Introduction
We
are a blank check company formed in the British Virgin Islands on January 23, 2017 as a business company with limited liability.
This means that our shareholders have no additional liability for our liabilities over and above the amount paid for their shares.
We were formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing
all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business
combination, with one or more businesses or entities. To date, our efforts have been limited to organizational activities, activities
related to our IPO, and activities related to an initial business combination. Our efforts to identify a prospective target business
have not been limited to a particular industry or geographic region, although we have focused our search on target businesses
and assets in the energy services industry, with an emphasis on oil and gas services globally (with an initial focus on North
America, Europe, Asia and Africa). Our management believes this area of focus represents a favorable and highly fragmented market
opportunity to consummate an initial business combination.
We
seek to capitalize on the 60 years of experience in the oil and gas business of the two executives leading the company: Sherif
Foda and Tom Wood. Mr. Foda was an officer of Schlumberger Limited (NYSE: SLB) with over 24 years of experience in managing a
variety of businesses and operations globally. He most recently managed a portfolio of $20 billion revenue each year and oversaw
30,000 employees at Schlumberger Limited. Mr. Wood was the Chief Executive Officer of Xtreme Drilling Corp. (TSX: XDC), a leading
drilling, workover and coil tubing company, doing business in North America, the Middle East and Asia. Previously, Mr. Wood founded
and ran more than six companies. Messrs. Foda and Wood have a wealth of knowledge, client relations, business acumen, and track
records of mergers and acquisitions.
We
intend to identify and acquire businesses that could benefit from the strong operations background of our management team, with
the broad expertise they have in oilfield services globally. Since even fundamentally sound companies can often under-perform
their potential due to a temporary period of dislocation in the markets in which they operate, inefficient capital allocation,
over-levered capital structures, excessive cost structures, incomplete management teams and/or inappropriate business strategies,
we believe that we will be able to locate an attractive target business to acquire. Our management team has extensive experience
in identifying and executing acquisitions across the global energy market including the upstream and service sectors of the oil
and gas services industry. In the past five years, our management team has been involved in over 20 mergers and acquisitions transactions
valued at more than $2 billion. In addition, our team has significant hands-on experience working with private investors and international
companies. In the event that we elect to pursue an investment outside of the oil and gas services industry, our management’s
expertise related to that industry may not be directly applicable to its evaluation or operation, and the information contained
herein regarding this industry might not be relevant to an understanding of the business or asset that we elect to acquire.
We
believe that our management team is well positioned to identify attractive risk-adjusted returns in the marketplace and that their
contacts and transaction sources, ranging from industry executives, private owners, and investment bankers, in addition to the
extensive global industry and geographical reach of management’s past experience, will enable us to pursue a broad range
of opportunities. Our management believes that its ability to identify and implement value creation initiatives will remain central
to its differentiated acquisition strategy. However, there is no assurance that we will complete an initial business combination
nor is there any guarantee that such initial business combination will be successful. The members of our management team are not
required to devote any significant amount of time to our business and are concurrently involved with other businesses. There is
no guarantee that our current officers and directors will continue in their respective roles, or in any other role, after our
initial business combination, and their expertise may only be of benefit to us until our initial business combination is completed,
if at all.
Our
management team’s objective is to generate attractive returns and create value for our stockholders by applying a disciplined
strategy of effecting changes in a target business after making an acquisition to unlock value. We favor companies with certain
elements of downside protection, for example, companies with multiple year contracts, proven infrastructure, good governance and
credibility in the market place in which they operate.
We
have until May 17, 2019 to consummate our initial business combination. If we are unable to consummate the Business Combination
or an alternative initial business combination by May 17, 2019, we will, as promptly as reasonably possible but not more than
ten 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.
On
November 12, 2017, we entered into two stock purchase agreements, namely the Stock Purchase Agreement (“NPS Stock Purchase
Agreement”) for shares of NPS Holdings Limited (“NPS”) and the Agreement for the Sale and Purchase of Shares
in Gulf Energy S.A.O.C. (“GES Stock Purchase Agreement” and, together with the NPS Stock Purchase Agreement, the “Stock
Purchase Agreements”), along with related contracts, all of which collectively provide for: (i) our acquisition of all of
the outstanding issued shares and other equity interests in NPS, and (ii) our acquisition, directly and through our wholly owned
subsidiary, National Energy Services Reunited Corporation, a Texas corporation, of all of the issued and outstanding shares of
capital stock in Gulf Energy S.A.O.C. (“GES”). These two proposed acquisitions and related transactions collectively
shall be referenced hereafter as the “Business Combination.” Consummation of the Business Combination is subject to
customary conditions of the respective parties, including the approval of the Business Combination by our shareholders in accordance
with our amended and restated memorandum and articles of association and the completion of a redemption offer whereby we will
be providing our public shareholders with the opportunity to redeem their ordinary shares for cash equal to their pro rata share
of the aggregate amount on deposit in our trust account (net of taxes payable).
The
Stock Purchase Agreements and related agreements are further described in the Form 8-K filed by the Company on November 16, 2017.
For additional information regarding NPS and GES, the Stock Purchase Agreements and the Business Combination, see the Proxy Statement.
Other
than as specifically discussed, this report does not assume that the closing of the Business Combination will occur.
Significant
Activities Since Inception
Since
inception, all activity of the Company has related to the Company’s formation, its IPO, which is described below, and identifying
a target company for an initial business combination.
The
registration statement for the Company’s IPO was declared effective on May 11, 2017. On May 17, 2017, the Company consummated
its IPO, issuing 21,000,000 units and generating gross proceeds of $210,000,000. Each unit consisted of one ordinary share and
one warrant to purchase one-half of one ordinary share at an exercise price of $5.75 per half share ($11.50 per whole share).
Simultaneously
with the closing of the IPO, the Company consummated the sale of 11,850,000 private warrants at a price of $0.50 per warrant in
a private placement to the Company’s Sponsor, NESR Holdings Ltd., generating gross proceeds of $5,925,000.
Following
the closing of the IPO on May 17, 2017, an amount of $210,000,000 ($10.00 per unit) from the net proceeds of the sale of the units
in the IPO and the private warrants was placed in a trust account. Funds in the trust account must be invested in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money
market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment
Company Act, as determined by the Company, until the earlier of: (i) the consummation of an initial business combination or (ii)
the distribution of the trust account, as described below.
On
May 30, 2017, in connection with the underwriters’ election to partially exercise their over-allotment option, the Company
consummated the sale of an additional 1,921,700 units at a price of $10.00 per unit and the sale of an additional 768,680 private
warrants at a price of $0.50 per warrant, generating total gross proceeds of $19,601,340. Following the closing, an additional
$19,217,000 of net proceeds ($10.00 per unit) was placed in the trust account, resulting in a total of $229,217,000 ($10.00 per
unit) being held in the trust account.
Transaction
costs related to the IPO amounted to $13,761,498, consisting of $4,014,340 of underwriting fees, $9,032,265 ($7,025,095 in cash
and 200,717 ordinary shares) of deferred underwriting fees and $714,893 of IPO costs. As of December 31, 2017, $741,096 of cash
was held outside of the trust account and was available for working capital purposes.
Our
units began trading on May 12, 2017 on the NASDAQ Capital Market under the symbol “NESRU.” Commencing on June 5, 2017,
the units ceased trading and separated into their component securities, which ordinary shares and public warrants began separately
trading on the NASDAQ Capital Market under the symbols “NESR” and “NESRW,” respectively.
Stock
Purchase Agreements
As
discussed above, on November 12, 2017, we entered into the Stock Purchase Agreements and related agreements, pursuant to which,
among other things and subject to the terms and conditions contained therein, the Company will acquire NPS and GES.
Pursuant
to the NPS Stock Purchase Agreement, NESR will acquire 100% of the equity interests of NPS from its selling stockholders and Hana
Investments Co. WLL (“Hana Investments”). Hana Investments purchased, in cash, an aggregate of 83,660,878 NPS shares
on January 14, 2018, and has agreed to exchange such NPS shares for NESR ordinary shares in connection with the Business Combination.
As consideration for the acquisition of NPS, we agreed to: (i) issue an aggregate of 25,077,276 of our ordinary shares, which
includes 11,318,827 ordinary shares at a value of $10.00 per share to the NPS selling stockholders and 13,340,448 shares to Hana
Investments at a value of $11.244 per share, plus interest of up to $4.7 million payable in cash or ordinary shares to Hana Investments
at the value of $11.244 per share or 418,001 ordinary shares, plus (ii) issue up to an additional 3,343,408 ordinary shares that
may be issued pursuant to certain equity earn-outs, (iii) pay total cash of $292.8 million, (iv) potentially pay an additional
$7,572,444 pursuant to a cash earn-out and (v) additional interest factor fees (“Ticker Fee”) that accrue to NPS selling
stockholders from January 1, 2018, until the consideration is paid under the NPS Stock Purchase Agreement, upon the closing of
the Business Combination.
