Robert-Bosch-Str. 32-36,
72250
Freudenstadt, Germany
Tel: +49 7441 538 0

(Address, including Zip Code, and Telephone Number, including Area Code, of Principal Executive Offices)​

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer) ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.​

2.

Proposal No. 2 — Merger Proposal — A proposal, by a special resolution, to authorize and approve the Plan of Merger made in accordance with Part XVI of the Companies Act (As Revised) of the Cayman Islands (the “Plan of Merger”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex B, pursuant to which Pegasus will merge with Merger Sub, with Pegasus as the surviving company (the “Merger”); and

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3.

Proposal No. 3 — The Adjournment Proposal — A proposal, by an ordinary resolution, to approve the adjournment of the Extraordinary General Meeting to a later date or dates to be determined by the chairman of the Extraordinary General Meeting, if necessary or appropriate, either (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Merger Proposal or (ii) if holders of Class A ordinary shares, par value US$0.0001 each, of Pegasus (the “Pegasus Class A Ordinary Shares”) have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets. In either such case, the Adjournment Proposal will be the only proposal presented at the Extraordinary General Meeting.

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As further described in the accompanying proxy statement/prospectus, subject to the terms and conditions of the Business Combination Agreement, upon consummation of the Business Combination, among other things:

•

Pegasus shall sell TopCo to the shareholders of Schmid for nominal consideration;

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•

The shareholders of Schmid shall contribute their shares of Company Common Stock (as defined in the Business Combination Agreement) to TopCo in return for a number of TopCo Ordinary Shares equal to the equity value of Schmid divided by $10.10 (the “Exchange”);

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•

Pegasus will merge with Merger Sub, with Pegasus as the surviving company (the “Surviving Company”) in the Merger;

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•

In connection with the Merger, each issued and outstanding Eligible Pegasus Share will be automatically cancelled and extinguished in exchange for the Merger Consideration (as defined in the Business Combination Agreement) (together with the Merger, the “Business Combination”);

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•

Each outstanding public warrant of Pegasus to purchase a Pegasus Class A Ordinary Share (“Pegasus Public Warrants”) and each outstanding private warrant of Pegasus to purchase a Pegasus Class A Ordinary Share (“Pegasus Private Placement Warrants”) will, by its terms, convert into a warrant of TopCo (“TopCo Public Warrants” and “TopCo Private Placement Warrants”, respectively) to purchase one ordinary share A, nominal value EUR 0.01 per share of TopCo (“TopCo Ordinary Share”), on the same contractual terms and conditions as were in effect with respect to such warrants immediately prior to the closing of the Merger; and

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•

Immediately thereafter, a notarial deed will be executed by a Dutch notary in order to change the legal form of TopCo from a private limited liability company to a public limited liability company.

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In connection with the foregoing and concurrently with the execution of the Business Combination Agreement, Pegasus and TopCo entered into a letter agreement (the “Sponsor Agreement”) with Pegasus Digital Mobility Sponsor LLC (the “Sponsor”) and Schmid, pursuant to which the Sponsor has agreed (a) to vote all of its Pegasus Class A Ordinary Shares and Class B ordinary shares, par value $0.0001 each (“Pegasus Class B Ordinary Shares” and collectively with the Pegasus Class A Ordinary Shares, the “Pegasus Ordinary Shares”) in favor of all of the Transaction Proposals and to take all actions reasonably necessary to cause the closing of the Business Combination, including execution of the shareholder approval, (b) be bound by certain transfer restrictions with respect to their Pegasus Ordinary Shares prior to Closing, and (c) be bound by certain lock-up provisions during the lock-up period described therein with respect to the Equity Securities of TopCo issued pursuant to the Business Combination Agreement, in each case on the terms and subject to the conditions set forth therein.

It is anticipated that, upon completion of the Business Combination: (i) holders of Pegasus Class A Ordinary Shares (“Pegasus Public Shareholders”) will receive approximately 7.6% of TopCo Ordinary Shares and 7.6% of the voting rights; (ii) the Sponsor and the directors and officers of Pegasus who hold Class B Ordinary Shares will receive approximately 2.2% of TopCo Ordinary Shares and 2.2% of the voting rights; (iii) certain IPO anchor investors who hold Pegasus Class B Ordinary Shares will receive 2.1% of TopCo Ordinary Shares and 2.1% of the voting rights; and (iv) the current shareholders of Schmid (the “Participating Shareholders”) will receive approximately 88.2% of TopCo Ordinary Shares and 88.2% of the

voting rights. These ownership levels in TopCo assume the following: (i) no additional redemptions by Pegasus Public Shareholders (subsequent to the redemptions that have already occurred on April 19, 2023 and on July 26, 2023), (ii) no Pegasus shareholder exercises dissenter rights with respect to the Merger, (iii) Participating Shareholders represent 100% of the issued and outstanding shares of Schmid, (iv) 2,812,500 Pegasus Class B Ordinary Shares are not used for incentives to PIPE investors and/or non-redemption agreements and are cancelled, (v) no PIPE investments or other additional investors in TopCo at the consummation of the Business Combination who will receive TopCo Ordinary Shares, and (vi) that none of the Pegasus Private Placement Warrants or the Pegasus Public Warrants have been exercised or are exercised at the time of the completion of the Business Combination. If all of the Pegasus Private Placement Warrants and Pegasus Public Warrants were exercisable and immediately exercised upon completion of the Business Combination on a 1:1 basis for cash, Pegasus Public Shareholders would hold in aggregate approximately 18.7% of TopCo Ordinary Shares and 18.7% of the voting rights (note that the Sponsor holds 7,000,000 Pegasus Private Placement Warrants and Pegasus’ directors and officers hold 2,750,000 Pegasus Private Placement Warrants); however, note that the warrants are subject to restrictions on the timing of their exercise and may also be exercisable on a cashless basis by reference to the fair market value of the ordinary shares, and these percentages are therefore indicative only.

In addition to the Business Combination Proposal and the Merger Proposal Pegasus shareholders are being asked to consider and vote upon a proposal to adjourn the Extraordinary General Meeting to a later date or dates to be determined by the chairman of the Extraordinary General Meeting, if necessary or appropriate, either (i) to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Merger Proposal or (ii) if Pegasus Public Shareholders have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets. The Adjournment Proposal will only be presented to Pegasus shareholders (i) in order to solicit additional proxies from Pegasus shareholders in favor of the Business Combination Proposal or the Merger Proposal, (ii) to allow reasonable time for the filing or mailing of any supplemental or amended disclosures that Pegasus has determined, based on the advice of outside legal counsel, is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by Pegasus shareholders prior to the Extraordinary General Meeting, or (iii) if Pegasus Public Shareholders have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets. Each of these proposals is more fully described in this proxy statement/ prospectus, which each shareholder is encouraged to read carefully.

The Pegasus Class A Ordinary Shares, Pegasus Public Units and Pegasus Public Warrants are currently listed on the New York Stock Exchange (“NYSE”) under the symbols “PGSS,” “PGSS.U” and “PGSS.WS,” respectively. Upon the closing of the Business Combination, the Pegasus securities will be delisted from NYSE. TopCo intends to apply to list the TopCo Ordinary Shares and TopCo Public Warrants on NYSE upon the closing of the Business Combination. We cannot assure you that the TopCo Ordinary Shares or TopCo Public Warrants will be approved for listing on NYSE.

TopCo is an “emerging growth company” under applicable United States federal securities laws and will be subject to reduced public company reporting requirements. Investing in TopCo’s securities involves a high degree of risk. See “Risk Factors” beginning on page 41 of the accompanying proxy statement/prospectus for a discussion of information that should be considered in connection with an investment in TopCo’s securities.

With respect to Pegasus and the holders of the Pegasus Ordinary Shares, the accompanying proxy statement/prospectus serves as a:

•

proxy statement for the Extraordinary General Meeting of Pegasus shareholders being held on           , 2023, where Pegasus shareholders will vote on, among other things, proposals to adopt, approve and authorize each of the Business Combination Agreement and the Plan of Merger, and the transactions contemplated thereby; and

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•

prospectus for the TopCo Ordinary Shares and TopCo Public Warrants that Pegasus shareholders, Schmid shareholders and public warrant holders will receive in the Business Combination.

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Pursuant to the Pegasus second amended and restated memorandum and articles of association adopted by special resolution passed on April 19, 2023 and effective on April 19, 2023 (as further amended and/or restated from time to time) (the “Pegasus Memorandum and Articles of Association”), Pegasus is providing Pegasus Public Shareholders with the opportunity to redeem, upon the closing of the Business Combination, Pegasus Class A Ordinary Shares then held by them for cash equal to their pro rata share of

the aggregate amount then on deposit (as of two business days prior to the closing of the Business Combination) in the trust account established by Pegasus containing the proceeds of Pegasus’s initial public offering (the “Pegasus IPO”) and from certain private placements occurring simultaneously with the Pegasus IPO for the benefit of Pegasus Public Shareholders (the “Trust Account”) (the “Pegasus Shareholder Redemption”). The per-share amount Pegasus will distribute to Pegasus Public Shareholders who properly redeem their Pegasus Class A Ordinary Shares will not be reduced by the aggregate deferred underwriting commission that Pegasus will pay to the underwriters of the Pegasus IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account of approximately $      as of   , 2023, the estimated per Pegasus Class A Ordinary Share redemption price would have been approximately $      . The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to the Transfer Agent in order to validly redeem its shares. Pegasus Public Shareholders may elect to redeem their Pegasus Class A Ordinary Shares even if they vote for the Business Combination Proposal. Each redemption of Pegasus Class A Ordinary Shares by Pegasus Public Shareholders will reduce the amount in the Trust Account. The Business Combination Agreement provides that Schmid’s obligation to consummate the Business Combination is conditioned on the amount of cash in the Trust Account (after giving effect to the Pegasus Shareholder Redemption) including any cash proceeds from any PIPE investments being at least $35,000,000 (the “Aggregate TopCo Transaction Proceeds Condition”).

The conditions to closing in the Business Combination Agreement are for the sole benefit of the parties thereto and may be waived by such parties. In no event will Pegasus redeem its Pegasus Class A Ordinary Shares in an amount that would cause its (or TopCo’s after giving effect to the Business Combination) net tangible assets to be less than $5,000,001, as provided in the Pegasus Memorandum and Articles of Association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Business Combination Agreement. Holders of outstanding Pegasus Public Warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that (i) none of the Pegasus Public Shareholders exercise their redemption rights with respect to their Pegasus Class A Ordinary Shares, (ii) none of Pegasus’s shareholders exercise dissenters rights with respect to the Merger and (iii) Schmid shareholders represent 100% of the issued and outstanding shares of Schmid. For more information about the factors that affect the assumptions above, please see the section entitled “The Business Combination — Ownership of TopCo.”

The Sponsor and the directors and officers of Pegasus have agreed, for no additional consideration, to waive their redemption rights with respect to any Pegasus Class B Ordinary Shares held by them in connection with the consummation of the Business Combination (the “Founder Shares”), and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor and the directors and officers of Pegasus have agreed to vote any Pegasus Ordinary Shares owned by them in favor of the Business Combination and the transactions contemplated thereby. The Founder Shares are subject to transfer restrictions. The Pegasus Memorandum and Articles of Association includes a conversion adjustment which provides that the Pegasus Class B Ordinary Shares will automatically convert at the time of the Business Combination into a number of Pegasus Class A Ordinary Shares, at a conversion rate that entitles the holders of such Pegasus Class B Ordinary Shares to continue to own, in the aggregate, 20% of the issued and outstanding Pegasus Ordinary Shares. However, the Sponsor and the directors and officers of Pegasus have agreed to waive such conversion adjustment pursuant to the Sponsor Agreement. Please see the section entitled “Frequently Used Terms and Basis of Presentation” in the accompanying proxy statement/​prospectus for assumptions relating to this calculation.

Pegasus is providing the accompanying proxy statement/prospectus and accompanying proxy card to its shareholders in connection with the solicitation of proxies to be voted at the Extraordinary General Meeting and at any adjournments or postponements of the Extraordinary General Meeting. Information about the Extraordinary General Meeting, the Business Combination, the Merger and other related business to be considered by the Pegasus shareholders at the Extraordinary General Meeting is included in the accompanying proxy statement/prospectus. Whether or not you plan to attend the Extraordinary General Meeting, all Pegasus shareholders are urged to read carefully the accompanying proxy statement/prospectus, including the Annexes and the accompanying financial statements of TopCo, Pegasus and Schmid carefully and in their entirety. In particular, you are urged to read carefully the section entitled “Risk Factors” beginning on page 41 of the accompanying proxy statement/prospectus.

After careful consideration, the Pegasus Board has approved the Business Combination Agreement, the Business Combination and the Merger, and recommends that Pegasus shareholders vote “FOR” the Business

Combination Proposal, “FOR” the Merger Proposal and “FOR” all other proposals presented to Pegasus shareholders in the accompanying proxy statement/ prospectus. When you consider the Pegasus Board’s recommendation of these proposals, you should keep in mind that certain Pegasus directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. Please see the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination” in the accompanying proxy statement/prospectus for additional information.

Approval of the Merger Proposal requires a special resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of at least two-thirds of the Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present. Approval of the Business Combination Proposal, and the Adjournment Proposal each require an ordinary resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of a majority of the Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present.

The transactions contemplated by the Business Combination Agreement, including the Merger, will be consummated only if both the Business Combination Proposal and the Merger Proposal are approved at the Extraordinary General Meeting. The closing of the Business Combination is conditioned upon the approval of the Business Combination Proposal and the Merger Proposal. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Extraordinary General Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Extraordinary General Meeting in person, the effect will be, among other things, that your shares will not be voted at the Extraordinary General Meeting. If you are a shareholder of record and you attend the Extraordinary General Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

IF YOU ARE A PEGASUS PUBLIC SHAREHOLDER AND WISH TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT PEGASUS REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT BY FOLLOWING THE PROCEDURES OUTLINED IN THE ACCOMPANYING PROXY STATEMENT AND TENDER YOUR SHARES TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE INITIALLY SCHEDULED VOTE AT THE EXTRAORDINARY GENERAL MEETING. THE REDEMPTION RIGHTS INCLUDE THE REQUIREMENT THAT A HOLDER MUST IDENTIFY HIMSELF, HERSELF OR ITSELF IN WRITING AS A BENEFICIAL HOLDER AND PROVIDE HIS, HER OR ITS LEGAL NAME, PHONE NUMBER AND ADDRESS TO THE TRANSFER AGENT IN ORDER TO VALIDLY REDEEM HIS, HER OR ITS SHARES. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. IF YOU HOLD THROUGH A NOMINEE, YOU WILL BE REQUIRED TO IDENTIFY YOURSELF.

On behalf of the Pegasus Board, I would like to thank you for your support of Pegasus and look forward to a successful completion of the Business Combination.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

 

 

NOTICE OF EXTRAORDINARY GENERAL MEETING
OF PEGASUS DIGITAL MOBILITY ACQUISITION CORP.
TO BE HELD                  , 2023

Dear Shareholders of Pegasus Digital Mobility Acquisition Corp.:

NOTICE IS HEREBY GIVEN of an extraordinary general meeting (the “Extraordinary General Meeting”) of PEGASUS DIGITAL MOBILITY ACQUISITION CORP., a Cayman Islands exempted company (“Pegasus”), which will be held on                  , 2023 at           , Eastern time at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany and virtually over the internet via live audio webcast at https://​                 , or at such other time, on such other date and at such other place to which the meeting may be adjourned. The virtual meeting format allows attendance from any location in the world. You will be able to attend the Extraordinary General Meeting virtually online, vote and submit your questions during the Extraordinary General Meeting by visiting https://             and using the 12-digit control number found on your proxy card or notice of the Extraordinary General Meeting. Such virtual attendance will be treated as presence in person at the Extraordinary General Meeting.

At the Extraordinary General Meeting, you will be asked to consider and vote on the following proposals:

1.

Proposal No. 1 — The Business Combination Proposal — A proposal, by an ordinary resolution, to adopt and approve the Business Combination Agreement dated as of May 31, 2023 (as amended by that First Amendment to Business Combination Agreement dated as of September 26, 2023 (the “First Amendment to Business Combination Agreement”) and as it may be further amended from time to time, the “Business Combination Agreement,”), by and among Pegasus, Gebr. Schmid GmbH, a German limited liability company (“Schmid”), Pegasus Topco B.V., a Dutch private liability company (besloten vennootschap met beperkte aansprakelijkheid) (which will be converted into a Dutch public limited liability company (naamloze vennootschap) and renamed SCHMID Group N.V. prior to closing of the Business Combination) (“TopCo”), and Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned subsidiary of TopCo (“Merger Sub”) pursuant to which several transactions will occur, and in connection therewith, TopCo will become the ultimate parent company of Schmid and Pegasus, and the securityholders of Pegasus and Schmid will become securityholders of TopCo, and the consummation of the transactions contemplated thereby (the “Business Combination Proposal” or “Proposal No. 1”). A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A-1 (Original Business Combination Agreement) and Annex A-2 (First Amendment to Business Combination Agreement). The full text of the resolution to be voted on at the Extraordinary General Meeting is as follows:

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“RESOLVED, as an ordinary resolution, that the Business Combination Agreement dated as of May 31, 2023 (as amended by that First Amendment to Business Combination Agreement dated as of September 26, 2023 and as it may be further amended from time to time, the “Business Combination Agreement”) by and among Pegasus Digital Mobility Acquisition Corp. (“Pegasus”), Gebr. Schmid GmbH, a German limited liability company (“Schmid”), Pegasus Topco B.V., a Dutch private liability company (besloten vennootschap met beperkte aansprakelijkheid) (which will be converted into a Dutch public limited liability company (naamloze vennootschap) and renamed SCHMID Group N.V. prior to closing of the Business Combination) (“TopCo”), and Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned subsidiary of TopCo (“Merger Sub”) pursuant to which several transactions will occur, and in connection therewith, TopCo will become the ultimate parent company of Schmid and Pegasus (the “Business Combination”), and the consummation of the transactions contemplated thereby each be confirmed, ratified, authorized and approved in all respects.”

2.

Proposal No. 2 — Merger Proposal — A proposal, by a special resolution, to authorize and approve the Plan of Merger made in accordance with Part XVI of the Companies Act (As Revised) of the Cayman Islands (the “Plan of Merger”), a copy of which is attached to this proxy statement/​prospectus as Annex B, pursuant to which Pegasus will merge with Merger Sub, with Pegasus as

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the surviving company (the “Merger”). The full text of the resolution to be voted on at the Extraordinary General Meeting is as follows:

“RESOLVED, as a special resolution, that:

(a)

the Plan of Merger, by and among, Pegasus, Merger Sub and TopCo in the form tabled to the Extraordinary General Meeting (a copy of which is attached to the accompanying proxy statement/prospectus as Annex B, the “Plan of Merger”) pursuant to which Pegasus will merge with Merger Sub (the “Merger”) so that Pegasus will be the surviving company and all the undertaking, property and liabilities of Merger Sub vest in Pegasus by virtue of such Merger pursuant to the Companies Act (As Revised) of the Cayman Islands, be authorized, approved and confirmed in all respects;

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(b)

Pegasus be authorized to enter into the Plan of Merger;

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(c)

the Plan of Merger be executed by any one director on behalf of Pegasus and any director or delegate or agent thereof be authorized to submit the Plan of Merger, together with any supporting documentation, for registration to the Registrar of Companies of the Cayman Islands;

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(d)

as at the Effective Time (as defined in the Plan of Merger), the memorandum and articles of association of Pegasus as the surviving company will be in the form of the memorandum and articles of association of Pegasus in effect immediately before the Effective Time.”

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3.

Proposal No. 3 — The Adjournment Proposal — A proposal, by an ordinary resolution, to approve the adjournment of the Extraordinary General Meeting to a later date or dates to be determined by the chairman of the Extraordinary General Meeting, if necessary or appropriate, either (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Merger Proposal or (ii) if holders of Class A ordinary shares, par value US$0.0001 each, of Pegasus (the “Pegasus Class A Ordinary Shares”) have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets . In either such a case, the Adjournment Proposal will be the only proposal presented at the Extraordinary General Meeting. The full text of the resolution to be voted on at the Extraordinary General Meeting is as follows:

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“RESOLVED, as an ordinary resolution, that the adjournment of the Extraordinary General Meeting to a later date or dates to be determined by the chairman of the Extraordinary General Meeting, if necessary or appropriate, either (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Merger Proposal or (ii) if holders of Class A ordinary shares, par value US$0.0001 each, of Pegasus (the “Pegasus Class A Ordinary Shares”) have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets, be approved.”

Only holders of record of Pegasus Class A Ordinary Shares and Class B ordinary shares, par value $0.0001 per share, of Pegasus (“Pegasus Class B Ordinary Shares” and collectively with the Pegasus Class A Ordinary Shares, the “Pegasus Ordinary Shares”) at the close of business on            , 2023 (the “Record Date”) are entitled to notice of the Extraordinary General Meeting and to vote and have their votes counted at the Extraordinary General Meeting and any adjournments thereof.

As further described in this proxy statement/prospectus, subject to the terms and conditions of the Business Combination Agreement, upon consummation of the Business Combination, among other things:

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Pegasus shall sell TopCo to the shareholders of Schmid for nominal consideration;

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The shareholders of Schmid shall contribute their shares of Company Common Stock (as defined in the Business Combination Agreement) to TopCo in return for a number of TopCo Ordinary Shares equal to the equity value of Schmid divided by $10.10 (the “Exchange”);

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Pegasus will merge with Merger Sub, with Pegasus as the surviving company (the “Surviving Company”) in the Merger;

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In connection with the Merger, each issued and outstanding Eligible Pegasus Share will be automatically cancelled and extinguished in exchange for the Merger Consideration (as defined in the Business Combination Agreement) (together with the Merger, the “Business Combination”);

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Each outstanding warrant of Pegasus to purchase a Pegasus Class A Ordinary Share will, by its terms, convert into a warrant of TopCo to purchase one ordinary share A, nominal value EUR 0.01 per share of TopCo (“TopCo Ordinary Share”), on the same contractual terms and conditions as were in effect with respect to such warrants immediately prior to the closing of the Merger; and

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Immediately thereafter, a notarial deed will be executed by a Dutch notary in order to change the legal form of TopCo from a private limited liability company to a public limited liability company.

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In connection with their entry into the Business Combination Agreement, Pegasus and TopCo entered into a letter agreement (the “Sponsor Agreement”) with Pegasus Digital Mobility Sponsor LLC (the “Sponsor”), the directors and officers of Pegasus and Schmid, pursuant to which the Sponsor and the directors and officers of Pegasus have each agreed (a) to vote all of its Pegasus Ordinary Shares in favor of all of the Transaction Proposals, (b) be bound by certain transfer restrictions with respect to their Pegasus Ordinary Shares prior to Closing, and (c) be bound by certain lock-up provisions during the lock-up period described therein with respect to the Equity Securities of TopCo issued pursuant to the Business Combination agreement, on the terms and subject to the conditions set forth therein.

The above matters are more fully described elsewhere in this proxy statement/prospectus, which also includes a copy of the Business Combination Agreement as Annex A-1 (Original Business Combination Agreement) and Annex A-2 (First Amendment to Business Combination Agreement) and a copy of the Plan of Merger as Annex B. You are urged to read carefully this proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements of Topco, Pegasus and Schmid.

The closing of the Business Combination is conditioned upon the approval of the Business Combination Proposal and the Merger Proposal. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

Voting on all resolutions at the Extraordinary General Meeting will be conducted by way of a poll rather than on a show of hands. On a poll, votes are counted according to the number of Pegasus Ordinary Shares registered in each shareholder’s name which are voted, with each Pegasus Ordinary Share carrying one vote. Approval of the Merger Proposal requires a special resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of at least two-thirds of the Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present. Approval of each of the Business Combination Proposal and the Adjournment Proposal requires an ordinary resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of a majority of the Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present. The Pegasus Board recommends that you vote “FOR” each of these proposals.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Extraordinary General Meeting or not, please complete, sign, date and return the enclosed proxy card as soon as possible in the pre-addressed postage paid envelope provided and, in any event, so as to be received by our proxy agent, Morrow Sodali LLC (the “Proxy Agent”) no later than         Eastern Time, on            , 2023, being 48 hours before the time appointed for the holding of the Extraordinary General Meeting (or, in the case of an adjournment, no later than 48 hours before the time appointed for the holding of the adjourned meeting), or authorize the individuals named on your proxy card to vote your shares by using the internet as described in the instructions included with your proxy card. Submitting a proxy now will NOT prevent you from being able to attend and vote at the Extraordinary General Meeting. If your shares are held in “street name” in an account at a brokerage firm or bank, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that the shares you beneficially own are represented and voted at the Extraordinary General Meeting. In this regard, you must instruct your broker, bank or other nominee how to vote the shares you beneficially own, or if you wish to attend and cast your vote at the Extraordinary General Meeting, you must

 

 

obtain a legal proxy from the shareholder of record and e-mail a copy (a legible photograph is sufficient) of your proxy to proxy@continentalstock.com no later than 72 hours prior to the Extraordinary General Meeting. Holders should contact their broker or bank for instructions regarding obtaining a legal proxy. Holders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the Extraordinary General Meeting.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors

   

Prof. Dr. Sir Ralf Speth
Chief Executive Officer and Chairman of the Board of Directors

                 , 2023

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

HOLDERS OF PEGASUS CLASS A ORDINARY SHARES (“PEGASUS PUBLIC SHAREHOLDERS”) HAVE THE RIGHT TO HAVE THEIR PEGASUS CLASS A ORDINARY SHARES REDEEMED FOR CASH IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION. PEGASUS PUBLIC SHAREHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST ANY PROPOSAL DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, OR TO VOTE ON ANY PROPOSAL AT ALL, OR TO BE HOLDERS OF RECORD ON THE RECORD DATE IN ORDER TO HAVE THEIR PEGASUS CLASS A ORDINARY SHARES REDEEMED FOR CASH.

