Item 1. Business.
Introduction
We are a blank check
company incorporated on May 5, 2017 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business
Combination”). We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with
an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of
the target businesses that we have reviewed or with any other target business. We also have neither engaged in any operations nor
generated any revenue to date. Based on our business activities, the Company is a “shell company” as defined under
the Securities Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting
almost entirely of cash.
Our Public Offering
closed on September 18, 2017. Prior to our Public Offering, on May 10, 2017, we entered into a Securities Subscription Agreement
with our Sponsor, pursuant to which our Sponsor subscribed for an aggregate of 14,375,000 Class B ordinary shares, par value $0.0001
per share, for an aggregate purchase price of $25,000. On May 18, 2017, the Sponsor surrendered 2,875,000 Class B ordinary shares
for no value, and on August 23, 2017 and September 13, 2017, we approved share capitalizations resulting in an aggregate of 17,250,000
Class B ordinary shares issued and outstanding and held by our Sponsor (including the Class A ordinary shares issuable upon conversion
thereof, the “Founder Shares”).
On the Close Date, we
consummated our Public Offering of 69,000,000 units (which included the purchase of 9,000,000 units subject to the underwriters’
9,000,000 unit over-allotment option) at a price of $10.00 per unit generating gross proceeds of $690,000,000 before underwriting
discounts and expenses. Each unit (“Unit”) consists of one Class A ordinary share, par value $0.0001 per share,
and one-third of one warrant of the Company (“Warrant”). Each whole Warrant entitles the holder thereof to purchase
one Class A ordinary share for $11.50 per share. Simultaneously with the closing of the Public Offering, we completed the
private sale of an aggregate of 8,000,000 warrants to our Sponsor (the “Private Placement Warrants”), each exercisable
to purchase one Class A ordinary share for $11.50 per share at a price of $1.50 per Private Placement Warrant.
We received gross proceeds
from the Public Offering and the sale of the Private Placement Warrants of $690,000,000 and $12,000,000, respectively, for an aggregate
of $702,000,000, of which $690,000,000 of the gross proceeds were deposited in a trust account maintained by Continental Stock
Transfer and Trust Company (“Trustee”) acting as trustee (the “Trust Account”). We incurred $34,295,163
in Public Offering related costs, including $10,000,000 of underwriting fees, $24,150,000 of deferred underwriting fees and $145,163
of other costs.
The balance of the funds
held outside of the trust account are intended to be used primarily to identify and evaluate target businesses, perform business
due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target
businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a Business Combination. In the future, a portion of interest income on the funds held in
the Trust Account may be released to us to pay tax obligations. At December 31, 2018, funds held in the Trust Account consisted
solely of cash and U.S. Treasury Bills.
On September 25, 2017,
we announced that, commencing September 29, 2017, holders of the Units sold in our Public Offering may elect to separately trade
the Class A ordinary shares and Warrants included in the Units. Those Units not separated will continue to trade on the New
York Stock Exchange (“NYSE”) under the symbol “IPOA.U,” and the Class A ordinary shares and Warrants
that are separated will trade on the NYSE under the symbols “IPOA” and “IPOW,” respectively. We will not
issue fractional warrants upon separation of the Units and only whole Warrants will trade.
We are a partnership
between the investment firms of Social Capital and Hedosophia. Social Capital Hedosophia Holdings unites technologists, entrepreneurs
and technology-oriented investors around a shared vision of identifying and investing in innovative and agile technology companies.
We believe that our management team’s relationships with leading technology company founders, executives of private and public
companies, venture capitalists and growth equity fund managers, in addition to the extensive industry and geographical reach of
Social Capital and Hedosophia’s networks will give us a competitive advantage in pursuing a broad range of opportunities.
Our management team believes that its ability to identify and implement value creation initiatives will remain central to its differentiated
acquisition strategy.
Business Strategy
We intend to focus our
target sourcing efforts on assessing companies that we believe would benefit significantly from being publicly-traded. Further,
we believe that we are providing an interesting alternative investment opportunity that capitalizes on key trends impacting the
capital markets for technology companies.
We believe the future
success of the capital markets for technology companies is dependent on new company formation, the sustainability of robust private
market funding and an increased willingness of private technology companies to become publicly-traded and therefore become available
to a broader universe of investors who can benefit from their disruption and growth. Our mission is to create an alternative path
to a traditional IPO for disruptive and agile technology companies to achieve their long-term objectives and overcome key deterrents
to becoming public. By leveraging our extensive operational experience and network, we believe we can provide a number of significant
benefits to potential targets and public market investors that can potentially lead to attractive long-term risk-adjusted returns
in the public markets. These benefits include, but are not limited to, the following:
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Operational excellence:
Our management team has significant hands-on experience helping technology companies optimize their existing and new growth initiatives by exploiting insights from rich data assets that already exist within most technology companies. Further, we intend to share best practices and key learnings, gathered from Social Capital’s and Hedosophia’s operating and investment experience, as well as strong relationships in the technology sector, to help shape corporate strategies in an increasingly complex technology ecosystem.
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Broad, global reach:
Having operated and invested in leading global technology companies across their corporate life cycles, our management team has developed deep relationships with key large multi-national organizations and investors. These relationships and know-how present a significant opportunity to help drive strategic dialogue, access new customer relationships and achieve global ambitions.
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Efficiency:
We believe that a more streamlined and transparent path to the public market will encourage private companies, in the technology industry in particular, to go public while allowing them to remain operationally focused on long-term value creation. As a result, public market investors can gain more near-term, direct investment exposure to long-term technology themes.
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Acquisition Criteria
We intend to leverage
what we believe is a competitive advantage in sourcing potential targets that will materially benefit from our unique expertise
and where we are best situated to augment the value of the business following the completion of the initial Business Combination.
We believe our management
team is well positioned to identify unique opportunities across the technology private company landscape. Our selection process
will leverage our relationships with leading technology company founders, executives of private and public companies, venture capitalists
and growth equity funds, in addition to the extensive industry and geographical reach of Social Capital and Hedosophia’s
platforms, which we believe should provide us with a key competitive advantage in sourcing potential Business Combination targets.
Given our profile and thematic approach, we anticipate that target business candidates may be brought to our attention from various
unaffiliated sources, in particular founders of, and investors in, other private and public technology companies in our networks.
We also believe that
Social Capital and Hedosophia’s reputation, experience and track record of making investments in the technology industry
will make us a preferred partner for these potential targets.
Consistent with this
strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective
target businesses. We intend to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to
enter into our Business Combination with a target business that does not meet any of these criteria and guidelines.
We intend to seek to acquire companies that
we believe meet certain of the following criteria:
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are in the technology industry and can benefit from the extensive networks and insights we have built. In addition, we expect to evaluate targets in related industries that can use technology to drive meaningful operational improvements and efficiency gains, or enhance their strategic positions by using technology solutions to differentiate offerings;
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are ready to operate in the scrutiny of public markets, with strong management, corporate governance and reporting policies in place;
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will likely be well received by public investors and are expected to have good access to the public capital markets;
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are at an inflection point, such as those requiring additional management expertise, innovation to develop new products or services, improvement of financial performance or growth through a Business Combination;
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have significant embedded and/or underexploited expansion opportunities;
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exhibit unrecognized value or other characteristics that we believe have been misevaluated by the market based on our company-specific analysis and due diligence review. For a potential target company, this process will include, among other things, a review and analysis of the company’s capital structure, quality of earnings, potential for operational improvements, corporate governance, customers, material contracts, and industry background and trends; and
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will offer attractive risk-adjusted equity returns for our shareholders. Financial returns will be evaluated based on (1) the potential for organic growth in cash flows, (2) the ability to accelerate growth, including through the opportunity for follow-on acquisitions and (3) the prospects for creating value through other value creation initiatives. Potential upside from growth in the target business’ earnings and an improved capital structure will be weighed against any identified downside risks.
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These criteria are not
intended to be exhaustive. Any evaluation relating to the merits of a particular Business Combination may be based, to the extent
relevant, on these general guidelines, as well as other considerations, factors and criteria deemed relevant by our management
in effecting our Business Combination consistent with our business objectives. In the event that we decide to enter into our Business
Combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our shareholder communications related to our Business Combination, which, would be in the
form of tender offer documents or proxy solicitation materials that we would file with the United States Securities and Exchange
Commission (the “SEC”).
Our Acquisition Process
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and
other information which will be made available to us. We will also utilize our operational and capital planning experience.
Each of our officers
and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities
pursuant to which such officer or director is or will be required to present a Business Combination to such entity. Accordingly,
if any of our officers or directors becomes aware of a Business Combination opportunity that is suitable for an entity to which
he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such Business
Combination opportunity to such entity, subject to his or her fiduciary duties to us under Cayman Islands law. We do not believe,
however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to
complete our Business Combination.
Sourcing of Potential Business Combination Targets
We believe our management
team’s significant operating and transaction experience and relationships with companies will provide us with a substantial
number of potential Business Combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships around the world. This network has grown through the activities of our
management team sourcing, acquiring, financing and exiting investments and properties, our management team’s relationships
with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
This network provides
our management team with a robust and consistent flow of acquisition opportunities which were proprietary or where a limited group
of investors were invited to participate in the sale process. We believe that the network of contacts and relationships of our
management team will provide us with important sources of acquisition opportunities. In addition, we anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private
equity funds and large business enterprises seeking to divest non-core assets or divisions.