NESR
will acquire GES by acquiring 61% of the GES capital stock from certain GES selling stockholders directly pursuant to the GES
Stock Purchase Agreement, 11.7% of the GES capital stock pursuant to a Shares Exchange Agreement with our Sponsor, which acquired
such GES stock through certain loan agreements (“Loan Contracts”) with 11 separate investors (“GES Investors”),
and 27.3% of the GES stock pursuant to a Contribution Agreement with SV3 Holdings Pte Ltd, which acquired such GES shares in October
2017 independently of NESR. As consideration for the purchase of the aforementioned GES capital stock, we agreed to issue an aggregate
of 28,234,848 (plus approximately $1.25 million for interest accrued on loans pending closing) of our ordinary shares at a value
of $10.00 per share.
In
connection with the Business Combination, the Company expects to enter into a forward purchase agreement for up to $150 million
(the “Backstop Commitment”) with parties arranged by MEA Energy Advisory UK, LLP or its affiliates (“Backstop
Investor”), pursuant to which the Company will draw down a minimum of $70 million at $10.00 per share, and will have the
option to draw up to an additional $80 million at $11.244 per share, as needed. The funds will be used to replace capital removed
to pay shareholder redemptions, to help fund the cash portion of the consideration to the NPS selling stockholders and transaction
expenses in the Business Combination, or other corporate purposes, such that the Company meets its minimum cash requirements immediately
following the Business Combination. The Backstop Investor will have no obligation to purchase any NESR ordinary shares until definitive
agreements are entered into. NESR expects the definitive terms of the forward purchase agreement to be negotiated and agreed to
before the Proxy Statement becomes definitive and is mailed to NESR shareholders. Additionally, the Backstop Commitment will
be conditioned on the concurrent closing of the Business Combination and other customary closing conditions.
For
additional information regarding the Business Combination, please see the Proxy Statement.
Business
Strategy
Our
acquisition and value creation strategy is to identify, acquire and, after our initial business combination, build a company in
the energy services industry that complements the experience of our management team and can benefit from their operational expertise.
Our acquisition strategy will leverage our team’s network of potential proprietary and public transaction sources where
we believe a combination of our relationships, knowledge and experience in the energy services industry could effect a positive
transformation or augmentation of existing businesses or properties to improve their overall value proposition.
Acquisition
Criteria
Consistent
with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We have been focusing our efforts on seeking and completing an initial business combination with
a target entity that has an enterprise value of between $600 million and $1.25 billion, although a target entity with a smaller
or larger enterprise value may be considered. We have used these criteria and guidelines in evaluating acquisition opportunities,
including NPS and GES, but we may decide to enter into our initial business combination with a target business that does not meet
these criteria and guidelines. We intend to acquire companies that we believe:
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can
utilize the extensive networks and insights we have built in the energy services industry;
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are
at an inflection point, such as requiring additional management expertise, are able to innovate through new operational techniques,
or that we believe we can drive improved financial performance;
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are
fundamentally sound companies that are underperforming their potential as a result of the current low price of oil and corresponding
services;
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exhibit
unrecognized value or other characteristics that we believe have been misevaluated by the marketplace;
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need
new technology ideas and/or tools to reveal the full potential of the companies; and
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can
enlarge its base of services and expand its geographical footprint from the current serving platform.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management may deem relevant.
Our
Acquisition Process
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other
things, meetings with incumbent management and employees, document review, inspection of facilities, as well as a review of financial
and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
We will seek opinions from its clients and the industry for the credibility and reputation of the target companies. For information
regarding the due diligence review undertaken with respect to NPS and GES, see the Proxy Statement.
Initial
Business Combination
We
will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which shareholders
may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their
pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our shareholders
with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote)
for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable),
in each case subject to the limitations described herein. The decision as to whether we will seek shareholder approval of a proposed
business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval
under the law or stock exchange listing requirement or whether we would be deemed to be a foreign private issuer (which would
require that we conduct a tender offer under SEC rules rather than seeking shareholder approval). Asset acquisitions and stock
purchases would not typically require shareholder approval while direct mergers with our company where we do not survive and any
transactions where we issue more than 20.0% of our outstanding ordinary shares (unless we are deemed to be a foreign private issuer
at such time) or seek to amend our memorandum and articles of association would require shareholder approval.
If
we conduct a tender offer, we will file tender offer documents with the SEC which will contain substantially the same financial
and other information about the initial business combination as is required under the SEC’s proxy rules. If we seek shareholder
approval, we will only consummate our initial business combination if a majority of the outstanding ordinary shares voted at the
meeting at which such approval is sought are voted in favor of the business combination.
We
will have until May 17, 2019 to consummate our initial business combination. If we are unable to consummate our initial business
combination within such time period, we will distribute the aggregate amount then on deposit in the trust account, including interest
earned (net of taxes payable), pro rata to our public shareholders by way of the redemption of their shares and will cease all
operations except for the purposes of winding up of our affairs, as further described herein. In such event, our warrants will
expire worthless. Based on funds in the trust account of $230,554,024 as of December 31, 2017, the estimated per share redemption
price would have been approximately $10.06 per ordinary share purchased in the IPO. However, we may not be able to distribute
such amounts as a result of claims of creditors which may take priority over the claims of our public shareholders.
Pursuant
to NASDAQ listing rules, our initial business combination must be with a target business or businesses whose collective fair market
value is at least equal to 80% of the balance in the trust account (excluding any deferred underwriters fees and taxes payable
on the income earned on the trust account) at the time of the execution of a definitive agreement for such business combination,
although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined
by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential
sales, earnings, cash flow and/or book value). The target business or businesses that we acquire may have a collective fair market
value substantially in excess of 80% of the trust account balance.
We
currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target
business or businesses. We may, however, structure our initial business combination where we merge directly with the target business
or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction
parent company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the
voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in
the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we or a newly formed public holding company 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 the outstanding shares of the public parent company subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are
owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what
will be valued for purposes of the 80% of trust account balance test.
Competitive
Strengths
We
believe our competitive strengths to be the following:
Status
as a public company.
We believe our structure will make us an attractive business combination partner to target businesses.
As an existing public company, we offer a target business an alternative to the traditional initial public offering through a
merger or other business combination. In this situation, the owners of the target business would exchange their shares of stock
in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. We believe target businesses might find this method a more certain and cost
effective method to becoming a public company than the typical initial public offering. In a typical initial public offering,
there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely be reduced in connection
with a business combination with us. Furthermore, once the business combination is consummated, the target business will have
effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete
the offering, as well as general market conditions, which could prevent the offering from occurring. Once public, we believe the
target business would then have greater access to capital and an additional means of providing management incentives consistent
with shareholders’ interests than it would have as a privately-held company. Being public can offer further benefits by
augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While
we believe that our status as a public company will make us an attractive business partner, some potential target businesses may
view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination
with a more established entity or with a private company.
Financial
position.
With funds held in trust available for our initial business combination in the amount of $230,554,024
as of December 31, 2017, we offer a target business a variety of options such as providing the owners of a target business with
shares in a public company and a public means to sell such shares, providing cash for stock, and providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit
its needs and desires. If needed, we may take steps to secure additional third party financing to fund our initial business combination.
See “The Stock Purchase Agreements” above for a description of the proposed financing agreements that may
be entered into in connection with the proposed Business Combination.
Management
Operating and Investing Experience.
Over the course of their careers, the members of our management team have
developed a broad international network of contacts and corporate relationships which we believe will serve as a useful source
of investment opportunities. We will seek to capitalize on the global network and investing and operating experience of our management
team to identify, acquire and operate one or more businesses or assets in the energy sector, although we may pursue a business
combination outside of such industry.
We
believe our management team has the skills and experience to identify, evaluate and consummate a business combination and is positioned
to assist businesses we acquire. However, there is no assurance that we will complete an initial business combination nor is there
any guarantee that such an initial business combination will be successful. The members of our management team are not required
to devote any significant amount of time to our business and are concurrently involved with other businesses. There is no guarantee
that our current officers and directors will continue in their respective roles, or in any other role, after our initial business
combination, and their expertise may only be of benefit to us until our initial business combination is completed, if at all.
If
any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of
any entity to which he or she has pre-existing fiduciary or contractual obligations, he may be required to present such business
combination opportunity to such entity prior to presenting such business combination opportunity to us.
Effecting
Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial operations until the closing of our initial
business combination. We intend to utilize cash derived from the proceeds of our IPO and the private placement of private warrants,
our shares, debt or a combination of these in effecting our initial business combination. Although substantially all of the net
proceeds of our IPO and the private placement of private warrants are intended to be applied generally toward effecting a business
combination, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors have invested
without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. Our initial
business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital
but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences
of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance
with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company
that may be financially unstable or in its early stages of development or growth. We intend to effect the Business Combination
using cash held in our trust account and, if needed, funds from third party sources, including the Backstop Investor. See “The
Stock Purchase Agreements” above for a description of the proposed financing agreements that may be entered
into in connection with the Business Combination. In the event we do not consummate the Business Combination, we may seek to effect
simultaneous business combinations with more than one target business, but we may, as a result of our limited resources, effect
only a single business combination.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the
financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested
on an unsolicited basis, since many of these sources will have read our public filings and know what types of businesses we are
targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates
that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may
have, as well as attending trade shows or conventions. We may also engage professional firms or other individuals that specialize
in business acquisitions in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to
be determined in an arm’s length negotiation based on the terms of the transaction. We have no present intention to enter
into a business combination with a target business that is affiliated with any of our officers, directors or Sponsor. However,
we are not restricted from entering into any such transactions and may do so if (1) such transaction is approved by a majority
of our disinterested and independent directors (if we have any at that time) and (2) we obtain an opinion from an independent
investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view.