THIS MEANS THAT ANY PEGASUS PUBLIC SHAREHOLDER HOLDING PEGASUS CLASS A ORDINARY SHARES MAY EXERCISE REDEMPTION RIGHTS REGARDLESS OF WHETHER THEY ARE EVEN ENTITLED TO VOTE ON THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS.

TO EXERCISE REDEMPTION RIGHTS, PEGASUS PUBLIC SHAREHOLDERS MUST TENDER THEIR PEGASUS CLASS A ORDINARY SHARES TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, PEGASUS’S TRANSFER AGENT, NO LATER THAN TWO (2) BUSINESS DAYS PRIOR TO THE EXTRAORDINARY GENERAL MEETING. PEGASUS PUBLIC SHAREHOLDERS MAY TENDER THEIR SHARES BY EITHER DELIVERING THEIR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING THEIR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE PEGASUS PUBLIC SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. IF YOU HOLD THROUGH A NOMINEE, YOU WILL BE REQUIRED TO IDENTIFY YOURSELF. SEE “EXTRAORDINARY GENERAL MEETING OF PEGASUS SHAREHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

 

 

 

 

ii

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or SEC, by TopCo (File No. 333-       ), constitutes a prospectus of TopCo under Section 5 of the U.S. Securities Act of 1933, as amended, or the Securities Act, with respect to the TopCo securities to be issued to Pegasus shareholders and warrant holders and Schmid shareholders, if the business combination described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the Extraordinary General Meeting of Pegasus shareholders at which Pegasus shareholders will be asked to consider and vote upon proposals to adopt and approve the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination, and to adopt and approve the Plan of Merger and the Merger, , by the approval and adoption of the Business Combination Proposal and the Merger Proposal, respectively, and to adjourn the Extraordinary General Meeting, if necessary or appropriate, by approval of the Adjournment Proposal.

CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS

In this proxy statement/prospectus, unless otherwise specified or the context otherwise requires:

•

“$,” “USD” and “U.S. dollar” each refer to the United States dollar; and

​

•

“€,” “EUR” and “Euro” each refer to the Euro.

​

The exchange rate used for conversion between U.S. dollars and Euros is based on the ECB euro reference exchange rate published by the European Central Bank.

IMPORTANT INFORMATION ABOUT U.S. GAAP, IFRS AND NON-IFRS FINANCIAL MEASURES

Pegasus’s financial statements included in this proxy statement/ prospectus have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial information and pursuant to the rules and regulations of the SEC.

Schmid’s audited financial statements included in this proxy statement/prospectus have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). This proxy statement/prospectus includes certain references to financial measures that were not prepared in accordance with IFRS, including Adjusted EBITDA. Schmid presents non-IFRS measures because they are used by Schmid’s management in monitoring Schmid’s business and because Schmid believes that they and similar measures are frequently used by securities analysts, investors and others in evaluating companies in its industry. The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for Schmid’s combined financial results prepared in accordance with IFRS.

For additional information, see the section entitled “General Information — Presentation of Financial Information.”

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

The Schmid name, logos and other trademarks and service marks of Schmid appearing in this prospectus are the property of Schmid. Solely for convenience, some of the trademarks, service marks, logos and trade names referred to in this proxy statement/prospectus are presented without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This proxy statement/prospectus contains additional trademarks, service marks and trade names of others. All trademarks, service marks and trade names appearing in this proxy statement/ prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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FREQUENTLY USED TERMS AND BASIS OF PRESENTATION

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

“Business Combination” means the transactions contemplated by the Business Combination Agreement.

“Business Combination Agreement” means the Business Combination Agreement, dated May 31, 2023, by and among TopCo, Merger Sub, Pegasus and Schmid, as amended by that First Amendment to Business Combination Agreement dated as of September 26, 2023 and as it may be further amended from time to time.

“Business Combination Proposal” means the proposal to approve the adoption of the Business Combination Agreement and the Business Combination.

“Cayman Companies Act” means the Companies Act (As Revised) of the Cayman Islands.

“CCPA” means the California Consumer Privacy Act of 2018.

“Closing” means the closing of the transactions contemplated by the Business Combination Agreement.

“Closing Commencement Date” means the date on which the first Closing step occurs, being no later than the 3rd business day following the satisfaction or waiver of the conditions to the Business Combination, in each case pursuant to and in accordance with the terms of the Business Combination Agreement.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“DCGC” means the Dutch Corporate Governance Code.

“Dissenting Pegasus Shareholders” means holders of Dissenting Pegasus Shares.

“Dissenting Pegasus Shares” means Pegasus Ordinary Shares that are issued and outstanding immediately prior to the Merger Effective Time and held by a Pegasus shareholder who has validly exercised their dissenters’ rights for such Pegasus Ordinary Shares in accordance with Section 238 of the Cayman Companies Act, and otherwise complied with all of the provisions of the Cayman Companies Act relevant to the exercise and perfection of dissenters’ rights (and not waived, withdrawn, forfeited, failed to perfect or otherwise lost such rights).

“Eligible Pegasus Share” means each Pegasus Ordinary Share (other than the Excluded Pegasus Shares, Redeeming Pegasus Shares and Dissenting Pegasus Shares) issued and outstanding as of immediately prior to the Merger Effective Time.

“Exchange” means the exchange of Schmid shares for TopCo Ordinary Shares.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Excluded Pegasus Share” means each Pegasus Ordinary Share that is issued and outstanding and held immediately prior to the Merger Effective Time by Pegasus as treasury shares.

“Extraordinary General Meeting” means the Extraordinary General Meeting of Pegasus which will be held on           , 2023 at 9:00am, Eastern time, at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany and virtually over the internet via live audio webcast, or at such other time, on such other date and at such other place to which the meeting may be adjourned.

“FCPA” means the U.S. Foreign Corrupt Practices Act.

“Founder Shares” means the Pegasus Class B Ordinary Shares held by the Sponsor and the directors and officers of Pegasus.

“GDPR” means the European General Data Protection Regulation.

“IAS” means the International Accounting Standard.

 

2

 

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

“Merger” means the merger of Pegasus with Merger Sub, with Pegasus surviving such merger.

“Merger Documents” means all documentation and declarations required under the Cayman Companies Act in connection with the Merger, to be duly executed and properly filed with the Cayman Islands Registrar of Companies, in accordance with the relevant provisions of the Cayman Islands Acts.

“Merger Effective Time” means the time the Merger becomes effective.

“Merger Sub” means Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned subsidiary of TopCo.

“NYSE” means the New York Stock Exchange.

“OEMs” means original equipment manufacturers.

“Participating Shareholders” means Anette Schmid, Christian Schmid as well as a community of heirs for which Anette Schmid and Christian Schmid are the sole beneficiaries.

“Pegasus” means Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company.

“Pegasus Board” means the board of directors of Pegasus.

“Pegasus Class A Ordinary Shares” means the Class A ordinary shares, par value $0.0001 per share, of Pegasus.

“Pegasus Class B Ordinary Shares” means the Class B ordinary shares, par value $0.0001 per share, of Pegasus.

“Pegasus Initial Shareholders” means the Sponsor, Pegasus’s directors and officers and certain anchor investors in the Pegasus IPO.

“Pegasus IPO” means Pegasus’s initial public offering on the New York Stock Exchange.

“Pegasus Memorandum and Articles of Association” means the second amended and restated memorandum and articles of association of Pegasus adopted by special resolution passed on April 19, 2023 and effective on April 19, 2023 (as further amended and/or restated from time to time).

“Pegasus Ordinary Shares” means, collectively, the Pegasus Class A Ordinary Shares and Pegasus Class B Ordinary Shares.

“Pegasus Private Placement Warrants” means the 9,750,000 warrants held by the Sponsor and certain directors and officers of Pegasus shareholders, purchased by such holders in the private placement that occurred concurrently with the closing of Pegasus’s IPO, including any Pegasus Ordinary Shares issued or issuable upon conversion or exchange of such warrants.

“Pegasus Public Shareholders” means the holders of Pegasus Class A Ordinary Shares issued as part of the Pegasus Public Units.

“Pegasus Public Units” means the units issued in the Pegasus IPO consisting of Pegasus Class A Ordinary Shares and Pegasus Public Warrants.

“Pegasus Public Warrants” means the 11,250,000 public warrants, each of which is a warrant to purchase one Pegasus Class A Ordinary Share at a price of $11.50 per share, subject to adjustment in accordance with the Warrant Agreement.

 

3

 

“Pegasus Shareholder Redemption Right” means the right of the holders of Pegasus Class A Ordinary Shares to redeem all or a portion of their Pegasus Class A Ordinary Shares under the Pegasus Memorandum and Articles of Association.

“Pegasus Warrants” means collectively the Pegasus Public Warrants and the Pegasus Private Placement Warrants.

“Plan of Merger” means the Plan of Merger by and among, Pegasus, Merger Sub and TopCo, a copy of which is attached to this proxy statement/prospectus as Annex B.

“Record Date” means       , 2023.

“Redeeming Pegasus Share” means each Pegasus Class A Ordinary Share in respect of which the applicable holder thereof has validly exercised its Pegasus Shareholder Redemption Right in connection with the transactions contemplated by the Business Combination Agreement (and not waived, withdrawn or otherwise lost such rights in accordance with the terms of the Pegasus Memorandum and Articles of Association and applicable law).

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

“SEC” means the United States Securities and Exchange Commission.

“Schmid” means Gebr. Schmid GmbH, together with its subsidiaries as the context may require.

“Sponsor” means Pegasus Digital Mobility Sponsor LLC, a Cayman Islands limited liability company.

“Sponsor Support Agreement” means the Sponsor Support Agreement, dated May 31, 2023, by and between the Sponsor, Pegasus, Schmid, TopCo and certain individual insiders named therein.

“TopCo” means Pegasus TopCo B.V., Dutch private liability company (besloten vennootschap met beperkte aansprakelijkheid) (which will be converted into a Dutch public limited liability company (naamloze vennootschap) and renamed SCHMID Group N.V. upon consummation of the Business Combination).

“TopCo Board” means the board of directors of TopCo.

“TopCo Ordinary Shares” means the ordinary shares A, nominal value EUR 0.01 per share of TopCo.

“TopCo Private Placement Warrants” means the warrants issued to the holders of the Pegasus Private Placement Warrants.

“TopCo Public Warrants” means the warrants issued to the holders of the Pegasus Public Warrants.

“TopCo Warrants” means collectively the TopCo Public Warrants and the TopCo Private Placement Warrants.

“Trust Account” means the trust account established by Pegasus containing the proceeds of the Pegasus IPO and from certain private placements occurring simultaneously with the Pegasus IPO for the benefit of Pegasus Public Shareholders.

“Trustee” means Continental Stock Transfer & Trust Company.

“Warrant Agreement” means the Warrant Agreement, dated October 21, 2021, by and between Pegasus and Continental Stock Transfer & Trust Company, as warrant agent.

 

4

 

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORDINARY GENERAL MEETING

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Extraordinary General Meeting and the proposals to be presented at the Extraordinary General Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to Pegasus shareholders. Shareholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Extraordinary General Meeting, which will be held on                 , 2023 at 9:00am Eastern Time, at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany and virtually over the internet via live audio webcast at https://​                 . The virtual meeting format allows attendance from any location in the world. You will be able to attend the Extraordinary General Meeting virtually online, vote and submit your questions during the Extraordinary General Meeting by visiting                 and using the 12-digit control number found on your proxy card or notice of the Extraordinary General Meeting.

Q:

Why am I receiving this proxy statement/prospectus?

​

A:

Pegasus shareholders are being asked to consider and vote upon: (i) a proposal to adopt the Business Combination Agreement and approve the transaction contemplated thereby, including the Business Combination and (ii) a proposal to adopt and approve the Plan of Merger and the Merger, among other proposals. Pegasus is holding the Extraordinary General Meeting to allow shareholders to consider and vote upon these proposals. Pegasus has entered into the Business Combination Agreement, providing for, among other things:

​

1.

the Merger; and

​

2.

the Exchange.

​

These transactions are collectively referred to as the Business Combination. You are being asked to vote on the Business Combination Proposal and the Merger Proposal. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A-1 (Original Business Combination Agreement) and Annex A-2 (First Amendment to Business Combination Agreement) and a copy of the Plan of Merger is attached to this proxy statement/prospectus as Annex B.

This proxy statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.

Q:

When and where is the Extraordinary General Meeting?

​

A:

The Extraordinary General Meeting will be held on                 , 2023 at 9:00 am Eastern Time, at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany and virtually over the internet via live audio webcast at https://​                 . The virtual meeting format allows attendance from any location in the world. You will be able to attend the Extraordinary General Meeting virtually online, vote and submit your questions during the Extraordinary General Meeting by visiting https://​                 and using the 12-digit control number found on your proxy card or notice of the Extraordinary General Meeting.

​

Q:

What are the specific proposals on which I am being asked to vote at the Extraordinary General Meeting?

​

A:

Pegasus shareholders are being asked to approve the following proposals:

​

1.

Proposal No. 1 — The Business Combination Proposal — A proposal, by an ordinary resolution, to adopt and approve the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A-1 (Original Business Combination Agreement) and

​

 

5

 

Annex A-2 (First Amendment to Business Combination Agreement), and the transactions contemplated thereby, including the Business Combination;

2.

Proposal No. 2 — Merger Proposal — A proposal, by a special resolution, to authorize and approve the Plan of Merger, a copy of which is attached to this proxy statement/prospectus as Annex B, pursuant to which Pegasus will merge with Merger Sub, with Pegasus as the surviving company in accordance with the relevant provisions of the Cayman Companies Act; and

​

3.

Proposal No. 3 — The Adjournment Proposal — A proposal, by an ordinary resolution, to approve the adjournment of the Extraordinary General Meeting to a later date or dates to be determined by the chairman of the Extraordinary General Meeting, if necessary or appropriate, either (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Merger Proposal or (ii) if holders of Pegasus Class A Ordinary Shares have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets. In either such case, the Adjournment Proposal will be the only proposal presented at the Extraordinary General Meeting.

​

Q:

Are the proposals conditioned on one another?

​

A:

The closing of the Business Combination is conditioned upon the approval of the Business Combination Proposal and the Merger Proposal. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

​

It is important for you to note that in the event the Business Combination Proposal and the Merger Proposal do not receive the requisite vote for approval, then Pegasus will not consummate the Business Combination. Absent a further amendment to the Pegasus Memorandum and Articles of Association, if Pegasus does not consummate the Business Combination and fails to complete an initial business combination by December 31, 2023, Pegasus will be required to dissolve and liquidate the Trust Account by returning the then remaining available funds in such Trust Account to its public shareholders.

Q:

Why is Pegasus proposing the Business Combination?

​

A:

Pegasus is a blank check company incorporated as a Cayman Islands exempted company on March 30, 2021, and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more target businesses. Although Pegasus may pursue an acquisition opportunity in any business, industry, sector or geographical location for purposes of consummating an initial business combination, Pegasus has focused on industrial technology section.

​

Based on its due diligence investigations of Schmid and the industry in which it operates, including the financial and other information provided by Schmid in the course of negotiations, Pegasus believes that Schmid has an attractive business model and growth potential and a business combination with Schmid would offer the chance for a partnership approach with management to further facilitate expansion and promote shareholder value. Please see the section entitled “The Business Combination —  The Pegasus Board’s Reasons for the Business Combination” for additional information.

Q:

Why is Pegasus providing shareholders with the opportunity to vote on the Business Combination?

​

A:

The approval of the Business Combination is required under the Pegasus Memorandum and Articles of Association, and the Merger requires the approval of Pegasus shareholders under Cayman Islands law. In addition, such approvals are also conditions to the closing of the Business Combination under the Business Combination Agreement. Additionally, under the Pegasus Memorandum and Articles of Association, Pegasus must provide all Pegasus Public Shareholders with the opportunity to have their Pegasus Class A Ordinary Shares redeemed upon the consummation of its initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. For business and other reasons, Pegasus has elected to provide Pegasus Public Shareholders with the opportunity to have their Pegasus Class A Ordinary Shares redeemed in connection with a shareholder vote rather than a tender offer. Therefore, Pegasus is seeking to obtain the approval of its shareholders of the Business

​

 

6

 

Combination and the Merger and also allow Pegasus Public Shareholders to effectuate redemptions of their Pegasus Class A Ordinary Shares in connection with the closing of the Business Combination in accordance with the Pegasus Memorandum and Articles of Association.

Q:

What revenues and profits/losses has Schmid generated in the last two years?

​

A:

For the fiscal year ended December 31, 2022, Schmid had revenues of €95.1 million and a net income of €3.6 million, while for the fiscal year ended December 31, 2021, Schmid had revenues of €39.5 million and a net loss of €27.3 million. In the fiscal year ended December 31, 2022, Schmid generated Adjusted EBITDA of €19.9 million. At the end of fiscal year 2022, Schmid’s total assets were €180.2 million. For additional information, please see Schmid’s audited combined financial statements for the years ended December 31, 2022 and 2021 included elsewhere in this proxy statement/prospectus.

​

Q:

What will happen in the Business Combination?

​

A:

Pursuant to the Business Combination Agreement, and upon the terms and subject to the conditions set forth therein, Pegasus and Schmid will effect a transaction that would replicate the economics of a merger of Pegasus and Schmid through a series of mergers and equity contributions and exchanges, which is collectively referred to as the Business Combination. To effect the Business Combination, among other things, the Merger will be effected and the Exchange will be effected. As a result of the Business Combination, TopCo will be the ultimate parent company of Schmid (following the Exchange) and Schmid’s direct and indirect subsidiaries, and the securityholders of Pegasus and Schmid will become securityholders of TopCo. Please see the section entitled “The Business Combination” for additional information.

​

TopCo intends to apply to list the TopCo Ordinary Shares and TopCo Public Warrants on the NYSE upon the closing of the Business Combination. We cannot assure you that the TopCo Ordinary Shares or TopCo Public Warrants will be approved for listing on NYSE. In addition, TopCo will be a “foreign private issuer” and as a “foreign private issuer,” TopCo will be subject to different U.S. securities laws than domestic U.S. issuers. The rules governing the information that TopCo must disclose differ from those governing U.S. corporations pursuant to the Exchange Act. TopCo will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders. As a foreign private issuer, TopCo will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of the TopCo Ordinary Shares and TopCo Public Warrants. See “Risk Factors — As a foreign private issuer, we will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. domestic public company, which may limit the information available to our shareholders.”

Q:

How has the announcement of the Business Combination affected the trading price of Pegasus’s Class A Ordinary Shares?

​

A:

On May 30, 2023, the last trading date before the public announcement of the proposed Business Combination, the Pegasus Public Units, Pegasus Class A Ordinary Shares and Pegasus Public Warrants closed at $10.59, $10.60 and $0.07, respectively. On                 , 2023, the trading date immediately prior to the date of this proxy statement/prospectus, the Pegasus Public Units, Pegasus Class A Ordinary Shares and Pegasus Public Warrants closed at $      , $      and $      , respectively.

​

Q:

Following the Business Combination, will Pegasus’s securities continue to trade on a stock exchange?

​

A:

No. Pegasus anticipates that, following consummation of the Business Combination, the Pegasus Class A Ordinary Shares, Pegasus Public Units, and Pegasus Public Warrants will be delisted from NYSE and Pegasus will be deregistered under the Exchange Act. However, TopCo intends to apply to list the TopCo Ordinary Shares and TopCo Public Warrants on NYSE upon the closing of the Business Combination.

​

Q:

Is the Business Combination the first step in a “going private” transaction?

​

A:

No. Pegasus does not intend for the Business Combination to be the first step in a “going private”

​

 

7

 

transaction. One of the primary purposes of the Business Combination is to provide a platform for Schmid to access the U.S. public markets.

Q:

Will the management of Schmid change in the Business Combination?

​

A:

Christian Schmid and Julia Natterer intend to continue to serve as TopCo’s executive officers upon consummation of the Business Combination.

​

Pursuant to the Business Combination Agreement, effective immediately upon closing, the TopCo Board will be comprised of seven directors, of which four members shall be independent directors, with each director serving an initial two-year term.

Upon the closing of the Business Combination, the TopCo Board is intended to comprise of at seven directors, consisting of the following:

•

(1) Christian Schmid; (2) Anette Schmid; (3) Sir Dr. Ralph Speth; (4) Dr. Stefan Berger; and up to three additional directors who will be designated jointly by Pegasus and Schmid prior to the closing of the Business Combination; and

​

•

The management team will consist solely of Schmid’s current management team immediately prior to the Closing, including individuals selected by Schmid that join its management team between the date hereof and the closing.

​

For an explanation of the roles and responsibilities of the TopCo Board, please see the section entitled “Management of TopCo After the Business Combination”.

Q:

What will Pegasus shareholders receive in the Business Combination?

​

A:

Upon consummation of the Merger, each issued and outstanding Pegasus Ordinary Share will be subject to the terms and conditions of the Business Combination Agreement and the Plan of Merger and will be ultimately converted into a TopCo Ordinary Share.

​

Q:

What will Pegasus warrant holders receive in the Business Combination?

​

A:

Without any action of any party or any other person (but without limiting the obligations of TopCo pursuant to the Business Combination Agreement), each Pegasus Warrant that is outstanding immediately prior to the Merger Effective Time shall automatically cease to represent a right to acquire Pegasus Class A Ordinary Shares and shall automatically represent, immediately following the Merger Effective Time, a right to acquire TopCo Ordinary Shares on the same contractual terms and conditions as were in effect immediately prior to the Merger Effective Time under the terms of the Warrant Agreement; provided, that each converted warrant: (a) shall represent the right to acquire the number of TopCo Ordinary Shares equal to the number of Pegasus Class A Ordinary Shares subject to each such Pegasus Public Warrant immediately prior to the Merger Effective Time; (b) shall have an exercise price of $11.50 per whole warrant required to purchase one TopCo Ordinary Share; and (c) shall expire on the five (5) year anniversary of the Closing Date.

​

Q:

What will Pegasus unit holders receive in the Business Combination?

​

A:

In connection with the consummation of the Business Combination, the Pegasus Public Units will automatically separate into their component parts and be treated accordingly.

​

Q:

What will Schmid shareholders receive in the Business Combination?

​

A:

Upon consummation of the Exchange, holders of Schmid ordinary shares will receive TopCo Ordinary Shares. See “Summary — Consideration to Schmid Shareholders in the Business Combination” for information on the consideration to be received by Schmid shareholders, including the assumptions on which this calculation is based.

​

 

8

 

Q:

What equity stake will the current shareholders of Pegasus and the current shareholders of Schmid hold in TopCo after the closing of the Business Combination?

​

A:

It is anticipated that, upon completion of the Business Combination: (i) Pegasus Public Shareholders will receive approximately 7.6% of TopCo Ordinary Shares and 7.6% of the voting rights; (ii) the Sponsor and the directors and officers of Pegasus who hold Class B Ordinary Shares will receive approximately 2.2% of TopCo Ordinary Shares and 2.2% of the voting rights; (iii) certain IPO anchor investors who hold Class B Ordinary Shares will receive 2.1% of TopCo Ordinary Shares and 2.1% of the voting rights; and (iv) the current shareholders of Schmid will receive approximately 88.2% of TopCo Ordinary Shares and 88.2% of the voting rights. These ownership levels in TopCo assume the following: (i) no additional redemptions by Pegasus Public Shareholders, (ii) there are no Dissenting Pegasus Shareholders, (iii) Participating Shareholders represent 100% of the issued and outstanding shares of Schmid, (iv) 2,812,500 Pegasus Class B Ordinary Shares are not used for incentives to PIPE investors and/or non-redemption agreements and are cancelled, (v) no PIPE investments or other additional investors in TopCo at the consummation of the Business Combination who will receive TopCo Ordinary Shares, and (vi) that none of the Pegasus Private Placement Warrants or the Pegasus Public Warrants have been exercised or are exercised at the time of the completion of the Business Combination. If all of the Pegasus Private Placement Warrants and Pegasus Public Warrants were exercisable and immediately exercised upon completion of the Business Combination on a 1:1 basis for cash, Pegasus Public Shareholders would hold in aggregate approximately 18.7% of TopCo Ordinary Shares and 18.7% of the voting rights (note that the Sponsor holds 7,000,000 Pegasus Private Placement Warrants and Pegasus’ directors and officers hold 2,750,000 Pegasus Private Placement Warrants); however, note that the warrants are subject to restrictions on the timing of their exercise and may also be exercisable on a cashless basis by reference to the fair market value of the ordinary shares, and these percentages are therefore indicative only.

