Item
1. Business
Overview
We are an early
stage blank check company recently incorporated as a British Virgin Islands business company and formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses, which we refer to throughout this report 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 businesses primarily operating in the financial services industry or businesses providing technological
services to the financial industry, commonly known as fintech, in North America and Asia-Pacific.
We believe the financial
services industry has experienced a significant amount of change over the last several years as new companies providing technology,
software, and digital platforms have entered the market. According to an article titled “Global Fintech Investment Hits Record
$111.8B in 2018” published by KPMG in February 2019, there was over $31 billion invested in fintech companies in 2017
alone. Fintech companies exist across many industries within financial services, including banking technology, payment and financial
transaction processing, capital markets, wealth management, insurance, and financial management systems. We believe that fintech
companies have proven to be successful with multiple business models and strategic objectives. The objective of fintech companies
can range from improving the efficiency of traditional financial services companies, to introducing new products and creating new
markets, to those focused on disrupting traditional financial services companies with competitive products. Fintech is impacting
the financial services sector broadly in the following aspect:
|
●
|
Fintech
companies tend to snatch away the revenues of traditional financial institutions and
force them to be more competitive and vibrant;
|
|
●
|
Technology
disrupts the logic of traditional financial institutions and empowers them to adjust
their strategic direction;
|
|
●
|
Electronic
channel services occupy the entrance, driving traditional financial institutions to achieve
full channel integration and coordination;
|
|
●
|
Innovations
in fintech companies have sprung up, inspiring traditional financial institutions to
innovate their business models;
|
|
●
|
Business
innovation drives management innovation, forcing traditional financial institutions to
reform their organizational model and IT architecture.
|
We intend to capitalize
on the ability of our management team and the broad network our management team and members of the board of directors have built
up over their respective professional career to identify, acquire, and operate a business in the proposed business of our initial
business combination that may provide opportunities for attractive long-term risk-adjusted returns, though we reserve
the right to pursue an acquisition opportunity in any business or industry.
Business Strategy
Our business strategy
is to utilize our management team’s past to identify and complete our initial business combination with a company that our
management believes, with proper utilization of our network and experience, has compelling potential for value creation.
We believe our management
team and members of our board have experience in:
|
●
|
Operating
companies, setting and changing strategies, and identifying, mentoring and recruiting
exceptional talent;
|
|
●
|
Developing
and growing companies, both organically and through strategic transactions and acquisitions,
and expanding the product range and geographic footprint of a number of target businesses;
|
|
●
|
Investing
in leading private and public technology companies to accelerate their growth and maturation;
and
|
|
●
|
Accessing
the capital markets, including financing businesses and helping companies transition
to public ownership.
|
Market Opportunity
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 businesses within the fintech business with an overall transaction value between $300 million and $1.0 billion.
Broadly, fintech can refer to any innovation in how people transact business, from money transfers, check deposit over smartphone,
bypassing a bank for credit application, loaning money for small business instantly, or investing into money market fund without
in-person assistance. According to “2018 US Fintech Market Report” by S&P Global, capital has been pouring
into the fintech industry where payments, insurance technology, investment and capital technology, digital lending, banking technology
and financial media are taking the center stage. As indicated in the article titled Global Fintech Investment Hits Record $111.8B
in 2018 by KPMG, global fintech investment in 2018 reached $111.8 billion with investment in Asia taking the lead up to $22.7 billion.
The chart below presents an evolved ecosystem of financial services.
Source: Capgemini
Financial Services Analysis, 2019
Investment in core
and infrastructure technology for the financial services sector is needed to keep pace with innovation. According to the CB Report,
the capital markets ecosystem suffers from a current over-reliance on legacy technologies, which are on average 38 years
old. In contrast, the “information explosion” is causing increasing challenges with the management of data and information,
as shown in the charts below.
Source: Global
Intech Report Q3 2019 by CB Insight
Source: IDC
“Data Age 2025 Study” (sponsored by Seagate)
The rapid evolution
of the capital markets technology landscape has translated into significant investment in companies focused on back-office applications
and functions, as indicated by the number of capital investments made in the front office, middle office and back office within
the same time frame in the chart below.
Source: Global
Intech Report Q3 2019 by CB Insight
We have not narrowed
our business combination target in any particular fintech business, however, we do believe the following areas of the fintech
business are exposed to exponential growth.
Online Lending. Online
lending based on big data analytics has grown where traditional bank lending fails to cover or under covers. Around 2 billion
people worldwide are unbanked, ignored or technically not accessible by traditional banks or mainstream financial services companies,
per Accenture analysis of World Bank and UN figures in its May 2017 report titled Fintech — Did Someone Cancel the Revolution.
Those who are ignored or out of reach by traditional financial services are being served by advanced online lending technologies.
Big Data, Cloud
Computing and Credit Analytics. Big data powered by cloud computing provides financial lenders the
power to enhance credit rating and credit risk control. Bid data opens up a frontier to financial institutions to service those
unbanked and/or underbanked customers.
Mobile Phone Payment. Mobile
phone payment has been deployed quickly where cash payment can be eliminated creating fast and efficient transactions. However,
smart phone payment is regulated differently in different countries by their respective financial authorities causing deployment
of the technology unevenly worldwide.
Smart Contract. Smart
contract utilizes computer programs, often in block chain, to automatically execute contracts between two or more parties in a
variety of business in financial services, commercial transactions, B to B services, or B to C services, in lending, loan repayment,
mortgaging, reducing costs in the conventional flow of documents and enhancing accuracy and security of the flow of documents.
Insurtech. Insurtech
is short for “insurance technology.” It represents the emergence of new technologies that are transforming the insurance
industry by reducing costs for consumers and insurance companies, improving efficiency, and enhancing customer satisfaction. Insurtech
is seen to be a disruptor to the property and casualty homogenous insurance segment. Mass computing ability, scenario-based setting
and growth are key strengths of Insurtech companies. Insurtech incorporates AI and online-to-offline (O2O) integration by
tapping into casualty P&C homogeneous-like auto insurance and health insurance segments.
Insurtech has been
applied in areas such as AI-powered anti-fraud solutions for the P&C insurance industry. Insurtech provides a digitized
platform allowing customers to acquire all of their P&C in one place, suitable to small businesses. This digitalized market
place is designed to improve insurance agency processes and efficiency.
According to KPMG’s
March 2019 report titled “Insurtech 10: Trends for 2019,” insurtech trends in the arears of digital risk reduction,
digitizing customers, behaviorial science, AI and machine learning, vehicle-focused coverage (as opposed to driver-focused insurance),
and big data.
As reported by Insurance
Journal in May 2019, more than $1 billion was invested in 85 insurtech deals in the first quarter of 2019.
According to a March
2019 report titled Regulation and Supervision of Fintech by KPMG, fintech is moving from “under the regulatory” and
is attracting growing responses and supervisory scrutiny, and according to the CB Report, the regulatory landscape is more complex
than ever, giving rise to new business opportunities. The chart below presents the number of mentions of financial service regulation
terms in the media from the beginning of 2012 to the first half of 2019.