As of the date of this report, there are no affiliated entities that we would consider as a business combination target.
Selection
of a Target Business and Structuring of Our Initial Business Combination
Subject
to the limitation that a target business have a fair market value of at least 80% of the balance in the trust account at the time
of the execution of a definitive agreement for our initial business combination, as described below in more detail, our management
will have virtually unrestricted flexibility in identifying and selecting a prospective target business. Except for the general
criteria and guidelines set forth above under the caption “Our Strategy,” we have not established any specific attributes
or criteria (financial or otherwise) for prospective target businesses. Furthermore, we do not have any specific requirements
with respect to the value of a prospective target business as compared to our net assets or the funds held in the trust account.
Any
evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors
as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business
objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other
information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated
third parties we may engage.
The
time and costs required to select and evaluate a target business and to structure and complete our initial business combination
remain to be determined. Any costs incurred with respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available
to otherwise complete a business combination.
Fair
Market Value of Target Business
Pursuant
to NASDAQ listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial
business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust
account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets
of the target business or businesses. We may, however, structure a business combination where we merge directly with the target
business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives
of the target management team or shareholders or for other reasons, but we will only complete such business combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. Even if the post-transaction parent company owns or acquires 50% or more of the voting securities of the target,
our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we or a newly formed public holding company 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 the outstanding shares of the public parent company subsequent to our initial business combination. If
less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% trust
account balance test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities
to the sellers of such businesses and/or seek to raise additional funds through a public or private offering of debt or equity
securities. As example, see “The Stock Purchase Agreements” above for a description of the proposed financing
agreements that may be entered into in connection with the proposed Business Combination. The fair market value of the
target will be determined by our board of directors based upon one or more standards generally accepted by the financial community
(such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine
that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment
banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking
to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent
investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business
we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target business
complies with the 80% threshold. Notwithstanding the foregoing, with respect to the Business Combination, we have obtained a written
fairness opinion from J.P. Morgan, dated November 12, 2017, that, as of such date and based upon and subject to the factors and
assumptions set forth in its opinion, the Consideration (as defined in the opinion) to be paid by the Company in the proposed
Transactions (as defined in the opinion) was fair, from a financial point of view, to the Company. For more information about
the J.P. Morgan fairness opinion, see the Proxy Statement.
Lack
of Business Diversification
We
expect to complete only a single business combination, although this process may entail the simultaneous acquisitions of several
operating businesses. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance
of a single business operation. Unlike other entities which may have the resources to complete several business combinations of
entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating our initial
business combination with only a single entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination;
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result
in our dependency upon the successful development, construction and operation of a single mining asset; and
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result
in our dependency upon the performance of a single operating business or the development or market acceptance of a single
or limited number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for
each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Limited
Ability to Evaluate the Target Business’s Management Team
Although
we intend to scrutinize the management team of a prospective target business when evaluating the desirability of effecting our
initial business combination, our assessment of the target business’s management team may not prove to be correct. In addition,
the future management team may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore,
the future role of our officers and directors, if any, in the target business following our initial business combination remains
to be determined. While it is possible that some of our key personnel will remain associated in senior management or advisory
positions with us following our initial business combination, it is unlikely that they will devote their full time efforts to
our affairs subsequent to our initial business combination. Moreover, they would only be able to remain with the company after
the consummation of our initial business combination if they are able to negotiate employment or consulting agreements in connection
with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination
and could provide for them to receive compensation in the form of cash payments and/or our securities for services they would
render to the company after the consummation of the business combination. While the personal and financial interests of our key
personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company
after the consummation of our initial business combination will not be the determining factor in our decision as to whether or
not we will proceed with any potential business combination. Additionally, our officers and directors may not have significant
experience or knowledge relating to the operations of the particular target business.
Following
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We may not have the ability to recruit additional managers, or that any such additional managers we do recruit will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek shareholder approval of the business combination at
a shareholders’ meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether
they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit
in the trust account (net of taxes payable) or (2) provide our shareholders with the opportunity to sell their shares to us by
means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the
aggregate amount then on deposit in the trust account (net of taxes payable), in each case, subject to the limitations described
herein. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder
approval. If we are deemed to be a foreign private issuer, we will conduct redemptions in accordance with the SEC’s tender
offer rules.
Under
NASDAQ’s listing rules, shareholder approval would be required for our initial business combination (unless we are deemed
to be a foreign private issuer at such time) if, for example:
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we
issue ordinary shares that will be equal to or in excess of 20% of the number of our ordinary shares then outstanding;
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any
of our directors, officers or substantial shareholders (as defined by NASDAQ rules) has a 5% or greater interest (or such
persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired
or otherwise and the present or potential issuance of ordinary shares could result in an increase in outstanding ordinary
shares or voting power of 5% or more; or
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the
issuance or potential issuance of ordinary shares will result in our undergoing a change of control.
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If
we engage in a tender offer, such tender offer will be conducted pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act,
which regulate issuer tender offers, and structured so that each shareholder may tender all of his, her or its shares rather than
some pro rata portion of his, her or its shares. In that case, we will file tender offer documents with the SEC which will contain
substantially the same financial and other information about the initial business combination as is required under the SEC’s
proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon
such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in
favor of the business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under
the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any
type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon
consummation of such initial business combination, our net tangible asset threshold may limit our ability to consummate such initial
business combination (as we may be required to have a lesser number of shares redeemed or sold to us) and may force us to seek
third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate
such initial business combination and we may not be able to locate another suitable target within the applicable time period,
if at all. Public shareholders may therefore have to wait 24 months from the closing of our IPO in order to be able to receive
a pro rata share of the trust account.
Our
Sponsor and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any proposed business
combination, (2) not to redeem any ordinary shares in connection with a shareholder vote to approve a proposed initial business
combination and (3) not sell any ordinary shares in any tender in connection with a proposed initial business combination. As
a result, we would need only 8,595,638 shares, or 37.5% of the 22,921,700 public shares outstanding as of the date hereof, to
be voted in favor of our initial business combination in order to have such transaction approved.
Although
there is no commitment to do so, our officers, directors, Sponsor or their affiliates may purchase ordinary shares in the open
market or in private transactions. In addition, if we hold a meeting to approve a proposed business combination and a significant
number of shareholders vote, or indicate an intention to vote, against such proposed business combination, our officers, directors,
Sponsor or their affiliates could make such purchases in the open market or in private transactions in order to influence the
vote. Notwithstanding the foregoing, our officers, directors, Sponsor and their affiliates will not make purchases of ordinary
shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential
manipulation of a company’s stock.
Redemption
Rights
At
any meeting called to approve an initial business combination, any public shareholder, whether voting for or against such proposed
business combination, will be entitled to demand that their ordinary shares be redeemed for a full pro rata portion of the amount
then in the trust account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the trust account,
net of taxes payable). Alternatively, we may provide our public shareholders with the opportunity to sell their ordinary shares
to us through a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of
the aggregate amount then on deposit in the trust account (net of taxes payable).
Notwithstanding
the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights
with respect to 20% or more of the ordinary shares sold in our IPO. Accordingly, if an investor purchased more than 20% of the
ordinary shares sold in our IPO and our proposed Business Combination is approved, he/she will not be able to seek redemption
rights with respect to the full amount of his/her shares and may be forced to hold such additional ordinary shares or sell them
in the open market. Such a public shareholder would still be entitled to vote against a proposed business combination with respect
to all ordinary shares owned by him or his affiliates. We believe this restriction will prevent shareholders from accumulating
large blocks of shares before the vote held to approve a proposed business combination and attempt to use the redemption right
as a means to force us or our management to purchase their shares at a substantial premium to the then current market price.
Our
Sponsor, as well as our officers and directors, will not have redemption rights with respect to any ordinary shares owned by them,
directly or indirectly, except in the case of our liquidation if we do not complete a business combination as described below.
We
may also require public shareholders who wish to redeem, whether they are a record holder or hold their shares in “street
name,” to either tender their certificates to our transfer agent at any time through the vote on the business combination
or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option.
There
is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker
whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require
holders to deliver their shares prior to the vote on the business combination in order to exercise redemption rights. This is
because a holder would need to deliver shares to exercise redemption rights regardless of the timing of when such delivery must
be effectuated. However, in the event we require shareholders to exercise redemption rights prior to the consummation of the proposed
business combination and the proposed business combination is not consummated, this may result in an increased cost to shareholders.