We are not prohibited
from pursuing a Business Combination with a company that is affiliated with our Sponsor, officers or directors or making the acquisition
through a joint venture or other form of shared ownership with our Sponsor, officers or directors. In the event we seek to complete
a Business Combination with a target that is affiliated with our Sponsor, officers or directors, we, or a committee of independent
and disinterested directors, would obtain an opinion from an independent investment banking firm that is a member of the Financial
Industry Regulatory Authority (“FINRA”) or from an independent accounting firm, that such a Business Combination is
fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
As more fully discussed
in “Item 10. Directors, Executive Officers and Corporate Governance,” if any of our officers or directors becomes aware
of a Business Combination opportunity that falls within the line of business of any entity to which he or she has pre-existing
fiduciary or contractual obligations, he or she may be required to present such Business Combination opportunity to such entity
prior to presenting such Business Combination opportunity to us. Our officers and directors currently have fiduciary duties or
contractual obligations to various entities that may present a conflict of interest. As a result of these duties and obligations,
situations may arise in which business opportunities may be given to one or more of these other entities prior to being presented
to us.
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, share exchange, asset acquisition, share purchase,
reorganization or other Business Combination. In this situation, the owners of the target business would exchange their shares
of stock in the target business for our shares or for a combination of our shares and cash, allowing us to tailor the consideration
to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company,
we believe target businesses will find this method a more certain and cost effective method to becoming a public company than the
typical initial public offering. In a typical initial public offering, there are additional expenses incurred for marketing, road
show and public reporting efforts that may not be present to the same extent in connection with a Business Combination with us.
Furthermore, once a
proposed Business Combination is completed, the target business will effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring. 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. Our structure may offer
further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented
employees.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”),
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). We will remain an emerging growth
company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the Close Date,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of
the prior June 30th; and (ii) the date on which we have issued more than $1.00 billion in non-convertible debt securities
during the prior three-year period.
Additionally, we are
a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock
held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceeded $100 million during
such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior
June 30th.
Financial Position
With funds
available for a Business Combination of approximately $680.1 million as of December 31, 2018, assuming no redemptions and
after payment of the $24,150,000 of deferred underwriting discount, we offer a target business a variety of options such as
creating a liquidity event for its owners, 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 complete our Business Combination using
our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.
However, we have not taken any steps to secure third-party financing and there can be no assurance it will be available on
terms acceptable to us or at all.
Effecting Our Business Combination
We are not presently
engaged in, and we will not engage in, any operations until a Business Combination. We intend to effectuate our Business Combination
using cash from the proceeds of our Public Offering and the sale of the Private Placement Warrants, our shares, debt or a combination
of these as the consideration to be paid in our Business Combination. We may seek to complete our Business Combination with a company
or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous
risks inherent in such companies and businesses.
If our Business Combination
is paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the
consideration in connection with our Business Combination or used for redemptions of purchases of our Class A ordinary shares,
we may apply the balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in
completing our Business Combination, to fund the purchase of other companies or for working capital.
We may seek to raise
additional funds through a private offering of debt or equity securities in connection with the completion of our Business Combination,
and we may effectuate our Business Combination using the proceeds of such offering rather than utilizing the funds held in the
Trust Account.
In the case of a Business
Combination funded with assets other than the Trust Account assets, our tender offer documents or proxy materials disclosing the
Business Combination would disclose the terms of the financing and, only if required by law, we would seek shareholder approval
of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our Business
Combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising
any additional funds through the sale of securities or otherwise.
Selection of a Target Business and Structuring of Our Business
Combination
The rules of the NYSE
require that our Business Combination must be with one or more operating businesses or assets with a fair market value equal to
at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for the payment of taxes and excluding
the amount of any deferred underwriting discount held in trust). The fair market value of the target or targets will be determined
by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash
flow valuation or value of comparable businesses. If our board is not able to independently determine the fair market value of
the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA,
or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not intend to purchase multiple
businesses in unrelated industries in conjunction with our Business Combination. Subject to this requirement, our management has
virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not
be permitted to effectuate our Business Combination with another blank check company or a similar company with nominal operations.
In any case, we will
only complete a Business Combination in which we own or acquire 50% or more of the outstanding voting securities of the target
or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or
businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will
be valued for purposes of the 80% of net assets test. There is no basis for public shareholders to evaluate the possible merits
or risks of any target business with which we may ultimately complete our Business Combination.
To the extent we effect
our Business Combination with a company or business that may be financially unstable or in its early stages of development or growth,
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In evaluating
a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings
with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational,
legal and other information which will be made available to us.
The time required to
select and evaluate a target business and to structure and complete our Business Combination, and the costs associated with this
process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and
evaluation of a prospective target business with which our Business Combination is not ultimately completed will result in our
incurring losses and will reduce the funds we can use to complete another Business Combination.
Lack of Business Diversification
For an indefinite period
of time after the completion of our Business Combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in
one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks
of being in a single line of business. By completing our 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 on the particular industry in which we operate after our Business Combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s Management
Team
Although we intend to
closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our Business Combination
with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future
management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible
that one or more of our directors will remain associated in some capacity with us following our Business Combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our Business Combination. Moreover, we cannot assure
you that members of our management team will have significant experience or knowledge relating to the operations of the particular
target business.
We cannot assure you
that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination
as to whether any of our key personnel will remain with the combined company will be made at the time of our Business Combination.
Following a Business
Combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot
assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Shareholders May Not Have the Ability to Approve Our Business
Combination
We may conduct redemptions
without a shareholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated
memorandum and articles of association. However, we will seek shareholder approval if it is required by applicable law or stock
exchange listing requirement, or we may decide to seek shareholder approval for business or other reasons.
Under the rules of the
NYSE, shareholder approval would be required for our Business Combination if, for example:
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we issue (other than in a public offering for cash) ordinary shares that will either (a) be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding;
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any of our directors, officers or substantial security holders (as defined by the rules of the NYSE) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of ordinary shares to be issued, or if the number of ordinary shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of ordinary shares or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of ordinary shares or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; 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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The Companies Law and Cayman Islands law
do not currently require, and we are not aware of any other applicable law that will require, shareholder approval of our Business
Combination.
Permitted Purchases of Our Securities
In the event we seek
shareholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination
pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or any of their affiliates may purchase shares in
privately negotiated transactions or in the open market either prior to or following the completion of our Business Combination.
There is no limit on the number of shares such persons may purchase. However, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our Initial
Shareholders, directors, officers, advisors or any of their affiliates determine to make any such purchases at the time of a shareholder
vote relating to our Business Combination, such purchases could have the effect of influencing the vote necessary to approve such
transaction. None of the funds in the Trust Account will be used to purchase shares in such transactions. They will not make any
such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases
are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such shareholder,
although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise
its redemption rights. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan,
as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on
such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is
not necessary.
In the event that our
Sponsor, directors, officers, advisors or any of their affiliates purchase shares in privately negotiated transactions from public
shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke
their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to
such rules, the purchasers will comply with such rules.
The purpose of such
purchases would be to: (i) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining
shareholder approval of our Business Combination; or (ii) to satisfy a closing condition in an agreement with a target that requires
us to have a minimum net worth or a certain amount of cash at the closing of our Business Combination, where it appears that such
requirement would otherwise not be met. This may result in the completion of our Business Combination that may not otherwise have
been possible.
In addition, if such
purchases are made, the public “float” of our ordinary shares may be reduced and the number of beneficial holders of
our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange. Our Sponsor, directors, officers, advisors and/or any of their affiliates anticipate that they
may identify the shareholders with whom our Sponsor, directors, officers, advisors or any of their affiliates may pursue privately
negotiated purchases by either the shareholders contacting us directly or by our receipt of redemption requests submitted by shareholders
following our mailing of proxy materials in connection with our Business Combination. To the extent that our Sponsor, directors,
officers, advisors or any of their affiliates enter into a private purchase, they would identify and contact only potential selling
shareholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against
our Business Combination. Such persons would select the shareholders from whom to acquire shares based on the number of shares
available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase.
The price per share paid in any such transaction may be different than the amount per share a public shareholder would receive
if it elected to redeem its shares in connection with our initial Business Combination. Our Sponsor, officers, directors, advisors
or any of their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the
other federal securities laws.
Any purchases by our
Sponsor, officers, directors and/or any of their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will be made only to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from
liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our Sponsor, officers, directors and/or
any of 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.
Redemption Rights for Public Shareholders Upon Completion
of Our Business Combination
We will provide our
public shareholders with the opportunity to redeem all or a portion of their ordinary shares (collectively, the “Public Shares”)
upon the completion of our Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest
shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, subject to the limitations
described herein. At completion of the Business Combination, we will be required to purchase any ordinary shares properly delivered
for redemption and not withdrawn. The amount in the Trust Account is approximately $10.21 per Public Share as of December 31, 2018.
The per-share amount we will distribute to shareholders who properly redeem their shares will not be reduced by the deferred underwriting
commissions we will pay to the underwriters. Our Initial Shareholders have entered into a letter agreement with us, pursuant to
which they have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares they may hold
in connection with the completion of our Business Combination. Our directors and officers have entered into letter agreements similar
to the one signed by our Initial Shareholders with respect to public shares acquired by them, if any.
Manner of Conducting Redemptions
We will provide our
public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of our Business
Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of
a tender offer. 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 applicable law or stock exchange listing
requirement. Asset acquisitions and share 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% of our issued and outstanding ordinary shares
or seek to amend our amended and restated memorandum and articles of association would require shareholder approval. We intend
to conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is
required by applicable law or stock exchange listing requirement or we choose to seek shareholder approval for business or other
reasons.
If a shareholder vote is not required and
we do not decide to hold a shareholder vote for business or other reasons, we will, pursuant to our amended and restated memorandum
and articles of association:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file tender offer documents with the SEC prior to completing our Business Combination which contain substantially the same financial and other information about the Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement
of our Business Combination, we and our Sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
our Class A ordinary shares in the open market if we elect to redeem our Public Shares through a tender offer, to comply with Rule
14e-5 under the Exchange Act.
In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our Business Combination until the expiration
of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a
specified number of Public Shares which are not purchased by our Sponsor, which number will be based on the requirement that we
may not redeem Public Shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting
commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our Business Combination.
If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete
the Business Combination.