​

For more information, please see the sections entitled “The Business Combination — Ownership of TopCo” and “Unaudited Pro forma Condensed Combined Financial Information.”

Q:

Are there any arrangements to help ensure that Pegasus will have sufficient funds to consummate the Business Combination?

​

A:

Pegasus has sufficient funds to consummate the Business Combination regardless of the levels of redemptions by Pegasus Public Shareholders. After the Business Combination, there are sufficient funds for TopCo to pay all transaction expenses. Any proceeds from the Business Combination not used to pay transaction expenses will be used for growth projects and general corporate purposes.

​

Q:

Why is Pegasus proposing the Adjournment Proposal?

​

A:

Pegasus is proposing the Adjournment Proposal to allow the Pegasus Board to adjourn the Extraordinary General Meeting to a later date or dates, (A) in order to solicit additional proxies from Pegasus shareholders in favor of the Business Combination Proposal or the Merger Proposal, (B) to allow reasonable time for the filing or mailing of any supplemental or amended disclosures that Pegasus has determined, based on the advice of outside legal counsel, is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by Pegasus shareholders prior to the Extraordinary General Meeting, or (C) if Pegasus Public Shareholders have elected to redeem an amount of Pegasus Class A Ordinary Shares such that Pegasus would have less than $5,000,001 of net tangible assets. In either such case the Adjournment Proposal will be the only proposal presented at the Extraordinary General Meeting. Please see the section entitled “Proposal No. 3 — The Adjournment Proposal” for additional information.

​

Q:

What happens if I sell my Pegasus Ordinary Shares before the Extraordinary General Meeting?

​

A:

The Record Date for the Extraordinary General Meeting will be earlier than the date that the Business Combination is expected to be completed. If you transfer your Pegasus Ordinary Shares after the Record Date, but before the Extraordinary General Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Extraordinary General Meeting. However, you will not be able to seek redemption of your Pegasus Class A Ordinary Shares because

​

 

9

 

you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. Further, you will not be entitled to receive any Merger Consideration following the Closing because only Pegasus shareholders on the Closing Date will be entitled to receive the Merger Consideration.

Q:

What vote is required to approve the proposals presented at the Extraordinary General Meeting?

​

A

The approval of each of the Business Combination Proposal and the Adjournment Proposal requires an ordinary resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of at least a majority of Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present. The approval of the Merger Proposal requires a special resolution under the Pegasus Memorandum and Articles of Association, being the affirmative vote of holders of at least two-thirds of the Pegasus Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present. Accordingly, assuming a quorum is established, a Pegasus shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will have no effect on the outcome of any vote on the Business Combination Proposal, the Merger Proposal or the Adjournment Proposal. Broker non-votes and abstentions will be counted in connection with the determination of whether a valid quorum is established but will not count as votes cast at the Extraordinary General Meeting and otherwise have no effect on the Business Combination Proposal, the Merger Proposal or the Adjournment Proposal. The Sponsor has agreed to vote their Founder Shares and any Pegasus Class A Ordinary Shares purchased by them during or after the Pegasus IPO in favor of the Business Combination Proposal and the Merger Proposal.

​

Q:

What happens if the Business Combination Proposal or the Merger Proposal are not approved?

​

A:

Approval of the Business Combination Proposal and the Merger Proposal are a condition to the consummation of the Business Combination. If the Business Combination Proposal or the Merger Proposal are not approved, Pegasus will not be able to consummate the Business Combination. If Pegasus does not consummate a business combination by December 31, 2023, Pegasus will be required to dissolve and liquidate the Trust Account.

​

Q:

How many votes do I have at the Extraordinary General Meeting?

​

A:

Pegasus shareholders are entitled to one vote on each of the proposals at the Extraordinary General Meeting for each Pegasus Ordinary Share held of record as of the Record Date.

​

Q:

Who can vote at the Extraordinary General Meeting?

​

A:

Only holders of record of Pegasus Ordinary Shares at the close of business on           , 2023, being the Record Date, are entitled to have their vote counted at the Extraordinary General Meeting and any adjournment thereof. On the Record Date,           Pegasus Ordinary Shares were outstanding and entitled to vote.

​

Q:

What constitutes a quorum at the Extraordinary General Meeting?

​

A:

A quorum of Pegasus shareholders is necessary to hold a valid Extraordinary General Meeting. A quorum will be present at the Extraordinary General Meeting if one or more Pegasus shareholders holding a majority of the issued and outstanding Pegasus Ordinary Shares entitled to vote at the Extraordinary General Meeting are represented in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy. As of the Record Date, the holders of           Pegasus Ordinary Shares would be required to achieve a quorum.

​

Q:

How will the Sponsor and Pegasus’s directors and officers vote?

​

A:

Pegasus has entered into agreements with the Sponsor and the directors and officers, pursuant to which the Sponsor and the directors and officers have agreed to vote any Pegasus Ordinary Shares owned by them in favor of a proposed initial Business Combination. As of the record date, the Sponsor owned           Pegasus Ordinary Shares that are entitled to vote at the Extraordinary General

​

 

10

 

Meeting. As of the record date, the Pegasus’ directors and officers beneficially owned an aggregate of                 Pegasus Ordinary Shares that are entitled to vote at the Extraordinary General Meeting.

Q:

What interests do the Pegasus Initial Shareholders have in the Business Combination?

​

A:

The Pegasus Initial Shareholders have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination Proposal and the Merger Proposal. These interests include:

​

•

the fact that the Sponsor and the directors and officers of Pegasus have agreed not to redeem any Pegasus Ordinary Shares held by it in connection with a shareholder vote to approve a proposed initial business combination;

​

•

the fact that the Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination;

​

•

the fact that the Sponsor and Pegasus’s officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Pegasus Class B Ordinary Shares held by them if Pegasus fails to complete an initial business combination by December 31, 2023;

​

•

the fact that the Registration Rights Agreement will be entered into by the Sponsor;

​

•

the fact that the Sponsor paid an aggregate of $9,750,000 for its 9,750,000 Pegasus Private Placement Warrants to purchase Pegasus Class A Ordinary Shares and that such Pegasus Private Placement Warrants will expire worthless if a business combination is not consummated by December 31, 2023;

​

•

the fact that Pegasus has issued several promissory notes to the Sponsor which become repayable at the consummation of the Business Combination;

​

•

the right of the Sponsor to receive TopCo Ordinary Shares, subject to certain lock-up periods;

​

•

the expected cash retention payment to certain members of the Pegasus management team in connection with their agreement to remain available following the Closing for purpose of ensuring a smooth transition;

​

•

the anticipated designation by the Pegasus Initial Shareholders of Sir Dr. Ralph Speth and Stefan Berger as a non-executive director of TopCo following the Business Combination;

​

•

the continued indemnification of Pegasus’s existing directors and officers and the continuation of Pegasus’s directors’ and officers’ liability insurance after the Business Combination;

​

•

the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate;

​

•

the Sponsor and its affiliates can earn a positive rate of return on their investment, even if other Pegasus shareholders experience a negative rate of return in the post-Business Combination company;

​

•

the fact that Sponsor and Pegasus’s officers and directors will lose their entire investment in Pegasus and will not be reimbursed for any out-of-pocket expenses if an initial Business Combination is not consummated by December 31, 2023; and

​

•

the fact that if the Trust Account is liquidated, including in the event Pegasus is unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify Pegasus to ensure that the proceeds in the Trust Account are not reduced below $10.10 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pegasus has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pegasus, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account.

​

 

11

 

Q:

Did the Pegasus Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

​

A:

Yes. The Pegasus Board did obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination Agreement.

​

Accordingly, investors will not only be relying solely on the judgment of the Pegasus Board in valuing Schmid’s business and assuming the risk that the Pegasus Board may not have properly valued such business.

Q:

What happens if I vote against the Business Combination Proposal or the Merger Proposal?

​

A:

If you vote against the Business Combination Proposal or the Merger Proposal but the Business Combination Proposal and the Merger Proposal still obtain the affirmative vote of holders of at least the majority of Pegasus Ordinary Shares with respect to the Business Combination Proposal or two-thirds of Pegasus Ordinary Shares with respect to the Merger Proposal, that are entitled to vote and are voted at the Extraordinary General Meeting at which a quorum is present, then the Business Combination Proposal and the Merger Proposal will be approved, respectively, and, assuming the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Business Combination Agreement.

​

If you vote against the Business Combination Proposal or the Merger Proposal and the Business Combination Proposal or the Merger Proposal do not obtain the affirmative vote of holders of the majority of Pegasus Ordinary Shares with respect to the Business Combination Proposal or two-thirds of Pegasus Ordinary Shares with respect to the Merger Proposal, that are entitled to vote and are voted at the Extraordinary General Meeting, then the Business Combination Proposal and the Merger Proposal, respectively, will fail and Pegasus will not consummate the Business Combination. If Pegasus does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until December 31, 2023. If Pegasus fails to complete an initial business combination by December 31, 2023, then it will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to the Pegasus Public Shareholders.

Q:

How do the Pegasus Public Warrants differ from the Pegasus Private Placement Warrants and what are the related risks for any holders of Pegasus Public Warrants following the Business Combination?

​

A:

The Pegasus Private Placement Warrants are identical to the Pegasus Public Warrants in all material respects, except that so long as the Pegasus Private Placement Warrants are held by the Sponsor or its permitted transferees and subject to certain limited exceptions, they will not be transferable, assignable or salable until 30 days after the completion of the Business Combination and they will not be redeemable by Pegasus (except as described in the notes to Pegasus’s financial statements included elsewhere in this proxy statement/prospectus) so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Pegasus Private Placement Warrants on a cashless basis. If the Pegasus Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Pegasus Private Placement Warrants will be redeemable by Pegasus in all redemption scenarios and exercisable by the holders on the same basis as the Pegasus Public Warrants.

​

As a result, following the Business Combination, TopCo may redeem your TopCo Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby significantly impairing the value of such warrants. TopCo will have the ability to redeem outstanding TopCo Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the TopCo Ordinary Shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, 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 on which a notice of redemption is sent to the warrant holders. TopCo will not redeem the warrants as described above unless a registration statement under the Securities Act covering the TopCo Ordinary Shares issuable upon exercise of such warrants is effective and a current prospectus relating to those TopCo

 

12

 

Ordinary Shares is available throughout the 30-day redemption period. If and when the TopCo Public Warrants become redeemable by TopCo, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding TopCo Public Warrants could force you (i) to exercise your TopCo Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your TopCo Public Warrants at the then-current market price when you might otherwise wish to hold your TopCo Public Warrants, or (iii) to accept the nominal redemption price which, at the time the outstanding TopCo Public Warrants are called for redemption, is likely to be substantially less than the market value of your TopCo Public Warrants.

In addition, TopCo will have the ability to redeem the outstanding TopCo Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the closing price of the TopCo Ordinary Shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) on the trading day prior to the date on which a notice of redemption is sent to the warrant holders. Recent trading prices for the Pegasus Class A Ordinary Shares have not exceeded the $18.00 per share threshold at which the Pegasus Public Warrants would become redeemable. In such a case, the holders will be able to exercise their TopCo Public Warrants prior to redemption for a number of TopCo Ordinary Shares determined based on the redemption date and the fair market value of the TopCo Ordinary Shares. Please see the notes to Pegasus’s financial statements included elsewhere in this proxy statement/prospectus. The value received upon exercise of the TopCo Public Warrants (1) may be less than the value the holders would have received if they had exercised their TopCo Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the TopCo Public Warrants.

In each case, TopCo may only call the TopCo Public Warrants for redemption upon a minimum of 30 days’ prior written notice of redemption to each holder, provided that holders will be able to exercise their TopCo Public Warrants prior to the time of redemption and, at TopCo’s election, any such exercise may be required to be on a cashless basis.

Q:

Do I have redemption rights?

​

A:

Pursuant to the Pegasus Memorandum and Articles of Association, Pegasus Public Shareholders may elect to have their Pegasus Class A Ordinary Shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Pegasus Memorandum and Articles of Association. As of                 , 2023, this would have amounted to approximately $      per share. If a Pegasus Public Shareholder exercises its redemption rights, then such holder will be exchanging its Pegasus Class A Ordinary Shares for cash and will not own shares of TopCo following the closing of the Business Combination. Such a holder will be entitled to receive cash for its Pegasus Class A Ordinary Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to the Transfer Agent in accordance with the procedures described herein. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to the Transfer Agent in order to validly redeem its shares.

​

Each redemption of Pegasus Class A Ordinary Shares by Pegasus Public Shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $      as of                 , 2023. The Business Combination Agreement provides that Schmid’s obligation to consummate the Business Combination is conditioned on the amount of cash in the Trust Account (after giving effect to the redemption of Pegasus Class A Ordinary Shares) which together with any cash raised from PIPE investors for issuance of TopCo shares being at least $35,000,000. The conditions to closing in the Business Combination Agreement are for the sole benefit of the parties thereto and may be waived by such parties. In no event will Pegasus redeem its Pegasus Class A Ordinary Shares in an amount that would cause its (or TopCo’s after giving effect to the transactions contemplated by the Business Combination Agreement) net tangible assets to be less than $5,000,001, as provided in the Pegasus Memorandum and Articles of Association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Business Combination Agreement. Pegasus Public Shareholders who wish to redeem their Pegasus Class A Ordinary Shares for cash must refer to and follow the procedures set forth in the section entitled

 

13

 

“Extraordinary General Meeting of Pegasus Shareholders — Redemption Rights” in order to properly redeem their Pegasus Class A Ordinary Shares.

Holders of Pegasus Public Warrants will not have redemption rights with respect to such warrants.

Q:

Can the Sponsor redeem its Founder Shares in connection with consummation of the Business Combination?

​

A:

No. The Sponsor has agreed, for no additional consideration, to waive its redemption rights with respect to its Founder Shares and any Pegasus Class A Ordinary Shares it may hold in connection with the consummation of the Business Combination.

​

Q:

What happens if a substantial number of the Pegasus Public Shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

​

A:

Pegasus Public Shareholders are not required to vote “FOR” the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of public shareholders of TopCo following closing of the Business Combination are reduced as a result of redemptions by Pegasus Public Shareholders.

​

If a Pegasus Public Shareholder exercises its redemption rights, such exercise will not result in the loss of any Pegasus Public Warrants that it may hold. Even if a substantial part of all of the Pegasus Class A Ordinary Shares held by Pegasus Public Shareholders were redeemed, the 11,250,000 outstanding Pegasus Public Warrants would remain outstanding despite such redemptions. If a substantial number of, but not all, Pegasus Public Shareholders exercise their redemption rights, any non-redeeming shareholders would experience dilution to the extent such warrants are exercised and additional TopCo Ordinary Shares are issued.

In no event will Pegasus redeem its Pegasus Class A Ordinary Shares in an amount that would cause its (or TopCo’s after giving effect to the transactions contemplated by the Business Combination Agreement) net tangible assets to be less than $5,000,001, as provided in the Pegasus Memorandum and Articles of Association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Business Combination Agreement.

Additionally, as a result of redemptions, the trading market for the TopCo Ordinary Shares may be less liquid than the market for the Pegasus Class A Ordinary Shares was prior to consummation of the Business Combination and TopCo may not be able to meet the listing standards for NYSE or another national securities exchange.

Q:

Is there a limit on the number of shares I may redeem?

​

A:

Pegasus has no specified maximum redemption threshold under the Pegasus Memorandum and Articles of Association, except that (i) a Pegasus Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a partnership, syndicate, or other group for the purposes of acquiring, holding, or disposing of Pegasus shares, will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Pegasus IPO, without the prior consent of Pegasus and (ii) in no event will Pegasus redeem Pegasus Class A Ordinary Shares in an amount that would cause its net tangible assets to be less than $5,000,001, such that Pegasus is not 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 the Business Combination.

​

Each redemption of Pegasus Class A Ordinary Shares by Pegasus Public Shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $      as of                 , 2023. The Business Combination Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount of cash in the Trust Account (net of any amounts redeemed) and the cash received from any PIPE investors against the issuance of TopCo shares being at least $35,000,000. The conditions to closing in the Business Combination Agreement are for the sole benefit of the parties thereto and may be waived by such parties. In addition, in no event will Pegasus redeem its Pegasus Class A Ordinary Shares in an amount

 

14

 

that would cause its (or TopCo’s after giving effect to the transactions contemplated by the Business Combination Agreement) net tangible assets to be less than $5,000,001, as provided in the Pegasus Memorandum and Articles of Association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Business Combination Agreement.

Q:

Is there a limit on the total number of Pegasus public shares that may be redeemed?

​

A:

Yes. The Pegasus Memorandum and Articles of Association provide that Pegasus may not redeem its Pegasus Class A Ordinary Shares in an amount that would cause its net tangible assets to be less than $5,000,001 (such that Pegasus is not 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 such Business Combination. In this respect, the Business Combination Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount of cash in the Trust Account (net of any amounts redeemed) and the cash received from any PIPE investors against the issuance of TopCo shares being at least $35,000,000. In addition, the Business Combination Agreement provides that, as a condition to each party’s obligation to consummate the Business Combination, TopCo may not have net tangible assets less than $5,000,001 at the Closing Commencement Date (after giving effect to the transactions contemplated by the Business Combination Agreement). The conditions to closing in the Business Combination Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If the Business Combination is not consummated, Pegasus will not redeem any Pegasus Class A Ordinary Shares and all Pegasus Class A Ordinary Shares submitted for redemption will be returned to the holders thereof, and Pegasus instead may search for an alternate business combination.

​

Q:

Will how I vote affect my ability to exercise redemption rights?

​

A:

No. You may exercise your redemption rights whether you vote your Pegasus Class A Ordinary Shares for or against, or whether you abstain from voting on, the Business Combination Proposal, the Merger Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Business Combination Agreement and the Plan of Merger can be approved by shareholders who will redeem their shares and no longer remain shareholders, leaving shareholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer shareholders, potentially less cash and the potential inability to meet the listing standards of NYSE.

​

Q:

How do I exercise my redemption rights?

​

A:

In order to exercise your redemption rights, you must (i) hold Pegasus Class A Ordinary Shares or, if you hold Pegasus Public Units, elect to separate the underlying Pegasus Class A Ordinary Shares and Pegasus Public Warrants prior to exercising your redemption rights with respect to the Pegasus Class A Ordinary Shares, and (ii) prior to 5:00 p.m. Eastern Time on                 , 2023 (two business days before the initial date of the Extraordinary General Meeting), (a) submit a request in writing that Pegasus redeem all or a portion of your Pegasus Class A Ordinary Shares for cash and identify yourself as a beneficial holder and provide your legal name, phone number and address to Continental Stock Transfer & Trust Company (the “Transfer Agent”) at the following email address: spacredemptions@continentialstock.com and (b) deliver your Pegasus Class A Ordinary Shares to the Transfer Agent, physically or electronically, through The Depository Trust Company. If you have questions regarding the certification of your position or delivery of your Pegasus Class A Ordinary Shares, please contact:

​

Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attention: SPAC Redemption Team
Email: spacredemptions@continentalstock.com

You do not have to be a record date holder in order to exercise your redemption rights. Pegasus Public Shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery.

 

15

 

It is Pegasus’s understanding that Pegasus shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Pegasus does not have any control over this process and it may take longer than two weeks. If you hold your Pegasus Class A Ordinary Shares in “street name”, you will have to coordinate with your bank, broker or other nominee to have the shares certificated or delivered electronically.

Holders of Pegasus Class A Ordinary Shares seeking to exercise their redemption rights, whether they are registered holders or hold their shares in “street name” are required to either tender their certificates to the Transfer Agent, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such shareholder’s option, prior to 5:00 p.m. Eastern Time on                 , 2023 (two business days before the initial date of the Extraordinary General Meeting). The requirement for physical or electronic delivery prior to the Extraordinary General Meeting ensures that a redeeming shareholder’s election to redeem is irrevocable once the Business Combination is approved.

Any demand for redemption, once made, may be withdrawn at any time until the vote is taken with respect to the Business Combination at the Extraordinary General Meeting. If you delivered your shares for redemption to the Transfer Agent and decide within the required timeframe not to exercise your redemption rights, you may request that the Transfer Agent return the shares (physically or electronically). You may make such request by contacting the Transfer Agent at the phone number or address listed under the question “Who can help answer my questions?” below.

If you hold Pegasus Public Units registered in your own name, you must deliver the certificate for such Pegasus Public Units to the Transfer Agent with written instructions to separate such Pegasus Public Units into Pegasus Class A Ordinary Shares and Pegasus Public Warrants. This must be completed far enough in advance to permit the mailing of the share certificates back to you so that you may then exercise your redemption rights with respect to the Pegasus Class A Ordinary Shares.

If a broker, dealer, commercial bank, trust company or other nominee holds your Pegasus Public Units, you must instruct such nominee to separate your Pegasus Public Units into Pegasus Class A Ordinary Shares and Pegasus Public Warrants. Your nominee must send written instructions by facsimile to the Transfer Agent. Such written instructions must include the number of Pegasus Public Units to be split and the nominee holding such Pegasus Public Units. Your nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant Pegasus Public Units and a deposit of an equal number of Pegasus Class A Ordinary Shares and Pegasus Public Warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the Pegasus Class A Ordinary Shares from the Pegasus Public Units. While this is typically done electronically on the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your Pegasus Public Units to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

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 a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming shareholder. However, this fee would be incurred regardless of whether or not shareholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.

If the Business Combination is not approved or completed for any reason, then holders of the Pegasus Class A Ordinary Shares who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the cash in the Trust Account and these shares will be returned to such holder or their account.

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

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A:

Subject to the discussion below under “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — Application of the PFIC Rules to the Business Combination — Redemption of Pegasus Ordinary Shares,” the receipt of cash by a U.S. holder (as defined below under the caption “Certain

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Material U.S. Federal Income Tax Considerations”) of Pegasus Ordinary Shares in redemption of such shares will generally be a taxable transaction for U.S. federal income tax purposes. It is also possible that a redemption may be treated as a corporate distribution for U.S. federal income tax purposes depending on the number of Pegasus Ordinary Shares that the U.S. holder owns or is deemed to own. For a detailed discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — Application of the PFIC Rules to the Business Combination — Redemption of Pegasus Ordinary Shares.”

TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF EXERCISING REDEMPTION RIGHTS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXERCISE OF REDEMPTION RIGHTS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.

Q:

What are the material U.S. federal income tax consequences of the Business Combination to me?

​

A:

Certain material U.S. federal income tax considerations that may be relevant to you in respect of the Business Combination are discussed in more detail in the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — The Business Combination.” The discussion of the U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all of the U.S. federal tax considerations that are applicable to you in respect of the Business Combination, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws.

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U.S. holders of Pegasus Warrants are urged to consult with their tax advisors regarding the treatment of their Pegasus Warrants in connection with the Merger.

For an additional discussion of the U.S. federal income tax treatment of Pegasus Warrants in connection with the Merger, including the treatment of a U.S. holder that owns Pegasus Ordinary Shares in addition to Pegasus Warrants, see the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders,” which qualifies the summary above in its entirety.

Q:

If I am a Pegasus warrant holder, can I exercise redemption rights with respect to my Pegasus Public Warrants?

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A:

No. The holders of Pegasus Public Warrants have no redemption rights with respect to such warrants.

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Q:

Do I have appraisal rights or dissenters’ rights if I object to the proposed Business Combination?

​

A:

The Cayman Companies Act prescribes when shareholder appraisal rights will be available and sets the limitations on such rights. Where such rights are available, shareholders are entitled to receive fair value for their shares. However, regardless of whether such rights are or are not available, Pegasus Public Shareholders are still entitled to exercise the rights of redemption in respect to their Pegasus Class A Ordinary Shares as set out herein, and Pegasus’s Board of Directors has determined that the redemption proceeds payable to Pegasus Public Shareholders who exercise such redemption rights represent the fair value of those shares. See the section entitled “Proposal No. 2 — The Merger Proposal — Appraisal Rights Under the Cayman Companies Act” for additional information. Holders of Pegasus Public Units or Pegasus Warrants do not have appraisal rights in respect to such securities in connection with the Business Combination under the Cayman Companies Act.

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Appraisal rights are not available to holders of Schmid shares in connection with the Business Combination.

Q:

Can I exercise redemption rights and dissenter rights under the Cayman Companies Act?

​

A:

No. Any holder of Pegasus Class A Ordinary Shares who elects to exercise appraisal rights under Section 238 of the Cayman Companies Act will lose their right to have their Pegasus Class A Ordinary Shares redeemed in accordance with the Pegasus Memorandum and Articles of Association. The certainty provided by the redemption process may be preferable for Pegasus Public Shareholders wishing to exchange their Pegasus Class A Ordinary Shares for cash. This is because such appraisal rights are likely to be lost and extinguished, including where Pegasus and the other parties to the Business Combination Agreement determine to delay the consummation of the Business Combination in order to invoke the limitation on dissenter rights under Section 239 of the Cayman Companies Act, in which case any holder of Pegasus Class A Ordinary Shares who had sought to exercise appraisal rights would only be entitled to receive the Merger Consideration. See the section entitled “Proposal No. 2 — The Merger Proposal — Appraisal Rights Under the Cayman Companies Act” for additional information.