Acquisition Criteria
We seek to identify
companies that have compelling market presence and a combination of the following characteristics. We use these criteria and guidelines
in evaluating acquisition opportunities, but we may decide to enter our initial business combination with a target business that
does not meet these criteria and guidelines. We intend to acquire companies or assets that we believe have the following attributes:
|
●
|
Strong and
noticeable presence in its market. We intend to focus on investment in an industry segment
that has a noticeable presence in its market;
|
|
●
|
First mover
in its niche market. When pursuing our business combination, we look for targets that
are early leaders in their niche market and which set trends in their products and/or
services;
|
|
●
|
Differentiated
products or services. A company with differentiated products or services offers investors
a long term investment opportunity and we certainly spend time and resources to assess
our business combination in this regard;
|
|
●
|
Seasoned
management team. We intend to spend significant time assessing a company’s leadership
and personnel and evaluating what we can do to augment and/or upgrade the team over time
if needed;
|
|
●
|
Widely-applicable technology
& scalable model offering appealing growth potential. Our management believes that
technology-driven solutions that are widely applicable and scalable have a unique
window of opportunity to create advantages that will grow with the industry;
|
|
●
|
Stable and
reputable customer base. We seek target businesses that have a stable and reputable customer
base, with systematic advantages which are generally able to employ risk management measures
to endure economic downturns, industry consolidation, changing business preferences and
other unfavorable business environments that may negatively impact their customers, suppliers
and competitors.
|
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.
Status as a Public Company
We believe our structure
makes us an attractive business combination partner to target businesses. As an existing public company, we offer a target business
an alternative to the traditional initial public offering through a merger or other business combination. In this situation, the
owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination
of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there
are various costs and obligations associated with being a public company, we believe target businesses will find this method a
more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial
public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present
to the same extent in connection with a business combination with us.
Furthermore, once
a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent
with shareholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on
executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our
securities may be more volatile.
In addition, Section
107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an
emerging growth company until the earlier of (1) the last day of the fiscal year (a) following February 24, 2025, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million on the last
day of the second fiscal quarter of any given fiscal year, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Financial Position
With a trust account
in the amount of $138,826,973 as of June 30, 2020, we can offer a target business a variety of options to facilitate a business
combination and fund future expansion and growth of its business. This amount is after payments of $402,500 to the underwriters
in our initial public offering for deferred underwriting commissions and $3,795,000 to I-Bankers, the representative of the underwriters, for
certain business combination-related advisory fees. Because we are able to consummate a business combination using the cash proceeds
from our initial public 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.
Effecting Our Initial Business Combination
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to complete our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the private placement units,
our capital stock, debt or a combination of these as the consideration to be paid in our initial business combination. We may
seek to complete our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses, 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 equity or debt securities, or not all of the funds released from the trust account are used for
payment of the consideration in connection with our business combination or used for redemptions of our ordinary shares, we may
apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, to fund the purchase of other assets, companies or for working capital.
We may seek to raise
additional funds through a private offering of debt or equity securities in connection with the completion of our initial business
combination (which may include a specified future issuance), and we may complete 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 expect to complete such financing only simultaneously with the completion 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, we would seek shareholder
approval of such financing. There are no prohibitions on our ability to raise funds privately, including pursuant to any specified
future issuance, or through loans in connection with our initial business combination.
The time required
to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated
with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our 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.
Sources of Target Businesses
We expect to receive
a number of proprietary transaction opportunities to originate as a result of the business relationships, direct outreach, and
deal sourcing activities from the network built up by our management team and by the members of our Board. We also anticipate
that target business candidates will be brought to our attention from various unaffiliated sources, including investment banking
firms, consultants, accounting firms, private equity groups, large business enterprises, and other market participants. These
sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many
of these sources will have read this report and know what types of businesses we are targeting. Some of our officers and directors
may enter into employment or consulting agreements with the post-transaction company following our initial business combination.
The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an acquisition
candidate. In no event will our sponsor or any of our existing officers or directors, or any entity with which they are affiliated,
be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate,
the completion of our initial business combination (regardless of the type of transaction that it is).
We are not prohibited
from pursuing an initial business combination with a business combination target that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a business combination target 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 which is a member of FINRA or an independent accounting firm that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. 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 may be required to present
such business combination opportunity to such entity prior to presenting such business combination opportunity to us.
Lack of Business Diversification
For an indefinite
period of time after the completion of our initial business combination, the prospects for our success may depend entirely on
the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our 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 Target’s
Management Team
Although we intend
to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our business
combination with that business, our assessment of the target business’ management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore,
the future role of members of our management team or of our board, if any, in the target business cannot presently be stated with
any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our business combination, it is presently unknown if any of them will devote their full efforts to our affairs subsequent to our
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business. The determination as to whether any members of our board of directors
will remain with the combined company will be made at the time of our initial business combination.
Following a business
combination, to the extent that we deem it necessary, we may seek to recruit additional managers to supplement the incumbent management
team of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional
managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Selection of a Target Business and
Structuring of a Business Combination
Subject to the requirement
that, so long as our securities are listed on Nasdaq, 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 (less any deferred underwriting
commissions, certain advisory fees to I-Bankers and taxes payable on interest earned and less any interest earned thereon
that is released to us for taxes) at the time of the agreement to enter into such initial business combination, our management
have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we are
not 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. 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
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 have conducted and will continue to conduct an extensive due diligence review which encompasses, among other
things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information
which is made available to us. This due diligence review are conducted either by our management or by unaffiliated third parties
we may engage, although we have no current intention to engage any such third parties.
The time and costs
required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained
with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available
to otherwise complete a business combination.
Fair Market Value of Target Business
or Businesses
So long as our securities
are listed on Nasdaq, 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 (less any deferred underwriting commissions,
certain advisory fees to I-Bankers and taxes payable on interest earned and less any interest earned thereon that is released
to us for taxes) at the time of the agreement to enter into such initial business combination. So long as our securities
are listed on Nasdaq, 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 (less any deferred
underwriting commissions, certain advisory fees to I-Bankers and taxes payable on interest earned and less any interest earned
thereon that is released to us for taxes) 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 (although our memorandum and articles of association provides
that we may not issue securities that can vote with ordinary shareholders on matters related to our pre-initial business
combination activity). If we issue securities in order to consummate such an initial business combination, our shareholders could
end up owning a minority of the combined company’s 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.
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. 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.
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 or an independent accounting 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 or an independent
accounting firm that the price we are paying is fair to our shareholders.
Shareholders May Not Have the Ability
to Approve Our Initial Business Combination
Although we may 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 rules of Nasdaq). 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
|
Additionally, under
Nasdaq’s listing rules, shareholder approval would be required for our initial business combination if, for example:
|
●
|
we issue
ordinary shares that will be equal to or in excess of 20% of the number of ordinary shares
then outstanding (other than in a public offering);
|
|
●
|
any of our
directors, officers or substantial shareholders (as defined by Nasdaq rules) has a 5%
or greater interest (or such persons collectively have a 10% or greater interest), directly
or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of ordinary shares could result in an increase in outstanding ordinary
shares or voting power of 5% or more; or
|
|
●
|
the issuance
or potential issuance of ordinary shares will result in our undergoing a change of control.
|
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. So long as we maintain a listing of our securities on Nasdaq, we are
required to comply with such rules.
Ability to Extend Time to Complete
Business Combination
We have until May
24, 2021 to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial
business combination by May 24, 2021, we may, by resolution of our board if requested by our sponsor, extend such date to consummate
a business combination up to two times, each by an additional three months (up until November 24, 2021 to complete a business
combination), subject to the sponsor depositing additional funds into the trust account as set out below. Pursuant to the terms
of our amended and restated memorandum and articles of association and the trust agreement entered into between us and Continental
Stock Transfer & Trust Company, LLC, in order to extend the time available for us to consummate our initial business combination,
our initial shareholders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must
deposit into the trust account for each three-month extension $1,380,000 (or $0.10 per share) on or prior to the date of
the applicable deadline, up to an aggregate of $2,760,000, or approximately $0.20 per share. In the event that we receive notice
from our sponsor five days prior to the applicable deadline of its wish for us to effect an extension, we intend to issue a press
release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press
release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our sponsor and its
affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business
combination.