If, however, shareholder
approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain shareholder
approval for business or other reasons, we will, pursuant to our amended and restated memorandum and articles of association:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that we
seek shareholder approval of our Business Combination, we will distribute proxy materials and, in connection therewith, provide
our public shareholders with the redemption rights described above upon completion of the Business Combination.
If we seek shareholder
approval, we will complete our Business Combination only if a majority of the issued and outstanding ordinary shares voted are
voted in favor of the Business Combination. In such case, pursuant to the terms of a letter agreement entered into with us, our
Initial Shareholders have agreed (and their permitted transferees will agree) to vote their founder shares and any public shares
held by them in favor of our Business Combination. Our directors and officers also have agreed to vote in favor of our Business
Combination with respect to public shares acquired by them, if any.
We expect that at the
time of any shareholder vote relating to our Business Combination, our Initial Shareholders and their permitted transferees will
own at least 20% of our issued and outstanding ordinary shares entitled to vote thereon. Each public shareholder may elect to redeem
their Public Shares without voting and, if they do vote, irrespective of whether they vote for or against the proposed transaction.
In addition, our Initial Shareholders have entered into a letter agreement with us, pursuant to which they have agreed to waive
their redemption rights with respect to their Founder Shares and any Public Shares held by them in connection with the completion
of a Business Combination. Our directors and officers have entered into letter agreements similar to the one signed by our Initial
Shareholders with respect to public shares acquired by them, if any.
Our amended and restated
memorandum and articles of association provide that in no event will we redeem our Public Shares in an amount that would cause
our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock”
rules). Redemptions of our Public Shares may also be subject to a higher net tangible asset test or cash requirement pursuant to
an agreement relating to our Business Combination. For example, the proposed Business Combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed Business
Combination. In the event the aggregate cash consideration we would be required to pay for all Public Shares that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed
the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any Public Shares, and all
Public Shares submitted for redemption will be returned to the holders thereof.
Limitation on Redemption Upon Completion of Our Business
Combination if We Seek Shareholder Approval
Notwithstanding the
foregoing, if we seek shareholder approval of our Business Combination and we do not conduct redemptions in connection with our
Business Combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide
that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to Public Shares held in excess of 15% of the total Public Shares issued as part of the Units in
our Public Offering (“Excess Shares”). We believe this restriction will discourage public shareholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against
a proposed Business Combination as a means to force us or our Sponsor or its affiliates to purchase their shares at a significant
premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder holding more
than an aggregate of 15% of the Public Shares could threaten to exercise its redemption rights if such holder’s shares are
not purchased by us or our Sponsor or its affiliates at a premium to the then-current market price or on other undesirable terms.
By limiting a shareholder’s ability to redeem no more than 15% of the Public Shares, we believe we will limit the ability
of a small group of shareholders to unreasonably attempt to block our ability to complete our Business Combination, particularly
in connection with a Business Combination with a target that requires as a closing condition that we have a minimum net worth or
a certain amount of cash. However, we have not restricted our public shareholders’ ability to vote all of their shares, including
Excess Shares, for or against our Business Combination.
Tendering Share Certificates in Connection with a Tender
Offer or Redemption Rights
We may require our
public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents
or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve our Business
Combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the Business
Combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our Public Shares in connection
with our Business Combination will indicate whether we are requiring public shareholders to satisfy such delivery requirements.
Accordingly, a public shareholder would have from the time we send out our tender offer materials until the close of the tender
offer period, or up to two days prior to the vote on the Business Combination if we distribute proxy materials, as applicable,
to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer
period will be not less than 20 business days and, in the case of a shareholder vote, a final proxy statement would be mailed to
public shareholders at least 10 days prior to the shareholder vote. However, we expect that a draft proxy statement would be made
available to such shareholders well in advance of such time, providing additional notice of redemption if we conduct redemptions
in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for shareholders to use electronic
delivery of their Public Shares.
There is a nominal cost
associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC
System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to
pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders
seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption
rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business
combinations, many blank check companies would distribute proxy materials for the shareholders’ vote on a business combination,
and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder
was seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such
shareholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the shareholder then
had an “option window” after the completion of the business combination during which he or she could monitor the price
of the company’s shares in the market. If the price rose above the redemption price, he or she could sell his or her shares
in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights,
to which shareholders were aware they needed to commit before the shareholder meeting, would become “option” rights
surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement
for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable
once the business combination is approved.
Any request to redeem
such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the
shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a Public Share delivered its certificate
in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise
such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is
anticipated that the funds to be distributed to holders of our Public Shares electing to redeem their shares will be distributed
promptly after the completion of our Business Combination.
If our Business Combination
is not approved or completed for any reason, then our public shareholders who elected to exercise their redemption rights would
not be entitled to redeem their shares for the applicable pro rata share of the Trust Account. In such case, we will promptly return
any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed
Business Combination is not completed, we may continue to try to complete a Business Combination with a different target until
24 months from the Close Date.
Redemption of Public Shares and Liquidation if No Business
Combination
Our Sponsor, officers
and directors have agreed that we have only 24 months from the Close Date (i.e., until September 18, 2019) to complete our Business
Combination. If we are unable to complete our Business Combination within such 24-month period, we will: (i) cease all operations
except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’
rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and
(iii) 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 Cayman Islands law to provide
for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our Warrants and Private Placement Warrants, which will expire worthless if we fail to complete our Business Combination
within the 24 month time period.
Our Initial Shareholders
have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from
the Trust Account with respect to their Founder Shares if we fail to complete our Business Combination within 24 months after the
Close Date. However, if our Initial Shareholders own Public Shares, they will be entitled to liquidating distributions from the
Trust Account with respect to such Public Shares if we fail to complete our Business Combination within the allotted 24-month time
period.
Our Sponsor, officers
and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and
restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our
Public Shares if we do not complete our Business Combination within 24 months after the Close Date, unless we provide our public
shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding Public Shares. However, we may not redeem our Public Shares in an amount
that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules).
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
held outside the Trust Account, although we cannot assure you that there will be sufficient funds for such purpose. However, if
those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent
that there is any interest accrued in the Trust Account not required to pay taxes, we may request the Trustee to release to us
an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend
all of the net proceeds of our Public Offering and the sale of the Private Placement Warrants, 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 public shareholders upon our dissolution would be approximately $10.00. 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.
We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.00.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all
creditors’ claims.
Although we will seek
to have all vendors, service providers (other than our independent auditors), 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 enter into an agreement
with a third party that has not executed a waiver only if management believes that such third party’s engagement would be
significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will
agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable
to complete our Business Combination within the prescribed time frame, or upon the exercise of a redemption right in connection
with our Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may
be brought against us within the 10 years following redemption. In order to protect the amounts held in the Trust Account, our
Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount
per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of
the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a
third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our
indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities Act.
In the event that an executed waiver is deemed to be unenforceable against a third party, then our Sponsor will not be responsible
to the extent of any liability for such third-party claims. We have not independently verified whether our Sponsor has sufficient
funds to satisfy its indemnity obligations and believe that our Sponsor's only assets are securities of our Company and, therefore,
our Sponsor may not be able to satisfy those obligations. None of our directors or officers will indemnify us for claims by third
parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the
proceeds in the Trust Account are reduced below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy
its indemnification 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, we cannot assure you that due to claims of creditors the actual value of the per-share
redemption price will not be substantially 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 (other than our independent auditors), 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 the Public Offering against
certain liabilities, including liabilities under the Securities Act. At December 31, 2018, we had access to up to $462,162
from the proceeds of the Public Offering and the sale of the Private Placement Warrants, with which to pay any such potential claims
(including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$100,000).
If we file a bankruptcy
petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account
could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third
parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the Trust Account, we cannot
assure you we will be able to return $10.00 per share to our public shareholders. Additionally, if we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our shareholders. Furthermore,
our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby
exposing itself and our Company to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public shareholders
will be entitled to receive funds from the Trust Account only in the event of the redemption of our Public Shares if we do not
complete our Business Combination within 24 months from the Close Date or if they redeem their respective shares for cash upon
the completion of the Business Combination. In no other circumstances will 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 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.
Amended and Restated Memorandum and Articles of Association
Our amended and restated
memorandum and articles of association contain certain requirements and restrictions that apply to us until the consummation of
our Business Combination. If we seek to amend any provisions of our amended and restated memorandum and articles of association
relating to shareholders’ rights or pre-Business Combination activity, we will provide public shareholders with the opportunity
to redeem their Public Shares in connection with any such vote. Our Initial Shareholders have agreed to waive any redemption rights
with respect to their Founder Shares and any Public Shares held in connection with the completion of our Business Combination.
Specifically, our amended and restated memorandum and articles of association provide, among other things, that:
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prior to the consummation of our Business Combination, we shall either (1) seek shareholder approval of our 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, including interest (which interest shall be net of taxes payable), or (2) provide our public shareholders with the opportunity to tender 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, including interest (which interest shall be net of taxes payable), in each case subject to the limitations described herein;
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we will consummate our 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;
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if our Business Combination is not consummated within 24 months after the Close Date, then our existence will terminate and we will distribute all amounts in the Trust Account; and
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prior to our Business Combination, we may not issue additional ordinary shares that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote on any Business Combination.
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These provisions cannot
be amended without the approval of holders of at least two thirds of our ordinary shares. In the event we seek shareholder approval
in connection with our Business Combination, our amended and restated memorandum and articles of association will provide that
we may consummate our Business Combination only if approved by a majority of the ordinary shares voted by our shareholders at a
duly held shareholders meeting.
Competition
In identifying, evaluating
and selecting a target business for our Business Combination, we may encounter intense competition from other entities having a
business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public
companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be
limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of
a target business. Furthermore, our obligation to pay cash in connection with our public shareholders who exercise their redemption
rights may reduce the resources available to us for our Business Combination and our outstanding Warrants, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a
competitive disadvantage in successfully negotiating a Business Combination.
