence separate trading, shareholders 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 the Companys transfer agent in order to separate the Units into Shares, Rights and
Warrants. Upon consummation of an initial business combination, the units will cease trading.
If the Company is unable to consummate
an initial business combination, there would be no distribution from the Trust Account with respect to the Rights and Warrants, and such
Rights and Warrants would expire worthless.
F-11
Table of Contents
Note 4 Deferred Offering Costs
Deferred Offering costs consist of
legal, underwriting and accounting fees incurred through the balance sheet date that are related to the Proposed Public Offering and that will be
charged to shareholders equity upon the receipt of the capital raised or expensed in the event that the Proposed Public Offering is
terminated.
Note 5 Amount due to Sponsor
The Sponsor, an entity controlled by
Winnie Lai Ling Ng, has advanced to the Company an aggregate of $125,000 on a non-interest bearing basis as of June 10, 2014. Such advances are due on
demand.
Note 6 Commitments and
Contingencies
The Company will agree to pay an
aggregate of $10,000 a month for office space and general and administrative services to the Sponsor commencing on the Effective Date and will
terminate upon the earlier of: (i) the consummation of an initial business combination; or (ii) the liquidation of the Company.
The Sponsor (and/or its designees) and
EBC (and/or its designees) have committed to purchase an aggregate of 320,000 Private Units at a price of $10.00 per Private Unit
($3,200,000 in the aggregate) in a private placement that will occur simultaneously with the closing of the Proposed Public Offering. The
Sponsor and EBC (and/or their designees) 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 Unit (up to a maximum of 33,750 Private Units) that is necessary to maintain in the Trust Account an amount
equal to approximately $10.05 per share sold to the public in the Proposed Public Offering. 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 the offering and placed in a Trust Account in the United States at UBS
with Continental Stock Transfer & Trust Company, acting as trustee. If the Company anticipates that it may not be able to consummate an initial
business combination within 18 months, it may extend the period of time to consummate an initial business combination twice, each by an additional
three months, for an aggregate of six additional months. In order to extend the time available for the Company to consummate an initial business
combination, the Sponsor and/ or designees must deposit an aggregate of $150,000, or $0.025 per public share (or $172,500 if the overallotment is
exercised in full) into the Trust Account prior to the applicable deadline for each three month extension. Neither the Sponsor nor any of its
affiliates or designees is obligated to fund the Trust Account to extend the time for the Company to complete an initial business combination. If the
Company does not complete an initial business combination within 18 (or up to 24 if extended) months from the closing of the Proposed Public Offering,
the proceeds from the sale of the Private Units will be included in the liquidating distribution to the holders of the Companys public
shares.
The holders of the Private Units (or
underlying securities) will be entitled to registration rights with respect to the Private Units (or underlying securities) pursuant to an agreement to
be signed prior to or on the Effective Date.
The Company intends to enter into an
agreement with the underwriters of the Proposed Public Offering (the Underwriting Agreement). The Underwriting Agreement will
require the Company to pay 3.25% of the gross proceeds of the Proposed Public Offering or $1,950,000 or $2,242,500 if the underwriters
overallotment option is exercised in full, as underwriting discounts and commissions upon closing of the Proposed Public Offering.
Additionally, the Company will engage
EBC as an investment banker in connection with its initial business combination to provide it with assistance in negotiating and structuring the terms
of the initial business combination. The Company anticipates that these services will include holding meetings with the Companys shareholders to
discuss the potential initial business combination and the target business attributes, introducing the Company to potential investors that are
interested in purchasing the Companys securities, assisting the Company in obtaining shareholder approval for the initial business combination
and assisting the Company with its press releases and public filings in connection with the initial business combination. The Company will pay EBC a
fee pursuant to such agreement upon the consummation of the initial business
F-12
Table of Contents
Note 6 Commitments and Contingencies
(Continued)
combination in an amount equal to
4% of the total gross proceeds raised in the Proposed Public Offering. The Company will have the option to pay up to 25% of the aforementioned fee in
Shares at $10.00 per Share.