Redemption Rights for Public Shareholders
upon Consummation of Our Initial Business Combination
We will provide our
public shareholders with the opportunity to redeem all or a portion 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. The amount in the trust account as of June 30, 2020 is approximately $10.00 per share (subject to increase of up to an
additional approximately $0.20 per share in the event that our sponsor elects to extend such date to consummate a business combination,
as described in more detail in this report). The per-share amount we will distribute to investors who properly redeem their
shares will not be reduced by certain advisory fees we will pay to I-Bankers. Our initial shareholders have agreed to waive their
right to receive liquidating distributions if we fail to consummate our initial business combination within the requisite time
period. However, if our initial shareholders or any of our officers, directors or affiliates acquires public shares in or after
our initial public 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
public 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 initial shareholders have agreed to vote their founder shares, private
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. As a result, we would need only 4,307,376 of the 13,800,000 public shares, or approximately 31.2%, sold in our initial
public offering to be voted in favor of a transaction in order to have our initial business combination approved. Each public
shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.
In addition, our initial shareholders have agreed to waive their redemption rights with respect to their founder shares, private
shares and public shares in connection with the consummation of our initial business combination.
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 prior to or upon the
consummation of our initial business combination after payment of the deferred underwriting commission. Furthermore, the redemption
threshold may be further limited by the terms and conditions of our initial business combination. If too many public shareholders
exercise their redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth or cash requirements,
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 rules of Nasdaq), 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 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 at least $5,000,001 prior to or upon the consummation of our initial
business combination after payment of the deferred underwriting commission. 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 prior
to or upon the consummation of our initial business combination after payment of the deferred underwriting commission (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 initial shareholders have
agreed to waive their redemption rights with respect to their founder shares, private 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 our initial public 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 our initial public offering could threaten to exercise its redemption rights if such holder’s shares are
not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting
our shareholders’ ability to redeem no more than 15% of the shares sold in our initial public offering, we believe we will
limit the ability of a small group of shareholders to unreasonably attempt to block our ability to 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. However, we would not be restricting our shareholders’ ability
to vote all of their shares (including all shares held by those shareholders that hold more than 15% of the shares sold in our
initial public offering) for or against our initial business combination. 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 or their affiliates may purchase shares in privately negotiated transactions
or in the open market 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 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 maintain the listing or trading of our securities on a national
securities exchange following consummation of a business combination.
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 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, or to deliver their shares to the transfer agent electronically using The Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s 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 company’s
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
at or prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination
is approved.
Any request to redeem
such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the
shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its
certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If 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 by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination, as described in
more detail in this report).
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 by May 24, 2021 (or up to November 24, 2021 if
we extend such date to consummate a business combination, as described in more detail in this report). We may not be able to find
a suitable target business and consummate our initial business combination by such dates. If we are unable to consummate our initial
business combination by May 24, 2021 (or up to November 24, 2021 from the closing of our initial public offering if we extend
such date to consummate a business combination, as described in more detail in this report), 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
(net of taxes payable, and less up to $50,000 of interest to pay liquidation 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 effected as required 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 and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any
other steps he considers appropriate to identify the company’s creditors, after which our remaining assets would be distributed.
As soon as the affairs of the company are fully wound-up, the liquidator must complete his statement of account and file notice
with the Registrar that the liquidation is complete. We would be dissolved once the Registrar issues a Certificate of Dissolution.
Our initial shareholders
have agreed to waive their redemption rights with respect to their founder shares and private units if we fail to consummate our
initial business combination within the applicable period from the closing of our initial public offering.
However, if our initial
shareholders, or any of our officers, directors or affiliates acquire public shares in or after our initial public 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 and
warrants, which will expire worthless in the event we do not consummate our initial business combination by May 24, 2021 (or up
to November 24, 2021 if we extend such date to consummate a business combination, as described in more detail in this report).
We will pay the costs of our liquidation from our remaining assets outside of the trust account or interest earned on the funds
held in the trust account. 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 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 our initial public offering, other than the proceeds deposited in the trust account, and without taking
into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon
our dissolution would be approximately $10.00 (based on the trust account balance as of June 30, 2020). 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 $10.00,
plus interest (net of taxes payable, and less up to $50,000 of interest to pay liquidation expenses).
Although we have sought
and will continue to seek to have all vendors, service providers (other than our independent auditor), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will
execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust
account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well
as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against
our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims
to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only
enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s
engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or
skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent
registered public accounting firm, will not execute agreements with us waiving such claims to the monies held in the trust account.
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, our sponsor and our officers agreed that they 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 $10.00 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 our initial public offering against certain liabilities,
including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third
party, our sponsor will not be responsible to the extent of any liability for such third party claims. However, our sponsor may
not be able to satisfy those obligations. Other than as described above, 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 our sponsor has sufficient funds to satisfy his indemnity obligations and believe that our sponsor’s
only assets are securities of our company. We believe the likelihood of our sponsor 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 $10.00 per share and our sponsor asserts that it is unable to satisfy any
applicable obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
in any particular instance. Accordingly, due to claims of creditors, the actual value of the per-share redemption price may
be less than $10.00 per share.
We seek to reduce
the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have all
vendors, service providers (other than our independent auditor), 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. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. As of September 18, 2020, we had
access to up to approximately $780,000 not placed in the trust account (approximately $389,000 as of June 30, 2020) with
which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently
estimated to be more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the
reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable
for claims made by creditors.
If we are deemed insolvent
for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been
set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a
British Virgin Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the
value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), 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 (i) in the event of a redemption of the public shares prior to any
winding up in the event we do not consummate our initial business combination by May 24, 2021 (or up to November 24, 2021 if we
extend such date to consummate a business combination, as described in more detail in this report), (ii) if they redeem their
shares in connection with an initial business combination that we consummate or (iii) if they redeem their shares in connection
with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by May
24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination, as described in more detail
in this report) or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination
activity. 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 shareholder’s voting in connection
with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro
rata share of the trust account. Such shareholder must have also exercised its redemption rights described above.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we have encountered and may continue to encounter intense
competition from other entities having a business objective similar to ours, including other blank check companies, private equity
groups, venture capital funds 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 is 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, so long as our securities are listed on Nasdaq,
we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the trust account
(less any deferred underwriting commissions, certain advisory fees to I-Bankers and taxes payable on interest earned and
less any interest earned thereon that is released to us for taxes) 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 our outstanding
rights and warrants and the potential future dilution they 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.
Indemnity
Our sponsor, Xiaoma
(Sherman) Lu (our Chief Executive Officer) and Chunyi (Charlie) Hao (our Chairman and Chief Financial Officer) have agreed that
they 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 $10.00 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 our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable
against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have
not independently verified whether our sponsor, Mr. Lu or Mr. Hao, have sufficient funds to satisfy its indemnity obligations
and believe that their only assets are securities of our company. We believe the likelihood of our sponsor, Mr. Lu and Mr. Hao
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.