Conflicts of Interest
Certain of our executive
officers and directors have fiduciary and contractual duties to either Social Capital or Hedosophia and to certain companies in
which either of them has invested. These entities may compete with us for acquisition opportunities. If these entities decide to
pursue any such opportunity, we may be precluded from pursuing such opportunities. However, we do not expect these duties to present
a significant conflict of interest with our search for a Business Combination. Social Capital and Hedosophia’s traditional
activities typically involve investing in private companies, investing in those entities several years prior to an initial public
offering, not at the time of such offering. None of the members of our management team who are also employed by our Sponsor or
its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become
aware. Our management team, in their capacities as directors, officers or employees of our Sponsor or its affiliates or in their
other endeavors, may choose to present potential business combinations to the related entities described above, current or future
entities affiliated with or managed by our Sponsor, or third parties, before they present such opportunities to us, subject to
applicable fiduciary duties.
Each of our officers
and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to one or
more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable
for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations
to present such business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands law.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect
our ability to complete our Business Combination.
Indemnity
Our Sponsor has agreed
that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below: (i) $10.00 per Public Share; or (ii) such lesser amount per
Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of
the trust assets, in each case, net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party
who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity
of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in
the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the
extent of any liability for such third party claims. We have not independently verified whether our Sponsor has sufficient funds
to satisfy its indemnity obligations and believe that our Sponsor’s only assets are securities of our Company and, therefore,
our Sponsor may not be able to satisfy those obligations. We have not asked our Sponsor to reserve for its indemnification obligations.
Employees
We currently have five
officers and do not intend to have any full-time employees prior to the completion of our initial business combination. Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our Business Combination. The amount of time that any
such person will devote in any time period will vary based on whether a target business has been selected for our Business Combination
and the current stage of the Business Combination process.
Periodic Reporting and Financial Information
Our Units, Class A
ordinary shares and Warrants are registered under the Exchange Act and as a result we have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange
Act, our annual reports will contain financial statements audited and reported on by our independent registered public auditors.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at: http://www.sec.gov.
We previously filed
a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention
of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our Business Combination. In accordance with the requirements of the Exchange Act, this Annual Report on Form 10-K contains
financial statements audited and reported on by our independent registered public accountants.
We expect to provide
shareholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy
solicitation materials sent to shareholders to assist them in assessing the target business. These financial statements may be
required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America (“U.S. GAAP”), or International Financing Reporting Standards, as promulgated by the International Accounting
Standards Board (“IFRS”), depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the United States Public Company Accounting Oversight Board (“PCAOB”).
These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may
be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal
proxy rules and complete our Business Combination within the prescribed time frame. While this may limit the pool of potential
acquisition candidates, we do not believe that this limitation will be material.
We are required to evaluate
our internal control procedures starting with the fiscal year ended 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 no longer qualify as an emerging growth
company will we be required to have our internal control procedures audited. A target business 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 target business to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete
any such acquisition.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may
be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the Close
Date, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million
as of the prior June 30th, and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities
during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the JOBS Act.
Additionally, we are
a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. We will remain a smaller reporting company
until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million
as of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value
of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
Item 1A. Risk Factors.
An investment in
our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the
other information contained in this Annual Report on Form 10-K, before making a decision to invest in our securities. If any of
the following events occur, our business, financial condition and operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you could lose all or part of your investment.
We
have no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We
were incorporated under the laws of the Cayman Islands in 2017 and have no operating results. Because we lack an operating history,
you have no basi
s upon which to evaluate our ability to achieve our business objective of completing our Business Combination
with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning
a Business Combination and may be unable to complete our Business Combination. If we fail to complete our Business Combination,
we will never generate any operating revenues.
Our public shareholders may not be
afforded an opportunity to vote on our proposed Business Combination, which means we may complete our Business Combination even
though a majority of our public shareholders do not support such a combination.
We may not hold a
shareholder vote to approve our Business Combination unless the Business Combination would require shareholder approval under applicable
law or stock exchange rules or if we decide to hold a shareholder vote for business or other reasons. For instance, the rules of
the NYSE 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 seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration
in any Business Combination. Therefore, if we were structuring a Business Combination that required us to issue more than 20% of
our issued and outstanding shares, we would seek shareholder approval of such Business Combination. However, except as required
by applicable law or stock exchange rules, the decision as to whether we will seek shareholder approval of a proposed Business
Combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would
otherwise require us to seek shareholder approval. Accordingly, we may consummate our Business Combination even if holders of a
majority of the issued and outstanding ordinary shares do not approve of the Business Combination we consummate. Please refer to
"Item 1. Business – Shareholders May Not Have the Ability to Approve Our Business Combination" for additional information.
If we seek shareholder approval of
our Business Combination, our Initial Shareholders, officers and directors have agreed to vote in favor of such Business Combination,
regardless of how our public shareholders vote.
Unlike some other blank
check companies in which the Initial Shareholders agree to vote their founder shares in accordance with the majority of the votes
cast by the public shareholders in connection with Business Combination, our Initial Shareholders have agreed (and their permitted
transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares and any
Public Shares held by them in favor of our Business Combination. As a result, in addition to our Initial Shareholders’ Founder
Shares, we would need 25,875,001, or 37.5%, of the 69,000,000 issued and outstanding Public Shares to be voted in favor of a transaction
(assuming all issued and outstanding ordinary shares are voted) in order to have such Business Combination approved. Our directors
and officers have entered into letter agreements similar to the one signed by our Initial Shareholders with respect to public shares
acquired by them, if any. We expect that our Initial Shareholders and their permitted transferees will own at least 20% of our
issued and outstanding ordinary shares at the time of any such shareholder vote. Accordingly, if we seek shareholder approval of
our Business Combination, it is more likely that the necessary shareholder approval will be received than would be the case if
such persons agreed to vote their founder shares in accordance with the majority of the votes cast by our public shareholders.
Your only opportunity to effect the
investment decision regarding a potential Business Combination will be limited to the exercise of your right to redeem your shares
from us for cash, unless we seek shareholder approval of such Business Combination.
Since our Board of Directors
may complete a Business Combination without seeking shareholder approval, public shareholders may not have the right or opportunity
to vote on the Business Combination, unless we seek such shareholder approval. Accordingly, if we do not seek shareholder approval,
your only opportunity to effect the investment decision regarding a potential Business Combination may be limited to exercising
your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents
mailed to our public shareholders in which we describe our Business Combination.
The ability of our public shareholders
to redeem their shares for cash may make our financial condition unattractive to potential Business Combination targets, which
may make it difficult for us to enter into a business combination with a target.
We may seek to enter
into a Business Combination transaction agreement with a prospective target that requires as a closing condition that we have a
minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not be
able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination. Furthermore,
in no event will we redeem our Public Shares in an amount that would cause our net tangible assets, after payment of the deferred
underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock”
rules), or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our Business Combination.
Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001
or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and
the related Business Combination and may instead search for an alternate Business Combination. Prospective targets will be aware
of these risks and, thus, may be reluctant to enter into a Business Combination transaction with us.
The ability of our public shareholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable Business
Combination or optimize our capital structure.
At the time we enter
into an agreement for our Business Combination, we will not know how many shareholders may exercise their redemption rights and,
therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the
purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the
Trust Account to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares is submitted
for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash
in the trust account or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity
issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to
complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public shareholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our Business Combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our Business Combination
agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum
amount of cash at closing, the probability that our Business Combination would be unsuccessful increases. If our Business Combination
is unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate the Trust Account. If you
are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares
may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss
on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to
sell your shares in the open market.
The requirement that we complete
our Business Combination within the prescribed time frame may give potential target businesses leverage over us in negotiating
a Business Combination and may limit the time we have in which to conduct due diligence on potential Business Combination targets,
in particular as we approach our dissolution deadline, which could undermine our ability to complete our Business Combination on
terms that would produce value for our shareholders.
Any potential target
business with which we enter into negotiations concerning a Business Combination will be aware that we must complete our Business
Combination within 24 months from the Close Date. Consequently, such target business may obtain leverage over us in negotiating
a Business Combination, knowing that if we do not complete our Business Combination with that particular target business, we may
be unable to complete our Business Combination with any target business. This risk will increase as we get closer to the end of
the 24-month period. In addition, we may have limited time to conduct due diligence and may enter into our Business Combination
on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our
Business Combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding
up and we would redeem our Public Shares and liquidate, in which case our public shareholders may receive only $10.00 per share,
or less than such amount in certain circumstances, and our warrants will expire worthless.
Our Sponsor, officers
and directors have agreed that we must complete our Business Combination within 24 months from the Close Date. We may not be able
to find a suitable target business and complete our Business Combination within such time period. Our ability to complete our Business
Combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks
described herein.
If we have not completed
our Business Combination within such time period, we will: (1) cease all operations except for the purpose of winding up; (2) as
promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of
interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including
the right to receive further liquidating distributions, if any), subject to applicable law; and (3) 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 Cayman Islands law to provide for claims of creditors and the requirements of other
applicable law. In such case, our public shareholders may receive only $10.00 per share, or less than $10.00 per share, on the
redemption of their shares, and our warrants will expire worthless.
If we seek shareholder approval of
our Business Combination, our Sponsor, directors, officers, advisors or any of their affiliates may elect to purchase shares from
public shareholders, which may influence a vote on a proposed Business Combination and reduce the public “float” of
our ordinary shares.
If we seek shareholder
approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant to
the tender offer rules, our Sponsor, directors, officers, advisors or any of their affiliates may purchase shares in privately
negotiated transactions or in the open market either prior to or following the completion of our Business Combination, although
they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although
still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. In the event that our Sponsor, directors, officers, advisors or any of their affiliates purchase shares in privately negotiated
transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would
be required to revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different
than the amount per share a public shareholder would receive if it elected to redeem its shares in connection with our Business
Combination. The purpose of such purchases could be to vote such shares in favor of our Business Combination and thereby increase
the likelihood of obtaining shareholder approval of our Business Combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our Business Combination,
where it appears that such requirement would otherwise not be met. This may result in the completion of our Business Combination
that may not otherwise have been possible.