The Company will also sell to EBC
and/or its designees, at the time of the closing of the Proposed Public Offering, for an aggregate of $100.00, an option (Unit Purchase
Option or UPO) to purchase 600,000 Units. The UPO will be exercisable at any time, in whole or in part, during the period commencing
on the later of the first anniversary of the Effective Date and the closing of the Companys initial business combination and terminating on the
fifth anniversary of the Effective Date at a price per Unit equal to $11.75. The Company has agreed to grant to the holders of the UPO demand and
piggy back registration rights for periods of five and seven years, respectively, from the Effective Date, including securities directly
and indirectly issuable upon exercise of the UPO.
Note 7 Stockholders Equity
The Company is authorized to issue an
unlimited number of shares of no par value divided into six classes of shares as follows:
1. |
|
Ordinary shares of no par value (Ordinary
Shares); |
2. |
|
Class A preferred shares of no par value (Class A
Preferred Shares); |
3. |
|
Class B preferred shares of no par value (Class B
Preferred Shares); |
4. |
|
Class C preferred shares of no par value (Class C
Preferred Shares); |
5. |
|
Class D preferred shares of no par value (Class D
Preferred Shares); and |
6. |
|
Class E preferred shares of no par value (Class E
Preferred Shares and together with the Class A Preferred Shares, the Class B Preferred Shares, Class C Preferred Shares and the Class D Preferred
Shares being referred to as the Preferred Shares). |
In connection with the organization of
the Company, on June 5, 2014, 100,000 Shares of the Company were sold to two officers for an aggregate consideration of $1,450. On June 8, 2014,
1,625,000 Shares of the Company were issued to the Sponsor in the amount of $23,550.
As of June 10, 2014, 1,725,000 Shares
were issued and outstanding, of which 225,000 Shares held by the Sponsor are subject to mandatory forfeiture to the extent that the underwriters
over-allotment option is not exercised in full so that the Companys Initial Shareholders will own 20% of the issued and outstanding shares after
the Proposed Public Offering.
The Initial Shareholders will place
their initial shares into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain
limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of:
|
|
one year after the date of the consummation of an initial
business combination; and |
|
|
the date on which the closing price of the Shares exceeds $12.50
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 an initial business combination. |
And the remaining 50% of the
insider shares will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of an initial business
combination, or earlier, in either case, if, subsequent to an initial business combination, the Company consummates a subsequent liquidation, merger,
stock exchange or other similar transaction which results in all of the Companys shareholders having the right to exchange their Shares for cash,
securities or other property.
F-13
Table of Contents
Until [], 2014 (25 days
after the date of this prospectus), all dealers that buy, sell or trade our ordinary shares, 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.
DT Asia Investments Limited
6,000,000 Units
_____________, 2014
Table of Contents
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:
SEC
Registration Fees |
|
|
|
$ |
8,887 |
|
FINRA Filing
Fees |
|
|
|
$ |
14,990 |
|
Accounting
fees and expenses |
|
|
|
$ |
30,000 |
|
Printing and
engraving expenses |
|
|
|
$ |
45,000 |
|
Nasdaq Capital
Market expenses |
|
|
|
$ |
50,000 |
|
D&O
insurance |
|
|
|
$ |
75,000 |
|
Legal fees and
expenses |
|
|
|
$ |
170,000 |
|
Miscellaneous(1) |
|
|
|
$ |
6,123 |
|
Total
|
|
|
|
$ |
400,000 |
|
(1) |
|
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.
British Virgin Islands law does not
limit the extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to
the extent any such provision may be held by the British Virgin Islands Court to be contrary to public policy, such as to provide indemnification
against civil fraud or the consequences of committing a crime. Our memorandum and articles of association provide that, subject to certain limitations,
the company shall indemnify its directors and officers against all expenses, including legal fees, and against all judgments, fines and amounts paid in
settlement and reasonably incurred in connection with legal, administrative or investigative proceedings. Such indemnity only applies if the person
acted honestly and in good faith with a view to the best interests of the company and, in the case of criminal proceedings, the person had no
reasonable cause to believe that their conduct was unlawful.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we
have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the
Securities Act and is theretofore unenforceable.
Item 15. Recent Sales of Unregistered
Securities.