Employees
We currently have
two officers. These individuals are not obligated to devote any specific number of hours to our matters but they devote as much
of their time as they deem necessary and intend to continue doing so to our affairs until we have completed our initial business
combination. The amount of time they devote in any time period will vary based on whether a target business has been selected
for our initial business combination 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 have registered
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, this
report contains 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. These financial statements must be prepared in
accordance with, or be reconciled to, GAAP, or IFRS and the historical financial statements must be audited in accordance with
the standards of 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 15-month (or up to 21-month, as applicable) time frame.
We are required to
have our internal control procedures evaluated for the fiscal year ending June 30, 2020 required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal
control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our
securities and the prices of our securities may be more volatile.
In addition, Section
107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an
emerging growth company until the earlier of (1) the last day of the fiscal year (a) following February 24, 2025, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last
day of the second fiscal quarter of any given fiscal year, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Item
1A. Risk Factors
An investment in
our securities involves a high degree of risk. You should consider carefully all of the following risks and all the other information
contained in this report, including the financial statements. If any of the following risks occur, our business, financial condition
or results of operations may be materially and adversely affected. In that event, the trading price of our securities could decline,
and you could lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are
encouraged to perform your own investigation with respect to us and our business.
We are a blank check company with no
operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check
company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective of completing our initial business combination with one or more target businesses. We 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 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 if a majority of our public shareholders do not support such a combination.
If we do not decide
to hold a shareholder vote in conjunction with our initial business combination for business or other legal reasons (so long as
shareholder approval is not required by the Companies Act or the rules of Nasdaq), we will conduct redemptions pursuant to the
tender offer rules of the SEC and our memorandum and articles of association. Nasdaq rules currently allow us to engage in a tender
offer in lieu of a shareholder meeting, provided that we were not seeking to issue more than 20% of our outstanding shares to
a target business as consideration in any business combination. Furthermore, shareholder approval would not be required pursuant
to the Companies Act if our initial business combination were structured as a purchase of assets, a purchase of stock of the target
not involving a merger with us, or a merger of the target into a subsidiary of our company, or if we otherwise entered into contractual
arrangements with a target to obtain control of such company. 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.
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.
As of the date of
this report, our initial shareholders owns approximately 24.2% of our issued and outstanding ordinary shares. Accordingly, they
may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including
amendments to our memorandum and articles of association. If 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 divided into two classes, each of which generally serve for a term of two 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 one-half 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.
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 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 initial business combination.
The ability of our public shareholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into 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 such 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 prior to or upon the consummation of our
initial business combination after payment of the deferred underwriting commission or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. 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 prior to or upon the consummation of our initial business combination
after payment of the deferred underwriting commission, 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 our public shareholders
to exercise redemption rights with respect to a large number of our shares may not allow us to consummate the most desirable business
combination or optimize our capital structure.
In connection with
the successful consummation of our initial business combination, we may redeem up to that number of ordinary shares that would
permit us to maintain net tangible assets of at least $5,000,001 prior to or upon the consummation of our initial business combination
after payment of the deferred underwriting commission. If our initial 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 per share 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.
The requirement that
we complete our initial business combination by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate
a business combination, as described in more detail in this report) may give potential target businesses leverage over us in negotiating
our initial business combination and may limit the amount of time we have 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 by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination,
as described in more detail in this report). 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 the required time period, 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 by May 24, 2021 (or up to November 24, 2021 if
we extend such date to consummate a business combination, as described in more detail in this report). We may not be able to find
a suitable target business and consummate our initial business combination by such dates. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the
other risks described herein.
If we are unable to
consummate our initial business combination by such dates, 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 (net of taxes payable, and less
up to $50,000 of interest to pay liquidation 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 effected as required by function of our memorandum and articles of association and prior to any
voluntary winding up.
Our sponsor may decide not to extend
the term we have to consummate our initial business combination, in which case we would cease all operations except for the purpose
of winding up and we would redeem our public shares and liquidate, and the rights and warrants will be worthless.
We have until May
24, 2021 to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial
business combination by May 24, 2021, we may, by resolution of our board if requested by our sponsor, extend such date to consummate
a business combination up to two times, each by an additional three months (up to November 24, 2021 to complete a business combination),
subject to the sponsor depositing additional funds into the trust account as set out below. In order for the time available for
us to consummate our initial business combination to be extended, our sponsor or its affiliates or designees must deposit into
the trust account for each three month extension $1,380,000 (or $0.10 per share) on or prior to the date of the applicable deadline,
up to an aggregate of $2,760,000, or approximately $0.20 per share. Any such payments would be made in the form of a loan. The
terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. Consequently, such loans
might not be made on the terms described in this report. Our sponsor and its affiliates or designees are not 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 applicable time period, we will, as promptly as reasonably possible but not more than five business
days thereafter, redeem the public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably
possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve
and liquidate, subject in each case to our obligations under British Virgin Islands law to provide for claims of creditors and
the requirements of other applicable law. In such event, the rights and warrants will be worthless.
If we seek shareholder approval of
our business combination, our sponsor, directors, officers and their affiliates may elect to purchase shares from shareholders,
in which case 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 or their affiliates may purchase shares in privately negotiated transactions
or in the open market 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 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 or their affiliates may make it difficult
for us to maintain the listing of our ordinary shares on a national securities exchange following the consummation of an initial
business combination.
If our sponsor, directors,
officers 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 maintain the listing or trading of our securities on a national securities exchange following consummation of 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, potentially at a loss.
Our public shareholders
shall be entitled to receive funds from the trust account only (i) 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 (ii) if they redeem their
shares in connection with an initial business combination that we consummate or (iii) if they redeem their shares in connection
with a shareholder vote to amend our memorandum and articles of association (A) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination by May 24, 2021 (or up to November
24, 2021 if we extend such date to consummate a business combination, as described in more detail in this report) or (B) with
respect to any other provision relating to shareholders’ rights or pre-business combination activity. 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 securities, potentially at a loss.
Nasdaq may delist our securities from trading on its exchange,
which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units, ordinary
shares, warrants and rights are listed on Nasdaq. There can be no assurances that our securities will continue to be listed on
Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior
to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must
maintain a minimum amount in shareholders’ equity (generally $2,500,000) and a minimum number of holders of our securities
(generally 300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements,
in order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required
to be at least $4.00 per share, our shareholders’ equity would generally be required to be at least $5.0 million and we
would be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with
a market value of at least $2,500) of our securities. There can be no assurances that we will be able to meet those initial listing
requirements at that time.
If Nasdaq delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
|
●
|
a
limited availability of market quotations for our securities;
|
|
●
|
reduced
liquidity for our securities;
|
|
●
|
a
determination that our ordinary shares is a “penny stock” which will require
brokers trading in our ordinary shares to adhere to more stringent rules and possibly
result in a reduced level of trading activity in the secondary trading market for our
securities;
|
|
●
|
a
limited amount of news and analyst coverage; and
|
|
●
|
a
decreased ability to issue additional securities or obtain additional financing in the
future.
|
The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Since our units, ordinary shares, warrants and rights are
listed on Nasdaq, they are covered securities. Although the states are preempted from regulating the sale of our securities, the
federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of
fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not
aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other
than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state
in which we offer our securities, including in connection with our initial business combination.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds
of our initial public 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 have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated by the SEC to protect investors
in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits or protections of those rules.
Among other things, this means that 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 unless and until the funds in the trust account were released to us in connection with our consummation
of an initial business combination.