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Q:

What happens to the funds held in the Trust Account upon consummation of the Business Combination?

​

A:

If the Business Combination is consummated, the funds held in the Trust Account will be used to: (i) pay Pegasus Public Shareholders who properly exercise their redemption rights; (ii) pay $2,441,250 in deferred underwriting commissions to certain of the underwriters of the Pegasus IPO (noting that Barclays Capital Inc. has waived its deferred underwriting commission); and (iii) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by Pegasus and other parties to the Business Combination Agreement in connection with the Business Combination pursuant to the terms of the Business Combination Agreement. In total, we estimate fees and costs overall to be approximately $22 million (thereof approximately $15 million in relation to Pegasus and $7 million for Gebr. Schmid GmbH, which includes expenses for D&O insurance), including the deferred underwriting fees. Any remaining funds as well as any cash generated from potential PIPE investors will be used by TopCo for growth investment and for general corporate purposes.

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Q:

What conditions must be satisfied to complete the Business Combination?

​

A:

There are a number of closing conditions in the Business Combination Agreement, including the approval by Pegasus shareholders of the Business Combination Proposal and the Merger Proposal and the Aggregate TopCo Transaction Proceeds Condition. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “The Business Combination Agreement and Ancillary Documents — Conditions to Closing of the Business Combination.”

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Q:

What happens if the Business Combination Agreement is terminated, or the Business Combination is not consummated?

​

A:

There are certain circumstances under which the Business Combination Agreement may be terminated. Please see the section entitled “The Business Combination Agreement and Ancillary Documents” for information regarding the parties’ specific termination rights.

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If Pegasus does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until December 31, 2023. If Pegasus fails to complete an initial business combination by December 31, 2023 (or a later date approved by Pegasus Shareholders through an amendment to the Pegasus Memorandum and Articles of Association), then Pegasus 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 Pegasus Class A Ordinary 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 Pegasus Class A Ordinary Shares, which redemption will completely extinguish Pegasus Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pegasus’s remaining shareholders and the Pegasus Board, dissolve and liquidate, subject in each case to Pegasus’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Pegasus IPO. Please see the section entitled “Risk Factors — Risks Related to Pegasus” for additional information.

Holders of Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, there will be no redemption rights or liquidating distributions with respect to the Pegasus Public Warrants and Pegasus Private Placement Warrants, which will expire worthless if Pegasus fails to complete an initial business combination by December 31, 2023.

Q:

When is the Business Combination expected to be completed?

​

A:

The closing of the Business Combination is expected to commence on or prior to the third business day following the satisfaction or waiver of the conditions described below in the subsection entitled “The Business Combination Agreement and Ancillary Documents — Conditions to Closing of the Business Combination.” The Business Combination Agreement may be terminated by Pegasus or Schmid if the closing of the Business Combination has not occurred on or prior to the later of December 31, 2023 (the “Termination Date”).

​

For a description of the conditions to the completion of the Business Combination, see the section entitled “The Business Combination Agreement and Ancillary Documents — Conditions to Closing of the Business Combination.”

Q:

What do I need to do now?

​

A:

You are urged to read carefully and consider the information contained in this proxy statement/ prospectus, including the Annexes, and to consider how the Business Combination will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this

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proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q:

How do I vote?

​

A:

If you are a shareholder of record of Pegasus Ordinary Shares on the close of business on the Record Date, there are three ways to vote:

​

Voting Online at the Meeting.   You may vote online by virtually attending the Extraordinary General Meeting at https://www.cstproxy.com/pegasusdigitalmobility/bc2023 and using the 12-digit control number found on your proxy card or notice of the Extraordinary General Meeting. You can pre-register to attend the Extraordinary General Meeting online webcast starting on      , 2023, at 9.00 am, Eastern Time (five business days prior to the meeting date) by entering the following URL address into your browser       and entering your control number, name and email address. Once you pre-register you can vote or enter questions in the chat box during the Extraordinary General Meeting. At the start of the Extraordinary General Meeting, you will need to log in again using your control number and will also be prompted to enter your control number if you vote during the Extraordinary General Meeting. If you do not have your control number, contact the Transfer Agent at spacredemptions@continentalstock.com.

Voting in Person at the Meeting.   You may attend the Extraordinary General Meeting and vote in person at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany to the extent consistent with, or permitted by, applicable law and directives of public health authorities. Shareholders will be provided with a ballot upon entering the meeting. You will need to present valid ID and proof of ownership.

Voting by Proxy.   You can vote by proxy by having one or more individuals who will be at the Extraordinary General Meeting vote your shares for you. These individuals are called “proxies” and using them to cast your ballot at the Extraordinary General Meeting is called voting “by proxy.” If you wish to vote by proxy you must complete, sign and date the enclosed form, called a “proxy card,” and mail it in the envelope provided in accordance with the instructions on the enclosed proxy card, or authorize the individuals named on your proxy card to vote your shares by using the Internet as described in the instructions included with your proxy card. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign, date and return all proxy cards to ensure that all of your shares are voted. Proxies submitted by mail must be received by                 , Eastern Time, on     , 2023, being 48 hours before the time appointed for the holding of the Extraordinary General Meeting (or, in the case of an adjournment, no later than 48 hours before the time appointed for the holding of the adjourned meeting). If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the Business Combination Proposal, the Merger Proposal and the Adjournment Proposal, if presented at the Extraordinary General Meeting. You may still attend the Extraordinary General Meeting and vote even if you have already voted by proxy, with such vote superseding your proxy vote.

If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that the shares you beneficially own are represented and voted at the Extraordinary General Meeting. In this regard, you must instruct your broker, bank or other nominee how to vote the shares you beneficially own, or if you wish to attend and cast your vote at the Extraordinary General Meeting, you must obtain a legal proxy from the shareholder of record and e-mail a copy (a legible photograph is sufficient) of your proxy to proxy@continentalstock.com no later than 72 hours prior to the Extraordinary General Meeting. Holders should contact their broker or bank for instructions regarding obtaining a legal proxy. Holders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the Extraordinary General Meeting.

For additional information, please see the section entitled “Extraordinary General Meeting of Pegasus Shareholders.”

 

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Q:

What will happen if I abstain from voting or fail to vote at the Extraordinary General Meeting?

​

A:

At the Extraordinary General Meeting, a properly executed proxy marked “ABSTAIN” with respect to a particular proposal will be counted as present for purposes of determining whether a quorum is present. For purposes of approval, broker non-votes and abstentions will have no effect on the Business Combination Proposal, the Merger Proposal, or the Adjournment Proposal.

​

Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

​

A:

Signed and dated proxies received by Pegasus without an indication of how the shareholder intends to vote on a proposal will be voted “FOR” the Business Combination Proposal, the Merger Proposal, and the Adjournment Proposal, if presented to the shareholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Extraordinary General Meeting.

​

Q:

If I am not going to attend the Extraordinary General Meeting in person, should I return my proxy card instead?

​

A:

Yes. Whether you plan to attend the Extraordinary General Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided by no later than 48 hours before the time appointed for the Extraordinary General Meeting to commence, or authorize the individuals named on your proxy card to vote your shares by using the Internet as described in the instructions included with your proxy card.

​

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

​

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee.

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Pegasus believes that all of the proposals presented to the shareholders at this Extraordinary General Meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Extraordinary General Meeting. If you do not provide voting instructions, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares. This indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be counted for the purposes of determining the existence of a quorum but will not be counted for purposes of determining the number of votes cast at the Extraordinary General Meeting. Your broker, bank or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker, bank or other nominee to vote your shares in accordance with directions you provide.

Q:

May I change my vote after I have mailed my signed proxy card?

​

A:

Yes. If you are a shareholder of record of Pegasus Ordinary Shares as of the close of business on the Record Date, you can change or revoke your proxy before it is voted at the Extraordinary General Meeting in one of the following ways:

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submit a new proxy card bearing a later date so that it is received no later than 48 hours before the time appointed for the holding of the Extraordinary General Meeting (or in case of an adjournment, no later than 48 hours before the time appointed for the holding of the adjourned meeting);

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•

give written notice of your revocation to Pegasus, which notice must be received by Pegasus prior to the start of the Extraordinary General Meeting; or

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•

attend the Extraordinary General Meeting in person and vote. Please note that your attendance at the Meeting will not alone serve to revoke your proxy. However, should you virtually attend the Extraordinary General Meeting and vote online, such vote will supersede your proxy vote.

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If your shares are held in “street name” by your broker, bank or another nominee, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.

 

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Q:

What should I do if I receive more than one set of voting materials?

​

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/​prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

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Q:

Who will solicit and pay the cost of soliciting proxies for the Extraordinary General Meeting?

​

A:

Pegasus will pay the cost of soliciting proxies for the Extraordinary General Meeting. Pegasus has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the Extraordinary General Meeting. Pegasus has agreed to pay Morrow its customary fee, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. Pegasus will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Pegasus Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of Pegasus Ordinary Shares and in obtaining voting instructions from those owners. The directors, officers and employees of Pegasus may also solicit proxies by telephone, by facsimile, by mail, on the Internet, or in person. They will not be paid any additional amounts for soliciting proxies.

​

Q:

Who can help answer my questions?

​

A:

If you have questions about the proposals or if you need additional copies of this proxy statement/​prospectus or the enclosed proxy card you should contact:

​

Pegasus Digital Mobility Acquisition Corp.
660 Steamboat Road,
Greenwich, CT 06830
United States
Attention: Investor Relations
Email: investor-relations@pegasusdm.com

You may also contact the proxy solicitor for Pegasus at:

Individuals, please call toll-free: +1 (800) 662-5200
Banks and brokerage, please call: +1 (203) 658-9400
Email: PGSS.info@investor.morrowsodali.com

To obtain timely delivery, Pegasus shareholders must request the materials no later
than, 2023, or five business days prior to the Extraordinary General Meeting.

You may also obtain additional information about Pegasus from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you have questions regarding the redemption of your Pegasus Class A Ordinary Shares, including with respect to the certification of your position or delivery of your shares, please contact the Transfer Agent:

Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attention: SPAC Redemption Team
Email: spacredemptions@continentalstock.com

 

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Pegasus Board’s Reasons for Approval of the Business Combination

The Pegasus Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated thereby, including but not limited to, the following material factors:

Please see the section entitled “The Business Combination — The Pegasus Board’s Reasons for the Business Combination” for additional information.

The Extraordinary General Meeting of Pegasus Shareholders

Date, Time and Place of Extraordinary General Meeting

The Extraordinary General Meeting of Pegasus shareholders will be held on   , 2023, at 9.00 am Eastern Time, at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany and virtually over the internet via live audio webcast at https://            .

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Material Tax Considerations

For a detailed discussion of certain U.S. federal income tax consequences and Cayman Islands, Dutch and German tax consequences of the Business Combination, see the sections titled “Certain Material U.S. Federal Income Tax Considerations,” “Certain Material Cayman Islands Tax Considerations,” “Certain Material Dutch Tax Considerations — TopCo Ordinary Shares and TopCo Warrants,” and “Certain Material German Tax Considerations — TopCo Ordinary Shares and TopCo Warrants,” respectively, in this proxy statement/prospectus.

Holders of Pegasus Ordinary Shares and Pegasus Public Warrants should read carefully the information included under “Material Tax Considerations” for a detailed discussion of material U.S. federal income tax consequences of the Merger and the Cayman Islands, German and Dutch tax consequences of the Business Combination, including the receipt of cash pursuant to the exercise of redemption rights with respect to the Pegasus Class A Ordinary Shares, and the material U.S. federal and Cayman Islands, German and Dutch tax consequences of the ownership and disposition of TopCo Ordinary Shares and TopCo Public Warrants after the Business Combination. Holders of Pegasus Ordinary Shares and Pegasus Public Warrants are urged to consult their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or other income and other tax laws) of the Business Combination, including the U.S. federal income tax consequences and the Cayman Islands, German and Dutch tax consequences of the acquisition holding, redemption and disposal of TopCo Ordinary Shares or acquisition, holding, exercise or disposal of TopCo Public Warrants.

Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a capital reorganization. Under this method of accounting, Pegasus will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Schmid issuing shares at the closing of the Business Combination for the net assets of Pegasus as of the closing date, accompanied by a recapitalization. The net assets of Pegasus will be stated at historical cost, with no goodwill or other intangible assets recorded.

Schmid has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

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Additionally, competitors could benefit from favorable tax regimes or additional governmental grants and subsidies. Certain of our competitors in various countries in which we do business, including China, may be owned by or affiliated with members of local governments and political entities. These competitors may receive special treatment with respect to regulatory compliance and product registration, while certain of our products, including those based on new technologies, may be delayed or even prevented from entering into the local market.

Escalating trade tensions, for example between the United States and China, can also lead to restrictions on the import and export of certain goods and technologies to or from certain countries. Further, additional trade import taxes can create disruption in competitiveness. Disruption in the global supply chain due to an escalation of trade tensions, the outbreak of war, a disease epidemic or other unexpected situation can cause certain services, goods and materials to be unavailable or in limited supply and can further limit production capability and result in an inability to produce equipment for customers within an acceptable timeframe and at the needed volume. Such disruptions can have a material impact on our business, results of operations and financial condition. in time and in the needed volume.

We are currently in the process of patenting the technology for embedded traces (“ET”) which we believe is the next level technology for high-end PCBs & substrates. We believe we are the only acter in the market that is currently able to supply equipment for ET production and our best estimate, based on third-party data from a leading international consultancy firm, assumes that the ET market for high-end PCB equipment will grow substantially starting in 2024. If competitors concentrate on the ET as well and develop either better or more cost competitive processes and machinery, we could fail to capture the growth we expect in the ET market, which could have a material adverse effect on our business, financial condition, and results of operations.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty products, equipment and services.

We have maintained a strong reputation in the electronics and photovoltaics industries for more than 155 years. Our products, equipment and services are associated with long-lasting and reliable high quality.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty products, equipment and services and to attract and retain customers. Negative publicity regarding our company or actual, alleged, or perceived issues regarding one of our products or services, particularly given the high cost-of-failure nature of our products and services, could harm our relationships with customers and may adversely affect our credibility and our business.

Our business is dependent on the continued acceptance by our customers of our existing products and services and the value placed on them. If these products and services do not maintain market acceptance, our revenues may decrease. A portion of our sales originate from our worldwide customer-oriented services, which is an important element of our business. If we do not devote sufficient resources or are otherwise unsuccessful in assisting our customers effectively with the products sold to them, we could adversely affect our ability to retain existing customers and could discourage prospective customers from adopting our services. We may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. We may also be unable to modify the nature, scope and delivery of our customer support to compete with changes in the support services provided by our competitors. Increased demand for customer support, without corresponding revenue, could increase costs and adversely affect our business, results of operations and financial condition.

We are also continually investing in new product development to expand our offerings beyond our traditional products and services. Market acceptance of any new products or services may be affected by customer confusion surrounding our introduction of new products and services. Our expansion into new offerings may present increased risks and efforts to expand beyond our traditional products and services may not succeed. However, if we do not continue to innovate and provide innovative machinery and technological solutions that are competitive within our industry, we may lose customers, and our revenues and results of operations could suffer.

Through our products, we have established ourselves as one of the leaders in quality and innovation in the markets in which we operate. For that reason, our customers are willing to pay above market prices for

 

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our machinery and technological solutions. If we do not continue to innovate and provide innovative machinery and technological solutions that are competitive within our industry, our customers may no longer be willing to pay above market price for our machinery and technological solutions or may move to our competitors. Our customers moving to our competitors could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our business is subject to constant and rapid technological change, product obsolescence, price erosion, evolving standards, and raw material price fluctuations. The industry is currently affected by localization and a shift in customers’ businesses. In particular, there is currently a reorganization of the global supply chain underway, with a focus on decreasing dependency on China. The trends and characteristics in these industries may cause significant fluctuations in our results of operations and cash flows and have a material adverse effect on our financial condition. Our growth and success depend upon our ability to enhance our existing products and services and to develop and introduce new products and services to keep pace with such changes and developments and to meet changing customer needs and preferences. However, newer products or services may not achieve market acceptance if current or potential customers do not value the benefits of using our products, do not achieve favorable results using our products, use their budgets for different products, experience difficulties in using our products, or believe that our products are not cutting edge or do not add as much value as our competition’s products. If these newer products and services do not achieve market acceptance, there could be a material adverse effect on our business, financial condition, and results of operations and our profitability could decline. Additionally, changes, including technological changes, in our customers’ products or processes may make our specialty machines unnecessary or reduce the quantity of our specialty machines needed for a given product or process, which would reduce the demand for such. We have had, and may continue to have, customers who find alternative materials or processes and therefore no longer require our products, which could have a material adverse effect on our business, financial condition, and results of operations. Further, our plans for operating our business and leading further growth include adding new products and services. These investments could contribute to losses, and we cannot guarantee whether or when any of these plans will be successful with customers or result in an improvement in profits for our business.

In addition, we may fail to anticipate the impact of new and emerging technology or changes in trends, fail to accurately determine market demand for new products and services, experience cost overruns, delays in delivery or performance problems, or create market confusion by making changes to our existing products and services. If we are not successful in obtaining acceptance for new products or services, demand for our products and services may decline and/or we may not be able to grow our business or growth may occur more slowly than we anticipate. Some of our current or future products or services could also be rendered obsolete as a result of competitive offerings or market shifts. Furthermore, if our customers deviate from the envisaged timeline for the introduction of new technology, the sales of our newer products could be adversely affected. Failure to anticipate or quickly adapt to changes in our customers’ product introduction timelines could have a material adverse effect on our business, financial condition, and results of operations.

Our profitability could suffer if our cost management strategies are unsuccessful, or our competitors develop an advantageous cost structure that we cannot match.

Our ability to improve or maintain our profitability is dependent on our ability to successfully manage our costs. Our cost management strategies include maintaining appropriate alignment between the price of raw materials, the demand for our offerings and our resource capacity and maintaining or improving our sales and marketing and general and administrative costs as a percentage of revenues. If our cost management efforts are not successful, our efficiency may suffer, and we may not achieve desired levels of profitability. In addition, we may not be able to implement our cost management efforts in a manner that permits us to realize the cost savings we anticipate in the time, manner, or amount we currently expect, or at all due to a variety of risks, including, but not limited to, difficulties in integrating shared services within our business, higher than expected employee severance or retention costs, higher than expected overhead expenses, delays in the anticipated timing of activities related to our cost savings plans, and other unexpected costs associated with operating our business. If we are not effective in managing our operating costs in response to changes in demand or pricing, or if we are unable to absorb or pass on increases in the compensation of our employees or costs of raw materials, we may not be able to invest in our business in an amount necessary to achieve

 

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our planned rates of growth, and our business, financial condition, and results of operations could be materially adversely affected.

It may be possible for our current or future competitors to gain an advantage in product technology, manufacturing technology, or process technology, which may allow them to offer products or services that have a significant advantage over our offerings. Advantages could be in price, capacity, performance, reliability, serviceability, industry standards or formats, brand and marketing, or other attributes. If we do not compete successfully by developing and deploying new cost-effective products, processes, and technologies on a timely basis and by adapting to changes in our industry and the global economy, there could be a material adverse effect on our business, financial condition, and results of operations. Similarly, our products are used by manufacturers of component parts for a variety of industries. To the extent these industries become more sensitive to input costs, we may face price pressure. Our ability to respond to such pressures depends on the strength and viability of our internal cost management and pricing programs. Any failure of these programs could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to continuously develop new, improved and more cost-effective technologies and products, this could have a material adverse effect on our business, financial condition and results of operations.

We depend on our continued ability to develop new, improved and more cost-effective technologies and products, to produce the same in a cost-effective manner and to commercialize and distribute new products successfully. The trend towards commoditization and standardization in some of our markets is further increasing the importance of research and development as we need to offer specialized products that are offering higher value to customers in order to achieve satisfactory margins.

We may not be able to successfully and constantly adapt, expand and improve our research and development activities, product portfolio and our marketing strategy in a timely manner and to the necessary extent, or may lack the capacity to invest the required level of human or financial resources in the development of new products required to respond to the existing trends and future changes. Competitors, in particular those with greater financial resources, might be able to outperform us by developing new technologies or products with favorable characteristics. In addition, the market for a newly developed technology or product may unexpectedly decline or could even disappear. In such case, all or part of our investments in the development of the relevant technology or product, which might be substantial, may be lost.

If we fail to continuously develop new, improved and more cost-effective technologies and products and to constantly adapt our research and development activities, product portfolio and marketing strategy to new trends and technological changes, this could have a material adverse effect on our business, financial condition and results of operations.

Our direct customers and their direct and indirect customers face numerous competitive challenges, which may materially adversely affect their business and ours.

Factors adversely affecting our direct customers and their direct and indirect customers may also adversely affect us. These factors include recessionary periods in their markets, their inability to adapt to rapidly changing technology and evolving industry standards, their inability to develop, market, or gain commercial acceptance of their products, some of which are new and untested and their products becoming commoditized or obsolete. Our customers are also subject to a highly competitive consumer products industry, which may have shorter product lifecycles, shifting end-user preferences, and higher revenue volatility.

If our customers or our customers’ direct and indirect customers in the ultimate end-markets are unsuccessful in addressing these competitive challenges, their businesses may be materially adversely affected, reducing the demand for our offerings, decreasing our revenues, or altering our production cycles and inventory management, each of which could have a material adverse effect on our business, financial condition, and results of operations.

 

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Our revenue, earnings, and other operating results have fluctuated in the past and may fluctuate in the future.

If demand for our products fluctuates as a result of economic conditions or for other reasons, our revenue and profitability could be impacted. Our future operating results will depend on many factors, including the following:

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business, political, and macroeconomic changes, and the overall global economy;

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wars or epidemic events;

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changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices;

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fluctuations in demand for our customers’ and their customers’ products;

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our ability to forecast our customers’ demand for our products accurately;

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our ability to anticipate secular trends that affect demand for our products and the degree to which those trends materialize;

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our customers’ ability to manage the inventory that they hold and to forecast accurately their demand for our products;

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our ability to achieve cost savings and improve yields and margins on our new and existing products; and

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our ability to utilize our capacity efficiently or acquire additional capacity in response to customer demand.

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It is likely that our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.

Any disruptions to our supply chain, significant increase in material costs, or shortages of critical components, could adversely affect our business and result in increased costs.

Any disruptions to our supply chain, significant increases in the cost of materials or shortages of critical components, could adversely affect our business and result in increased costs. Such a disruption could occur as a result of any number of events, including, but not limited to: market shortages due to surge in demand for any particular part or component, increases in prices or impact of inflation, the imposition of regulations, quotas or embargoes on components, labor stoppages, transportation delays or failures affecting the supply chain and shipment of materials and finished goods, supply bottlenecks resulting from plant closures and production adjustments due to public health crises, such as pandemics and epidemics, third-party interference in the integrity of the parts and components sourced through the supply chain, the unavailability of raw materials, severe weather conditions, adverse effects of climate change, natural disasters, geopolitical developments, war or terrorism, and disruptions in utilities and other services. In addition, any future updates or modifications to the anticipated design of Schmid products may increase the number of parts and components we would be required to source and increase the complexity of our supply chain management. Failure to effectively manage the supply of parts and components could materially and adversely affect our results of operations, financial condition and prospects.

Any continued decline or disruption in the photovoltaics, and electronics markets or any economic downturn or uncertainty, in particular in Europe and Asia, could materially adversely affect our business, results of operations, and financial condition.

In recent years, we have generated a large percentage of our revenue in China and Europe. Any continued decline or disruptions in those markets, especially in respect to the photovoltaics and electronics market, could have a direct impact on our business. Trends in nearshoring global semiconductor supply chains could also directly impact our business as customers may choose to move to competitors whose production facilities are closer to their factories. We have also historically been impacted by economic declines or disruptions in those markets, for example the outbreak of the COVID-19 pandemic which led to severe

 

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interruptions to business operations generally and within China in particular. Any similar decline or disruption in the future could materially adversely affect our business, results of operations, and financial condition.

Our performance also depends on the financial health and strength of our customers, which in turn is dependent on the economic conditions of the markets in which we and our customers operate. Declines or uncertainties in Europe, the United States, China and other global economies may lead customers to delay or reduce purchases of our products and services as they take measures to reduce their operating costs, including by delaying the development or launch of new products and brands and/or reducing R&D spending generally.

We are also sensitive to general trends and changes in the key markets we serve. Some of these markets, including the market for substrate manufacturing, exhibit a degree of cyclicality. Decisions to purchase our products and equipment are largely the result of the performance of these and other end-markets. If demand for output in these end-markets decreases, demand for our offerings will decrease as well. Demand for the products produced by customers in our end-markets is impacted by numerous factors, including macroeconomic conditions, prices of commodities, rates of infrastructure spending, consumer confidence and spending, labor conditions, and fuel costs, among others. For example, public skepticism of autonomous driving may negatively impact the demand for high-frequency sensors, which could result in decreased demand for our products. Increases or decreases in these variables globally may significantly impact the demand for our offerings and could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to accurately predict demand in our end-markets or of the customers we serve, we may be unable to meet our customers’ needs, resulting in the loss of potential sales. Alternatively, we may manufacture excess products, resulting in increased inventories and overcapacity in our manufacturing facilities, increasing our incremental production costs and decreasing our operating margins.