In addition, if such
purchases are made, the public “float” of our ordinary shares and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national
securities exchange.
If a shareholder fails to receive
notice of our offer to redeem our Public Shares in connection with our Business Combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with
the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our Business Combination.
Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable,
such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy
materials, as applicable, that we will furnish to holders of our Public Shares in connection with our Business Combination will
describe the various procedures that must be complied with in order to validly tender or redeem Public Shares. In the event that
a shareholder fails to comply with these procedures, its shares may not be redeemed.
You will not have any rights or interests
in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be
forced to sell your Public Shares or Warrants, potentially at a loss.
Our public shareholders
will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (1) the completion of our Business
Combination; (2) the redemption of any Public Shares properly tendered in connection with a shareholder vote to amend our amended
and restated memorandum and articles of association to modify the substance or timing of our obligation to redeem 100% of our Public
Shares if we do not complete our Business Combination within 24 months from the Close Date; and (3) the redemption of all of our
Public Shares if we are unable to complete our Business Combination within 24 months from the Close Date, subject to applicable
law and as further described herein. In no other circumstances will a public shareholder have any right or interest of any kind
in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or Warrants, potentially
at a loss.
The NYSE may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us
to additional trading restrictions.
We cannot assure you
that our securities will continue to be listed on the NYSE in the future or prior to our Business Combination. In order to continue
listing our securities on the NYSE prior to our Business Combination, we must maintain certain financial, distribution and share
price levels. Generally, we must maintain a minimum number of holders of our securities. Additionally, in connection with our Business
Combination, we will be required to demonstrate compliance with the NYSE’s initial listing requirements, which are more rigorous
than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE.
For instance, our share price would generally be required to be at least $4 per share. We cannot assure you that we will be able
to meet those initial listing requirements at that time.
If the NYSE delists
any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because our Units, Class A ordinary shares and Warrants
are listed on the NYSE, our Units, Class A ordinary shares and Warrants will qualify as covered securities under such statute.
Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate
companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or
bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit
or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators
view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as
covered securities under such statute and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Because we have net
tangible assets in excess of $5,000,000 and timely filed a Current Report on Form 8-K after the Close Date, including an audited
balance sheet of the Company demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among
other things, this means our units will be immediately tradable and we will have a longer period of time to complete our Business
Combination than do companies subject to Rule 419. Moreover, if we were subject to Rule 419, that rule would prohibit the release
of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to
us in connection with our completion of a Business Combination.
If we seek shareholder approval of
our Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such
shares in excess of 15% of our Class A ordinary shares.
If we seek shareholder
approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant to
the tender offer rules, our amended and restated memorandum and articles of association will provide that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in the Public Offering, which we refer to as the “Excess Shares.” However, we
would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our
Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our Business
Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our Business Combination.
And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be
required to sell your shares in open market transactions, potentially at a loss.
Because of our limited resources
and the significant competition for Business Combination opportunities, it may be more difficult for us to complete our Business
Combination. If we are unable to complete our Business Combination, our public shareholders may receive only approximately $10.00
per share, or less in certain circumstances, on our redemption of their shares, and our Warrants will expire worthless.
We expect to encounter
intense competition from other entities having a business objective similar to ours, including private investors (which may be
individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to
various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there are numerous target businesses we could potentially acquire with the net proceeds of our Public Offering and the
sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that
are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek shareholder approval of our Business
Combination and we are obligated to pay cash for our Class A ordinary shares, it will potentially reduce the resources available
to us for our Business Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating
a Business Combination. If we are unable to complete our Business Combination, our public shareholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
See "—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share
redemption amount received by shareholders may be less than $10.00 per share" and other risk factors herein.
If the funds not being held in the
Trust Account are insufficient to allow us to operate for at least the 24 months after the Close Date, we may be unable to complete
our Business Combination.
The funds
available to us outside of the Trust Account may not be sufficient to allow us to operate for at least the 24 months after
the Close Date, assuming that our Business Combination is not completed during that time. We expect to incur significant
costs in pursuit of our acquisition plans. However, our affiliates are not obligated to make loans to us in the future (other than our Sponsor's commitment to provide us an aggregate of $200,000 in loans in order to finance transaction costs
in connection with a Business Combination), and
we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in
the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We believe
that, as of December 31, 2018, the funds available to us outside of the Trust Account as well as funds available pursuant
to commitment letters from the Sponsor of up to an aggregate of $200,000, will be sufficient to allow us to operate until
September 18, 2019, which is the date 24 months from the Close Date; however, we cannot assure you that our estimate is
accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to
assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a
“no-shop” provision (a provision in letters of intent designed to keep target businesses from
“shopping” around for transactions with other companies or investors on terms more favorable to such target
businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do
so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were
subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete
our Business Combination, our public shareholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless. See "—If third
parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by shareholders may be less than $10.00 per share" and other risk factors herein.
If the funds not being held in the
Trust Account are insufficient, it could limit the amount available to fund our search for a target business or businesses and
complete our Business Combination and we will depend on loans from our Sponsor or management team to fund our search, to pay our
taxes and to complete our Business Combination.
Of the
net proceeds of the Public Offering and the sale of the Private Placement Warrants, only $462,162 is available to us as
of December 31, 2018 outside the Trust Account to fund our working capital requirements, in addition to the the
Sponsor commitment of up to an aggregate of $200,000. In the event that such amount is insufficient to fund our search for a
target business and to consummate a Business Combination we may seek additional capital. If we are required to
seek additional capital, we would need to borrow funds from our Sponsor, management team or other third parties to operate or
may be forced to liquidate. Other than the Sponsor commitment for an aggregate of $200,000, none of our Sponsor, members of
our management team or any of their affiliates is under any obligation to loan funds to us in such circumstances. Any such
loans would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our
Business Combination. We do not expect to seek loans from parties other than our Sponsor, an affiliate of our Sponsor or
certain of our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and
provide a waiver against any and all rights to seek access to funds in our Trust Account. If we are unable to complete our
Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. Consequently, our public shareholders may only receive $10.00 per share, or possibly less than
$10.00 per share, on our redemption of our Public Shares and our Warrants will expire worthless. See "—If third
parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by shareholders may be less than $10.00 per share" and other risk factors herein.
Subsequent to our completion of our
Business Combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other
charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities,
which could cause you to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues
that may be present with a particular target business that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a
target business or by virtue of our obtaining post-combination debt financing. Accordingly, any shareholder or warrant holder who
chooses to remain a shareholder or warrant holder following our Business Combination could suffer a reduction in the value of their
securities. Such shareholders and warrant holders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be
less than $10.00 per share.
Our placing of funds
in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors,
service providers (other than our independent auditors), prospective target businesses 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, such parties may not execute such agreements, or even if they execute such agreements
they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account.
If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management
will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed
a waiver only if management believes that such third party’s engagement would be significantly more beneficial to us than
any alternative.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason.
Upon redemption of our Public Shares, if we are unable to complete our Business Combination within the prescribed timeframe, or
upon the exercise of a redemption right in connection with our Business Combination, we will be required to provide for payment
of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly,
the per-share redemption amount received by public shareholders could be less than the $10.00 per share initially held in the Trust
Account, due to claims of such creditors.
Our Sponsor has agreed
that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors) for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (1) $10.00 per public share or (2) such lesser amount per public share
held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver
of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of
this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability
for such third party claims. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity
obligations and believe that our Sponsor’s only assets are securities of our company. Our Sponsor may not have sufficient
funds available to satisfy those obligations. We have not asked our Sponsor to reserve for such obligations, and therefore, no
funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the
trust account, the funds available for our Business Combination and redemptions could be reduced to less than $10.00 per public
share. In such event, we may not be able to complete our Business Combination, and you would receive such lesser amount per share
in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third
parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available
for distribution to our public shareholders.
In the event that the
proceeds in the Trust Account are reduced below the lesser of (1) $10.00 per public share or (2) such lesser amount per share held
in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account
available for distribution to our public shareholders may be reduced below $10.00 per share.
If, after we distribute the proceeds
in the Trust Account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us
to claims of punitive damages.
If, after we distribute
the proceeds in the Trust Account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may
be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public shareholders
from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds
in the Trust Account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and
the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing
the proceeds in the Trust Account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders.
To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation would be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities;
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each of which may make it difficult for us to complete our initial
business combination.
In addition, we may have imposed upon us
burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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We do not believe that
our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the Trust Account may
be invested by the trustee only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds
investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the
investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption
provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act,
compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and
may hinder our ability to complete a business combination. If we are unable to complete our Business Combination, our public shareholders
may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and
our Warrants will expire worthless.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our Business Combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
If we are unable to consummate our
Business Combination within 24 months of the Close Date, our public shareholders may be forced to wait beyond such 24 months before
redemption from our Trust Account.
If we are unable to
consummate our Business Combination within 24 months after the Close Date, we will distribute the aggregate amount then on deposit
in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall
be net of taxes payable), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes
of winding up of our affairs, as further described herein. Any redemption of public shareholders from the Trust Account shall be
effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding
up. If we are required to windup, liquidate the Trust Account and distribute such amount therein, pro rata, to our public shareholders,
as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of
the Companies Law. In that case, investors may be forced to wait beyond the initial 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 Business Combination prior thereto and then only 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 Business
Combination.
Our shareholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to
enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was
proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due
in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders.
Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted
in bad faith, and thereby exposing themselves and our company to claims, by paying public shareholders from the Trust Account prior
to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and
our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium
account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence
and may be liable to a fine of up to approximately $18,300 and to imprisonment for five years in the Cayman Islands.