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 our initial public offering. Your inability to redeem more than an aggregate of 15%
of the shares sold in our initial public 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 our initial
public offering not being held in the trust account are insufficient to allow us to operate until May 24, 2021 (or up to November
24, 2021 if we extend such date to consummate a business combination, as described in more detail in this report), 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 for
the payment of our tax obligations, may not be sufficient to allow us to operate until May 24, 2021 (or up to November 24, 2021
if we extend such date to consummate a business combination, as described in more detail in this report), assuming that our initial
business combination is not consummated during that time. 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 $10.00 per share (based on the balance of our trust account
as of June 30, 2020 and excluding $50,000 of interest to pay dissolution expenses) or potentially less than $10.00 per share on
our redemption, and our rights and warrants will expire worthless.
If funds available to us outside of
the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses
and complete our initial business combination and we will depend on loans from our sponsor or management team to fund our search,
to pay our taxes and to complete our initial business combination. If we are unable to obtain these loans, we may not be able
to complete our initial business combination.
As of June 30, 2020,
we had $389,361 held outside the trust account that is available to us to fund our working capital requirements. If we are required
to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate
or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation
to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account
or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust
account. In such case, our public shareholders may only receive $10.05 per share (based on the balance of our trust account as
of June 30, 2020 and excluding $50,000 of interest to pay dissolution expenses), or less in certain circumstances and our warrants
will expire worthless.
Subsequent to our consummation of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other
charges that could have a significant negative effect on our financial condition, results of operations and 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. Although
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.
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 by May 24,
2021 (or up to November 24, 2021 if we extend such date to consummate a business combination, as described in more detail in this
report), this will trigger the required 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 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 our sponsor, resulting in a reduction in the amount of funds in the
trust account available for distribution to our public shareholders.
In the event that
the proceeds in the trust account are reduced below $10.00 per share and our sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
on our behalf whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
in any particular instance. If our independent directors choose not to enforce these indemnification obligations on our behalf,
the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 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.
|
We do not believe that
our principal activities subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the
trustee only in United States government treasury bills with a maturity of 185 days or less or in money market funds investing
solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the
investment of the proceeds are restricted to these instruments, we believe we will meet the requirements for the exemption provided
in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance
with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder
our ability to complete a business combination. If we are unable to complete our initial business combination, our public shareholders
may receive only approximately $10.05 per share (based on the balance of our trust account as of June 30, 2020 and excluding $50,000
of interest to pay dissolution expenses), on the liquidation of our trust account and our warrants will expire worthless.
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 are 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.
The British Virgin
Islands, together with several other non-European Union jurisdictions, have recently introduced legislation aimed at addressing
concerns raised by the Council of the European Union as to offshore structures engaged in certain activities which attract profits
without real economic activity. With effect from January 1, 2019, the Economic Substance (Companies and Limited Partnerships)
Act, 2018 (the “ESA”) came into force in the British Virgin Islands introducing certain economic substance requirements
for British Virgin Islands tax resident companies which are engaged in certain “relevant activities”, which in the
case of companies incorporated before January 1, 2019 will apply in respect of financial years commencing June 30, 2019
onwards. However, it is not anticipated that the company itself will be subject to any such requirements prior to any business
combination and thereafter the company may still remain out of scope of the legislation or else be subject to more limited substance
requirements. Although it is presently anticipated that the ESA will have little material impact on the company or its operations,
as the legislation is new and remains subject to further clarification and interpretation it is not currently possible to ascertain
the precise impact of these legislative changes on the company.
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 report or its memorandum
and articles of association.
If we are unable to consummate our
initial business combination by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination,
as described in more detail in this report), our public shareholders may be forced to wait beyond such period before redemption
from our trust account.
If we are unable to
consummate our initial business combination by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a
business combination, as described in more detail in this report), 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 (net of taxes payable, and
less up to $50,000 of interest to pay liquidation 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 as required by 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 (net of taxes payable, and less up to $50,000 of interest to pay liquidation 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 May 24, 2021 (or up to November 24, 2021 if we extend
such date to consummate a business combination, as described in more detail in this report) 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. Except as otherwise described herein, we have no obligation to return funds to investors prior to the date of any redemption
required as a result of our failure to consummate our initial business combination within the period described above or our 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 any such redemption of public shares as we are required to effect 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 by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination,
as described in more detail in this report), we will be required to redeem our public shares from the trust account pursuant to
our memorandum and articles of association.
However, if at any
time we are deemed insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory
demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment,
decree or order of a British Virgin Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied;
or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as
they fall due), we are required to immediately enter insolvent liquidation. In these circumstances, a liquidator will be appointed
who will give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any)
who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin
Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business,
and taking any other steps he considers appropriate, after which our assets would be distributed. Following the process of insolvent
liquidation, the liquidator will complete its final report and accounts and will then notify the Registrar. 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. In addition,
our sponsor, Mr. Lu and Mr. Hao have agreed that they 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 our initial public offering against certain liabilities, including liabilities under
the Securities Act. However, we cannot assure you that the liquidator will not determine that he or she requires additional time
to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors).
We also cannot assure you that a creditor or shareholder will not file a petition with the British Virgin Islands Court which,
if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution
of some or all of our assets to our public shareholders.
If deemed to be insolvent, distributions
made to public shareholders, or part of them, from our trust account may be subject to claw back in certain circumstances.
If we do not complete
our initial business combination by May 24, 2021 (or up to November 24, 2021 if we extend such date to consummate a business combination,
as described in more detail in this report), and instead distribute the aggregate amount then on deposit in the trust account
(net of taxes payable), 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.
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
entered into on the date of this report, our initial shareholders, anchor investors, I-Bankers and their permitted transferees
can make up to three demands on or after the consummation of our initial business combination that we register for resale an aggregate
of 3,450,000 founder shares, 167,000 insider units and underlying securities, 108,000 anchor units and underlying securities,
75,000 I-Bankers units and underlying securities, and up to 1,500,000 units, and underlying securities, issuable upon conversion
of working capital loans. 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 private units or their respective permitted transferees are registered.
Because we are not limited to any 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.
Although we intend
to focus on fintech business in North America and Asia-Pacific, we may pursue acquisition opportunities in any geographic region
and in any business industry or sector. Except for the limitations that, so long as our securities are listed on Nasdaq,
a target business have a fair market value of at least 80% of the value of the trust account (less any deferred underwriting commissions,
certain advisory fees to I-Bankers and taxes payable on interest earned and less any interest earned thereon that is released
to us for taxes) 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 business’s 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.
Past performance by our management
team may not be indicative of future performance of an investment in the Company.
Information regarding
performance by, or businesses associated with, our management team and their affiliates is presented for informational purposes
only. Past performance by our management team is not a guarantee either (i) that we will be able to identify a suitable candidate
for our initial business combination or (ii) of success with respect to any business combination we may consummate. You should
not rely on the historical record of the performance of our management team as indicative of our future performance of an investment
in the company or the returns the company will, or is likely to, generate going forward. None of our officers or directors has
had experience with any blank check companies in the past.
We may seek investment opportunities
outside of our management’s 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 we may determine that such candidate
offers an attractive investment opportunity for our company. In the event we elect to pursue an investment outside of our management’s
expertise, our management’s experience may not be directly applicable to the target business or their evaluation of its
operations.
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 rules
of Nasdaq, 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 $10.00 per
share or potentially less than $10.00 per share on our redemption, and our rights and warrants will expire worthless.