In addition, mergers or consolidations among our customers could reduce the number of our customers and potential customers. Consolidation in certain industries that we serve might also adversely affect or otherwise impact our revenues even if these events do not reduce the activities of the consolidated entities. When entities consolidate, overlapping services previously purchased separately are usually purchased only once by the consolidated entity, leading to loss of revenues. In addition, consolidated entities can better negotiate pricing terms while reducing spending on other services that were previously purchased by one of the merged or consolidated entities which may be deemed unnecessary or cancelled. Any such developments among our customers could have material adverse effect on our business, financial condition, and results of operations.

Most of our revenue is derived from our electronics business and while we believe that the business we operate in will grow significantly in the future, this may not materialize.

While we focus on several sectors such as electronics and photovoltaics, the majority of our revenue is achieved from our business with electronics customers. If one or more of the products and services we offer in this business area does not continue to remain profitable or we fail to maintain the quality of the products we offer for any reason, our business, financial condition, and results of operations may be materially adversely affected.

In particular, in our best estimate, based on third-party data from a leading international consultancy firm, the ET market for high-end PCB equipment will grow substantially starting in 2024. If the high-end PCB equipment market develops differently, for instance if traditional process technologies or other new technologies continue to capture most or all of the high-end PCB equipment market, we would not be able to grow our own revenues through our ET process technology, which could have a material adverse effect on our business, financial condition, and results of operations.

Our future business plans are formulated on the expectation of positive long-term trends and drivers in the market in which we operate. Key drivers of this growth are technology such as mobile devices and wearables as well as automotive and mobility innovations. If our expectations and estimates are not correct or do not materialize in the manner in which we anticipate, this could have a negative impact on our future business plans and results of operations.

 

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Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Difficult global economic conditions, including concerns about sovereign debt and significant volatility in the capital, credit, and commodities markets, could have a material adverse effect on our business, financial condition, results of operations, and cash flows. These global economic factors, combined with low levels of business and consumer confidence and high levels of unemployment, precipitated a slow recovery from the global recession and from time to time create a concern about a return to recessionary conditions. These difficult conditions and the overall economy can affect our business in several ways. For example:

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as a result of the volatility in commodity prices, we may encounter difficulty in achieving sustained market acceptance of past or future price increases, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows;

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under difficult market conditions, there can be no assurance that borrowings under our revolving credit facility would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all;

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in order to respond to market conditions, we may need to seek waivers from certain provisions in financing agreements, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all;

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market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity, or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly; and

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market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.

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In general, downturns in economic conditions can cause fluctuations in demand for our and our customers’ products, product prices, volumes, and margins. Future economic conditions may not be favorable to our industry and future growth in demand for our products, if any, may not be sufficient to alleviate any existing or future conditions of excess industry capacity. A decline in the demand for our products or a shift to lower margin products due to deteriorating economic conditions could have a material adverse effect on our business, financial condition, and results of operations and could also result in impairments of certain of our assets. We do not know if market conditions or the state of the overall economy will maintain its current course, improve, or decline in the near future. We cannot provide assurance that any decline in economic conditions or economic downturn in one or more of the geographic regions in which we sell our products would not have a material adverse effect on our business, financial condition, and results of operations.

Foreign currency exchange rate fluctuations and volatility in global currency markets could have a material adverse effect on our business, financial condition, and results of operations.

Our combined financial statements are presented in Euros. Our international sales and operations expose us to fluctuations in foreign currency exchange rates. These movements in exchange rates may cause our revenues and expenses to fluctuate, impacting our profitability and cash flows and our results generally.

A significant part of our costs and revenues is denominated in currencies other than the Euro, with the significant majority of our non-Euro denominated revenues being in RMB and a significant majority of our costs being denominated in Euro. Because a majority of our revenues and costs are denominated in currencies other than the Euro, changes in foreign currency exchange rates, in particular a depreciation of the Euro against the RMB, could reduce our ability to service our debt.

These risks related to exchange rate fluctuations and currency volatility may increase in future periods as our operations outside of Europe continue to expand. Consequently, our business, financial condition, and results of operations may be materially adversely affected by fluctuations in currency exchange rates.

 

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Natural disasters, catastrophes, fire, or other unexpected events could have a material adverse effect on our business, financial condition, and results of operations.

Many of our business activities involve substantial investments in manufacturing facilities. These facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes, and earthquakes, or by catastrophes, fire or other unexpected events such as adverse weather conditions or other disruptions to our facilities, supply chain, or our customers’ facilities. We could incur uninsured losses and liabilities arising from any such events, including damage to our reputation, and/or suffer severe impairments to our operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.

Any natural disaster, catastrophe, fire, or other unexpected event could result in personal injury and loss of life, damage to property, and contamination of the environment, which may result in a shutdown of our facilities, suspension of operations, and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs, and claims by governmental entities or third parties. We are dependent on the continued operation of our production facilities, and the loss or shutdown of operations over an extended period at any of our other major operating facilities could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to retain existing key customers, or if our key customers fail to grow their own sales in the future, our business, results of operations, and financial condition could be materially adversely affected.

We have a concentrated customer base and are dependent on a small number of significant customers in the technology sector for a large percentage of our sales and revenue. For fiscal year 2022, the two largest customers measured in terms of sales volume represented approximately 39% of our revenues and the ten largest customers represented approximately 76% of our revenues. If we fail to retain these key customers our own results could be materially adversely impacted.

After introducing our products into their operations, our customers often become highly dependent on our continued provision of products and services. This means that a part of our revenue is derived from subsequent business following the original customer purchase. If such customers were to switch to other providers, we would lose revenue from both initial business as well as subsequent business from follow-on sales and services.

Further, our key customers may fail to grow their own sales in the future which may result in withdrawing from business with us. Loss of any such customer or any disruption in our relationship with such customers could result in decreased revenues. If we are unable to replace revenue generated by one or more of our major customers, our revenue may significantly decrease, which would have a material adverse effect on our business, financial condition, and results of operations.

Our business, financial condition, and results of operations could be adversely affected by decreases in the average selling prices of products.

Decreases in the average selling prices of our products may have a material adverse effect on our business, financial condition, and results of operations. Our ability to maintain or increase our profitability will continue to be dependent, in large part, upon our ability to offset decreases in average selling prices by improving production efficiency or by shifting to higher margin products. In the past, we have elected to discontinue selling certain products as a result of sustained material decreases in the selling price of such products and our inability to effectively offset such decrease through shifts in operations. If we are unable to respond effectively to decreases in the average selling prices of our products in the future, our business, financial condition, and results of operations could be materially adversely affected. Further, while we may elect to discontinue products that are significantly affected by such price decreases, we can provide no assurance that any such discontinuation will mitigate the related declines in our financial condition.

We may be required to record an impairment charge on our accounts receivable if we are unable to collect the outstanding balances from our customers.

We typically pre-finance a large portion of development services and resources for manufacturing customer-specific products and frequently sell products and services to customers on credit. While we carry

 

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out credit checks for our customers and generally require down payments for orders, there is a risk of delay for payments of the remaining amounts or that customers do not fulfil their payment obligations in full. We estimate the collectability of our accounts receivable based on our analysis of the accounts receivable, historical bad debts, customer creditworthiness, and current economic trends. We continuously monitor collections from our customers and maintain adequate impairment allowance for doubtful accounts. However, if the bad debts significantly exceed our impairment allowance, we may be required to record an impairment charge and our business, financial condition, and results of operations could be materially adversely affected.

Economic, financial, geopolitical, epidemiological, or other conditions could result in business disruptions which could seriously harm our future revenue and financial condition and increase our costs and expenses.

Concerns over inflation, geopolitical issues, the U.S. financial markets, foreign exchange rates, capital and exchange controls, unstable global credit markets and financial conditions, the COVID-19 pandemic, supply chain disruptions and economic issues have led to periods of significant economic instability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, and increased unemployment rates. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly and more dilutive. In addition, there is a risk that one or more of our current or future service providers, manufacturers, suppliers and other partners could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.

Our operations, and those of third-party contractors and consultants upon which we rely, could be subject to wildfires, earthquakes, tsunamis, power shortages or outages, floods or monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war (including trade wars), political instability or other conflicts, and other natural or man-made disasters or other events outside of our control that could disrupt our business. In February 2022, armed conflict escalated between Russia and Ukraine. The sanctions announced by the United States and other countries, following Russia’s invasion of Ukraine, against Russia to date include restrictions on selling or importing goods, services or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia. It is not possible to predict further actions by the United States and other countries and the broader consequences of this war, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition and results of operations.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our ability to obtain supplies and materials for the production of our products could be disrupted if the operations of our suppliers are affected by a man-made or natural disaster or other business interruption. Damage or extended periods of interruption to our corporate, development or research facilities due to fire, natural disaster, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay the marketing or development of some or all of our products and services. Although we maintain property damage and business interruption insurance coverage, our business, financial condition, and results of operations may be seriously harmed should the losses we suffer as a result of such property damage and/or business interruption substantially exceed our insurance coverage and we are required to make up for this shortfall.

Risks Related to our Operations

Our global operations subject us to increased risks.

We have global operations and, accordingly, our business is subject to risks resulting from differing legal and regulatory requirements, political, social, and economic conditions, and unforeseeable developments in a variety of jurisdictions. We have a significant presence in several major regions, including certain

 

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emerging markets such China, and we plan to continue and diversify global expansion. Our global operations are subject to the following risks, among others:

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political instability, including regime changes, and corruption;

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acts of terrorism and military actions in response to such acts;

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unexpected changes in regulatory environments and government interference in the economy;

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changes to economic sanctions laws and regulations, including regulatory exemptions that currently authorize certain of our limited dealings involving sanctioned countries;

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increasingly stringent laws related to privacy and consumer and data protection, including the EU General Data Protection Regulation and US State privacy and security breach notification laws;

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international trade disputes that could result in tariffs or other protectionist measures;

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social unrest, crime, strikes, riots and civil disturbances;

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varying tax regimes, including with respect to the imposition of confiscatory taxes, other unexpected taxes, or withholding taxes on remittances and other payments by our partnerships or subsidiaries;

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differing labor regulations, particularly in Germany and China where we have a significant number of employees;

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rising wages and rates of inflation;

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fluctuations in foreign currency exchange rates and foreign exchange controls and restrictions on repatriation of funds;

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the outbreak of disease pandemics and responsive governmental measures;

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inability to collect payments, or seek recourse under, or comply with ambiguous or vague commercial or other laws;

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difficulty in obtaining, or denial of, export licenses or delay or interruption of the transportation of our products;

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differing protections for intellectual property rights;

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increased risk of cybersecurity incidents and cyberattacks from third-party and state actors and privacy violations;

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difficulties in attracting and retaining qualified management and employees;

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increased credit risk and different financial conditions of customers and distributors may necessitate longer payment cycles of accounts receivable or result in increased bad debt write-offs (including due to bankruptcy) or additions to reserves;

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differing business practices, which may require us to enter into agreements that include non-standard terms; and

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difficulties in penetrating new markets due to entrenched competitors, lack of recognition of our brand, and lack of local acceptance of our products and services.

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Our overall success as a global business depends, in part, on our ability to anticipate and effectively manage these risks, but there can be no assurance that we will be able to do so without incurring unexpected costs. If we are not able to manage the risks related to our international operations, our business, financial condition, and results of operations may be materially adversely affected.

Our business in various markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends, in part, upon our ability to succeed in different legal, regulatory, economic, social, and political conditions. We may not succeed in developing and implementing policies and strategies which will be effective in each location where we do business. Furthermore, any of the foregoing factors or any combination thereof could have a material adverse effect on our business, financial condition, and results of operations.

 

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We may also face difficulties managing and administering an internationally dispersed business. In particular, the management of our personnel across several countries can present logistical and managerial challenges. Additionally, international operations present challenges related to operating under different business cultures and languages. We may have to comply with unexpected changes in foreign laws and regulatory requirements, which could negatively impact our operations and ability to manage our global financial resources. Export controls or other regulatory restrictions could prevent us from shipping our products into and from some markets. Moreover, we may not be able to adequately protect our trademarks and other intellectual property overseas due to uncertainty of laws and enforcement in several countries relating to the protection and enforcement of intellectual property rights.

Changes in tax regulations in Germany or the United States and other jurisdictions, including under and with respect to bilateral and multilateral tax treaties, or the interpretation thereof, could significantly reduce the financial performance of our foreign operations or the magnitude of their contributions to our overall financial performance. In addition, the interpretation and application of consumer and data protection laws in the United States, Europe, and elsewhere are often uncertain, contradictory, and in flux. It is possible that any such newly introduced or amended laws are interpreted and applied in a manner that is inconsistent with our data practices. If so, this could result in government-imposed fines or orders requiring that we change our data practices, which could have an adverse effect on our business. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

We are not insured against all potential risks.

To the extent available, we maintain insurance coverage that we believe is customary in our industry, covering our respective properties, operations, personnel, and businesses. Such insurance does not, however, provide coverage for all liabilities, including certain hazards incidental to our business, and we can provide no assurance that our insurance coverage will be adequate to cover claims that may arise or that we will be able to maintain adequate insurance at rates we consider reasonable. For example, the occurrence of a significant business interruption in the operation of one or more of our key facilities, countries, business partners, or systems could result in liability to us that is not insured and therefore could have a material adverse effect on our business, financial condition, and results of operations. In addition, our products are used in or integrated with many high-risk end-products and therefore if such products were involved in a disaster or catastrophic accident, we could be involved in litigation arising out of such incidents and susceptible to significant expenses or losses.

In the event of a total or partial loss affecting any of our property, certain items of equipment and inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to obtain replacement units or inventory may cause significant delays, which may have a material adverse effect on our business, financial condition, and results of operations. In addition, certain zoning laws and regulations may prevent rebuilding substantially the same facilities in the event of a casualty, which may have a material adverse effect on our business, financial condition, and results of operations.

As a result, we cannot assure you that we are insured against all potential risks or for those risks that are covered by insurance that the insurance proceeds will compensate us fully for our losses, which could result in a material adverse effect on our business, financial condition, and results of operations.

Our ability to use and operate certain portions of our facilities may be limited by the validity of, or a default or termination under, our real property leases.

Certain portions of our facilities are leased from third-party landlords, and we expect to lease facilities in the future. The invalidity of, or default or termination under, any of our leases may interfere with our ability to use and operate all or a portion of certain of our facilities, which may have a material adverse effect on our business, financial condition, and results of operations.

Our operations and assets in foreign jurisdictions may be subject to significant political and economic uncertainties.

We operate and have subsidiaries and partners in various jurisdictions such as China, Taiwan, South Korea, Malaysia, United States and Saudi Arabia. Changes in laws and regulations, or their interpretation,

 

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or the imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency, or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, financial condition, and results of operations of our subsidiaries. For example, under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

If we repatriate funds from our operations in foreign jurisdictions, in order to fund our working capital requirements in other jurisdictions, to pay dividends, or otherwise, we may be required to comply with the procedures and regulations of applicable law, which may significantly limit our ability to extract cash from such operations. For instance, under the Chinese Enterprise Income Tax Law and the regulation on the implementation of the Enterprise Income Tax Law, absent application of a relevant treaty, withholding tax at 10% will normally apply to dividends payable to non-Chinese investors which are derived from sources within China. Any changes to these procedures and regulations, implementation of such legislation in other jurisdictions or our failure or inability to comply with these or other aspects of these or other procedures and regulations, could prevent us from repatriating funds from our operations or subject us to other forms of taxation and/or penalties, which could have a material adverse effect on our business, financial condition, and results of operations. Failure to comply with applicable laws, regulations and/or rules in relation to foreign exchange control, including but not limited to the Administrative Regulations on Foreign Exchange of China, could subject us to administrative penalties (such as warnings and/or fines), as well as potential criminal liabilities in severe situations.

The foreign economies may differ from the economies of Germany or U.S. in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. While such economies may have experienced significant growth in the past 30 years, growth may have been uneven, both geographically and among various sectors of the economy. Such economies may not continue to grow and if there is growth, such growth may not be steady and uniform. If there is a slowdown, such slowdown may have a negative effect on our business and operations in such economies as well as on our business in general. We can provide no assurance that the various macroeconomic measures and monetary policies adopted by the foreign governments to guide economic growth and the allocation of resources will be effective in sustaining the growth rate of the respective foreign economies. If growth of such economies stagnates or there is an economic downturn in such economies, our business, financial condition, and results of operations may be materially adversely affected.

In foreign jurisdictions, government may control the currency conversion and expatriation of funds which may affect our liquidity and increase our regulatory compliance burden.

We operate and have subsidiaries in various jurisdictions such as China, Taiwan, Korea, Malaysia and Saudi Arabia. Any government-imposed control of currency conversion and expatriation of funds may affect our liquidity and increase our regulatory compliance burden. For example, the Chinese government has imposed controls on the convertibility of the currency of China (the “RMB”) into foreign currencies and, in certain cases, the remittance of currency out of China. Substantially all revenues of our subsidiaries organized under the laws of China are denominated in RMB. Shortages in the availability of foreign currency in China may restrict the ability of our Chinese subsidiaries to remit sufficient foreign currency to pay dividends or to make other payments to us, or otherwise to satisfy their foreign currency-denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade-related payments, can be made in foreign currencies without prior approval from China’s State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements, including, among others, submission of relevant documentary evidence of such transactions to designated foreign exchange banks in China for processing of relevant payments. We are required to present relevant documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks in China. However, for any Chinese company, dividends can be declared and paid only out of the retained earnings of that company under Chinese law and may be subject to taxation. In accordance with relevant Chinese laws and provisions in their articles of association, each of our Chinese subsidiaries is required to set aside 10% of its after tax profits based on Chinese accounting standards as statutory reserve until such reserve reaches 50% of its registered capital. As a result, our

 

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Chinese subsidiaries may be restricted in their ability to transfer cash outside of China whether in the form of dividends, loans or advances. These restrictions and requirements could reduce the amount of distributions that we receive from our subsidiaries, which would restrict our ability to fund our operations, generate income, pay dividends, and service our indebtedness.

Furthermore, approval from SAFE or its local branch is required where RMB are to be converted into foreign currencies and remitted out of China for payments of capital account items, such as the repayment of loans denominated in foreign currencies. Without a prior approval from SAFE or its local branch, cash generated from the operations of our Chinese subsidiaries may not be used to repay debt in a currency other than the RMB owed by such subsidiaries to entities outside China, or make other payments of capital account items outside China in a currency other than the RMB. The Chinese government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. In the current regime of stringent regulation of outflow of capital, RMB outflow may face the same level of scrutiny by the Chinese government as the outflow of foreign currencies.

Additionally, because repatriation of funds of our Chinese subsidiaries requires the prior approval of SAFE and/or its authorized bank and/or compliance with certain procedural requirements, such repatriation could be delayed, restricted, or limited. There can be no assurance that the rules and regulations pursuant to which SAFE grants or denies such approval or stipulates the procedural requirements will not change in a way that adversely affects the ability of our Chinese subsidiaries to expatriate funds out of China. Future measures, including any additional requirements to repatriate profits earned in China, may increase our regulatory compliance burden.

Such legislation may be imposed in other jurisdictions where we operate which may affect our liquidity and increase our regulatory compliance burden which may materially adversely affect our business, financial condition, and results of our operations.

Uncertainties presented by the foreign legal systems could limit the legal protections available to us and subject us to legal risks, which could have a material adverse effect on our business, financial condition, and results of operations.

We operate and have subsidiaries and partners in various jurisdictions such as China, Taiwan, Korea, Malaysia, the United States and Saudi Arabia. Our operations in foreign jurisdictions are subject to foreign applicable laws, rules and regulations. In such jurisdictions, a fully integrated legal system may not yet be developed, or imposed laws may not sufficiently cover all aspects of economic activities and prior court decisions may have limited value as precedents. Additionally, foreign statutes may often be principle-oriented and require detailed interpretations by the enforcement bodies to further apply and enforce such laws. In particular, some of these laws and regulations may be relatively new, and there may be limited volume of published decisions. For that reason interpretation and enforcement of these laws and regulations involve uncertainties.

In addition, a legal system may be based in part on government policies and internal rules, some of which may not be published on a timely basis or at all, and some of which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Any administrative and court proceedings may be protracted, resulting in substantial costs and diversion of resources and management attention. Further, as administrative and court authorities may have significant discretion in interpreting and implementing statutory, regulatory, and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection than in more developed legal systems. These uncertainties may also impede our ability to enforce the contracts we have entered into in foreign jurisdictions. As a result, these uncertainties could have a material adverse effect on our business, financial condition, and results of operations.

Our management has limited experience in operating a public company.

Our management has limited experience in the management of a publicly listed company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a

 

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significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the combined company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies. The development and implementation of the standards and controls necessary for the combined company to achieve the level of accounting standards required of a public company listed in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods. See “Being a Public Company” below for further descriptions of related risks.

Material increases in labor costs in China could have an adverse impact on our business and operating results.

We operate a number of manufacturing facilities in China. In past years, we and other manufacturers have experienced increases in labor costs in our Chinese facilities due to rising inflation. Increases in the cost of labor in manufacturing facilities in China, including those of Schmid, are expected to continue to occur in the future.

To the extent we are unable to pass on increases in labor costs to our customers by increasing the prices for our products and services, minimum wage increases, or increases in other labor costs, or to move our operations into a jurisdiction where labor cost is lower, this could have a material adverse effect on our business, financial condition, and results of operations.

Changes in the Chinese government’s policy on foreign investment in China may adversely affect our business and results of operations.

The Foreign Investment Access Special Management Measures (Negative List) (2019 Version) (“Negative List”), which became effective on July 30, 2019, has identified the industrial areas that are restricted or prohibited for foreign investors. The business of our Chinese subsidiaries does not fall within any of such restricted or prohibited areas and their business scope was duly approved by the Chinese foreign investment regulatory authority upon their establishment.

The Negative List may, however, be updated from time to time, and there can be no assurance that the Chinese government will not change its policies in a manner that would render part or all of our business to fall within the restricted or prohibited categories. If we cannot obtain approval from the relevant approval authorities to engage in a business that becomes prohibited or restricted for foreign investors pursuant to any applicable updates under the Negative List, we may be forced to sell or restructure our business in China. If we are forced to adjust our corporate structure or business as a result of changes in government policy on foreign investment, this could adversely affect our reputation, business, financial condition, and results of operations.

The Chinese government may enact further restrictive measures in the future which could adversely affect our reputation, business, financial condition, and results of operations.

Our ability to obtain additional capital on commercially reasonable terms may be limited.

Although we believe our cash and cash equivalents, together with cash we expect to generate from operations and unused capacity available under our revolving credit facility, provide adequate resources to fund ongoing operating requirements, we may need to seek additional financing to compete effectively.

If we are unable to obtain capital on commercially reasonable terms, it could:

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reduce funds available to us for purposes such as working capital, capital expenditures, research and development, strategic acquisitions, and other general corporate purposes;

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restrict our ability to introduce new products or exploit business opportunities;

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•

increase our vulnerability to economic downturns and competitive pressures in the markets in which we operate; and

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•

place us at a competitive disadvantage.

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We intend to continue to make investments to support our business and may require additional funds. In particular, we may seek additional funds to develop new products and enhance our platform and existing products, expand our operations, including our sales and marketing organizations, improve our infrastructure or acquire complementary businesses, technologies, services, products and other assets. Accordingly, we may need to engage in equity or debt financings to secure additional funds. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. We may not be able to obtain additional financing on reasonable terms or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth, scale our infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired, and our business, results of operations and financial condition may be adversely affected.

Risks Related to Regulation and Litigation

Our financial results may be affected by tariffs, border adjustment taxes or other adverse trade restrictions.

We have global operations, including a significant presence in several major regions, including markets such as Malaysia, Taiwan, South Korea, United States, Saudi Arabia and China. We cannot predict whether the countries in which we operate, or may operate in the future, could become subject to new or additional trade restrictions imposed by the United States or other governments, including the likelihood, type or effect of any such restrictions. The U.S. government imposed various actions regarding trade with China, including levying various tariffs on imports from China, and is contemplating imposing additional actions in the future. Imposing additional tariffs, border adjustment taxes or other adverse trade restrictions on countries where we have operations could have a material adverse effect on our business, financial condition, and results of operations.

The international scope of our operations and our corporate and financing structure may expose us to potentially adverse tax consequences.

We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to intercompany pricing laws, including those relating to the flow of funds between our companies pursuant to, for example, purchase agreements, licensing agreements, or other arrangements. Adverse developments in these laws or regulations, or any change in position regarding the application, administration, or interpretation of these laws or regulations in any applicable jurisdiction, or our inability to comply with all applicable requirements of these laws or regulations could have a material adverse effect on our business, financial condition, and results of operations.