Any
request to redeem such shares once made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore,
if a holder of a public share delivered his certificate in connection with an election of their redemption and subsequently decides
prior to the applicable date not to elect to exercise such rights, he may simply request that the transfer agent return the certificate
(physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public 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 have their shares redeemed.
Liquidation
if No Business Combination
If
we do not complete a business combination by May 17, 2019, we will, as promptly as reasonably possible but not more than ten business
days thereafter, distribute the aggregate amount then on deposit in the trust account, including interest earned (net of taxes
payable), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding
up of our affairs. This redemption of public shareholders from the trust account shall be done automatically by function of our
amended and restated 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
make a notificational filing with the Registrar. We would be dissolved once the Registrar issues a Certificate of Dissolution.
Our
Sponsor has agreed to waive its redemption rights with respect to its insider shares if we fail to consummate our initial business
combination within the applicable period from the closing of our IPO.
However,
if our Sponsor, or any of our officers, directors or affiliates acquire public shares in or after our IPO, 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 warrants, which will expire worthless
in the event we do not consummate our initial business combination by May 17, 2019. We will pay the costs of our liquidation from
our remaining assets outside of the trust account. However, the liquidator may determine that he or it 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 IPO, other than the proceeds deposited in the trust account, and without taking
into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon our
dissolution would be $10.00 as of December 31, 2017. 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 any taxes payable).
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our
Sponsor agreed that it 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 IPO 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. None of our 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 its indemnity obligations and believe that our Sponsor’s only assets
are securities of our company. We have not asked our Sponsor to reserve for such indemnification obligations. 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
will seek to reduce the possibility that our Sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our Sponsor will also
not be liable as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities
under the Securities Act. We will have access to amounts not placed in the trust account (which as of December 31, 2017 was approximately
$741,000) with which to pay any such potential claims. 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 in the event of a redemption to public shareholders
prior to any winding up in the event we do not consummate our initial business combination or our liquidation or if they redeem
their shares in connection with an initial business combination that we consummate. In no other circumstances shall a shareholder
have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with
our initial business combination, a 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, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there may be numerous potential target businesses that we could acquire with the net proceeds of our IPO, our ability
to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek shareholder approval of our initial business combination or engage in a tender offer may delay the completion
of a transaction;
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our
obligation to redeem ordinary shares held by our public shareholders may reduce the resources available to us for our initial
business combination;
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our
outstanding warrants, and the potential future dilution they represent;
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our
obligation to either repay or issue private warrants upon conversion of up to $1,500,000 of working capital loans that may
be made to us by our Sponsor, officers, directors or their affiliates; and
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our
obligation to register the resale of the insider shares, as well as the private warrants (and underlying securities) and any
securities issued to our Sponsor, officers, directors or their affiliates upon conversion of working capital loans.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating our initial business combination. Our
management believes, however, that our status as a public entity and potential access to the United States public equity markets
may give us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target
business with significant growth potential on favorable terms.
If
we succeed in effecting our initial business combination, there will be, in all likelihood, intense competition from competitors
of the target business. Subsequent to our initial business combination, we may not have the resources or ability to compete effectively.
Facilities
We
currently maintain our principal executive offices at 777 Post Oak Blvd., Suite 730, Houston, Texas 77056. The cost for this space
is included in the $10,000 per-month fee our Sponsor charges us for general and administrative services pursuant to a letter agreement
between us and our Sponsor. We believe, based on rents and fees for similar services in Houston, Texas, that the fee charged by
our Sponsor is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space,
combined with the other office space otherwise available to our executive officers, adequate for our current operations.
Employees
We
have two executive officers, neither of whom is paid a salary by us. These individuals are not obligated to devote any specific
number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time
they will devote in any time period will vary based on whether a target business has been selected for the business combination
and the stage of the business combination process the company is in. Accordingly, once a suitable target business to acquire has
been located, management will spend more time investigating such target business and negotiating and processing the business combination
(and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business. We do not
intend to have any full time employees prior to the consummation of our initial business combination.
Periodic
Reporting and Audited Financial Statements
We
have registered our ordinary shares and public warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our
annual report will contain financial statements audited and reported on by our independent registered public accountants.
We
have provided shareholders with audited financial statements of NPS and GES in the Proxy Statement, and in the event that the
Business Combination is not consummated, we will provide shareholders with audited financial statements of another prospective
target business as part of any proxy solicitation materials or tender offer documents sent to shareholders to assist them in assessing
the target business. These financial statements will need to be prepared in accordance with or reconciled to United States generally
accepted accounting principles or international financial reporting standards as issued by the International Accounting Standards
Board (“IASB”). We cannot assure you that any particular target business identified by us as a potential acquisition
candidate will have the necessary financial statements. To the extent that this requirement cannot be met, we may not be able
to acquire the proposed target business.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2018 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and we no longer qualify as an emerging
growth company 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.
You
should carefully consider all of the risk factors described below and all of the other information contained in this report, before
making a decision to invest in our securities. This report also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors,
including the risks described below. Risks associated with the Business Combination, NPS and GES, are more fully discussed in
the Proxy Statement.
Risks
Associated with Our Business
We
are a recently formed blank check company with no operating history and no revenues and, accordingly, investors do not have any
basis on which to evaluate our ability to achieve our business objective.
We
are a recently formed blank check company with no operating results to date. Since we do not have an operating history, current
and potential investors have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire
an operating business. We will not generate any revenues until, at the earliest, after the consummation of our initial business
combination.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of December 31, 2017, we had $741,096 in cash and a working capital deficiency of $2,605,984. Further, we have incurred and expect
to continue to incur significant costs in pursuit of our acquisition plans. Our plans to consummate the Business Combination or
an alternative initial business combination may not be successful. These factors, among others, raise substantial doubt about
our ability to continue as a going concern. The financial statements contained elsewhere in this report do not include any adjustments
that might result from our inability to continue as a going concern.
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public shareholders do not support such a combination.
The
Business Combination requires the approval of our shareholders. However, in the event the Business Combination is not consummated,
we may not hold a shareholder vote to approve our initial business combination unless the business combination would require shareholder
approval under the laws of the British Virgin Islands or the rules of NASDAQ or if we decide to hold a shareholder vote for business
or other reasons. For instance, NASDAQ rules currently allow us to engage in a tender offer in lieu of a shareholder meeting but
would still require us to obtain shareholder approval if we were not a foreign private issuer and were seeking to issue more than
20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring
a business combination that required us to issue more than 20% of our outstanding shares and we were not a foreign private issuer,
we would seek shareholder approval of such business combination. However, except as required by law, the decision as to whether
we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of
the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval, or whether we
will be deemed to be a foreign private issuer (in which case we would be required to conduct a tender offer under SEC rules rather
than seeking shareholder approval). Accordingly, we may consummate our initial business combination even if holders of a majority
of our outstanding ordinary shares do not approve of the business combination we consummate. Please see the section entitled “Business
— Effecting our Initial Business Combination — Shareholders May Not Have the Ability to Approve an Initial Business
Combination” for additional information.
According
to our amended and restated memorandum and articles of association, our entire board of directors must approve our initial business
combination, which may make it more difficult to bring such potential targets to our public shareholders for their vote.
Unlike
many other blank check companies in which only the majority of a company’s board of directors (including a majority of its
independent directors) is required to approve a business combination, our amended and restated memorandum and articles or association
requires all of our directors to approve our initial business combination in order to have such transaction approved. Accordingly,
there will be fewer potential transactions that could be brought to a vote of our shareholders than would be the case if the approval
of only a majority of our board members was required. In addition, it may be more difficult for our board of directors to approve
a potential business combination, thereby increasing the risk that we would be forced to liquidate and dissolve without closing
a business combination.
If
we seek shareholder approval of our initial business combination, such as in connection with the Business Combination, our initial
shareholders have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.
Unlike
many other blank check companies in which the initial shareholders agree to vote their insider shares in accordance with the majority
of the votes cast by the public shareholders in connection with an initial business combination, our initial shareholders have
agreed to vote their insider shares, as well as any public shares purchased during or after our IPO, in favor of our initial business
combination. Our initial shareholders own approximately 20% of our outstanding ordinary shares as of the date of this report.
As a result, we would need only 8,595,638 shares, or 37.5% of the 22,921,700 public shares sold in our IPO, to be voted in favor
of our initial business combination in order to have such transaction approved. Accordingly, if we seek shareholder approval of
our initial business combination, it is more likely that the necessary shareholder approval will be received than would be the
case if our initial shareholders agreed to vote their insider shares in accordance with the majority of the votes cast by our
public shareholders.
You
will not be entitled to protections normally afforded to investors of blank check companies.
Since
the net proceeds of our IPO are intended to be used to complete our initial business combination with a target business that had
not been identified as of the IPO, we may be deemed to be a “blank check” company under the U.S. securities laws.