We may not hold an annual meeting
of shareholders until after the consummation of our Business Combination. Our public shareholders will not have the right to elect
directors prior to the consummation of our Business Combination.
There is no
requirement under the Companies Law for us to hold annual or general meetings to elect directors and we may not hold an
annual meeting of shareholders until after we consummate our Business Combination (unless required by the NYSE). Until we
hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to discuss company affairs
with management. In addition, as holders of our Class A ordinary shares, our public shareholders will not have the right to
vote on the election of directors prior to consummation of our Business Combination.
We have not registered the Class
A ordinary shares issuable upon exercise of the Warrants under the Securities Act or any state securities laws at this time, and
such registration may not be in place when an investor desires to exercise Warrants, thus precluding such investor from being able
to exercise its Warrants except on a cashless basis and potentially causing such Warrants to expire worthless.
We have not registered
the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this
time. However, under the terms of the Warrant agreement, we have agreed, as soon as practicable, but in no event later than 15
business days after the closing of our Business Combination, to use our best efforts to file a registration statement under the
Securities Act covering the issuance of such shares and maintain a current prospectus relating to the Class A ordinary shares issuable
upon exercise of the Warrants, until the expiration of the Warrants in accordance with the provisions of the Warrant agreement.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change
in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by
reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the Warrants
are not registered under the Securities Act, we will be required to permit holders to exercise their Warrants on a cashless basis.
However, no Warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class
A ordinary shares are at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require
holders of public Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange
for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under applicable state
securities laws and no exemption is available. If the issuance of the shares upon exercise of the Warrants is not so registered
or qualified or exempt from registration or qualification, the holder of such Warrant shall not be entitled to exercise such Warrant
and such Warrant may have no value and expire worthless. In such event, holders who acquired their Warrants as part of a purchase
of units will have paid the full unit purchase price solely for the Class A ordinary shares included in the units. If and when
the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
Class A ordinary shares for sale under all applicable state securities laws.
The grant of registration rights
to our Initial Shareholders and their permitted transferees may make it more difficult to complete our Business Combination, and
the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to an agreement
entered into at the Close Date, our Initial Shareholders and their permitted transferees can demand that we register the resale
of their founder shares after those shares convert to our Class A ordinary shares at the time of our Business Combination. In addition,
our Sponsor and its permitted transferees can demand that we register the resale of the Private Placement Warrants and the Class
A ordinary shares issuable upon exercise of the Private Placement Warrants, and holders of warrants that may be issued upon conversion
of working capital loans may demand that we register the resale of such warrants or the Class A ordinary shares issuable upon exercise
of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares.
In addition, the existence of the registration rights may make our Business Combination more costly or difficult to conclude. This
is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market price of our Class A ordinary shares that is expected when the ordinary
shares owned by our Initial Shareholders or their permitted transferees, our private placement warrants or warrants issued in connection
working capital loans are registered for resale.
Because we are not limited to a particular
industry or any specific target businesses with which to pursue our Business Combination, you will be unable to ascertain the merits
or risks of any particular target business’s operations.
Although we expect to
focus our search for a target business in the technology industry, we may seek to complete a Business Combination with an operating
company in any industry or sector. However, we will not, under our amended and restated memorandum and articles of association,
be permitted to effectuate our Business Combination with another blank check company or similar company with nominal operations.
To the extent we complete our Business Combination, we may be affected by numerous risks inherent in the business operations with
which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of
sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment
in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in a business combination target. Accordingly, any shareholder who chooses to remain a shareholder following our initial business
combination could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such
reduction in value.
Past performance by our management
team and their affiliates may not be indicative of future performance of an investment in the Company.
Information regarding
performance by our management team and their affiliates, including Social Capital and Hedosophia, is presented for informational
purposes only. Past performance by our management team and their affiliates, including Social Capital and Hedosophia, is not a
guarantee either (1) that we will be able to identify a suitable candidate for our initial business combination or (2) of success
with respect to any business combination we may consummate. You should not rely on the historical record of our management team
or their affiliates, including Social Capital and Hedosophia, or any related investment’s performance as indicative of our
future performance of an investment in the company or the returns the company will, or is likely to, generate going forward.
We may seek acquisition opportunities
outside the technology industries, which may be outside of our management’s areas of expertise.
We will consider a Business
Combination outside the technology industries, which may be outside of our management’s areas of expertise, if a Business
Combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for
our company. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding
the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire.
As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors relevant to such
acquisition. Accordingly, any shareholder who chooses to remain a shareholder following our Business Combination could suffer a
reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our Business
Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter
into our Business Combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our Business Combination will not have all of these positive attributes. If we complete our Business Combination
with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination
with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide
to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval of
our Business Combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our Business Combination, our public shareholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our Trust Account and our warrants will expire worthless.
We may seek acquisition opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete
our Business Combination with an early stage company, a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These
risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues
or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess
all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks
may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business.
We are not required to obtain an
opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our
Business Combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking
firm that is a member of FINRA, or from an independent accounting firm, that the price we are paying is fair to our company from
a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our Board of Directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our Business Combination.
We may issue additional Class A ordinary
shares or preferred shares to complete our Business Combination or under an employee incentive plan after completion of our Business
Combination. We may also issue Class A ordinary shares upon the conversion of the Class B ordinary shares at a ratio greater than
one-to-one at the time of our Business Combination as a result of the anti-dilution provisions contained in our amended and restated
memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other
risks.
Our amended and
restated memorandum and articles of association authorizes the issuance of up to 500,000,000 Class A ordinary shares, par
value $0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 5,000,000 undesignated
preferred shares, par value $0.0001 per share. At December 31, 2017, there were 400,000,000 and 32,750,000 authorized but
unissued Class A and Class B ordinary shares available, respectively, for issuance, which amount takes into account shares
reserved for issuance upon exercise of outstanding warrants but not upon conversion of the Class B ordinary shares. Class B
ordinary shares are convertible into Class A ordinary shares, initially at a one-for-one ratio but subject to adjustment as
set forth herein. At December 31, 2017, there were no preferred shares issued and outstanding.
We may issue a substantial
number of additional ordinary shares, and may issue preferred shares, in order to complete our Business Combination or under an
employee incentive plan after completion of our Business Combination. We may also issue Class A ordinary shares upon conversion
of the Class B ordinary shares at a ratio greater than one-to-one at the time of our Business Combination as a result of the anti-dilution
provisions contained in our amended and restated memorandum and articles of association. However, our amended and restated memorandum
and articles of association will provide, among other things, that prior to our Business Combination, we may not issue additional
ordinary shares that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote on any Business
Combination. The issuance of additional ordinary shares or preferred shares:
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may significantly dilute the equity interest of investors in this offering;
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may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;
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could cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, ordinary shares and/or warrants.
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We may be a passive foreign investment
company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for
any taxable year (or portion thereof) that is included in the holding period of a beneficial owner of our Class A ordinary shares
or Warrants who or that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States,
(ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws
of the United States, any state thereof or the District of Columbia or (iii) an estate or trust the income of which is includible
in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust if (A) a court within the United
States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust or (B) it has in effect a valid election to be treated as a U.S. person (a “U.S.
holder”), such U.S. holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional
reporting requirements. Based on the composition of our income and assets, we believe we may have been a PFIC for our taxable year
ending December 31, 2018. Our PFIC status for subsequent taxable years will depend on the composition of our income and assets
in such subsequent taxable years and will not be known until after the end of such subsequent taxable years. Upon request, we will
endeavor to provide to a U.S. holder such information as the Internal Revenue Service may require, including a PFIC annual information
statement, in order to enable the U.S. holder to make and maintain a “qualified electing fund” election, but there
can be no assurance that we will timely provide such required information, and such election would be unavailable with respect
to our Warrants in all cases. We urge U.S. holders to consult their own tax advisors regarding the possible application of the
PFIC rules.
We may reincorporate in another jurisdiction
in connection with our Business Combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection
with our Business Combination and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction
in which the target company or business is located or in another jurisdiction. The transaction may require a shareholder to recognize
taxable income in the jurisdiction in which the shareholder is a tax resident or in which its members are resident if it is a tax
transparent entity. We do not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject
to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
Resources could be wasted in researching
acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we are unable to complete our Business Combination, our public shareholders may receive only approximately
$10.00 per share, or less than such amount in certain circumstances, on the liquidation of our Trust Account and our warrants will
expire worthless.
We anticipate that the
investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and
others. If we decide not to complete a specific Business Combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete
our Business Combination for any number of reasons including those beyond our control. Any such event will result in a loss to
us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with
another business. If we are unable to complete our Business Combination, our public shareholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
We are dependent upon our officers
and directors and their departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and in particular, Chamath Palihapitiya, Chairman of our board of directors and our
Chief Executive Officer, and Ian Osbourne, our President and one of our directors. We believe that our success depends on the continued
service of our officers and directors, at least until we have completed our Business Combination. In addition, our officers and
directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest
in allocating their time among various business activities, including identifying potential Business Combinations and monitoring
the related due diligence. Moreover, certain of our officers and directors have time and attention requirements for investment
funds of which affiliates of our Sponsor are the investment managers. We do not have an employment agreement with, or key-man insurance
on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers
could have a detrimental effect on us.
Our ability to successfully effect
our 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 Business Combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully
effect our Business Combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior
management or advisory positions following our Business Combination, it is likely that some or all of the management of the target
business will remain in place. While we intend to closely scrutinize any individuals we engage after our Business Combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with
the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping
them become familiar with such requirements.
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 Business Combination and as a result, may cause them to have conflicts of interest
in determining whether a particular Business Combination is the most advantageous.
Our key personnel may
be able to remain with the Company after the completion of our Business Combination only if they are able to negotiate employment
or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the
negotiation of the Business Combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the Business Combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business, subject to his or
her fiduciary duties under Cayman Islands law. However, we believe the ability of such individuals to remain with us after the
completion of our Business Combination will not be the determining factor in our decision as to whether or not we will proceed
with any potential Business Combination. There is no certainty, however, that any of our key personnel will remain with us after
the completion of our Business Combination. We cannot assure you that any of our key personnel will remain in senior management
or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the
time of our Business Combination.