On June 5, 2014, 100,000 ordinary
shares of the Company were sold to two officers for an aggregate consideration of $1,450, at a price of $0.0145 per share. On June 8, 2014, 1,625,000
ordinary shares of the Company were issued to our Sponsor in the amount of $23,550, at a price of $0.0145 per share. The founder shares include 225,000
shares subject to forfeiture by our sponsor to the extent that the underwriters over-allotment option is not exercised in full. Such securities
were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities
Act.
Each of our initial shareholders is an
accredited investor for purposes of Rule 501 of Regulation D. In addition, our sponsor (and/or its designees) and EarlyBirdCapital (and/or its
designees) have committed to purchase from us private units at $10.0 per unit (for an aggregate purchase price of $3,200,000). These purchases
will take place on a private placement basis simultaneously with the consummation of our initial public offering. 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.
II-1
Table of Contents
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 |
|
|
|
Letter Agreement between the Registrant and EarlyBirdCapital* |
3.1 |
|
|
|
Memorandum and articles of association* ** |
3.2 |
|
|
|
Amended and Restated Memorandum and Articles of Association** |
4.1 |
|
|
|
Specimen Unit Certificate** |
4.2 |
|
|
|
Specimen Ordinary Shares Certificate** |
4.3 |
|
|
|
Specimen Right Certificate** |
4.4 |
|
|
|
Specimen Warrant Certificate** |
4.5 |
|
|
|
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.** |
5.1 |
|
|
|
Form of Opinion of Ogier* |
5.2 |
|
|
|
Form of Opinion of Ellenoff Grossman &Schole LLP* |
10.1 |
|
|
|
Form
of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and each of the sponsor, directors and officers of the Registrant.* |
10.2 |
|
|
|
Form
of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant** |
10.3 |
|
|
|
Form
of Letter Agreement between DeTiger Holdings Limited, our sponsor, and the Registrant regarding administrative support** |
10.4 |
|
|
|
Form
of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.** |
10.5 |
|
|
|
Form
of Securities Purchase Agreement between the Company and initial shareholders. ** |
10.6 |
|
|
|
Unit
Purchase Agreement between the Registrant and sponsor** |
10.7 |
|
|
|
Unit
Purchase Agreement between the Registrant and EarlyBirdCapital** |
10.8 |
|
|
|
Form
of Registration Rights Agreement between the Registrant and securityholders.** |
10.9 |
|
|
|
Form
of Indemnity Agreement** |
10.10 |
|
|
|
Form
of Right Agreement* |
14 |
|
|
|
Form
of Code of Ethics** |
23.1 |
|
|
|
Consent of UHY LLP* |
23.2 |
|
|
|
Consent of Ogier (included in Exhibit 5.1)** |
23.3 |
|
|
|
Consent of Ellenoff Grossman &Schole LLP (included on Exhibit 5.2)** |
24 |
|
|
|
Power
of Attorney (included in signature page) |
99.1 |
|
|
|
Audit
Committee Charter** |
99.2 |
|
|
|
Compensation Committee Charter** |
99.3 |
|
|
|
Consent of Haibin Wang** |
99.4 |
|
|
|
Consent of Foelan Wong** |
99.5 |
|
|
|
Consent of Hai Wang** |
99.6 |
|
|
|
Consent of Jason Kon Man Wong** |
** |
|
To be filed by amendment. |
II-2
Table of Contents
Item 17. Undertakings.
(a) The undersigned
registrant 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.
(b) 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.
(c) 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. |
(3) |
|
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. |
(4) |
|
For the purpose of determining liability of a registrant
under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in
a primary offering of securities of an 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) |
|
Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant; |
II-3
Table of Contents
(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. |
II-4
Table of Contents
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 the City of New York, State of New York, on the 6 th day of August, 2014.
|
|
|
|
DT
ASIA INVESTMENTS LIMITED |
|
|
|
|
|
|
|
|
|
|
|
By: |
|
/s/ Stephen N. Cannon |
|
|
|
|
Name: |
|
Stephen N. Cannon |
|
|
|
|
Title: |
|
Chief
Executive Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Stephen N. Cannon 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
|
Stephen N.
Cannon |
|
|
|
Chief
Executive Officer, President and Director (Principal executive officer and principal financial officer) |
|
August 6, 2014 |
|
|
|
|
|
|
|
Emily
Chui-Hung Tong |
|
|
|
Chairman of the Board |
|
August 6, 2014 |
II-5