However, since we had net tangible assets in excess of $5,000,001 upon the consummation of our initial public offering and filed
a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated
by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits
or protections of those rules which would, for example, completely restrict the transferability of our securities, require us
to complete our initial business combination within 18 months of the effective date of our initial registration statement and
restrict the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, we will be
entitled to withdraw interest income earned on the funds held in the trust account prior to the completion of our initial business
combination and we will have a longer period of time to complete such a business combination than we would if we were subject
to such rule.
We
may issue shares of our stock to complete our initial business combination, which would reduce the equity interest of our shareholders
and could cause a change in control of our ownership.
Our
amended and restated memorandum and articles of association authorizes the issuance of an unlimited amount of both ordinary shares
of no par value and preferred shares of no par value. In connection with and in the event that the Business Combination is consummated,
we may enter into a Forward Purchase Agreement for the sale of up to 14,114,906 ordinary shares, to be used to fund a portion
of the cash consideration for the Business Combination, to cover redemptions, and for working capital purposes. In the event the
Business Combination is not consummated, we will likely need to issue a substantial number of additional ordinary or preferred
shares, or a combination of ordinary and preferred shares, to complete our initial business combination. The issuance of additional
ordinary and/or preferred shares:
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significantly reduce the equity interest of existing shareholders;
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may
subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to
our ordinary shares;
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may
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
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may
adversely affect prevailing market prices for our ordinary shares and/or warrants.
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We
may incur significant indebtedness in order to consummate our initial business combination.
If
we find it necessary to incur significant indebtedness in connection with our initial business combination, it could result in:
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default
and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our
debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding.
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The
funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside
of the trust account to fund our search for target businesses, to pay our tax obligations and working capital and to complete
our initial business combination.
Of
the net proceeds of our IPO as of December 31, 2017, $741,000 is available to us outside the trust account to fund our working
capital requirements. We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any
tax obligations that we may owe. Interest rates on permissible investments for us have been less than 1% over the last several
years. Accordingly, if we do not earn a sufficient amount of interest on the funds held in the trust account and use all of the
funds held outside of the trust account, we may not have sufficient funds available with which to structure, negotiate or close
our initial business combination. In such event, we would need to borrow funds from our Sponsor, officers or directors to operate
or may be forced to liquidate. Our Sponsor, officers and directors are under no obligation to loan us any funds. If we are unable
to obtain the funds necessary, we may be forced to cease searching for a target business and may be unable to complete our initial
business combination.
If
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 amended and restated memorandum and articles of association, if we do not complete our initial
business combination by May 17, 2019, this will trigger an automatic redemption of our ordinary shares using the available funds
in the trust account pursuant to our amended and restated memorandum and articles of association, resulting in our repayment of
available funds in the trust account. Thereafter, 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 the liquidator 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, or 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.
If
we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants issued
in our IPO, public holders will only be able to exercise such warrants on a “cashless basis.”
If
we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the public warrants
at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis.”
As a result, the number of ordinary shares that holders will receive upon exercise of the public warrants will be fewer than it
would have been had such holders exercised their warrants for cash. Under the terms of the warrant agreement, we have agreed to
use our best efforts to 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 investors 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. Notwithstanding
the foregoing, the private warrants and any other warrants that may be issued to our officers, directors, Sponsor or their affiliates
as described elsewhere in this report 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 be able to exercise a warrant only 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 shares issuable
upon such exercise have been registered or qualified or deemed to be exempt under the securities laws of the state of residence
of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national
securities exchange, which would provide an exemption from registration in every state. Accordingly, we believe holders in every
state will be able to exercise their warrants as long as our prospectus relating to the ordinary shares issuable upon exercise
of the warrants is current. 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.
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. As of the date of this report, our Sponsor owns approximately 35.5% of the outstanding warrants. Therefore,
we would only need approval from public holders of approximately 14.5% of the outstanding warrants to amend the terms of the warrants.
Since
we are not limited to a particular industry or target business with which to complete our initial business combination, in the
event that the Business Combination is not consummated, we are unable to ascertain the merits or risks of the industry or business
in which we may ultimately operate.
Although
we intend to focus our search on target businesses in the energy services industry, we may consummate our initial business combination
with a company in any industry we choose and are not limited to any particular industry or type of business. Accordingly, in the
event that the Business Combination is not consummated, there is no current basis for current and potential investors to evaluate
the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may
ultimately acquire. To the extent we complete our initial business combination with a financially unstable company or an entity
in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete
our initial business combination with an entity in an industry characterized by a high level of risk, we may be affected by the
currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular
industry or target business, we may not properly ascertain or assess all of the significant risk factors. An investment in our
securities may not ultimately prove to be more favorable to shareholders than a direct investment, if an opportunity were available,
in a target business.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
We
may consummate a business combination with a target business in any geographic location or industry we choose. Our officers and
directors may not have enough experience or sufficient knowledge relating to the jurisdiction of the target or its industry to
make an informed decision regarding our initial business combination.
The
requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least
80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business
combination may limit the type and number of companies that we may complete such a business combination with.
Pursuant
to the NASDAQ listing rules, the target business or businesses that we acquire must collectively have a fair market value equal
to at least 80% of the balance of the funds in the trust account (excluding any deferred underwriters fees and taxes payable on
the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination.
This restriction may limit the type and number of companies that we may complete a business combination with. If we are unable
to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and an investor
will only be entitled to receive his/her pro rata portion of the funds in the trust account.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a business combination so that the post-transaction company in which our public shareholders own shares will own
less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company, in which our public shareholders own shares, acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an
investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even
if the post-transaction company, in which our public shareholders own shares, owns 50% or more of the voting securities of the
target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new ordinary shares in exchange for all of the outstanding capital
stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding
ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings
resulting in a single person or group obtaining a larger share of our stock than we initially acquired. Accordingly, this may
make it more likely that our management will not be able to maintain our control of the target business.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. While we intend to closely
scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove
to be correct.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. We believe
that our success depends on the continued service of our key personnel, at least until we have consummated our initial business
combination. None of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will
have conflicts of interest in allocating management time among various business activities, including identifying potential business
combinations and performing and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance
on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect
on us.
If
the Business Combination is consummated, Messrs. Foda, Wood and Mejia and Ms. Zeibak will serve as directors of the combined company.
In the event that the Business Combination is not consummated, the role of our key personnel after our initial business combination,
however, remains to be determined. Although some of our key personnel may serve in senior management or advisory positions following
our initial business combination, it is likely that most, if not all, of the management of the target business will remain in
place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment
of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a public
company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could
be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Our
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.
If
the Business Combination is consummated, members of our management team may be paid consulting, management or other fees from
the combined company. In the event that the Business Combination is not consummated, our key personnel will be able to remain
with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting
agreements or other appropriate arrangements in connection with the business combination.
Such
negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals
to receive compensation in the form of cash payments and/or our securities for services they would render to the company after
the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate
our initial business combination.
Our
officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when
allocating their time between our operations and their other commitments. Each of our officers and directors devotes such amount
of time as they reasonably believe is necessary to our business. We do not intend to have any full time employees prior to the
consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors
and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ other
business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote
time to our affairs and could have a negative impact on our ability to consummate the Business Combination or an alternative business
combination. These conflicts may not be resolved in our favor.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and, accordingly, may have
conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies, including
companies that are engaged in business activities similar to those intended to be conducted by us. Accordingly, they may participate
in transactions and have obligations that may be in conflict or competition with our consummation of our initial business combination.
As a result, a potential target business may be presented by our management team to another entity prior to its presentation to
us and we may not be afforded the opportunity to engage in a transaction with such target business.
The
shares beneficially owned by our Sponsor, officers and directors will not participate in liquidation distributions and, therefore,
our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate
for our initial business combination.
Our
Sponsor and our officers and directors have waived their right to redeem their insider shares or any other ordinary shares acquired
in our IPO or thereafter, or to receive distributions with respect to their insider shares upon our liquidation if we are unable
to consummate our initial business combination. Accordingly, the insider shares will be worthless if we do not consummate our
initial business combination. The private warrants and any other warrants they acquire will also be worthless if we do not consummate
an initial business combination. The personal and financial interests of our Sponsor, officers and directors 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.
NASDAQ
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are currently listed on NASDAQ, a national securities exchange. However, we cannot assure current and potential investors
that our securities will continue to be listed on NASDAQ in the future prior to an initial business combination. In order to continue
listing our securities on NASDAQ, 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 round-lot 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 stock price would generally be required to be at least $4.00 per share and our shareholders’
equity would generally be required to be at least $5 million. We may not 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:
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limited availability of market quotations for our securities;
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reduced
liquidity with respect to our securities;
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a
determination that our shares are a “penny stock,” which will require brokers trading in our shares to adhere
to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our
shares;
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limited amount of news and analyst coverage for our company; and
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decreased ability to issue additional securities or obtain additional financing in the future.
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We
may only be able to complete one business combination with the proceeds of our IPO, which will cause us to be solely dependent
on a single business which may have a limited number of products, services or potential sources of revenue.