Management’s flexibility in identifying
and selecting a prospective acquisition candidate, along with our management’s 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, so long as our securities are listed on Nasdaq, 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 (less any deferred underwriting
commissions, certain advisory fees to I-Bankers and taxes payable on interest earned and less any interest earned thereon
that is released to us for 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 management’s
ability to identify business combinations, evaluate their merits, conduct or monitor diligence and conduct negotiations. Management’s
flexibility in identifying and selecting a prospective acquisition candidate, along with management’s 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.
We are not required to obtain an opinion
from an independent investment banking firm or an independent accounting 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 or an independent accounting 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. Our board of directors will have significant
discretion in choosing the standard used to establish the fair market value of the target acquisition. 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 upon or 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 incentive plan upon or after consummation of our initial business combination (although our memorandum
and articles of association provides that we may not issue securities that can vote with ordinary shareholders on matters related
to our pre-initial business combination activity).
However, our memorandum
and articles of association provides, among other things, that prior to our initial business combination, we may not issue additional
shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any
initial business combination. These provisions of our memorandum and articles of association, like all provisions of our memorandum
and articles of association, may be amended with the approval of our shareholders. However, our executive officers and directors
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our memorandum and articles
of association (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by May 24, 2021 (or up to November 24, 2021) from the closing of our initial public offering
or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity,
unless we provide our public shareholders with the opportunity to redeem their public shares upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
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 our initial public 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 are issued, which may
affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors;
and
|
|
●
|
may adversely
affect prevailing market prices for our units, ordinary shares, rights and/or warrants.
|
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 $10.00 per share or potentially less than $10.00 per share 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 of our ordinary
shares, rights or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject
to additional reporting requirements. Our actual PFIC status for our current taxable year may depend on whether we qualify for
the PFIC start-up exception. Depending on the particular circumstances the application of the start-up exception may
be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly,
there can be no assurances with respect to our status as a PFIC for our current taxable year or any future taxable year. Our actual
PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. If we determine
we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service
(“IRS”) may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and
maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required
information, and such election would likely be unavailable with respect to our rights and warrants.
We urge U.S. investors
to consult their own tax advisors regarding the possible application of the PFIC rules.
U.S. federal income tax reform could
adversely affect us and holders of our units.
We could be
adversely affected by changes in applicable U.S. tax laws, regulations, or administrative interpretations thereof. For
example, the U.S. federal tax legislation commonly referred to as the Tax Cuts and Jobs Act, enacted in December 2017,
resulted in fundamental changes to the Code. This legislation, among other things, changes the U.S.
federal tax rates, imposes significant additional limitations on the deductibility of interest, allows the expensing of
capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial
system. We continue to examine the impact this tax reform legislation may have on us. The impact of this tax reform, or of
any future administrative guidance interpreting provisions thereof, on holders of our units is uncertain and could be
adverse. This report does not discuss any such tax legislation or the manner in which it might affect holders of our units.
We urge prospective investors to consult with their legal and tax advisors with respect to any such legislation and the
potential tax consequences of investing in our units.
We may reincorporate in another jurisdiction
in connection with our initial business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection
with our initial business combination, reincorporate in the jurisdiction in which the target company or business is located or
in another jurisdiction. The transaction may require a shareholder to recognize taxable income in the jurisdiction in which the
shareholder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make
any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding taxes or other taxes with
respect to their ownership of us after the reincorporation.
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 to 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. Additionally, we do not intend to have any full time employees prior to the consummation
of our initial business combination.
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 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 target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
The officers and directors of an acquisition
candidate may resign upon consummation of our initial business combination. The loss of an acquisition target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained at this time.
Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with 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.
Until we consummate
our business combination, we will continue to engage in the business of identifying and combining with one or more businesses.
Our officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business.
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 or contractual obligations. 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 directors and/or executives are
currently managing or will be managing other businesses similar to the market opportunities we are pursuing business combination.
Furthermore, certain
of our directors and/or executives may enter into blank check companies by serving either directors and/or executives. In order
to minimize potential conflicts of interest which may arise from multiple affiliations, Messrs. Lu and Hao will be required to
present all suitable target businesses to the Company prior to presenting them to such other blank check company, unless such
opportunity is expressly offered to Messrs. Hao and Lu solely in their capacity as officers of such company.
The shares beneficially owned by our
officers and directors may 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, shares underlying private rights or private warrants,
or any other ordinary shares acquired in our initial public offering or thereafter, or to receive distributions with respect to
their founder shares, private shares, or shares underlying private rights or private warrants upon our liquidation if we are unable
to consummate our initial business combination, until all of the claims of any redeeming shareholders and creditors are fully
satisfied (and then only from funds held outside the trust account). 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 sponsor,
officers or directors, which may raise potential conflicts of interest.
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 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. Despite our agreement to obtain an opinion from an independent investment banking firm or an independent account
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 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 October 2018, we
issued an aggregate of 1,437,500 founder shares to our initial shareholders for an aggregate purchase price of $25,000, or approximately
$0.017 per share, with 625,000 shares issued to our sponsor, Double Ventures Holdings Limited, of which Mr. Chunyi (Charlie)
Hao, our Chairman and Chief Financial Officer, is the sole director, 625,000 to Navy Sail International Limited, of which Mr. Hao
is the sole director, and 187,500 shares issued to Mr. Hao. In January 2020, we performed a share split whereby each
ordinary share was sub-divided into two shares, resulting in our initial shareholders holding an aggregate of 2,875,000 founder
shares. The founder shares will be worthless if we do not consummate an initial business combination. In February 2020, we effected
a 1.2 for 1 share dividend for each ordinary share outstanding, resulting in our initial shareholders holding an aggregate
of 3,450,000 founder shares. In addition, our sponsor (and/or its designees), together with our anchor investors, have purchased
an aggregate of 275,000 private units in a private placement, each consisting of one ordinary share, one right to receive one-tenth (1/10)
of one ordinary share, and one warrant to purchase one-half (1/2) of one ordinary share, for an aggregate purchase price
of $2,750,000 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 report to issue any notes or other debt securities, or to otherwise incur outstanding debt,
we may choose to incur substantial debt to complete initial business combination. Furthermore, we may issue a substantial number
of additional ordinary or preferred shares to complete our initial business combination or under an employee incentive plan upon
or after consummation of our initial business combination (although our memorandum and articles of association provides that we
may not issue securities that can vote with ordinary shareholders on matters related to our pre-initial business combination
activity). 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 our initial public offering, and the sale of the private units, 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.
As of June 30, 2020,
$138,826,973 was available for completing our initial business combination (which includes $402,500 for the payment of deferred
underwriting commission).
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 risks. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities, which may have the resources to complete
several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for
our success may be:
|
●
|
solely dependent
upon the performance of a single business, property or asset, or
|
|
●
|
dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
|
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously 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.
Our management team and our shareholders
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 company’s 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 may 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. Historically, blank check companies would not be
able to consummate an initial business combination if the holders of such company’s public shares voted against a proposed
business combination and elected to redeem more than a specified maximum percentage of the shares sold in such company’s
initial public offering, which percentage threshold was typically between 19.99% and 39.99%. As a result, many blank check companies
were unable to complete a business combination 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 its 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 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 prior
to or upon the consummation of our initial business combination after payment of the deferred underwriting commission. Furthermore,
the redemption threshold may be further limited by the terms and conditions of our initial business combination. If too many public
shareholders exercise their redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth or
cash requirements, 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, 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.
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. 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 warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential
“upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless. Notwithstanding
the foregoing, the 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 have our securities listed on a national securities
exchange, which would provide an exemption from registration in every state. However, we cannot assure you of this fact. If the
ordinary shares issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in
which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited
and they may expire worthless if they cannot be sold.