We may have limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the
desirability of effecting our Business Combination with a prospective target business, our ability to assess the target business’s
management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s
management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected.
Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, shareholders who choose
to remain shareholders following our Business Combination could suffer a reduction in the value of their securities. Such shareholders
are unlikely to have a remedy for such reduction in value.
The officers and directors
of an acquisition candidate may resign upon completion of our Business Combination. The departure of a Business Combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition
candidate’s key personnel upon the completion of our Business Combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition
candidate following our Business Combination, it is possible that members of the management of an acquisition candidate will not
wish to remain in place.
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 complete our Business Combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have
any full-time employees prior to the completion of our Business Combination. Each of our officers is engaged in several other business
endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific
number of hours per week to our affairs. In particular, certain of our executive officers and directors have fiduciary and contractual
duties to either Social Capital or Hedosophia and to certain companies in which either of them has invested, including companies
in industries we may target for our Business Combination. Our independent directors also serve as officers and board members for
other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of
time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs,
which may have a negative impact on our ability to complete our Business Combination.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity
should be presented.
Until we consummate
our Business Combination, we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsor
and officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business, and
they are not prohibited from sponsoring, or otherwise becoming involved with, other blank check companies prior to us completing
our Business Combination. Moreover, certain of our officers and directors have time and attention requirements for investment funds
of which affiliates of our Sponsor are the investment managers.
Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which
they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target
business may be presented to other entities prior to its presentation to us, subject to his or her fiduciary duties under Cayman
Islands law.
For a complete discussion
of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware
of, please see “Item 10. Directors, Executive Officers and Corporate Governance,” and “Item 13. Certain
Relationships and Related Transactions, and Director Independence.”
Our officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have
an interest. In fact, we may enter into a business combination with a target business that is affiliated with our Sponsor, our
directors or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have
a conflict between their interests and ours.
In particular, affiliates
of our Sponsor have invested in industries as diverse as healthcare, education, financial services, artificial intelligence and
social media. As a result, there may be substantial overlap between companies that would be a suitable Business Combination for
us and companies that would make an attractive target for such other affiliates.
We may engage in a Business Combination
with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers or directors
which may raise potential conflicts of interest.
In light of the involvement
of our Sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
sponsor, officers and directors. Our officers and directors also serve as officers and board members for other entities, including,
without limitation, those described at “Item 10. Directors, Executive Officers and Corporate Governance.” Such entities
may compete with us for Business Combination opportunities. Our Sponsor, officers and directors are not currently aware of any
specific opportunities for us to complete our Business Combination with any entities with which they are affiliated, and there
have been no preliminary discussions concerning a Business Combination with any such entity or entities. Although we will not be
specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we
determined that such affiliated entity met our criteria for a Business Combination and such transaction was approved by a majority
of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking
firm that is a member of FINRA, or from an independent accounting firm, regarding the fairness to our company from a financial
point of view of a Business Combination with one or more domestic or international businesses affiliated with our Sponsor, officers
or directors, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be
as advantageous to our public shareholders as they would be absent any conflicts of interest.
Since our Initial Shareholders will
lose their entire investment in us if our Business Combination is not completed, a conflict of interest may arise in determining
whether a particular Business Combination target is appropriate for our Business Combination.
In May 2017, our Sponsor
subscribed for an aggregate of 14,375,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.002 per
share (after giving effect to a surrender of shares by our Sponsor for no value on May 18, 2017 and a subsequent share capitalization
on August 23, 2017). On September 13, 2017, we effected a pro rata share capitalization resulting in an increase in the total number
of Founder Shares outstanding from 14,375,000 to 17,250,000 in order to maintain the ownership of our Initial Shareholders at 20%
of our issued and outstanding shares. In addition, our Sponsor purchased an aggregate of 8,000,000 Private Placement Warrants,
each exercisable for one Class A ordinary share, for a purchase price of $12,000,000 in the aggregate or $1.50 per warrant, that
will also be worthless if we do not complete a Business Combination. Each Private Placement Warrant may be exercised for one Class
A ordinary share at a price of $11.50 per share, subject to adjustment as provided herein.
The Founder Shares are
identical to the ordinary shares included in the Units except that: (1) holders of the Founder Shares have the right to vote on
the election of directors prior to our Business Combination; (2) the Founder Shares are subject to certain transfer restrictions;
(3) our Initial Shareholders have entered into a letter agreement with us, pursuant to which they have agreed (A) to waive their
redemption rights with respect to their Founder Shares and any Public Shares held by them in connection with the completion of
our Business Combination and (B) to waive their rights to liquidating distributions from the Trust Account with respect to their
Founder Shares if we fail to complete our Business Combination within 24 months after the Close Date, although they will be entitled
to liquidating distributions from the Trust Account with respect to any Public Shares they hold if we fail to complete our Business
Combination within the prescribed time frame; (4) the Founder Shares are automatically convertible into our Class A ordinary shares
at the time of our Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment
pursuant to certain anti-dilution rights, as described herein; and (5) the Founder Shares are entitled to registration rights.
In addition, our officers and directors have entered into letter agreements similar to the one signed by our Initial Shareholders
with respect to any public shares acquired by them, if any.
The personal and financial
interests of our Sponsor, officers and directors may influence their motivation in identifying and selecting a target Business
Combination, completing a Business Combination and influencing the operation of the business following the Business Combination.
This risk may become more acute as the 24-month anniversary of the Close Date nears, which is the deadline for the completion of
our Business Combination.
We may issue notes or other debt
securities, or otherwise incur substantial debt, to complete a Business Combination, which may adversely affect our leverage and
financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although we have no
commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise incur
outstanding debt, we may choose to incur substantial debt to complete our Business Combination. We have agreed that we will not
incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or
to the monies held in the Trust Account. As such, no issuance of debt will affect the per-share amount available for redemption
from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after a 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;
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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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our inability to pay dividends on our ordinary shares;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We may be able to complete only one
Business Combination with the proceeds of our Public Offering and the sale of the Private Placement Warrants, which will cause
us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
We may effectuate our
Business Combination with a single target business or multiple target businesses simultaneously or within a short period of time.
However, we may not be able to effectuate our Business Combination with more than one target business because of various factors,
including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated
on a combined basis. By completing our Business Combination with only a single entity our lack of diversification may subject us
to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from
the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our Business Combination.
We may attempt to simultaneously
complete Business Combinations with multiple prospective targets, which may hinder our ability to complete our Business Combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase
of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult
for us, and delay our ability, to complete our Business Combination. With multiple business combinations, we could also face additional
risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if
there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could
negatively impact our profitability and results of operations.
We may attempt to complete our Business
Combination with a private company about which little information is available, which may result in a Business Combination with
a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition
strategy, we may seek to effectuate our Business Combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential Business Combination
on the basis of limited information, which may result in a Business Combination with a company that is not as profitable as we
suspected, if at all.
Our management may not be able to
maintain control of a target business after our Business Combination. We cannot provide assurance that, upon loss of control of
a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our
Business Combination so that the post-transaction company in which our public shareholders own shares will own less than 100% of
the equity interests or assets of a target business, but we will complete such a Business Combination only if the post-transaction
company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act.
We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of
the voting securities of the target, our shareholders prior to our 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 issued and 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 issued and outstanding ordinary shares subsequent to such transaction. In addition, other
minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of
the company’s 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.
We do not have a specified maximum
redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a business combination
with which a substantial majority of our shareholders do not agree.
Our amended and restated
memorandum and articles of association will not provide a specified maximum redemption threshold, except that in no event will
we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions,
to be less than $5,000,001 (such that we do not then become subject to the SEC’s “penny stock” rules), or any
greater net tangible asset or cash requirement that may be contained in the agreement relating to our Business Combination. As
a result, we may be able to complete our Business Combination even though a substantial majority of our public shareholders do
not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our Business Combination and
do not conduct redemptions in connection with our Business Combination pursuant to the tender offer rules, have entered into privately
negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or any of their affiliates. In the event
the aggregate cash consideration we would be required to pay for all ordinary shares that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the Business Combination or redeem any shares, all ordinary shares submitted
for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
The exercise price for the Warrants
is higher than in some other blank check company offerings in the past, and, accordingly, the warrants are more likely to expire
worthless.
The exercise price of
the Warrants is higher than in some other blank check companies in the past. For example, historically, the exercise price of a
warrant was generally a fraction of the purchase price of the units in the Public Offering. The exercise price for our Warrants
is $11.50 per share, subject to adjustment as provided herein. As a result, the Warrants are more likely to expire worthless.
In order to effectuate a Business
Combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments.
We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing
instruments in a manner that will make it easier for us to complete our Business Combination that some of our shareholders may
not support.
In order to effectuate
a Business Combination, blank check companies have, in the past, amended various provisions of their charters and modified governing
instruments. For example, blank check companies have amended the definition of Business Combination, increased redemption thresholds
and changed industry focus. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles
of association or governing instruments in order to effectuate our Business Combination, though amending our amended and restated
memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman Islands
law.
Certain provisions of our amended
and restated memorandum and articles of association that relate to our pre-Business Combination activity (and corresponding provisions
of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of at least
two-thirds of our ordinary shares who attend and vote in a general meeting, which is a lower amendment threshold than that of some
other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association
and the trust agreement to facilitate the completion of a Business Combination that some of our shareholders may not support.