Although
we have the ability to simultaneously acquire several target businesses and the proposed Business Combination currently contemplates
the acquisition of two businesses, if the Business Combination is not consummated, it is possible we will consummate our initial
business combination with a single target business. By consummating a business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business;
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dependent
upon the successful development, construction and operation of a single mining asset; or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
Alternatively,
if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need
for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business
combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple
business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent
assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable
to adequately address these risks, it could negatively impact our profitability and results of operations.
The
ability of our public shareholders to exercise their redemption rights or sell their shares to us in a tender offer 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 or seek to sell their shares to us in a tender offer, we may
either need to reserve part of the trust account for possible payment upon such redemption or sale, or we may need to arrange
third party financing to help fund our initial business combination. For instance, in connection with the Business Combination
in which a portion of the cash consideration shall come from the remaining funds in the trust account, we are negotiating a Backstop
Commitment pursuant to which we may draw up to $150 million to help fund the Business Combination. In the event that the acquisition
involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares 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 the full 24 months in order to be able to receive
a pro rata 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 a pro rata share of the trust account for their shares.
If
we hold a shareholder meeting to approve any initial business combination, we will offer each public shareholder the option to
vote in favor of the proposed business combination and still seek redemption of his, her or its shares.
In
connection with any meeting held to approve an initial business combination, we will offer each public shareholder (but not our
initial shareholders or the lead investors) 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. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon
such consummation and, solely if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in
favor of the business combination. Accordingly, public shareholders owning a substantial majority of the shares sold in our IPO
may exercise their redemption rights and we could still consummate a proposed business combination so long as a majority of shares
voted at the meeting are voted in favor of the proposed business combination. This 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.
Public
shareholders that fail to vote either in favor of or against a proposed business combination will not be able to have their shares
redeemed for cash.
If
we hold a meeting to approve a proposed business combination, public shareholders must vote either in favor of or against a proposed
business combination in order to have their shares redeemed to cash. 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, her or its ordinary shares so redeemed for cash.
Public
shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,”
will be restricted from seeking redemption rights with respect to more than 20% of the ordinary shares sold in our IPO.
In
connection with any meeting held to approve an initial business combination, we will offer each public shareholder (but not our
initial shareholders or the lead investors) the right to have his, her or its ordinary shares redeemed for cash. Notwithstanding
the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a “group” will be restricted from seeking redemption rights with respect to more than 20% of the ordinary shares
sold in our IPO. Generally, in this context, a shareholder will be deemed to be acting in concert or as a group with another shareholder
when such shareholders agree to act together for the purpose of acquiring, voting, holding or disposing of our equity securities.
Accordingly, if an investor purchases more than 20% of the ordinary shares sold in our IPO and our proposed business combination
is approved, he/she will not be able to seek redemption rights with respect to the full amount of his/her shares and may be forced
to hold such additional shares or sell them in the open market. The value of such additional ordinary shares may not appreciate
over time following our initial business combination, and the market price of our ordinary shares may not exceed the per-share
redemption price.
In
connection with any shareholder meeting called to approve a proposed initial business combination, we may require public shareholders
who wish to redeem their ordinary shares 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.
In
connection with any shareholder meeting called to approve a proposed initial business combination, each public shareholder (but
not our initial shareholders or the lead investors) will have the right, regardless of whether he is voting for or against such
proposed business combination, to demand that we redeem his ordinary shares for his pro rata portion of the cash held in the trust
account. We may require public shareholders who wish to redeem their ordinary shares in connection with a proposed business combination
to either tender their certificates to our transfer agent at any time prior to the vote taken at the shareholder meeting relating
to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System. 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. 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.
If,
in connection with any shareholder meeting called to approve a proposed business combination, we require public shareholders who
wish to redeem their ordinary shares to comply with the delivery requirements for redemption, such redeeming shareholders may
be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.
If
we require public shareholders who wish to redeem their ordinary shares to comply with specific delivery requirements for redemption
described above and 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 shares
may decline during this time and investors may not be able to sell their securities when they 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 funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited
when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses
that we could acquire with the net proceeds of our IPO, our ability to compete in acquiring certain sizable target businesses
will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing
the acquisition of certain target businesses. Furthermore, seeking shareholder approval of our initial business combination may
delay the consummation of a transaction. Additionally, the insider shares and our outstanding warrants, and the future dilution
they represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage
in successfully negotiating our initial business combination.
Our
ability to consummate an attractive business combination may be impacted by the market for initial public offerings.
Our
efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although
it is very likely that our target will want to be a public reporting company. If the market for initial public offerings is limited,
we believe there will be a greater number of attractive target businesses open to being acquired by us as a means to achieve publicly
held status. Alternatively, if the market for initial public offerings is robust, we believe that there will be fewer attractive
target businesses amenable to being acquired by us to become a public reporting company. Accordingly, during periods with strong
public offering markets, it may be more difficult for us to complete an initial business combination.
We
may be unable to obtain additional financing, if required, to complete our initial business combination or to fund the operations
and growth of the target business, which could compel us to restructure or abandon a particular business combination.
Pursuant
to the proposed arrangement with the Backstop Investor, we anticipate that we will have the ability to draw up to
$150 million to cover redemptions, fund the cash consideration for the Business Combination, and provide additional working capital
following the closing of the Business Combination. Although we believe that the net proceeds of our IPO, together with the proceeds
received pursuant to the Backstop Commitment, will be sufficient to allow us to consummate the Business Combination, in the event
that the Business Combination is not consummated (and thus the Backstop Commitment will not be consummated), we cannot ascertain
the capital requirements for any particular transaction. In addition, if the Business Combination is not consummated and we attempt
to consummate an alternative business combination, if the net proceeds of our IPO prove to be insufficient, either because of
the size of the business combination, the depletion of the available net proceeds in search of a target business, or the obligation
to redeem for cash a significant number of ordinary shares, we will be required to seek additional financing. Such financing may
not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed
to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. In addition, if we consummate a business combination,
we may require additional financing to fund the operations or growth of the target business. The failure to secure additional
financing could have a material adverse effect on the continued development or growth of the target business. None of our officers,
directors or Sponsor is required to provide any financing to us in connection with or after our initial business combination.
Our
initial shareholder controls a substantial interest in us and thus may influence certain actions requiring a shareholder vote.
Our
Sponsor owns approximately 20% of our issued and outstanding ordinary shares. Although there is no commitment to do so, our Sponsor,
officers, directors or their affiliates may purchase securities from persons in the open market or in private transactions, to
the extent permitted by law. In connection with any vote for a proposed business combination, our Sponsor, as well as all of our
officers and directors, have agreed to vote all ordinary shares owned by them in favor of such proposed business combination.
Our
board of directors is divided into two classes, each of which generally serves 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. Accordingly, in investor may not be able to exercise his/her voting
rights under corporate law for up to 24 months. If there is an annual meeting, our Sponsor, because of its ownership position,
will have considerable influence regarding the outcome. Accordingly, our Sponsor will continue to exert control at least until
the consummation of our initial business combination.
If
we do not hold an annual meeting of shareholders until after the consummation of our initial business combination, shareholders
will not be afforded an opportunity to elect directors and to discuss company affairs with management until such time.
Unless
otherwise required by law or the NASDAQ Capital Market, we do not currently intend to call an annual meeting of shareholders until
after we consummate our initial business combination. In accordance with the NASDAQ rules, a newly listed company not previously
subject to a requirement to hold an annual meeting is required to hold its first annual meeting within one year after its first
fiscal year-end following listing, unless such company is a foreign private issuer. 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 30% 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
30%. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to elect directors
and to discuss company affairs with management.
Our
outstanding warrants may have an adverse effect on the market price of ordinary shares and make it more difficult to effect a
business combination.
We
have issued warrants to purchase 11,460,850 ordinary shares as part of the units offered and sold in our IPO and the private warrants
to purchase up to 6,309,340 ordinary shares. We may also issue additional warrants to our Sponsor, officers, directors or their
affiliates upon redemption of promissory notes issued to such entities or individuals for loans made to supplement our working
capital requirements, as described elsewhere in this report. To the extent we issue ordinary shares to effect a business combination,
the potential for the issuance of a substantial number of additional shares upon exercise of these warrants could make us a less
attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will increase the number of
issued and outstanding ordinary shares and reduce the value of the shares issued to complete the business combination. Accordingly,
our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on
the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised,
you may experience dilution to your holdings.
We
may redeem the warrants at a time that is not beneficial to public investors.
We
may call the public warrants for redemption at any time after the redemption criteria described elsewhere in this report have
been satisfied. If we call the public warrants for redemption, public shareholders may be forced to accept a nominal redemption
price or sell or exercise the warrants when they may not wish to do so.
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 its warrant (including any warrants held by
our Sponsor, officers, directors or their permitted transferees) to do so on a “cashless basis.” If our management
chooses to require holders to exercise their warrants on a cashless basis, the number of 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.
If
our security holders exercise their registration rights, it may have an adverse effect on the market price of our ordinary shares
and the existence of these rights may make it more difficult to effect our initial business combination.