Our management’s ability to require
holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer ordinary shares upon
their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public
warrants for redemption after the redemption criteria described elsewhere in this report have been satisfied, our management will
have the option to require any holder that wishes to exercise his warrant (including any warrants held by our initial shareholders
or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise
their warrants on a cashless basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would
have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside”
of the holder’s investment in our company.
We may amend the terms of the warrants
in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants are 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.
We have no obligation to net cash settle
the warrants.
In no event will we
have any obligation to net cash settle the warrants. Furthermore, there are no contractual penalties for failure to deliver securities
to the holders of the warrants upon consummation of our initial business combination or exercise of the warrants. Accordingly,
the warrants may expire worthless.
Our rights and warrants may have an
adverse effect on the market price of our ordinary shares and make it more difficult to effectuate our initial business combination.
We have issued rights
to receive 1,380,000 of our ordinary shares and warrants to purchase 6,900,000 of our ordinary shares, as part of the units offered
in our initial public offering, rights to receive 35,000 of our ordinary shares and warrants to purchase 175,000 of our ordinary
shares, as part of a private placement. The warrants are exercisable at a price of $11.50 per full share, subject to adjustment.
We have also issued representative’s warrants exercisable for 690,000 ordinary shares at an initial exercise price
of $12.00 per share, subject to adjustment. In addition, our initial shareholders, officers and directors or their affiliates
may, but are not obligated to, make certain loans to us, up to $1,500,000 of which may be converted upon consummation of our initial
business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders
being issued 150,000 ordinary shares if $1,500,000 of notes were so converted, as well as 150,000 rights to receive 15,000 ordinary
shares and 150,000 warrants to purchase 75,000 shares). To the extent we issue ordinary shares to effectuate a business transaction,
the potential for the issuance of a substantial number of additional ordinary shares upon exercise of these warrants could make
us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding
ordinary shares and reduce the value of the ordinary shares issued to complete the business transaction. Therefore, our rights
and warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
A provision of our warrant agreement
may make it more difficult for us to consummate an initial business combination.
Unlike most blank
check companies, if
|
●
|
we issue
additional ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of our initial business combination at an issue price
or effective issue price of less than $9.50 per ordinary share,
|
|
●
|
the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of our initial business combination,
and
|
|
●
|
the market
value is below $9.50 per share,
|
then the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the market price, and the $18.00 per share
redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the market price. This
may make it more difficult for us to consummate an initial business combination with a target business.
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.
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 until May 24, 2021 from the closing of our initial public offering (or
up to November 24, 2021 if we extend such date to consummate a business combination, as described in more detail in this report),
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 intend to offer
each public shareholder the option to vote in favor of the proposed business combination and still seek redemption of such shareholders’
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 report) 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 so long as (after
any redemption) we have net tangible assets of at least $5,000,001 prior to or upon such consummation after payment of the deferred
underwriting commission 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 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 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, or to deliver their shares to the transfer agent electronically using The Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. In order to obtain a physical
stock certificate, a shareholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate
this request. It is our understanding that shareholders should generally allot at least two weeks to obtain physical certificates
from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take
significantly longer than two weeks to obtain a physical 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. In the event that a shareholder fails to comply with the various procedures that
must be complied with in order to validly tender or redeem public shares, its shares may not be redeemed.
Additionally, despite
our compliance with the proxy rules or tender offer rules, as applicable, shareholders may not become aware of the opportunity
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 private
equity groups, 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. 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, including an amendment to permit
us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation
is substantially reduced or eliminated, 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 company’s pre-business combination activity, without approval by a certain percentage of the company’s shareholders.
Typically, amendment of these provisions requires approval by between 90% and 100% of the company’s 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, including to
permit us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or
liquidation is substantially reduced or eliminated, 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 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 beneficially
own approximately 24.2% of our ordinary shares as of the date of this report, 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 (A) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination by May 24, 2021 (or up to November
24, 2021) from the closing of our initial public offering or (B) with respect to any other provision relating to shareholders’
rights or pre-initial business combination activity, unless we provide our public shareholders with the opportunity to redeem
their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number
of then outstanding public shares.
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 $10.00 per share or potentially less than $10.00 per share on our redemption, and the
rights and warrants will expire worthless.
Although we believe
that the net proceeds of our initial public offering and the sale of the private units, 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 our initial public offering and the sale of the
private units 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. 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 $10.00 per share or potentially
less than $10.00 per share on our redemption, and the rights and 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.
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 rules of Nasdaq, 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.
The requirements of being a public
company may strain our resources and divert management’s attention.
As a public company,
we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”),
the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities
rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance costs, make some
activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are
no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective
disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve
our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources
and management oversight may be required. As a result, management’s attention may be diverted from other business concerns,
which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside
consultants to comply with these requirements, which will increase our costs and expenses.
A market for our securities may not
develop, which would adversely affect the liquidity and price of our securities.
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 Nasdaq, 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 Nasdaq 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 Nasdaq or another national exchange. You may be unable to sell your securities unless a market
can be established and sustained.
Our securities may not continue to
be listed on Nasdaq in the future, which could limit investors’ ability to make transactions in our securities and subject
us to additional trading restrictions.
Our securities are
currently listed on Nasdaq. However, we cannot assure you of this or that our securities will continue to be listed on Nasdaq
in the future. Additionally, in connection with our business combination, Nasdaq will require us to file a new initial listing
application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot
assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists
our securities from trading on its exchange, we could face significant material adverse consequences, including:
|
●
|
a limited
availability of market quotations for our securities;
|
|
●
|
a reduced
liquidity with respect to our securities;
|
|
●
|
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;
|
|
●
|
a limited
amount of news and analyst coverage for our company; and
|
|
●
|
a decreased
ability to issue additional securities or obtain additional financing in the future.
|
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 (“GAAP”), or International Financial Reporting Standard as issued
by the International Accounting Standards Board (“IFRS”), and the historical financial statements must be audited
in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“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 15-month (or up to 21-month, as applicable) time frame.
Compliance obligations under the Sarbanes-Oxley Act
may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing a business combination.
Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ended June 30, 2020. Only in the event we are deemed to be a large accelerated filer or an
accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be
required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our
business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal
controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such business combination.
We may re-domicile or continue
out of the British Virgin Islands into, 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 or re-domicile or continue out of
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
are governed by our memorandum and articles of association, the Companies Act and the common law of the British Virgin Islands.
The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities
of our directors to us under British Virgin Islands law are governed by the Companies Act and the common law of the British Virgin
Islands. The common law of the British Virgin Islands is derived from English common law, and whilst the decisions of the English
courts are of persuasive authority, they are not binding on a court in the British Virgin Islands. The rights of our shareholders
and the fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly established as they
would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands
has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully
developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in British Virgin
Islands law for derivative actions to be brought in certain circumstances, shareholders in BVI companies may not have standing
to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action
may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights
of shareholders of a BVI company being more limited than those of shareholders of a company organized in the United States. Accordingly,
shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred.