In addition, the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our activities or transactions, including the tax treatment or characterization of our tax residency, indebtedness, or the transactions contemplated in connection with the Business Combination. If any competent tax authorities were to successfully challenge the tax treatment or characterization of any of these, it could result in the disallowance of deductions, the imposition of additional or new taxation in certain jurisdictions, the imposition of withholding taxes on internal deemed transfers or in general, capital gains taxes, including on transfers that have been made and/or deemed to have been made in connection with the Transactions or otherwise, the reallocation of income, penalties, or other consequences that could have a material adverse effect on our business, financial condition, and results of operations.

Our failure to comply with trade restrictions such as economic sanctions and export controls could negatively impact our reputation and results of operations.

We are subject to trade restrictions, including economic sanctions and export controls, imposed by governments around the world with jurisdiction over our operations, which prohibit or restrict transactions

 

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involving certain designated persons and certain designated countries or territories, including Russia, Cuba, Iran, Syria, North Korea, and the Crimea Region of Ukraine. Our failure to successfully comply with any such laws and regulations may expose us to reputational harm as well as significant sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts, and other remedial measures. Investigations of alleged violations can be expensive and disruptive. We maintain policies and procedures designed to comply with these laws and regulations. As part of our business, we may, from time to time, engage in limited sales and transactions involving certain countries that are targets of economic sanctions, provided that such sales and transactions are authorized pursuant to applicable economic sanctions laws and regulations. However, we cannot predict the nature, scope, or effect of future regulatory requirements, including changes that may affect existing regulatory authorizations, and we cannot predict the manner in which existing laws and regulations might be administered or interpreted. Any changes in economic sanctions laws in the future could adversely impact our business.

In addition, any perceived or actual breach of compliance by us with respect to applicable laws, rules, and regulations could have a significant impact on our reputation and could cause us to lose existing customers; prevent us from obtaining new customers; negatively impact investor sentiment about our company; require us to expend significant funds to remedy problems caused by violations and to avert further violations; and expose us to legal risk and potential liability — all of which may have a material adverse effect on our reputation, business, financial condition, and results of operations.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (“FCPA”), European anti- bribery and corruption laws, and other anti-corruption laws and regulations. The FCPA and European anti- bribery and corruption laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. Our policies and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation.

We may be adversely affected by changes in legislation and regulation, which may impact how we provide products and services.

We are subject to extensive laws, regulations, and industry standards in the various jurisdictions where we operate, market, and distribute our products, including, inter alia, environmental, occupational health and safety, product regulatory and liability, patent and trademark, competition, financial, accounting, and tax laws and regulations, which vary from jurisdiction to jurisdiction. Legislative and regulatory changes that impact us and our customers’ industries may impact how we provide products and services to our customers. It is difficult to predict in what form laws and regulations will be adopted or how they will be construed by the relevant courts, or the extent to which any changes might adversely affect us. Delays in adapting our products and services to legislative and regulatory changes could harm our reputation. Also, we may not be as

 

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well-equipped to respond to changes in legislation or regulation as some of our competitors or we may become subject to new legislation or regulation with regard to the products and services we offer which could cause us to be prohibited from providing certain services or make provision of affected services more expensive.

Although we have implemented policies and procedures that are designed to ensure compliance with applicable laws, rules, and regulations, there is no guarantee that we will remain in compliance. Any noncompliance could result in civil, criminal and administrative fees, fines, penalties, taxes, interruptions in our operations, and reputational harm for the company, which may have a material adverse effect on our business, financial condition, and results of operations.

We operate in a litigious environment, which may adversely affect our business, financial condition, and results of operations.

We may become involved in legal actions and claims arising in the ordinary course of business, including litigation regarding employment matters, breach of contract, and other commercial matters. Due to the inherent uncertainty in the litigation process, the resolution of any particular legal proceeding could result in changes to our products and business practices and/or substantial payment obligations or costs to be borne by us, which could have a material adverse effect on our business, financial condition, and results of operations.

We may be liable for damages based on product liability claims brought against our customers in our end-markets or from our customers and their employees, and any successful claim for damages could have a material adverse effect on our business, financial condition, and results of operations.

In addition, many of our products provide critical performance attributes to our customers’ products that are sold to consumers who could potentially bring product liability suits related to such products. Our sale of these products therefore involves the risk of product liability claims, including class action lawsuits that claim liability for death, injury, or property damage caused by products that we manufacture or that contain our components. If a person were to bring a product liability suit against one of our customers, this customer may attempt to seek contribution from us. A person may also bring a product liability claim directly against us. A successful product liability claim or series of claims against us in excess of our insurance coverage for payments, for which we are not otherwise indemnified, could have a material adverse effect on our business, financial condition, and results of operations. While we endeavor to protect ourselves from such claims and exposures in our contractual negotiations, we can provide no assurance that our efforts in this regard will ultimately protect us from any such claims.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business.

We and any contract manufacturers and suppliers we engage are subject to numerous federal, state, and local environmental, health, and safety laws, regulations, and permitting requirements, including those governing generation, handling, use, storage, treatment, and disposal of hazardous and regulated materials and waste; the emission and discharge of hazardous materials into the ground, air, and water; and employee health and safety. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. Under certain environmental laws, we could be held responsible for costs relating to any contamination at our current or past facilities and at third-party facilities. We also could incur significant costs associated with civil or criminal fines and penalties.

Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our research, product development and manufacturing efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or waste. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not currently maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with storage or disposal of hazardous and flammable materials, including chemicals and biological materials. Accordingly,

 

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in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended, which could have a material adverse effect on business, financial condition, results of operations and growth prospects.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions that could have a material adverse effect on our business, reputation and growth prospects.

Global climate change legislation could negatively impact our results of operations or limit our ability to operate our business.

We operate production facilities in several countries. In many of the countries in which we operate, legislation has been passed or proposed, or legislation is being considered, to limit greenhouse gases through various means, including the capping and trading of emissions credits. Greenhouse gas regulation in the jurisdictions in which we operate could negatively impact our future results from operations through increased costs of production. We may be unable to pass such increased costs on to our customers, which may decrease our revenues and net income and have a material adverse effect on our business, financial condition, and results of operations. In addition, the potential impact of climate change regulation on our customers is highly uncertain and may also materially adversely affect our business, financial condition, and results of operations.

Failure of information security and privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.

We must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States, Europe and elsewhere. For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective in 2018, and the State of California adopted the California Consumer Privacy Act of 2018 (“CCPA”); additional U.S. states are likely to adopt measures similar to the CCPA in the near term. Both the GDPR and the CCPA impose additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under the GDPR) and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks.

Compliance with any additional laws and regulations could be expensive and may place restrictions on the conduct of our business and the manner in which we interact with our customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, and damage to our reputation and credibility, and could have a negative impact on revenues and profits.

Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online retail and other online services generally, which may reduce the number of orders we receive.

 

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Risks Related to Employee Matters, Managing Growth, and Relationships with Suppliers and Other Third Parties

If we do not continue to attract, motivate, and retain members of our senior management team and qualified employees, we may not be able to support our operations.

The completion and execution of our strategies depend on the continued service and performance of our senior management team. If we lose key members of our senior management team, we may not be able to effectively manage our transition to a public company or our current and future operations. The loss or incapacity of existing members of our senior management team or key scientists and engineers could adversely affect our operations, particularly if we experience difficulties hiring qualified successors.

In addition, our business depends on our ability to continue to attract, motivate, and retain many skilled employees across all of our operations. There is a limited pool of employees who have the requisite skills, training, and education. We compete with many businesses and organizations that are seeking skilled individuals, particularly those with experience in technology and the sciences and technical fields. Competition for professionals across our entire business can be intense, as other companies seek to enhance their positions in the markets we serve. In addition, competition for experienced talent and employees can intensify globally, requiring us to increase our focus on attracting and developing highly skilled employees. We also face additional challenges in terms of recruiting a requisite number of skilled and qualified workers due to regional or global trends such as labor supply issues in connection with an aging workforce. As competition for experienced talent grows, we may be forced to increase spending on employee salaries which could have a material adverse effect on our business, financial condition, and results of operations.

Future organizational changes and the implementation of our cost savings initiatives could also cause our employee attrition rate to increase and may result in significant costs to us in connection with implementing such initiatives. If we are unable to continue to identify or be successful in attracting, motivating, and retaining appropriately qualified personnel, there could be a material adverse effect on our business, financial condition, and results of operations.

We may acquire other businesses which could require significant management attention, disrupt our business, dilute shareholder value, and adversely affect our results of operations.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies. The identification of suitable acquisition candidates is difficult, and we may not be able to complete such acquisitions on favorable terms, if at all. If we do complete future acquisitions, we may not ultimately strengthen our competitive position or achieve our goals and business strategy; we may be subject to claims or liabilities assumed from an acquired company, product, or technology; and any acquisitions we complete could be viewed negatively by our customers, investors, and securities analysts. In addition, if we are unsuccessful at integrating future acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and results of operations of the combined company could be adversely affected. Any integration process may require significant time and resources, which may disrupt our ongoing business and divert management’s attention, and we may not be able to manage the integration process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, realize anticipated synergies from the acquisition, or accurately forecast the financial impact of an acquisition transaction and integration of such acquisition, including accounting charges. We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common shares. The issuance of equity or equity-linked debt to finance any future acquisitions could result in dilution to our shareholders. The incurrence of indebtedness would result in increased liabilities and could also include covenants or other restrictions that would impede our ability to manage our operations. The occurrence of any of these risks could harm our business, results of operations, and financial condition.

We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans.

We are continually executing on several growth initiatives, strategies, and operating plans designed to enhance our business. In addition to these growth strategies, our business plan incorporates certain transformational initiatives, including our enhanced senior leadership team, globalized management structure,

 

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renewed focus on customers, optimized R&D, cost management initiatives, and a new incentive structure and may include potential acquisitions.

The anticipated benefits from these strategies and initiatives are based on several assumptions that may prove to be inaccurate, including assumptions as to the key trends that will drive growth in our business. Moreover, we may not be able to successfully complete these growth initiatives, strategies, and operating plans without making additional expenditures or at all. If we are unable to complete these initiatives, strategies, and operating plans, we may not realize all the benefits we currently anticipate, including the growth targets and cost savings we expect to achieve. The anticipated cost savings disclosed elsewhere in this prospectus are presented on a gross basis and do not reflect any expenses that may be required to achieve such cost savings.

A variety of risks could cause us not to realize some or all the expected benefits. These risks include, among others, delays in the anticipated timing of activities related to such growth initiatives, strategies, and operating plans; the secular trends on which many of our strategies and initiatives are based not materializing or not materializing to the degree expected; increased difficulty and cost in implementing our growth efforts; and the incurrence of other unexpected costs associated with operating the business. Moreover, our continued implementation of these programs may disrupt our operations and performance. Similarly, we may not realize the benefits we currently expect from our comprehensive systems and solutions approach.

If any of the assumptions underlying our growth initiatives prove to be inaccurate or any of the foregoing risks materialize, we may not realize the expected benefits of our initiatives and we may be adversely affected, including as the result of the costs associated with these initiatives. If, for any reason, the benefits we realize are less than our estimates or the implementation of these growth initiatives, strategies, and operating plans adversely affects our operations or cost more or take longer to effectuate than we expect, or if our assumptions, including our assumptions with respect to growth of our end-markets, prove inaccurate, our business, financial condition, and results of operations may be materially adversely affected.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, internal codes of conduct, and insider trading prohibition.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with applicable regulations, to provide accurate information to the German, Chinese, United States or other regulators, to comply with manufacturing standards we have established, to comply with federal and state fraud and abuse laws and regulations in Germany, the United States and other countries or jurisdictions, to report financial information or data accurately, or to disclose unauthorized activities to us.

It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations, including applicable environmental laws and regulations. If any such misconduct occurs or any related actions are instituted against us (and we are not successful in defending ourselves or asserting our rights) such misconduct or actions could have a material adverse effect on our business, financial condition, and results of operations.

If any of our suppliers become economically distressed or declare bankruptcy, we may be required to provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase our costs, affect our liquidity or cause production disruptions.

We procure various types of materials and components from our suppliers. We have historically obtained a significant proportion of the materials we require to manufacture our products from a limited number of suppliers, for example in connection with sensor and control technology and pumps and filters. If these suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, we may be required to provide substantial financial support to ensure supply continuity or would have to take other measures to ensure components and materials remain available. Any disruption could affect our ability to deliver orders to our clients and could increase our costs and negatively affect our liquidity and financial performance.

 

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Increases in costs or reductions in the supplies of our specialty and commodity raw materials required for our manufacturing, testing, and operations processes could materially and adversely affect our business, financial condition, and results of operations.

We use a variety of specialty and commodity raw materials, including precious metals and specialty plastic materials, in our manufacturing processes, and our most significant raw material input by value is plastics. Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. We purchase our major raw materials on a contract or as-needed basis from outside sources. The availability and prices of raw materials may be subject to curtailment or change due to, among other things, the financial stability of our suppliers, suppliers’ allocations to other purchasers, interruptions in production by suppliers, new laws or regulations, changes in foreign currency exchange rates, and worldwide price levels. In addition, many of our raw materials and intermediate products are available in the quantities we require from a limited number of suppliers, which makes it more difficult to replace suppliers in the event of any supply disruption. Further, in some cases, we are limited in our ability to purchase certain raw materials from other suppliers by supply agreements that contain certain minimum purchase requirements. Additionally, we can provide no assurance that, as our supply contracts expire, we will be able to renew them or, if they are terminated, that we will be able to obtain replacement supply agreements on terms favorable to us.

In particular, we may face difficulties or delays in finding a new supplier should a critical supplier stop supplying us with components or software. In particular, while we may find a new supplier quickly, we will need to make sure that this new supplier meets our performance standards and that the component, materials and software can be integrated into our machinery without an impact on delivery timelines or the quality of our products. Our business, financial condition, and results of operations could be materially adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or if the costs of raw materials increase significantly.

From time to time, suppliers may extend lead times, limit supplies, or increase prices due to capacity constraints, environmental limitations, or other factors. We may not always be able to pass on these price increases, and price increases by our other suppliers, to our customers due to competitive pricing pressure, and, even when we are able to do so, there may be a time delay between increased raw material prices and our ability to increase the prices of our products. Any limitation on, or delay in, our ability to pass on any price increases could have a material adverse effect on our business, financial condition, and results of operations.

We depend upon our information technology systems, which are subject to interruption and failure.

Our business operations could be disrupted if our information technology systems fail to perform adequately. The efficient operation of our business depends on our information technology systems, some of which are managed by third-party service providers. We rely on our information technology systems to effectively manage our business data, communications, supply chain, order entry and fulfillment, and other business processes. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures and security breaches. Further, our information technology systems, including those managed by third-party service providers, may be subject to computer viruses, malicious software, attacks by hackers, and other forms of cyber intrusions or unauthorized access, any of which can create system disruptions, shutdowns, or unauthorized disclosure of sensitive data. Any such damage or interruption could have a material adverse effect on our business, financial condition, and results of operations.

In addition, a security breach that leads to disclosure of information protected by privacy laws could compel us to comply with breach notification requirements under state, national, and federal laws and regulations, potentially resulting in litigation or regulatory action, or otherwise subjecting us to liability under laws that protect personal data.

Moreover, there are inherent risks associated with developing, improving, expanding and updating our current systems, such as the disruption of our data management, procurement, production execution, finance,

 

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supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, deploy, deliver and service our machines, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We cannot be sure that these systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

We attempt to mitigate the above risks by employing several measures, including monitoring and testing of our security controls, employee training, maintenance of protective systems and contingency plans, and contracting with service providers to address third-party cybersecurity risks. Nonetheless, it is impossible to eliminate all cybersecurity risk and thus we remain potentially vulnerable to known or unknown threats. Information security risks have generally increased in recent years because of the increased proliferation, sophistication, and availability of complex malware and hacking tools to carry out cyber-attacks. As cyber threats continue to evolve, we may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our information security capabilities or to investigate and remediate security vulnerabilities.

Risks Related to Schmid’s Intellectual Property

Our know-how and innovations may not be adequately protected.

We believe that our product development, brand recognition and reputation, and the technological and innovative skills of our personnel are essential to establishing and maintaining our leadership position. We rely on a combination of patent, copyright, trademark, trade secrets, confidentiality procedures, technical measures, and contractual agreements with our customers, suppliers, and employees to establish and protect our know-how and innovations according to our products and services. If we fail to protect our know-how and innovations, our competitive position could suffer, which could adversely affect our business, financial condition, and results of operations.

We may be forced to initiate litigation or other enforcement actions against third parties to protect our know-how and innovations as well as defend and enforce our intellectual property rights. Litigating claims related to the enforcement of intellectual property rights is very expensive and can be burdensome in terms of management time and resources, which could adversely affect our business, financial condition, and results of operations. Moreover, the scope of our intellectual property rights may not prevent competitors from designing around such rights.

In some cases, we rely upon unpatented proprietary manufacturing expertise, continuing technological innovation, and other trade secrets to develop and maintain our competitive position. While we generally will enter into confidentiality agreements with our employees and third parties to protect our intellectual property, our confidentiality agreements could be breached and may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise. In addition, adequate remedies may not be available in the event of unauthorized use or disclosure of our trade secrets or manufacturing expertise. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition.

In addition, we rely on both registered and unregistered trademarks to protect our name and brands. We can provide no assurance that our pending trademark applications will be approved. Failure by us to adequately maintain the quality of our products and services associated with our trademarks or any loss to the distinctiveness of our trademarks may cause us to lose certain trademark protection, which could result in the loss of goodwill and brand recognition in relation to our name and products. In addition, successful third-party challenges to the use of any of our trademarks may require us to rebrand our business or certain products or services associated therewith.

The failure of our patents, applicable intellectual property law, or our confidentiality agreements to protect our intellectual property and other proprietary information, including our know-how and innovations relating to processes, apparatuses, technology, trade secrets, trade names and proprietary manufacturing

 

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expertise, methods, and compounds, or if we are unsuccessful in our judicial enforcement proceedings, could have a material adverse effect on our competitive advantages, business, financial condition, and results of operations, and could require us to devote resources to advertising and marketing these new brands. Further, we can provide no assurance that competitors will not infringe our trademarks or patents, or that we will have adequate resources to enforce our trademarks or patents.

From time to time, competitors challenge the validity of our patents and trademarks, and we challenge the validity of their patents and trademarks. Further, our competitors may circumvent our patents or our patents may not be of sufficient scope or strength to provide us with meaningful protection or commercial advantage. We cannot be certain either of successfully defending the validity of our patents and trademarks or of invalidating patents and trademarks of our competitors. Additionally, our patents will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect any competitive advantage we have stemming from those products and technologies. We also cannot assure that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

Our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as in Germany or the United States and changes in patent laws or their interpretations could diminish the value of patents in general, thereby impairing our ability to protect our products.

The laws of some countries regarding trademark, patent, copyright, and other intellectual property rights also do not protect proprietary rights to the same degree as the laws of Germany or the United States and there is a risk that our ability to protect our proprietary rights may not be adequate in these countries. Many companies have encountered significant problems in protecting their proprietary rights against copying or infringement in such countries, some of which are countries in which we intend to operate or to sell our products. In particular, the application of laws governing intellectual property rights in China, where we operate, has historically been less effective than those in other jurisdictions, mainly due to the lack of procedural rules for discovery of evidence, low damage awards, and low rates of criminal penalties against intellectual rights infringements. Accordingly, protection of intellectual property rights in China may not be as effective as other countries. Furthermore, the policing of unauthorized use of proprietary technology is difficult and expensive, and we may need to commence and become involved in expensive and lengthy proceedings to enforce or defend patents issued to us or determine the enforceability, scope, and validity of our proprietary rights or those of others. The experience and capabilities of different courts in handling intellectual property related matters vary, and outcomes are unpredictable. Therefore, it could involve substantial risks to us. If we are unable to adequately protect our intellectual property rights in China or elsewhere, our business, financial condition, and results of operations could be materially adversely affected.

In addition, our competitors in China and these other countries may independently develop similar technology or duplicate our products, even if unauthorized, which could potentially reduce our sales in these countries and have a material adverse effect on our business, financial condition, and results of operations. While we generally consider applying for patents in those countries where we intend to make, have made, use, or sell patented products, we may not accurately assess all the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, our pending patent applications may be challenged by third parties and may not be issued by the applicable patent offices as patents. We also cannot assure you that the patents issued as a result of our foreign patent applications will have the same scope of coverage as our German, European or U.S. patents. It is possible that only a limited number of the pending patent applications will result in issued patents, which may have a material adverse effect on our business, financial condition, and results of operations.

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We rely on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses, and other contractual rights to establish and protect our rights in our technology. Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights

 

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or those rights are not enforceable. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take are aimed to prevent misappropriation. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources, including significant amounts of time from our key executives and management, and may not have the desired outcome.

Filing, prosecuting, and defending patents covering our products throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent or other intellectual property protection to develop their own products and, further, may export otherwise infringing products to territories where we may have or obtain patent or other intellectual property protection, but where patent or other intellectual property enforcement is not as strong as that in Germany or the United States. These unauthorized products may compete with our products in such jurisdictions and take away our market share where we do not have any issued or licensed patents or other intellectual property protection and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Our ability to protect and enforce our intellectual property rights may be further adversely affected by unforeseen changes in intellectual property laws. In general, changes in patent laws or their interpretations, including in the United States, Germany or other countries where available protections are generally stronger, could diminish the value of our patents, thereby impairing our ability to protect our products. This could have a material adverse impact on our business, financial condition and results of operations.

We may be subject to claims that our employees, consultants or independent contractors have infringed, misappropriated or otherwise violated the intellectual property of a third party, including trade secrets or know-how of their former employers or other third parties.

We may be subject to claims that our employees or consultants have wrongfully used for our benefit or disclosed to us confidential information of third parties. We employ individuals who were previously employed at other companies, or at research institutions. Some of these employees, consultants and contractors may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property rights, proprietary information, know-how or trade secrets of others in their work for us and seek to protect our ownership of intellectual property rights by ensuring that our agreements with employees, collaborators, and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. To the extent that our employees, consultants or contractors use intellectual property rights or proprietary information owned by others in their work for us, disputes may arise as to the rights in any related or resulting know-how and inventions. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents or other intellectual property or proprietary rights. Litigation may be necessary to defend against any of these claims. There is no guarantee of success in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. In addition, we may lose personnel as a result of such claims and any such litigation, or the threat thereof, may adversely affect our ability to hire employees or contract with independent contractors. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

If we fail to validly execute invention assignment agreements with our employees and contractors involved in the development of intellectual property, the value of our products, business and competitive position may be harmed. Our patent rights and other intellectual property may also be subject to priority, ownership or inventorship disputes, interferences, and similar proceedings.

To maintain the confidentiality of our trade secrets, proprietary information and other intellectual property rights, we have certain confidentiality and invention assignment provisions in place with our employees, consultants, suppliers, contract manufacturers, collaborators and others. However, we may not enter into such agreements with each party that may have or have had access to our trade secrets or proprietary

 

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technology and processes or who conceives or develops intellectual property rights that we regard as our own. Moreover, even when we obtain agreements assigning intellectual property to us, the assignment of intellectual property rights may not be self-executing, and we may be forced to bring claims against third parties or defend claims that they may bring against us to determine the ownership of what we regard as our intellectual property. There can be no assurance that such agreements and provisions are in place in all instances that may be needed or that where they are in place they will be upheld in the face of a potential challenge, that other parties will not breach their agreements with us or that we will have adequate remedies to address any breach.

We may also be subject to claims that former employees, collaborators, or other third parties have an interest in our current or future patents and patent applications or other intellectual property rights, including as an inventor or co-inventor. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents and patent applications, such co-owners rights may be subject, or in the future subject, to assignment or license to other third parties, including competitors. In addition, we may need the cooperation of any such co-owners to enforce any such patents and any patents issuing from such patent applications against third parties, and such cooperation may not be provided. Additionally, we may be subject to claims from third parties challenging our ownership interest in or inventorship of intellectual property we regard as our own, for example, based on claims that our agreements with employees or consultants obligating them to assign intellectual property rights to us are ineffective or in conflict with prior or competing contractual obligations to assign inventions to another employer, to a former employer, or to another person or entity, despite the inclusion of valid, present-tense intellectual property assignment obligations. Litigation may be necessary to defend against claims, and it may be necessary or we may desire to enter into a license to settle any such claim.

If we or our licensors are unsuccessful in any priority, validity (including any patent oppositions), ownership or inventorship disputes to which we or they are subject, we may lose valuable intellectual property rights through the loss of one or more of our patents, or such patent claims may be narrowed, invalidated, or held unenforceable, or through loss of exclusive ownership of or the exclusive right to use our owned or in-licensed patents. In the event of loss of patent rights as a result of any of these disputes, we may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture, and commercialization of one or more of the products we may develop. An inability to incorporate technologies, features or other intellectual property that are important or essential to our products could have a material adverse effect on our business and competitive position. The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Even if we are successful in priority, inventorship or ownership disputes, such disputes could result in substantial costs and be a distraction to management and other employees. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. Any of the foregoing could result in a material adverse effect on our business, financial condition, results of operations or prospects.