The
holders of the insider shares are entitled to demand that we register the resale of the insider shares and the holders of the
private warrants are entitled to demand that we register the resale of the private warrants (and underlying securities) and any
securities our Sponsor, officers, directors or their affiliates may be issued in payment of working capital loans made to us.
The presence of these additional securities trading in the public market may have an adverse effect on the market price of our
securities. In addition, the existence of these rights may make it more difficult to effectuate our initial business combination
or increase the cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering
into a business combination with us or will request a higher price for their securities because of the potential effect the exercise
of such rights may have on the trading market for our ordinary shares.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under
the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could
be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will
subject us to the Investment Company Act of 1940. To this end, the proceeds held in the trust account may be invested by the trustee
only in United States government treasury bills, notes or bonds having a maturity of 180 days or less, in money market funds meeting
the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S.
treasuries or in demand deposit accounts. By restricting the investment of the proceeds to these instruments, we intend to meet
the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940.
If
we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain
restrictions that may make it more difficult for us to complete our initial business combination, including:
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restrictions
on the issuance of securities.
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In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company;
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adoption
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reporting,
record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
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Compliance
with these additional regulatory burdens would require additional expense for which we have not allotted.
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 we are not required to observe any restrictions in respect of our conduct save as disclosed in this report
or our amended and restated memorandum and articles of association.
If
we are unable to consummate our initial business combination, our public shareholders may be forced to wait up to 24 months before
redemption from our trust account.
If
we are unable to consummate our initial business combination by May 17, 2019, which is 24 months from the closing of our IPO,
we will, as promptly as reasonably possible but not more than ten business days thereafter, distribute the aggregate amount then
on deposit in the trust account, including interest earned (net of taxes payable), pro rata to our public shareholders by way
of redemption and cease all operations except for the purposes of winding up of our affairs by way of a voluntary liquidation,
as further described herein. Any redemption of public shareholders from the trust account shall be effected automatically by function
of our amended and restated 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 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 24 months before the redemption proceeds of our trust account become available to them,
and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return
funds to investors prior to the date of our redemption or liquidation unless we consummate our initial business combination prior
thereto and only then in cases where investors have sought to redeem their ordinary shares. Only upon our redemption or any liquidation
will public shareholders be entitled to distributions if we are unable to complete our initial business combination.
If
we are deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent
of potential creditor claims. In these circumstances, prior payments made by the company may be deemed “voidable transactions.”
If
we do not complete our initial business combination by May 17, 2019, this will trigger an automatic redemption of public shareholders
from the trust account pursuant to our amended and restated 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 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 investors 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 has agreed that it 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 IPO against certain liabilities, including liabilities under the Securities Act. However,
we have not independently verified whether our Sponsor has sufficient funds to satisfy its obligations and believe that our Sponsor’s
only assets are securities of our company. We have not asked our Sponsor to reserve for such indemnification obligations. We cannot
assure our investors 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
our investors 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
we are 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 17, 2019, and instead distribute the aggregate amount then on deposit
in the trust account, including interest earned (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
requirement that we complete our initial business combination within 24 months from the closing of our IPO may give potential
target businesses leverage over us in negotiating our initial business combination.
We
have 24 months from the closing of our IPO, or May 17, 2019, to complete our initial business combination. Any potential target
business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently,
such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business
combination with that particular target business, we may be unable to complete a business combination with any other target business.
This risk will increase as we get closer to the time limit referenced above.
We
may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore investors may be relying
solely on the judgment of our board of directors in approving a proposed business combination.
Although
we have received a fairness opinion in connection with the proposed Business Combination, we are only required to obtain a fairness
opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers,
directors or Sponsor. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors may be relying
solely on the judgment of our board of directors in approving a proposed business combination.
We
may not be required to obtain an opinion from an independent investment banking firm as to the fair market value of the target
business we are seeking to acquire.
We
will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value of such target
business if our board of directors independently determines that the target business complies with the 80% threshold. Accordingly,
investors will be relying solely on the judgment of our board of directors in valuing such target business or businesses, and
our board of directors may not properly value such target business or businesses.
Resources
could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business.
It
is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant
agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial
costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, such as the
Business Combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore,
even if an agreement is reached relating to a specific target business or businesses, such as those in the proposed Business Combination,
we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business.
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 securities, the U.S. Holder may be subject to increased U.S. federal income tax liability and may be subject to additional
reporting requirements. For purposes of this analysis, a US Holder is defined as
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an individual citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or
treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons
are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a U.S. person.
A
foreign (i.e., non-U.S.) corporation will be a passive foreign investment company, or PFIC, for U.S. tax purposes if at least
75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is
considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC
if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and
averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own
at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes
dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business)
and gains from the disposition of passive assets.
Because
we are a blank check company, with no current active business, we believe that it is likely that we have met the PFIC asset or
income test beginning with our initial taxable year ending December 31, 2017. However, pursuant to a start-up exception, a corporation
will not be a PFIC for the first taxable year the corporation has gross income (in our case, our taxable year ending December
31, 2017), if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC
for either of the first two taxable years following the start-up year (in our case, our taxable years ending December 31, 2018
and December 31, 2019); and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up
exception to us will not be known until after the close of our current taxable year ending December 31, 2018. Even if our initial
business combination is completed during our taxable year ending December 31, 2018, we may still meet one of the PFIC tests depending
on the timing of the acquisition and the amount of our passive income and assets as well as any passive income and assets of the
businesses acquired in the business combination. If we do not satisfy the start-up exception, we will likely be considered a PFIC
since our date of formation, and will continue to be treated as a PFIC until we no longer satisfy the PFIC tests (and in general,
the PFIC rules would continue to apply to any US Holder who held our ordinary shares or warrants at any time we were considered
a PFIC). If you made or will make a timely “mark to market” election (as described in the PFIC rules) with respect
to you ordinary shares you may avoid the adverse tax consequences of owning PFIC shares. However, such “mark-to-market”
election is not available for our warrants. We urge you to consult your own tax adviser regarding the possible application of
the PFIC rules in your particular circumstances.
An
investment in our securities may result in uncertain U.S. federal income tax consequences.
An
investment in our securities may result in uncertain U.S. federal income tax consequences. For instance, because there are no
authorities that directly address instruments similar to the units issued in our IPO, the allocation an investor makes with respect
to the purchase price of the unit between the ordinary shares and the warrant to purchase one-half of one ordinary share included
in each unit could be challenged by the IRS or the courts. Furthermore, the United States federal income tax consequences of a
cashless exercise of warrants included in the units sold in our IPO is unclear under current law. See the section titled “Taxation
– United States Federal Income Taxation” for a summary of the principal U.S. federal income tax consequences of an
investment in our securities. Prospective investors are urged to consult their tax advisors with respect to these and other tax
consequences when purchasing, holding or disposing of our securities.
After
our initial business combination, it is likely that a majority of our directors and officers will live outside the United States
and all of our assets will be located outside the United States; therefore investors may not be able to enforce federal securities
laws or their other legal rights.
It
is likely that after our initial business combination, a majority of our directors and officers will reside outside of the United
States and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases
not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors
or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors
and officers under United States laws.
Compliance
with the Sarbanes-Oxley Act of 2002 requires substantial financial and management resources and may increase the time and costs
of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal
controls and may require that we have such system of internal controls audited. If we fail to maintain the adequacy of our internal
controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability
to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act may require that our independent
registered public accounting firm report on management’s evaluation of our system of internal controls. A target company
may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties
encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our
operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors
to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our securities less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company”
for up to five years. However, if our non-convertible debt issued within a three-year period exceeds $1.0 million or revenues
exceeds $1.07 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million
on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the
following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements
of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our
ordinary shares less attractive because we may rely on these provisions. If some investors find our ordinary shares less attractive
as a result, there may be a less active trading market for our shares and our share price may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised
standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial
statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted
out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.
We
may re-incorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction
will likely govern all of our material agreements and we may not be able to enforce our legal rights.
In
connection with our initial business combination, we may relocate the home jurisdiction of our business from the British Virgin
Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction would likely govern all of our material
agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation
and interpretation as in the United States or the British Virgin Islands. 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.
Investors
may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts
may be limited, because we are formed under British Virgin Islands law.
We
are a company formed under the laws of the British Virgin Islands. As a result, it may be difficult for investors to enforce judgments
obtained in the United States courts against our directors or officers.
Our
corporate affairs will be governed by our amended and restated 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:
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to
recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S.
securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of
the company; and
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to
impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability
provisions of U.S. securities laws that are penal in nature.
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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:
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the
U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was
resident or carrying on business within such jurisdiction and was duly served with process;
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the
judgment is final and for a liquidated sum;
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the
judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of
the company;
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in
obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;
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recognition
or enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and
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the
proceedings pursuant to which judgment was obtained were not contrary to natural justice.
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In
appropriate circumstances, a British Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final
foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions
taken by management or controlling shareholders than they would as public shareholders of a U.S. company. For a discussion of
certain differences between the provisions of the Companies Act, remedies available to shareholders and the laws applicable to
companies incorporated in the United States and their shareholders, see “British Virgin Islands Company Considerations.”