The British Virgin
Islands Courts are also unlikely:
|
●
|
to recognize
or enforce against us judgments of courts of the United States based on certain civil
liability provisions of U.S. securities laws where that liability is in respect of penalties,
taxes, fines or similar fiscal or revenue obligations of the company; and
|
|
●
|
to impose
liabilities against us, in original actions brought in the British Virgin Islands, based
on certain civil liability provisions of U.S. securities laws that are penal in nature.
|
There is no statutory
recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin
Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may
be sued upon as a debt at common law so that no retrial of the issues would be necessary provided that the U.S. judgment:
|
●
|
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;
|
|
●
|
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 would not be contrary to public policy in the British
Virgin Islands; and
|
|
●
|
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 our board
of directors, management or controlling shareholders than they would as public shareholders of a U.S. company.
Our memorandum and articles of association
permit the board of directors by resolution to amend our memorandum and articles of association, including to create additional
classes of securities, including shares with rights, preferences, designations and limitations as they determine which may have
an anti-takeover effect.
Our memorandum and
articles of association permits the board of directors by resolution to amend certain provisions of the memorandum and articles
of association including to designate rights, preferences, designations and limitations attaching to the preferred shares as they
determine in their discretion, without shareholder approval with respect the terms or the issuance. If issued, the rights, preferences,
designations and limitations of the preferred shares would be set by the board of directors by amendment to relevant provisions
of the memorandum and articles of association 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 propose any amendment to our memorandum and articles of association (A) to modify
the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination
by May 24, 2021 (or up to November 24, 2021) from the closing of our initial public offering or (B) with respect to any other
provision relating to shareholders’ rights or pre-initial business combination activity, unless we provide our public
shareholders with the opportunity to redeem their public shares upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall
be net of taxes payable), divided by the number of then outstanding public shares.
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” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt
out of such extended transition period which means that when a standard is issued or revised and it has different application
dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private
companies adopt the new or revised standard. This may make comparison of our financial statements with another public company
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accountant standards used.
We may seek investment opportunities
with a financially unstable business or in its early stages of development.
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. These risks include volatile revenues or
earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the
recent coronavirus (COVID-19) outbreak.
In December 2019,
a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
China and other parts of the world. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus
disease (COVID-19) a “Public Health Emergency of International Concern.” On March 11, 2020 the World Health Organization
characterized the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could
result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business
of any potential target business with which we consummate a business combination could be materially and adversely affected.
Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit
the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among
others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our
ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business
combination, may be materially adversely affected.
The development of fintech is in its
early stage and any adverse development in fintech market may adversely affect our business and results of operations.
Fintech, as defined
by Financial Stability Board, is “technically enabled financial innovation that could result in new business models, applications,
processes or products with an associated material effect on financial markets and institutions and the provision of financial
services”. As of today, consumers and investors are benefiting from both the emergence of new fintech solutions and the
evolution of exiting financial services providers. This has generated a wide range of financial services and products more efficiently
and effectively. Some established fintech business today make only light or early-stage use of the technologies to deliver
new products and services to reach their customers in different financial segments. However, fintech companies are not all profitable.
Fintech companies’ failure to achieve profitability may have a negative impact in our business and operation.
There is no assurance that a fintech
business may be embraced and welcomed by users in the market place. Any negative sentiment to fintech business may adversely affect
our business and results of operations.
As a relatively new
technology, fintech has only recently been deployed in the market place of digital payment, digital wallet, mobile phone banking,
distributed financial record keeping, peer to peer lending, credit rating by artificial intelligence, financial cloud computing,
big data and analytics in financial services to individual credit, etc. However, there can be no assurance that those in the banking
database will welcome the emergence of new technology in the financial system. If privacy and privacy protection are not adequately
paired up, consumers may refuse to embrace the deployment of fintech and may refuse to receive services from fintech. Therefore,
our business and operation may adversely be impacted by the reverse of the market.
We are subject to regulatory risks
with regard to the deployment of fintech, which could negatively affect our business, results of operations and financial position.
Fintech is already
delivering significant benefits to consumers and investors; to financial services firms and financial market infrastructure; and
to financial stability and financial inclusion. The increase use of fintech solutions and emerging technologies also brings risk,
to which regulators and supervisors are responding. Fintech is moving from “under the regulatory” and is attracting
growing responses and supervisory scrutiny per a report titled Regulation and Supervision of Fintech by KPMG in March 2019. Fintech
industry regulation differs greatly from country to country. We foresee that the industry is subject to further governmental supervision
and regulation by governmental authorities in the country where fintech are to be deployed. We will see governmental authorities
are likely to issue new laws, rules and regulations governing the financial transactions via fintech platform, in the areas of
cyber security, open banking, outsourcing of cloud computing, data and AI and accounting and regulatory treatment. We cannot assure
you that we are able to successfully foresee any changes in law and regulations which may adversely affect our reputation, business,
financial condition and results of operations upon our initial business combination.
Erosion or loss of user confidence
in fintech could adversely impact our business, results of operations and financial condition. Financial transaction involving
fintech may suffer from hacking and fraud risks, which may adversely erode user confidence in the technology and reduce demand
for our products and services.
Transactions involving
fintech are entirely digital and, as with any virtual system, face risk from hackers, malware and operational glitches. Hackers
can target fintech platform to gain unauthorized access to transactions performed by and over fintech. Certain features of fintech,
such as decentralization, the open source protocols, and peer-to-peer connectivity, may increase the risk of fraud or cyber-attack by
potentially reducing the likelihood of a coordinated response. Fintech users may suffer from hacking risks and may face financial
losses, which may erode the confidence of fintech users, adversely affecting the operation of our business and negatively affect
demand for our products.
The functionality of most fintech platform
relies on the Internet. A significant disruption of Internet connectivity could adversely affect our business, results of operations
and financial condition.
We may be subject
to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications
failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions. System
redundancy and other continuity measures may be ineffective or inadequate, and our business continuity and disaster recovery planning
may not be sufficient for all eventualities. Such a significant disruption of Internet connectivity affecting large numbers of
users or geographic areas could impede the functionality of a fintech platform by, among other things, preventing users access,
interfering with transactions on fintech platform.
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:
|
●
|
rules and
regulations or currency redemption or corporate withholding taxes on individuals;
|
|
●
|
laws governing
the manner in which future business combinations may be effected;
|
|
●
|
exchange
listing and/or delisting requirements;
|
|
●
|
tariffs
and trade barriers;
|
|
●
|
regulations
related to customs and import/export matters;
|
|
●
|
tax issues,
such as tax law changes and variations in tax laws as compared to the United States;
|
|
●
|
currency
fluctuations and exchange controls;
|
|
●
|
challenges
in collecting accounts receivable;
|
|
●
|
cultural
and language differences;
|
|
●
|
employment
regulations;
|
|
●
|
crime, strikes,
riots, civil disturbances, terrorist attacks and wars; and
|
|
●
|
deterioration
of political relations with the United States. We may not be able to adequately address
these additional risks. If we 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 United States) may be inexperienced in cross-border business practices and unaware of significant differences in
accounting rules, legal regimes and labor practices. Even with a seasoned and experienced management team, the costs and difficulties
inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a
purely domestic business) and may negatively impact our financial and operational performance.
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 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 our initial public 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, certain members of our management team 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 may be located in a foreign country and substantially all of our revenue may 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.
Such economic growth has been uneven, both geographically and among various sectors of the economy and such growth may not be
sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our initial business combination
and if we effect our initial business combination, the ability of that target business to become profitable.
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 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 jurisdiction’s 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. Some foreign jurisdictions may be 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:
|
●
|
revoking
our business and other licenses;
|
|
●
|
requiring
that we restructure our ownership or operations; and
|
|
●
|
requiring
that we discontinue any portion or all of our business.
|
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.