Our patent applications may not be successful, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

We are currently in the process of patenting the technology for embedded traces which is the next level technology for high-end PCBs & Substrates. While some parts of the patents have gone through, the official process for all the technology is not yet completed. We believe we are the only acter in the market that is currently able to supply equipment for ET production.

For this technology or for any other technology for which we have filed, or in the future may file, a particular patent application, we cannot be certain that we are the first inventor of the subject matter. Moreover, we cannot be certain if we are the first party to file such a patent application or that our application will ultimately be successful. If another party has filed a patent application for the same subject matter as we have, or similar subject matter is otherwise publicly disclosed, we may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to

 

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determine. As a result, we cannot be certain that a patent, for which an application was filed, will actually be issued, or that our issued patents will afford protection against competitors with similar technology or will cover certain aspects of our products. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition or operating results.

As our patents may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights may not protect us effectively. In particular, we may not be able to prevent others from developing or exploiting competing technologies.

We cannot assure you that we will be granted patents pursuant to our pending applications or those we plan to file in the future. Even if our patent applications succeed and we are issued patents in accordance with them, these patents could be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with meaningful protection or competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might have priority over our patent applications and could result in refusal or invalidation of our patent applications. Finally, in addition to those who may claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

Companies, organizations, or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell, leasing or market our products, which could make it more difficult for us to operate our business. As the number of products and services in our markets increases and the functionality of these products and services further overlaps, we may become increasingly subject to claims by a third party that our products and services infringe such party’s intellectual property rights.

From time to time, we may receive communications from holders of patents (including non-practicing entities or other patent licensing organizations), trademarks or other intellectual property regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. In addition, there is a growing occurrence of patent suits being brought by organizations that use patents to generate revenues without manufacturing, promoting or marketing products, or investing in R&D in bringing products to markets. These organizations continue to be active and target whole industries as defendants. We may not prevail in any such litigation given the complex technical issues and inherent uncertainties in intellectual property litigation.

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. Further, we may be required to compensate the third-party bringing the suit either by paying a lump sum or ongoing license fees to be able to continue selling a particular product or service. This type of compensation could be significant. We might also be prevented or enjoined by a court from continuing to provide the affected product or service and may be forced to significantly increase our development efforts and resources to redesign such product or service. We may also be required to defend or indemnify any customers who have been sued for allegedly infringing a third-party’s patent in connection with using one of our products or services. Responding to intellectual property claims, regardless of the validity, can be time-consuming for our personnel and management, result in costly litigation, cause product shipment delays, and harm our reputation, any of which could have a material adverse effect on our business, financial condition, and results of operations.

 

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Being a Public Company listed on a U.S. Stock Exchange

We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect our billing and reporting.

To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect our manufacturing operations, customer billing and reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our customers, cause harm to our reputation and brand and could also result in errors in our financial and other reporting. We expect that complying with these rules and regulations will substantially increase our legal and financial compliance costs and will make some activities more time-consuming and costly. The increased costs will increase our net loss. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

We are a “foreign private issuer” and a “controlled company” within the meaning of the rules of the stock exchange on which we intend to list our common shares and, as a result, expect to qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

The corporate governance rules of the stock exchange on which we intend to list our common shares require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. While we expect to abide by the rules applicable to independent directors, by having a board of directors consisting of a majority of independent directors, as a foreign private issuer, we are permitted to, and we may, follow home country practice in lieu of the above requirements, subject to certain exceptions. As long as we would rely on the foreign private issuer exemption for certain of these corporate governance standards, a majority of our Board are not required to be independent directors and our Compensation Committee and Nominating and Corporate Governance Committee are not required to be composed entirely of independent directors. In that case, management oversight may be more limited than if we were subject to all the corporate governance standards of the stock exchange on which we intend to list our common shares.

Following the consummation of this offering, Anette Schmid and Christian Schmid will continue to control a majority of the voting power of our outstanding common shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the stock exchange on which we intend to list our common shares. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of the Board consist of independent directors;

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the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

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the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

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the requirement for an annual performance evaluation of the nominating and corporate governance committee and compensation committee.

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In the event we no longer qualify as a foreign private issuer, we may utilize these exemptions if we continue to qualify as a “controlled company.” If we were to utilize the controlled company exemption, we will not have a majority of independent directors and our Nominating and Corporate Governance and

 

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Compensation Committees will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all the corporate governance requirements of the stock exchange on which we list our common shares.

We will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

We will incur significant legal, accounting, insurance and other expenses as a result of being a public company. We will be subject to rules outlined by the SEC, the New York Stock Exchange and requirements under Dutch corporate law, which will require changes in our corporate governance practices. We expect that compliance with these laws, rules and regulations and the move from a private to a public company will substantially increase our expenses, including our legal, accounting and information technology costs and expenses, and make some activities more time consuming and costly, and these new obligations will require attention from our executive officers and senior management and could divert their attention away from the day-to-day management of our business. We also expect these laws, rules and regulations and the move from a private to a public company to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. Due to increased risks and exposure it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. As a result of the foregoing, we expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our shares, fines, sanctions and other regulatory action and potentially civil litigation, which could adversely impact our business, results of operation, financial condition and the price of our shares.

A liquid market for our shares may not develop and/or persist.

Prior to the Business Combination, there has been no public market for the shares of Schmid. An active trading market for the shares may never develop or, if developed, it may not be sustained. You may be unable to sell your shares unless a market can be established and sustained. This risk will be exacerbated if there is a high level of redemptions of the Pegasus shares in connection with the closing of the Business Combination. Following the Business Combination, fluctuations in the price of the shares could contribute to the loss of all or part of your investment. The valuation ascribed to Schmid in the Business Combination may not be indicative of the price that will prevail in the trading market. The trading price of the shares following the closing of the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Pegasus’s and Schmid’s control. Any of the factors listed could have a material and adverse effect on the trading price of shares, which may trade at prices significantly below the price you paid for the shares of Pegasus stock that are converted into Schmid stock in accordance with the terms of the Business Combination. In such circumstances, the trading price of shares may not recover and may experience a further decline.

Our failure to meet NYSE’s continued listing requirements could result in a delisting of our shares.

The NYSE requires companies to fulfill specific requirements in order for their shares to continue to be listed. If our common shares are delisted from the NYSE at some later date, our shareholders could find it difficult to sell our common shares. In addition, if our common shares are delisted from the NYSE at some later date, we may have our common shares quoted on the Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than the NYSE. In addition, if our common shares are not so listed or are delisted at some later date, our common shares may be subject to the “penny stock” regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in our common shares might decline. If our common shares are

 

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delisted from the NYSE at some later date or become subject to the penny stock regulations, it is likely that the price of our common shares would decline and that our shareholders would find it difficult to sell their shares.

If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our shares may depend on the research and reports that securities or industry analysts publish about us or our business. Currently, we do not have any analyst coverage and may not obtain analyst coverage in the future. In the event we obtain analyst coverage, we will not have any control over such analysts. If one or more of the analysts who will cover Schmid downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of Schmid or fail to regularly publish reports on Schmid we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

We will be an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors.

We will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination, (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 Schmid shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, such as an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares less attractive because we intend to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find our shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for our shares and the market price and trading volume of our shares may be more volatile and decline significantly.

Compliance obligations under the Sarbanes-Oxley Act may require substantial financial and management resources and shareholders may have fewer advantages until TopCo ceases to be an emerging growth company.

As indicated above, prior to the Business Combination, Schmid is not a publicly reporting company required to comply with Section 404 of the Sarbanes-Oxley Act (“Section 404”) and TopCo´s management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting obligations that will be applicable to TopCo after the Business Combination, including the requirement to document and test TopCo’s internal control over financial reporting so that TopCo’s management can certify as to the effectiveness of its internal control over financial reporting. These regulatory compliance and reporting obligations as a public company are likely to place a considerable strain on TopCo’s financial and management systems, processes and controls, as well as on its personnel. If TopCo is not able to implement the requirements of Section 404, including any additional requirements once TopCo is no longer an emerging growth company, in a timely manner or with adequate compliance, TopCo may not be able to assess whether its internal control over financial reporting is effective, which may subject TopCo to adverse regulatory consequences and could harm investor confidence and the market price of TopCo Ordinary Shares. Additionally, once TopCo is no longer an emerging growth company, TopCo will be required to comply with the independent registered public accounting firm attestation requirement on TopCo’s internal control over financial reporting. Until TopCo ceases to be an emerging growth company, shareholders will not have the benefit of an independent assessment of the effectiveness of TopCo’s internal control environment.

 

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As a foreign private issuer, we will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. domestic public company, which may limit the information available to our shareholders.

We will be a foreign private issuer, as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer, we will not be subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we will be exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. As long as we are a foreign private issuer, we will not be required to obtain shareholder approval for certain dilutive events, such as the establishment or material amendment of certain equity-based compensation plans, we will not be required to provide detailed executive compensation disclosure in our periodic reports, and we will be exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, our officers and directors will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of its securities.

As a foreign private issuer we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act.

Also, as a foreign private issuer, we will be permitted to follow home country practice in lieu of certain NYSE corporate governance rules, including those that require listed companies to have a majority of independent directors (although all of the members of the audit committee must be independent under the Exchange Act) and independent director oversight of executive compensation, nomination of directors and corporate governance matters; have regularly scheduled executive sessions with only independent directors; and adopt and disclose a code of ethics for directors, officers and employee. Accordingly, our shareholders may not have the same protections afforded to shareholders of listed companies that are subject to all of the applicable corporate governance requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act, however, under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2024.

In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus, and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

 

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Schmid will be subject to business uncertainties and contractual restrictions while the Business Combination is pending.

Uncertainty about the effect of the Business Combination on employees, suppliers and customers may have an adverse effect on Schmid. These uncertainties may impair Schmid’s ability to attract, retain and motivate key personnel until the Business Combination is completed, and could cause customers and others that deal with Schmid to seek to change existing business relationships with Schmid. Retention of certain employees may be challenging during the pendency of the Business Combination, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, TopCo’s business following the Business Combination could be negatively impacted. In addition, the Business Combination agreement restricts Schmid from making certain expenditures and taking other specified actions without the consent of Pegasus until the Business Combination occurs. These restrictions may prevent Schmid from pursuing attractive business opportunities that may arise prior to the completion of the Business Combination.

Risks Related to TopCo Being a Newly Incorporated Dutch Company

TopCo has no operating or financial history and its results of operations may differ significantly from the unaudited pro forma financial data included in this document.

TopCo has been recently incorporated and has no operating history and no revenues. TopCo’s unaudited pro forma condensed combined statement of operations included elsewhere in this proxy statement/​prospectus combines Pegasus’s historical audited results of operations for the 12 month periods ended December 31, 2021 and December 31, 2022 with Schmid’s historical audited results of operations for the 12 month periods ended December 31, 2021 and December 31, 2022, and gives pro forma effect to the Business Combination as if it had been consummated as of January 1, 2021.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination been consummated on the dates indicated above, or TopCo’s future consolidated results of operations or financial position. Accordingly, TopCo’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this document.

The rights of shareholders in companies subject to Dutch corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.

At Closing, we will be a Dutch public company with limited liability (naamloze vennootschap). Our corporate affairs are governed by our articles of association, our internal rules and policies and by the laws governing companies incorporated in the Netherlands. The rights of shareholders may be different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. The role of the management board in a Dutch company is also materially different, and cannot be compared to, the role of a board of directors in a corporation incorporated in the United States. In the performance of their duties, our management board is required by Dutch law to consider the interests of our company and the sustainable success of its business, with an aim to creating sustainable long-term value, taking into account the interests of its shareholders, its employees and other stakeholders of the company, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.

We are not obligated to, and do not, comply with all best practice provisions of the Dutch Corporate Governance Code.

We will be subject to the Dutch Corporate Governance Code (the “DCGC”). The DCGC contains both principles and best practice provisions on corporate governance that regulate relations between the management board and the general meeting of the shareholder of TopCo General Meeting and matters in respect of financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC is

 

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based on a “comply or explain” principle. Accordingly, companies are required to disclose in their annual reports (which are filed in the Netherlands) whether they comply with the provisions of the DCGC. If they do not comply with those provisions (for example, because of a conflicting NYSE requirement), the company is required to give the reasons for such noncompliance. The DCGC applies to Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including NYSE.

We acknowledge the importance of good corporate governance. However, we do not comply with all the provisions of the DCGC, to a large extent because such provisions conflict with or are inconsistent with the corporate governance rules of NYSE and U.S. securities laws, or because we believe such provisions do not reflect customary practices of global companies listed on NYSE. Any such non-compliance may affect your rights as a shareholder, and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Shareholders may not be able to exercise pre-emptive rights and, as a result, may experience substantial dilution upon future issuances of shares.

After the completion of the Business Combination, shareholders may be restricted or excluded by a resolution proposed by the management and adopted by the Extraordinary General Meeting of shareholders to exercise preemptive rights in case of further issuances of shares.

After the completion of the Business Combination, shareholders may be restricted or excluded by a resolution proposed by the management and adopted by the General Meeting to exercise pre-emptive rights in case of further issuances of shares.

 

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securities laws, would not be enforceable in the Netherlands unless the underlying claim is re-litigated before a Dutch court of competent jurisdiction. U.S. investors will be unable to enforce any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws, against us, members of our management and our directors. In addition, there is doubt as to whether a Dutch court would impose civil liability on us or the members of our management or our directors in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in the Netherlands against us or our management or directors.

Dutch, German and European insolvency laws are substantially different from U.S. insolvency laws and may offer our shareholders less protection than they would have under U.S. insolvency laws.

As a Dutch public limited liability company and as a company with its ‘center of main interest’ in Germany, we are subject to Dutch and German insolvency laws in the event any insolvency proceedings are initiated against us including, among other things, Regulation (EU) 2015/848 of the European Parliament and of the Council of May 20, 2015 on insolvency proceedings, as amended. Should courts in another European country determine that the insolvency laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over the insolvency proceedings initiated against us. Insolvency laws in Germany, the Netherlands or the relevant other European country, if any, may offer our shareholders less protection than they would have under U.S. insolvency laws and make it more difficult for our shareholders to recover the amount they could expect to recover in a liquidation under U.S. insolvency laws.

Shareholders may be subject to limitations on transfer of their shares.

Our shares are transferable on the transfer agent’s books. However, the transfer agent may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the transfer agent may refuse to deliver, transfer or register transfers of shares generally when our books or the transfer agent’s books are closed, or at any time if we or the transfer agent deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

Risks Related to Pegasus

The Pegasus Initial Shareholders and Pegasus’s other current officers and directors have interests in the Business Combination that may be different from or are in addition to other Pegasus shareholders in recommending that Pegasus shareholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.

When considering the Pegasus Board’s recommendation that Pegasus shareholders vote in favor of the approval of the Business Combination Proposal and the Merger Proposal, Pegasus shareholders should be aware that aside from their interests as shareholders, certain Pegasus Initial Shareholders and Pegasus’s other current officers and directors have interests in the Business Combination that may be different from, or in addition to, those of other Pegasus shareholders generally. These interests include:

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the Sponsor and directors and officers of Pegasus have agreed not to redeem any Pegasus Class A Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

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the fact that the Sponsor paid an aggregate of $25,000 for Pegasus Class B Ordinary Shares and such securities will have a significantly higher value at the time of the Business Combination;

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•

the Sponsor and directors and officers of Pegasus have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Pegasus fails to complete an initial business combination by December 31, 2023;

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the Registration Rights Agreement will be entered into by the Sponsor;

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the fact that the Sponsor paid an aggregate of $9,750,000 for its 9,750,000 private placement warrants originally purchased by the Sponsor (the “Private Placement Warrants”) to purchase

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Pegasus Class A Ordinary Shares and that such Pegasus Private Placement Warrants will expire worthless if a business combination is not consummated by December 31, 2023;

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Pegasus has issued several promissory notes to the Sponsor which become repayable at the consummation of the Business Combination;

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the right of the Sponsor to receive TopCo Ordinary Shares, subject to certain lock-up periods;

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the expected cash retention payment to certain members of the Pegasus management team in connection with their agreement to remain available following the Closing for purpose of ensuring a smooth transition;

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the anticipated designation by the Pegasus Initial Shareholders of Sir Dr. Ralph Speth and Stefan Berger as a non-executive director of TopCo following the Business Combination;

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the continued indemnification of Pegasus’s existing directors and officers and the continuation of Pegasus’s directors’ and officers’ liability insurance after the Business Combination;

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the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate;

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the Sponsor and its affiliates can earn a positive rate of return on their investment, even if other Pegasus shareholders experience a negative rate of return in the post-business combination company;

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the Sponsor and Pegasus’s officers and directors will lose their entire investment in Pegasus and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by December 31, 2023. If an initial business combination is consummated by December 31, 2023, there is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by Sponsor and its affiliates and Pegasus officers and directors in connection with activities on Pegasus behalf; and

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if the Trust Account is liquidated, including in the event Pegasus is unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify Pegasus to ensure that the proceeds in the Trust Account are not reduced below $10.10 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pegasus has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pegasus, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account.

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Pegasus shareholders will have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

Upon the issuance of the Topco Ordinary Shares to Pegasus shareholders, current Pegasus shareholders’ percentage ownership will be diluted. Assuming no Pegasus Public Shareholders exercise their redemption rights, that there are no Dissenting Pegasus Shareholders and that no warrants are exercised, current Pegasus shareholders’ percentage ownership in TopCo following the issuance of TopCo Ordinary Shares to Pegasus shareholders would be approximately 11.8% (7,815,718 TopCo Ordinary Shares) under the further assumption of 58,172,970 TopCo Ordinary Shares to be issued to the Schmid shareholders, 5,003,218 TopCo Ordinary Shares exchanged for all Pegasus Class A Ordinary Shares and assuming 2,812,500 Pegasus Class B Ordinary Shares have not been used for incentives to PIPE investors or for non-redemption agreements and are cancelled, thus 2,812,500 TopCo Ordinary Shares are exchanged for the remained of the 2,812,500 Pegasus Class B Ordinary Shares. Additionally, of the expected members of the Topco Board after the completion of the Business Combination, only two are expected to be a current director of Pegasus. The percentage of Topco Ordinary Shares that will be owned by current Pegasus shareholders as a group will vary based on the number of Pegasus Class A Ordinary Shares for which the holders thereof request redemption in connection with the Business Combination. Because of this, current Pegasus shareholders, as a group, will have less influence on the board of directors, management and policies of Topco than they now have on the board of directors, management and policies of Pegasus.

 

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Pegasus cannot assure you that its diligence review has identified all material risks associated with the Business Combination, and you may be less protected as an investor from any material issues with respect to Schmid’s business, including any material omissions or misstatements contained in the registration statement or proxy statement/prospectus relating to the Business Combination than an investor in an initial public offering.

Before entering into the Business Combination Agreement, Pegasus performed a due diligence review of Schmid and its business and operations; however, Pegasus cannot assure you that its due diligence review identified all material issues, and certain unexpected risks may arise and previously known risks may materialize in a manner not consistent with its preliminary risk analysis. Additionally, the scope of due diligence Pegasus has conducted in conjunction with the Business Combination may be different than would typically be conducted in the event Schmid pursued an underwritten initial public offering. In a typical initial public offering, the underwriters of the offering conduct due diligence on the company to be taken public, and following the offering, the underwriters are subject to liability to private investors for any material misstatements or omissions in the registration statement. While potential investors in an initial public offering typically have a private right of action against the underwriters of the offering for any of these material misstatements or omissions, there are no underwriters of the TopCo Ordinary Shares that will be issued pursuant to this registration statement and thus no corresponding right of action is available to investors in the Business Combination, for any material misstatements or omissions in the registration statement or this proxy statement/prospectus. Therefore, as an investor in the Business Combination, you may be exposed to future losses, impairment charges, write-downs, write offs or other charges that could have a significant negative effect on Schmid’s financial condition, results of operations and the share price of its securities, which could cause you to lose some or all of your investment without certain recourse against any underwriter that may be available in an underwritten public offering.

The Pegasus Initial Shareholders, including Sponsor and Pegasus independent directors, hold a significant number of Pegasus shares. They will lose their entire investment in Pegasus if a business combination is not completed.

The Sponsor, the Pegasus directors and officers and certain IPO anchor investors hold 5,625,000 Pegasus Class B Ordinary Shares currently representing 52.9% of the total outstanding Pegasus Ordinary Shares. These Pegasus Class B Ordinary Shares will be worthless if Pegasus does not complete a business combination by December 31, 2023. The Sponsor and the directors and officers of Pegasus currently hold 4,250,000 Pegasus Class B Ordinary Shares and will receive an aggregate of 1,437,500 TopCo Ordinary Shares upon Closing of the Business Combination (while 2,812,500 Pegasus Class B Ordinary Shares are subject to cancellation unless being used for incentives for PIPE investors or non-redemption agreements). 1,375,000 Pegasus Class B Ordinary Shares are held by certain IPO anchor investors which will be exchanged 1:1 by TopCo Ordinary Shares.

The personal and financial interests of Pegasus officers and directors may have influenced their motivation in identifying and selecting Schmid and completing a business combination with Schmid and may influence their operation of TopCo following the Business Combination.

Pegasus and the Sponsor are both incorporated in the Cayman Islands and Pegasus’s ability to complete an initial business combination may be impacted if such initial business combination is subject to U.S. foreign investment or other regulations and review by a governmental entity, such as the Committee on Foreign Investment in the United States (“CFIUS”).

Pegasus is a Cayman Islands exempted company and the Sponsor is a Cayman Islands limited liability company, meaning both are non-U.S. persons. Pegasus and the Sponsor do not believe the transaction will be subject to a review by CFIUS, or otherwise subject to enhanced scrutiny by a governmental entity. However, should an unanticipated governmental review be required or should Pegasus or the Sponsor or others involved in the proposed Business Combination determine they are required to make a voluntary or mandatory filing that is subject to further review by a governmental entity such review could have a significant impact on the overall timing of the transaction. If Pegasus cannot complete its initial business combination by December 31, 2023 because a governmental review process extends beyond such timeframe or because the initial business combination is ultimately prohibited by a governmental entity, Pegasus may be required to liquidate. If Pegasus liquidates, the warrants of Pegasus will expire as worthless, and shareholders will lose

 

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the potential investment opportunity associated with the Business Combination and the chance of realizing future gains on their investment through any price appreciation of shares in the combined company.

Since the Sponsor and Pegasus officers and directors will in most circumstances not be eligible to be reimbursed for their out-of-pocket expenses if a business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for a business combination.

At the Closing of the Business Combination, the Sponsor and Pegasus officers and directors, and any of their respective affiliates, should be reimbursed for out-of-pocket expenses incurred in connection with activities on Pegasus behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on Pegasus’s behalf. These financial interests of Sponsor and Pegasus officers and directors may influence their motivation in identifying and selecting a target business combination and completing the Business Combination.

The Sponsor will control the election of the Pegasus Board until consummation of a business combination and hold a substantial interest in Pegasus. As a result, prior to the consummation of a business combination, they may elect all of Pegasus’s directors and may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.

The Sponsor currently holds 3,406,250 Pegasus Class B Ordinary Shares which presents a significant amount of the issued and outstanding Pegasus Ordinary Shares. In addition, the Pegasus Class B Ordinary Shares, entitle the holders thereof to elect all of Pegasus’s directors prior to the initial business combination. Holders of Pegasus Class B Ordinary Shares have the exclusive right prior to Pegasus’s initial business combination to elect Pegasus’s directors. Accordingly, as holders of the Pegasus Class A Ordinary Shares, Pegasus Public Shareholders will not have the right to vote on the election of directors prior to consummation of the Business Combination. These provisions of the Pegasus Memorandum and Articles of Association may only be amended by a special resolution passed by the affirmative vote of a 90 per cent majority at a general meeting of Pegasus. As a result, Pegasus Public Shareholders will not have any influence over the election of directors of Pegasus prior to an initial business combination.

In addition, as a result of their substantial interest in Pegasus, the Sponsor (and other Pegasus Initial Shareholders) may exert a substantial influence on other actions requiring a shareholder vote, potentially in a manner that Pegasus shareholders do not support, including amendments to the Pegasus Memorandum and Articles of Association and approval of major corporate transactions, including the Business Combination. If the holders of Pegasus Class B Ordinary Shares purchase any Pegasus Class A Ordinary Shares in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, the holders of Pegasus Class B Ordinary Shares will exert significant influence over actions requiring a shareholder vote at least until the completion of a business combination.

The Sponsor and Pegasus’s other directors, officers, advisors and their affiliates may elect to purchase shares from Pegasus Public Shareholders, which may influence a vote on the Business Combination.

The Sponsor or Pegasus’s other directors, executive officers, advisors or their affiliates may purchase Pegasus Class A Ordinary Shares in privately negotiated transactions or in the open market prior to the completion of the 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 the Pegasus Class A Ordinary Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor or Pegasus’s other directors, executive officers, advisors or their affiliates purchase Pegasus Class A Ordinary Shares in privately negotiated transactions from Pegasus Public Shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases would be to vote such shares in favor of the Business Combination Proposal and the Merger Proposal and thereby increase the likelihood of obtaining shareholder approval of the Business Combination, where it appears that such approval would otherwise not be met. This may result in the completion of the Business Combination that may not otherwise have been possible.