Some other blank check
companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate
to a company’s pre-business combination activity, without approval by holders of a certain percentage of the company’s
shares. In those companies, amendment of these provisions typically requires approval by holders holding between 90% and 100% of
the company’s public shares. Our amended and restated memorandum and articles of association will provide that any of its
provisions (other than amendments relating to the appointment of directors, which require the approval of a majority of at least
90% of our ordinary shares voting in a general meeting), including those related to pre-Business Combination activity (including
the requirement to deposit proceeds of our Public Offering and the Private Placement Warrants into the Trust Account and not release
such amounts except in specified circumstances), may be amended if approved by holders of at least two-thirds of our ordinary shares
who attend and vote in a general meeting, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our ordinary shares. Our Initial Shareholders, who will collectively
beneficially own 20% of our ordinary shares, may participate in any vote to amend our amended and restated memorandum and articles
of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able
to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-Business Combination
behavior more easily than some other blank check companies, and this may increase our ability to complete our Business Combination
with which you do not agree. In certain circumstances, our shareholders may pursue remedies against us for any breach of our amended
and restated memorandum and articles of association.
We may be unable to obtain additional
financing to complete our Business Combination or to fund the operations and growth of a target business, which could compel us
to restructure or abandon a particular Business Combination.
Although we believe
that the net proceeds of our Public Offering and the sale of the Private Placement Warrants will be sufficient to allow us to complete
our Business Combination, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our
Public Offering and the sale of the Private Placement Warrants prove to be insufficient, either because of the size of our Business
Combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant
number of shares from shareholders who elect redemption in connection with our Business Combination or the terms of negotiated
transactions to purchase shares in connection with our Business Combination, we may be required to seek additional financing or
to abandon the proposed Business Combination. We cannot assure you that such financing will be available on acceptable terms, if
at all. To the extent that additional financing proves to be unavailable when needed to complete our Business Combination, we would
be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target
business candidate. In addition, even if we do not need additional financing to complete our Business Combination, we may require
such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a
material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders
is required to provide any financing to us in connection with or after our Business Combination. If we are unable to complete our
Business Combination, our public shareholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our Trust Account, and our Warrants will expire worthless.
Our Initial Shareholders will control
the election of our board of directors until consummation of our Business Combination and will hold a substantial interest in us.
As a result, they will elect all of our directors and may exert a substantial influence on actions requiring shareholder vote,
potentially in a manner that you do not support.
Upon the closing of
our Public Offering, our Initial Shareholders owned 20% of our issued and outstanding ordinary shares. In addition, the Founder
Shares, all of which are held by our Initial Shareholders, will entitle the holders to elect all of our directors prior to our
Business Combination. Holders of our Public Shares will have no right to vote on the election of directors during such time. These
provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed
by a majority of at least 90% of our ordinary shares voting in a general meeting. As a result, you will not have any influence
over the election of directors prior to our Business Combination.
Neither our Initial
Shareholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities,
other than as disclosed in this Annual Report. Factors that would be considered in making such additional purchases would include
consideration of the current trading price of our Class A ordinary shares. In addition, as a result of their substantial ownership
in our company, our Initial Shareholders may exert a substantial influence on other actions requiring a shareholder vote, potentially
in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association and
approval of major corporate transactions. If our Initial Shareholders purchase any additional ordinary shares in the aftermarket
or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, our Initial Shareholders
will exert significant influence over actions requiring a shareholder vote at least until the completion of our Business Combination.
We may amend the terms of the Warrants
in a manner that may be adverse to holders of public Warrants with the approval by the holders of at least 65% of the then outstanding
Warrant included in the Public Units.
Our Warrants were issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding Warrant included
in the Public Units to make any change that adversely affects the interests of the registered holders of public Warrants. Accordingly,
we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding
Warrant included in the Public Units approve of such amendment. Although our ability to amend the terms of the Warrants with the
consent of at least 65% of the then outstanding Warrants included in the Public Units is unlimited, examples of such amendments
could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease
the number of ordinary shares purchasable upon exercise of a Warrant.
We may redeem your unexpired Warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.
We have the ability
to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant; provided that the last reported sales price of our Class A ordinary shares equals or exceeds $18.00 per share (as adjusted
for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20
trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption
to the Warrant holders. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable
to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding
Warrants could force you to: (1) exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so; (2) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants;
or (3) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to
be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by us so
long as they are held by our Sponsor or its permitted transferees.
Our warrants and founder shares may
have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our Business
Combination.
In connection with our
Public Offering, we issued Warrants to purchase 23,000,000 Class A ordinary shares and an aggregate of 8,000,000 Private Placement
Warrants, each exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as provided
herein. Our Initial Shareholders currently hold 17,250,000 Founder Shares. The Founder Shares are convertible into Class A ordinary
shares on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our Sponsor, an affiliate of our Sponsor
or certain of our officers and directors make any working capital loans, up to $1,500,000 of such loans may be converted into warrants,
at the price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.
To the extent we issue Class A ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial
number of additional Class A ordinary shares upon exercise of these warrants or conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding Class A ordinary
shares and reduce the value of the Class A ordinary shares issued to complete the business transaction. Therefore, our Warrants
and Founder Shares may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target
business.
The Private Placement
Warrants are identical to the Warrants sold as part of the Units in our Public Offering except that, so long as they are held by
our Sponsor or its permitted transferees: (1) they will not be redeemable by us; (2) they (including the Class A ordinary shares
issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our
Sponsor until 30 days after the completion of our Business Combination; (3) they may be exercised by the holders on a cashless
basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.
Because each unit contains one-third
of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-third
of one Warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the Units, and only
whole Units will trade. This is different from other offerings similar to ours whose units include one Class A ordinary share and
one whole warrant to purchase one share. We have established the components of the Units in this way in order to reduce the dilutive
effect of the Warrants upon completion of a Business Combination since the Warrants will be exercisable in the aggregate for a
third of the number of shares compared to units that each contain a whole Warrant to purchase one share, thus making us, we believe,
a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our Units to be worth less
than if they included a Warrant to purchase one whole share.
Because we must furnish our shareholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous Business Combination with
some prospective target businesses.
The federal proxy rules
require that a proxy statement with respect to a vote on a Business Combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards
Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance
with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements
may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements
in time for us to disclose such financial statements in accordance with federal proxy rules and complete our Business Combination
within the prescribed time frame.
We are an emerging growth company
and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive
to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of any second quarter
of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict
whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our
securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than
they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities
may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for
public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accountant standards used.
Additionally, we are
a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock
held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceeded $100 million during
such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior
June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial
statements with other public companies difficult or impossible.
Compliance obligations under the
Sarbanes-Oxley Act may make it more difficult for us to effectuate our Business Combination, require substantial financial and
management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the
year ended December 31, 2018. 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 comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance
with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target
business with which we seek to complete our Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Because we are incorporated under
the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights
through the U.S. Federal courts may be limited.
We are an exempted company
incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process
within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our
directors or officers.
Our corporate affairs
will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented
or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors,
actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large
extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively
limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive
authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities
of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions
in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States,
and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition,
Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We have been advised
by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (1) to recognize or enforce against us judgments
of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States
or any state; and (2) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil
liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those
provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments
obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign
court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court
imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are
met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated
sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same
matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural
justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public
policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of
the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management,
members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
Provisions in our amended and restated
memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to
pay in the future for our Class A ordinary shares and could entrench management.
Our amended and restated
memorandum and articles of association will contain provisions that may discourage unsolicited takeover proposals that shareholders
may consider to be in their best interests. These provisions include two-year director terms and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and
may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
After our Business Combination, it
is possible 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 possible that
after our 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.
If we effect our Business Combination
with a company with operations or opportunities 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 Business
Combination with a company with operations or opportunities outside of the United States, we would be subject to any special considerations
or risks associated with companies operating in an international setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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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, including termination or reduction of tax and other incentives that the applicable government provides to domestic companies, and variations in tax laws as compared to the United States;
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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, natural disasters and wars;
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deterioration of political relations with the United States;
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obligatory military service by personnel; and
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government appropriation of assets.
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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, which may adversely impact
our results of operations and financial condition.
If our management following our Business
Combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws,
which could lead to various regulatory issues.
Following our Business
Combination, any or all of our management could resign from their positions as officers of the Company, and the management of the
target business at the time of the Business Combination could remain in place. Management of the target business may not be familiar
with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources
becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which
may adversely affect our operations.
After our Business Combination, substantially
all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations
in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic,
political, social and government policies, developments and conditions in the country in which we operate.
The economic, political
and social conditions, as well as government policies, of the country in which our operations are located could affect our business.
Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained
in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there
may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our Business Combination and if
we effect our Business Combination, the ability of that target business to become profitable.
Exchange rate fluctuations and 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, and 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 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 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.
We may face risks related to companies
in the technology industries.
Business combinations
with companies in the technology industries entail special considerations and risks. If we are successful in completing a Business
Combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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an inability to compete effectively in a highly competitive environment with many incumbents having substantially greater resources;
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an inability to manage rapid change, increasing consumer expectations and growth;
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an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty;
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a reliance on proprietary technology to provide services and to manage our operations, and the failure of this technology to operate effectively, or our failure to use such technology effectively;
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an inability to deal with our subscribers’ or customers’ privacy concerns;
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an inability to attract and retain subscribers or customers;
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an inability to license or enforce intellectual property rights on which our business may depend;
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any significant disruption in our computer systems or those of third parties that we would utilize in our operations;
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
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potential liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of materials that we may distribute;
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competition for advertising revenue;
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competition for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due to advances in technology and changes in consumer expectations and behavior;
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disruption or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,” misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events;
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an inability to obtain necessary hardware, software and operational support; and
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reliance on third-party vendors or service providers.
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Any of the foregoing
could have an adverse impact on our operations following a Business Combination. However, our efforts in identifying prospective
target businesses will not be limited to the technology industries. Accordingly, if we acquire a target business in another industry,
these risks we will be subject to risks attendant with the specific industry in which we operate or target business which we acquire,
which may or may not be different than those risks listed above.