The
provisions of our amended and restated memorandum and articles of association relating to the rights and obligations attaching
to our ordinary shares may be amended prior to the consummation of our initial business combination with the approval of the holders
of 65% (or 50% if for the purposes of approving, or in conjunction with, the consummation of our initial business combination)
of our outstanding ordinary shares attending and voting on such amendment at the relevant meeting, which is a lower amendment
threshold than that of many blank check companies. It may be easier for us, therefore, to amend our memorandum and articles of
association to facilitate the consummation of our initial business combination that a significant number of our shareholders may
not support.
Many
blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a 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 amended and restated memorandum and articles of association provide that, prior to the consummation of our initial
business combination, the provisions related to pre-business combination activity and the rights and obligations attaching to
the ordinary shares may be amended if approved by holders of 65% (or 50% if approved in connection with our initial business combination)
of our outstanding ordinary shares attending and voting on such amendment. Prior to 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 20% 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 more easily that many
blank check companies, and this may increase our ability to consummate an initial business combination with which a shareholder
does not agree. However, we and our directors and officers have agreed not to propose any amendment to our memorandum and articles
of association that would affect the substance and timing of our obligation to redeem the public shares of any public shareholder
without the consent of that holder if we are unable to consummate our initial business combination by May 17, 2019.
Our
amended and restated memorandum and articles of association permit the board of directors by resolution 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
amended and restated memorandum and articles of association permits the board of directors by resolution to amend the memorandum
and articles of association to designate rights, preferences, designations and limitations attaching to the preferred shares as
they determine in their discretion, without shareholder approval with respect the terms or the issuance. If issued, the rights,
preferences, designations and limitations of the preferred shares would be set by the board of directors and could operate to
the disadvantage of the outstanding ordinary shares the holders of which would not have any pre-emption rights in respect of such
an issue of preferred shares. Such terms could include, among others, preferences as to dividends and distributions on liquidation,
or could be used to prevent possible corporate takeovers. We may issue some or all of such preferred shares in connection with
our initial business combination. Notwithstanding the foregoing, we and our directors and officers have agreed not to propose
any amendment to our memorandum and articles of association that would affect the substance and timing of our obligation to redeem
our public shares if we are unable to consummate our initial business combination by May 17, 2019.
Because
we must furnish our shareholders with target business financial statements prepared in accordance with or reconciled to U.S. generally
accepted accounting principles or international financial reporting standards as issued by the IASB, we will not be able to complete
our initial business combination with prospective target businesses unless their financial statements are prepared in accordance
with or reconciled to U.S. generally accepted accounting principles or international financial reporting standards as issued by
the IASB.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or international financial reporting standards as issued by the IASB, or IFRS, depending on the circumstances,
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States), or PCAOB. We will include the same financial statement disclosure in connection with any tender
offer documents we use, whether or not they are required under the tender offer rules. Additionally, to the extent we furnish
our shareholders with financial statements prepared in accordance with IFRS, such financial statements will need to be audited
in accordance with U.S. GAAP at the time of the consummation of the business combination. These financial statement requirements
may limit the pool of potential target businesses we may acquire.
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. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
Investors may be unable to sell their securities unless a market can be established and sustained.
We
may face risks related to oil and gas exploration and production companies.
Business
combinations with oil and gas exploration and production companies entail special considerations and risks. If we acquire a target
business in the oil and gas exploration and production industry, we may be subject to, and possibly adversely affected by, the
following risks:
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our
success may be dependent on the prices of oil and natural gas;
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low
oil or natural gas prices and the substantial volatility in these prices may adversely affect our financial condition and
our ability to meet our capital expenditure requirements and financial obligations;
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our
exploration, development and exploitation projects may require substantial capital expenditures that may exceed our cash flows
from operations and potential borrowings, and we may be unable to obtain needed capital on satisfactory terms, which could
adversely affect our future growth;
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drilling
for and producing oil and natural gas are highly speculative and involve a high degree of operational and financial risk,
with many uncertainties that could adversely affect our business;
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we
may incur indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations
and our unit costs;
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our
operations may be subject to operational hazards and unforeseen interruptions for which we may not be adequately insured;
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our
reserves and production may be concentrated in a few core areas, such that problems in production and markets relating to
a particular area could have a material impact on our business;
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the
unavailability or high cost of drilling rigs, completion equipment and services, supplies and personnel could adversely affect
our ability to establish and execute exploration and development plans within budget and on a timely basis, which could have
a material adverse effect on our financial condition, results of operations and cash flows;
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our
oil and natural gas reserves may be estimated and may not reflect the actual volumes of oil and natural gas we will recover,
and significant inaccuracies in these reserves estimates or underlying assumptions could materially affect the quantities
and present value of our reserves;
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our
identified drilling locations may be scheduled over several years, making them susceptible to uncertainties that could materially
alter the occurrence or timing of their drilling;
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competition
in the oil and natural gas industry is intense, which may make it more difficult for us to acquire properties, market oil
and natural gas and secure trained personnel;
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our
competitors may use superior technology and data resources that we may be unable to afford or that would require a costly
investment by us in order to compete with them more effectively;
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strategic
relationships upon which we may rely may be subject to change, which may diminish our ability to conduct our operations;
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the
marketability of our production may be dependent upon oil and natural gas gathering, processing and transportation facilities
owned and operated by third parties, and the unavailability of satisfactory oil and natural gas gathering, processing and
transportation arrangements would have a material adverse effect on our revenue;
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financial
difficulties encountered by our oil and natural gas purchasers, third party operators or other third parties could decrease
our cash flows from operations and adversely affect the exploration and development of our prospects and assets;
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gathering,
processing and transportation services are subject to complex federal, state and other laws that could adversely affect the
cost, manner or feasibility of conducting our business;
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a
component of our growth may come through acquisitions, and our failure to identify or complete future acquisitions successfully
could reduce our earnings and hamper our growth;
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we
may purchase oil and natural gas properties with liabilities or risks that we did not know about or that we did not assess
correctly, and, as a result, we could be subject to liabilities that could adversely affect our results of operations;
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we
may incur losses or costs as a result of title deficiencies in the properties in which we invest;
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we
may be required to write down the carrying value of our proved properties under accounting rules and these write-downs could
adversely affect our financial condition;
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hedging
transactions, or the lack thereof, may limit our potential gains and could result in financial losses;
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we
may be subject to government regulation and liability, including complex environmental laws, which could require significant
expenditures; and
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we
may have difficulty managing growth in our business, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows and our ability to execute our business plan in a timely fashion.
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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 special
considerations or risks associated with companies operating in the target business’s home jurisdiction, including any of
the following:
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laws
governing the manner in which future business combinations may be effected;
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exchange
listing and/or delisting requirements;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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rates
of inflation;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
Because
of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively
impacted.
Managing
a business, operations, personnel or assets in another country is challenging and costly. Any management that we may have (whether
based abroad or in the U.S.) may be inexperienced in cross-border business practices and unaware of significant differences in
accounting rules, legal regimes and labor practices. Even with a seasoned and experienced management team, the costs and difficulties
inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely
domestic business) and may negatively impact our financial and operational performance.
If
social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments
occur in a country in which we may operate after we effect our initial business combination, it may result in a negative impact
on our business.
Political
events in another country may significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime
changes, changes in laws and regulations, political upheaval, and policy changes or enactments could negatively impact our business
in a particular country.
Many
countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject
to corruption and inexperience, which may adversely impact our results of operations and financial condition.
Our
ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to
defend ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could
adversely impact our operations, assets or financial condition.
Rules
and regulations in many countries are often ambiguous or open to differing interpretation by responsible individuals and agencies
at the municipal, state, regional and federal levels. The attitudes and actions of such individuals and agencies are often difficult
to predict and inconsistent.
Delay
with respect to the enforcement of particular rules and regulations, including those relating to customs, tax, environmental and
labor, could cause serious disruption to operations abroad and negatively impact our results.
If
relations between the United States and foreign governments deteriorate, it could cause potential target businesses or their goods
and services to become less attractive.
The
relationship between the United States and foreign governments could be subject to sudden fluctuation and periodic tension. For
instance, the United States may announce its intention to impose quotas on certain imports. Such import quotas may adversely affect
political relations between the two countries and 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 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, investors may be taxed on a larger amount in U.S. dollars
than the U.S. dollar amount that they will actually ultimately receive.
If
an investor is a U.S. holder of our ordinary shares, he/she 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 redeemed
into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution
that such investor must include in his/her 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 redeemed into U.S. dollars. Thus, if the value of the foreign currency
decreases before such investor actually redeems the currency into U.S. dollars, he/she will be taxed on a larger amount in U.S.
dollars than the U.S. dollar amount that he/she will actually ultimately receive.
If
our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend
time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, our management may resign from their positions as officers or directors of the company and the
management of the target business at the time of the business combination could 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.
Currency
policies may cause a target business’s 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 enforce remedies for breaches of those agreements 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. 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.