 

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If the Business Combination is not completed, new potential target businesses may have leverage over Pegasus in negotiating a business combination and Pegasus’s ability to conduct due diligence on a business combination as it approaches its dissolution deadline may decrease, which could undermine Pegasus’s ability to complete a business combination on terms that would produce value for Pegasus’s shareholders.

If Pegasus is unable to complete this Business Combination, any new potential target business with which Pegasus enters into negotiations concerning a business combination will be aware that Pegasus must complete an initial business combination by December 31, 2023. Consequently, a potential target may obtain leverage over Pegasus in negotiating a business combination, knowing that Pegasus may be unable to complete a business combination with another target business by December 31, 2023. This risk will increase as Pegasus gets closer to the timeframe described above. In addition, Pegasus may have limited time to conduct due diligence and may enter into a business combination on terms that Pegasus would have rejected upon a more comprehensive investigation.

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 Pegasus Public Units, Pegasus Class A Ordinary Shares or Pegasus Public Warrants, potentially at a loss.

Pegasus Public Shareholders will be entitled to receive funds from the Trust Account only in the following circumstances: (i) the redemption of any Pegasus Class A Ordinary Shares properly tendered in connection with a shareholder vote on the completion of an initial business combination; (ii) the redemption of any Pegasus Class A Ordinary Shares properly tendered in connection with a shareholder vote to amend certain aspects of the Pegasus Memorandum and Articles of Association; and (iii) the redemption of all of the Pegasus Class A Ordinary Shares if Pegasus is unable to complete a business combination by December 31, 2023 or a resolution is passed for Pegasus’s voluntary liquidation, subject to applicable law. In no other circumstances will a Pegasus 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 Pegasus Public Units, Pegasus Class A Ordinary Shares or Pegasus Public Warrants, potentially at a loss.

If Pegasus is unable to complete a business combination by December 31, 2023, Pegasus will cease all operations except for the purpose of winding up and Pegasus will redeem the Pegasus Class A Ordinary Shares and liquidate.

The Pegasus Memorandum and Articles of Association provide that Pegasus must complete a business combination by December 31, 2023 (or a later date approved by Pegasus shareholders through an amendment to the Pegasus Memorandum and Articles of Association). If Pegasus has not completed an initial business combination within such time period, it 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 Pegasus Class A Ordinary 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 outstanding Pegasus Class A Ordinary Shares, which redemption will completely extinguish Pegasus Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pegasus’s remaining shareholders and the Pegasus Board, dissolve and liquidate, subject in each case to Pegasus’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Pegasus IPO. In addition, if Pegasus fails to complete an initial business combination by December 31, 2023, there will be no redemption rights on liquidating distributions with respect to Pegasus Public Warrants or the Private Placement Warrants, which will expire worthless.

 

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Because of Pegasus’s limited resources and the significant competition for business combination opportunities, if this Business Combination is not completed, it may be more difficult for Pegasus to complete an initial business combination. In addition, 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 Pegasus is unable to complete an initial business combination by December 31, 2023, Pegasus Public Shareholders will receive a pro-rata portion of the Trust Account on the liquidation of the Trust Account and the Pegasus Public Warrants will expire as worthless.

If Pegasus is unable to complete this Business Combination, Pegasus would expect to encounter intense competition from other entities having a business objective similar to its business objective, 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 Pegasus could 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 Pegasus does and Pegasus’s financial resources will be relatively limited when contrasted with those of many of these competitors. While Pegasus believes there are numerous target businesses Pegasus could potentially acquire with the net proceeds of the Pegasus IPO and the sale of the Private Placement Warrants, Pegasus’s ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by Pegasus’s available financial resources. This inherent competitive limitation may give others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if Pegasus is obligated to pay cash for the Pegasus Class A Ordinary Shares redeemed and, in the event Pegasus seeks shareholder approval of a business combination, Pegasus makes purchases of its Pegasus Class A Ordinary Shares, potentially reducing the resources available to Pegasus for a business combination. Any of these obligations may place Pegasus at a competitive disadvantage in successfully negotiating a business combination.

Pegasus anticipates that, if Pegasus is unable to complete this Business Combination, the investigation of other 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 Pegasus decides 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 Pegasus reaches an agreement relating to a specific target business, Pegasus may fail to complete such business combination (including the Business Combination described in this proxy statement/​prospectus) for any number of reasons including those beyond Pegasus’s control. Any such event will result in a loss to Pegasus of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

If Pegasus is unable to complete an initial business combination by December 31, 2023, Pegasus Public Shareholders will receive a pro-rata portion of the Trust Account on the liquidation of the Trust Account and the Pegasus Public Warrants will expire as worthless.

The exercise of discretion by Pegasus’s directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Business Combination Agreement may result in a conflict of interest when determining whether such changes to the terms of the Business Combination Agreement or waivers of conditions are appropriate and in the best interests of the public shareholders of Pegasus.

In the period leading up to the closing of the Business Combination, other events may occur that, pursuant to the Business Combination Agreement, would require Pegasus to agree to amend the Business Combination Agreement, to consent to certain actions or to waive rights that Pegasus is entitled to under those agreements. Such events could arise because of changes in the course of Schmid’s business, a request by the Schmid shareholders or Schmid to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on Schmid’ business and would entitle Pegasus to terminate the Business Combination Agreement. In any of such circumstances, it would be in the discretion of Pegasus, acting through the Pegasus Board, to grant its consent or waive its rights. The existence of the financial and personal interests of Pegasus’s directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the

 

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part of one or more of the directors between what such individuals may believe is best for Pegasus and the Pegasus Public Shareholders and what such individuals may believe is best for themselves and/or their affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/​prospectus, Pegasus does not believe there will be any changes or waivers that Pegasus’s directors and officers would be likely to make after shareholder approval of the Business Combination has been obtained. While certain changes could be made without further shareholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the shareholders, Pegasus will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of the Pegasus shareholders with respect to the Business Combination Proposal.

The unaudited pro forma condensed combined financial information included in this proxy statement/​prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

The unaudited pro forma financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Topco’s actual financial position or results of operations would have been had the Business Combination been completed on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that Pegasus and Schmid currently believe are reasonable. The unaudited pro forma condensed combined information does not purport to indicate the results that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for the periods presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.

If Pegasus is unable to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Pegasus and materially and adversely affect its business and operating results.

Pegasus’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Pegasus’s internal control over financial reporting is designed to provide reasonable assurance to its management and board of directors regarding the preparation and fair presentation of published financial statements. Pegasus has previously reported the identification of material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of Pegasus’s annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. As previously disclosed in Pegasus’ annual report for the year ended December 31, 2022, as of December 31, 2022, a material weakness related to the fact that Pegasus had not yet designed and maintained effective controls relating to the presentation of the statements of cash flows was identified. This material weakness continued to exist as of June 30, 2023. In addition, as of June 30, 2023, Pegasus identified a material weakness related to the fact that Pegasus had not yet designed and maintained effective controls relating to the presentation of net income (loss) per ordinary share within the financial statements. There can be no guarantee that any future possible weaknesses will be identified and addressed through current internal controls and procedures. In such case, Pegasus may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements or investors may lose confidence in Pegasus’s financial reporting and its stock price may decline as a result.

Neither Pegasus nor its shareholders will have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the total Business Combination consideration in the event that any of the representations and warranties made by Schmid in the Business Combination Agreement ultimately proves to be materially inaccurate or incorrect.

The representations and warranties made by Schmid and Pegasus to each other in the Business Combination Agreement will not survive the consummation of the Business Combination. As a result, Pegasus and its shareholders will not have the protection of any indemnification, escrow, price adjustment

 

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or other provisions that allow for a post-closing adjustment to be made to the total Business Combination consideration if any representation or warranty made by Schmid in the Business Combination Agreement proves to be materially inaccurate or incorrect. Accordingly, to the extent such representations or warranties are incorrect, Pegasus would have no indemnification claim with respect thereto and its financial condition or results of operations could be adversely affected.

The future exercise of registration rights may adversely affect the market price of Topco’s ordinary shares.

Certain Topco ordinary shareholders will have registration rights for restricted securities. In connection with the consummation of the Business Combination, Topco will enter into the Registration Rights Agreement with the Sponsor and certain other shareholders of Topco, which will provide for customary registration rights for certain shareholders. Sales of a substantial number of shares of Topco Ordinary Shares pursuant to the resale registration statement in the public market could occur at any time the registration statement remains effective. In addition, certain registration rights holders can request underwritten offerings to sell their securities. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Topco Ordinary Shares.

Pegasus will incur significant transaction and transition costs in connection with the Business Combination.

Pegasus has incurred and expects to incur significant, non-recurring costs in connection with consummating the Business Combination. All expenses incurred in connection with the Business Combination Agreement and the transactions contemplated thereby (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs; provided that, Pegasus’s fees, expenses and costs will be reimbursed by Topco in the event that the Business Combination completes.

The total transaction expenses as a result of the Business Combination (Pegasus’ expenses and Schmid’s expenses) are currently estimated at approximately $22 million, including approximately $2,441,250  in deferred underwriting commissions to the underwriters of the Pegasus IPO.

Subsequent to consummation of the Business Combination, we may be exposed to unknown or contingent liabilities and may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.

We cannot assure you that the due diligence conducted in relation to Schmid has identified all material issues or risks associated with Schmid, its business or the industry in which it competes. Furthermore, we cannot assure you that factors outside of Schmid’s and our control will not later arise. As a result of these factors, we may be exposed to liabilities and incur additional costs and expenses and 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 has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on our financial condition and results of operations and could contribute to negative market perceptions about our securities or Schmid. Additionally, we have no indemnification rights against Schmid under the Business Combination Agreement.

Accordingly, any shareholders or warrant holders of Pegasus who choose to become Topco Ordinary Shareholders or warrant holders following the Business Combination could suffer a reduction in the value of their shares and warrants. Such shareholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our directors or officers of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration statement or proxy statement/​prospectus relating to the Business Combination contained an actionable material misstatement or material omission.

You may not have the same benefits as an investor in an underwritten public offering.

Like other business combination transactions and spin-offs, in connection with the Business Combination, you will not receive the benefits of the diligence performed by the underwriters in an

 

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underwritten public offering. Investors in an underwritten public offering may benefit from the role of the underwriters in such an offering. In an underwritten public offering, an issuer initially sells its securities to the public market via one or more underwriters, who distribute or resell such securities to the public. Underwriters have liability under the U.S. securities laws for material misstatements or omissions in a registration statement pursuant to which an issuer sells securities.

Because the underwriters have a defense to any such liability by, among other things, conducting a reasonable investigation, the underwriters and their counsel conduct a “due diligence” investigation of the issuer. Due diligence entails engaging legal, financial and/or other experts to perform an investigation as to the accuracy of an issuer’s disclosure regarding, among other things, its business and financial results. Auditors of the issuer also will deliver a “comfort” letter with respect to the financial information contained in the registration statement. In making their investment decision, investors in underwritten public offerings have the benefit of such diligence.

In connection with this proxy statement/prospectus, no parties other than Pegasus and Schmid and their advisors have conducted an investigation of the disclosure contained herein. In addition, as an unaffiliated investor, you will not be afforded the opportunity to perform your own due diligence investigation of, or otherwise obtain information on, Pegasus or Schmid beyond the information that is contained in this proxy statement/prospectus (or is otherwise publicly available). You therefore may not have the benefit of the same level of review as an investor in an underwritten public offering, who has the benefit of the underwriters’ evaluation and due diligence investigation of the issuer.

The ability of Pegasus Public Shareholders to exercise redemption rights with respect to a large number of Pegasus Class A Ordinary Shares could increase the probability that the Business Combination would be unsuccessful and that Pegasus Public Shareholders would have to wait for liquidation to redeem their shares.

At the time that Pegasus entered into the Business Combination Agreement and related transaction documents for the Business Combination, it did not know how many of its public shareholders would exercise their redemption rights, and therefore it structured the Business Combination based on its expectations as to the number of Pegasus Class A Ordinary Shares that will be submitted for redemption. If a larger number of Pegasus Class A Ordinary Shares are submitted for redemption than it initially expected, this could lead to a failure to consummate the Business Combination, a failure to maintain the listing of its securities on NYSE, which could impair its ability to fund its operations and adversely affect its business, financial condition and results of operations.

If third parties bring claims against Pegasus, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.10 per share.

Pegasus’s placing of funds in the Trust Account may not protect those funds from third-party claims against Pegasus. Although Pegasus will seek to have all vendors, service providers (other than Pegasus’s independent auditors), prospective target businesses or other entities with which Pegasus does business execute agreements with Pegasus waiving any right, title, interest or claim of any kind in or to any funds held in the Trust Account for the benefit of Pegasus 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 Pegasus’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the funds held in the Trust Account, Pegasus’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to Pegasus than any alternative.

Examples of possible instances where Pegasus 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 Pegasus management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where Pegasus management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Pegasus and will not seek

 

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recourse against the Trust Account for any reason. Upon redemption of Pegasus Class A Ordinary Shares, including if Pegasus is unable to complete the Business Combination within the prescribed timeframe, Pegasus will be required to provide for payment of claims of creditors that were not waived that may be brought against Pegasus within the ten years following redemption. Accordingly, the per-share redemption amount received by Pegasus Public Shareholders could be less than the $10.10 per share initially held in the Trust Account, due to claims of such creditors.

The Sponsor has agreed that it will be liable to Pegasus if and to the extent any claims by a vendor for services rendered or products sold to Pegasus, or a prospective target business with which Pegasus has discussed entering into a business combination, reduce the amount of funds in the Trust Account to below (i) $10.10 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 Pegasus’s indemnity of the underwriters of the Pegasus IPO 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, the Sponsor will not be responsible to the extent of any liability for such third-party claims. Pegasus has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of Pegasus. The Sponsor may not have sufficient funds available to satisfy those obligations. Pegasus has not asked the Sponsor to reserve for such eventuality, 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 a business combination and redemptions could be reduced to less than $10.10 per public share. In such event, Pegasus may not be able to complete a business combination, and Pegasus shareholders would receive such lesser amount per share in connection with any redemption of Pegasus Class A Ordinary Shares.

Pegasus’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Pegasus Public Shareholders.

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.10 per share or (ii) other than due to the failure to obtain such waiver, 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 the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, Pegasus’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While Pegasus currently expects that its independent directors would take legal action on its behalf against the Sponsor to enforce its indemnification obligations to Pegasus, it is possible that Pegasus’s independent directors in exercising their business judgment may choose not to do so in any particular instance, subject to their fiduciary duties. If Pegasus’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to Pegasus Public Shareholders may be reduced below $10.10 per share.

If, before distributing the proceeds in the Trust Account to Pegasus Public Shareholders, Pegasus files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pegasus that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Pegasus’s shareholders and the per-share amount that would otherwise be received by Pegasus’s shareholders in connection with Pegasus’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to Pegasus Public Shareholders, Pegasus files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pegasus that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Pegasus’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Pegasus’s shareholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by Pegasus’s shareholders in connection with its liquidation may be reduced.

Pegasus Public Shareholders may be held liable for claims by third parties against Pegasus to the extent of distributions received by them upon redemption of their Pegasus Class A Ordinary Shares.

If Pegasus is forced to enter into an insolvent liquidation, any distributions received by Pegasus Public Shareholders could be viewed as an unlawful payment if it was proved that immediately following the date

 

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on which the distribution was made, Pegasus was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Pegasus’s shareholders. Furthermore, Pegasus’s directors may be viewed as having breached their fiduciary duties to Pegasus or its creditors and/or may have acted in bad faith, and thereby exposing themselves and Pegasus to claims, by paying Pegasus Public Shareholders from the Trust Account prior to addressing the claims of creditors. Pegasus cannot assure you that claims will not be brought against it for these reasons. Pegasus and its directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of Pegasus’s share premium account while it was unable to pay its debts as they fall due in the ordinary course of business would be guilty of an offense and may be liable to a fine or imprisonment in the Cayman Islands.

If, after Pegasus distributes the proceeds in the Trust Account to Pegasus Public Shareholders, Pegasus files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pegasus that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of the Pegasus Board may be viewed as having breached their fiduciary duties to Pegasus’s creditors, thereby exposing the members of the Pegasus Board and Pegasus to claims of punitive damages.

If, after Pegasus distributes the proceeds in the Trust Account to Pegasus Public Shareholders, Pegasus files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pegasus that is not dismissed, any distributions received by Pegasus 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 all amounts received by Pegasus’s shareholders. In addition, the Pegasus Board may be viewed as having breached its fiduciary duty to Pegasus’s creditors and/or having acted in bad faith, thereby exposing itself and Pegasus to claims of punitive damages, by paying Pegasus Public Shareholders from the Trust Account prior to addressing the claims of creditors.

Because Pegasus is 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.

Pegasus is an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for Pegasus shareholders to effect service of process within the United States upon Pegasus’s directors or officers, or enforce judgments obtained in the United States courts against Pegasus’s directors or officers.

Pegasus’s corporate affairs are governed by the Pegasus Memorandum and Articles of Association, the Cayman Companies Act 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 Pegasus’s directors to Pegasus 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 Pegasus’s shareholders and the fiduciary responsibilities of Pegasus’s 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, shareholders of Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like Pegasus have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Pegasus directors have discretion under the Pegasus Memorandum and Articles of Association to determine whether or not, and under what conditions, corporate records may be inspected by shareholders, but are not obliged to make them available to shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

The courts of the Cayman Islands are unlikely (i) to recognize or enforce against Pegasus judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the

 

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United States or any state, and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Pegasus 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. Whilst 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, Pegasus shareholders may have more difficulty in protecting their interests in the face of actions taken by Pegasus management, members of the Pegasus Board or controlling shareholders of Pegasus than they would as public shareholders of a United States company.

Pegasus shareholders may have limited remedies if their shares suffer a reduction in value following the Business Combination.

Any shareholders who choose to remain shareholders following a business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value, unless they are able to successfully claim that the reduction was due to the breach by Pegasus’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy statement relating to a business combination contained an actionable material misstatement or material omission.

Risks for any holders of Pegasus Public Warrants following the Business Combination.

Following the Business Combination, Topco may redeem your Topco Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless. Topco will have the ability to redeem outstanding Topco Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the Topco Ordinary Shares equals or exceeds $18.00 per share (as adjusted for share subdivisions, share capitalizations, 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 on which a notice of redemption is sent to the warrant holders. Topco will not redeem the warrants as described above unless a registration statement under the Securities Act covering the Topco Ordinary Shares issuable upon exercise of such warrants is effective and a current prospectus relating to those Topco Ordinary Shares is available throughout the 30-day redemption period. If and when the Topco Public Warrants become redeemable by Topco, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Topco Public Warrants could force you (i) to exercise your Topco Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Topco Public Warrants at the then-current market price when you might otherwise wish to hold your Topco Public Warrants, or (iii) to accept the nominal redemption price which, at the time the outstanding Topco Public Warrants are called for redemption, is likely to be substantially less than the market value of your Topco Public Warrants.

In addition, Topco will have the ability to redeem the outstanding Topco Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the closing price of the Topco Ordinary Shares equals or exceeds $10.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) on the trading day prior to the date on which a notice of redemption is sent to the warrant holders. Recent trading prices for the Pegasus Class A Ordinary Shares have not exceeded the $10.00 per share threshold at which the Pegasus Public Warrants would become redeemable. In such a case, the holders will

 

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be able to exercise their Topco Public Warrants prior to redemption for a number of Topco Ordinary Shares determined based on the redemption date and the fair market value of the Topco Ordinary Shares. Please see the notes to Pegasus’s financial statements included elsewhere in this proxy statement/prospectus.

The value received upon exercise of the Topco Public Warrants (1) may be less than the value the holders would have received if they had exercised their Topco Public Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Topco Public Warrants.

Pegasus is likely a Passive Foreign Investment Company (“PFIC”) for U.S. federal income tax purposes.

A non-U.S. corporation will be classified as a PFIC for U.S. federal income tax purposes if (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income and/or (ii) at least 50% of its assets in a taxable year (ordinarily determined based on fair market value and averaged quarterly over the year), including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are treated as held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

If Pegasus was or is a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder (as defined in the section of this prospectus captioned “Certain Material U.S. Federal Income Tax Considerations”) of Pegasus Ordinary Shares or Pegasus Warrants, the U.S. holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements.

Based on the current and historic income, assets, and operations of Pegasus, it is anticipated that Pegasus was (and remains) a PFIC for each taxable year during which it was in existence, and it is likely that the “start-up” exception does not apply to Pegasus. As a result of this, it is anticipated that U.S. holders of Pegasus Ordinary Shares will be required to treat those shares as shares in a PFIC, and that, although not free from doubt, U.S. holders of Pegasus Warrants may be required to treat those warrants as shares in a PFIC (for purposes of the PFIC rules).

Although not free from doubt, if Pegasus was treated as a PFIC in any taxable year during which a U.S. holder owned Pegasus Ordinary Shares or Pegasus Warrants (and such U.S. holder continues to own those shares or warrants), that U.S. holder may be required to recognize gain (if any) on its Pegasus Ordinary Shares and Pegasus Warrants in connection with the Merger, notwithstanding any nonrecognition treatment that may generally be provided by any generally-applicable provisions of the Code, though if any such provisions did apply, it is anticipated that such U.S. holder may not be permitted to recognize loss (if any) on its Pegasus Ordinary Shares and Pegasus Warrants in connection with the Merger.

There may be tax consequences of the Business Combination that may adversely affect holders of Pegasus Ordinary Shares or Pegasus Warrants.

Although it is intended for the Merger to qualify as part of a tax-free exchange for U.S. federal income tax purposes as described in Section 351(a) of the Code, the requirements for such treatment are complex and qualification for such treatment could be adversely affected by events or actions that occur following the Business Combination that are beyond TopCo’s control (including, with respect to any gain on a U.S. holder’s Pegasus Ordinary Shares and Pegasus Warrants, Pegasus’s potential status as a PFIC, which is described in the above risk factor). There can be no assurance that the U.S. Internal Revenue Service (“IRS”) will not disagree with or challenge the intended characterization of the transaction for U.S. federal income tax purposes. To the extent the Merger is not treated as a tax-free exchange for U.S. federal income tax purposes, it could result in the imposition of substantial additional taxes on U.S. holders of Pegasus Ordinary Shares and Pegasus Warrants.

As a result of the uncertainties described above, as well as the discussion under “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — Application of the PFIC Rules to the Business Combination” below, the U.S. federal income tax treatment of the Business Combination for U.S. holders is

 

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subject to significant uncertainty and is therefore not capable of being the subject of a representation regarding its tax-free treatment.

It is unclear whether the Merger, in addition to potentially qualifying as an exchange described in Section 351(a) of the Code, will qualify as a “reorganization” under Section 368 of the Code. Despite the intention of the parties to the Business Combination Agreement that the Merger may also independently qualify as a “reorganization,” such treatment is highly uncertain. There are many requirements that must be satisfied in order for the Merger to qualify as a “reorganization,” some of which are based upon factual determinations. Under the applicable provisions of the Code and U.S. Treasury regulations promulgated thereunder, the acquiring corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance directly on point as to how the provisions of Section 368(a) of the Code apply in the case of an acquisition of a corporation with only investment-type assets, such as Pegasus. Moreover, the qualification of the Merger as a “reorganization” is dependent on facts that will not be known until or following the Closing. Specifically, this qualification could depend on whether a sufficient number of Pegasus Ordinary Shares are exchanged for TopCo Ordinary Shares in the Merger rather than redeemed for cash. If a significant number of Pegasus Ordinary Shares were to be redeemed, there is a risk that the aforementioned “continuity of business enterprise” requirement may not be satisfied. There can be no assurance that the Merger qualifies as a reorganization under Section 368 of the Code. U.S. holders should consult their tax advisors regarding the potential qualification of the Merger as a reorganization for U.S. federal income tax purposes.

Consequently, it is possible that a U.S. holder (as defined in “Certain Material U.S. Federal Income Tax Considerations”) of Pegasus Ordinary Shares and Pegasus Warrants could be treated as transferring its Pegasus Ordinary Shares and Pegasus Warrants, if any, to TopCo in an exchange governed only by Section 351(a) of the Code (and not by Section 368 of the Code), in which case (to the extent such U.S. holder is not required to recognize all of its gain on the transfer under Section 367(a) of the Code or the PFIC rules) such U.S. holder generally should (i) recognize gain (but not loss) with respect to the exchange of their Pegasus Ordinary Shares equal to the lesser of (A) the excess (if any) of the fair market value of the TopCo Ordinary Shares and TopCo Warrants allocable to such Pegasus Ordinary Shares over its adjusted tax basis in such Pegasus Ordinary Shares and (B) the fair market value of such TopCo Warrants, and (ii) recognize gain (but not loss) with respect to the exchange of their Pegasus Warrants equal to the lesser of (A) the excess (if any) of the fair market value of the TopCo Ordinary Shares and TopCo Warrants allocable to such Pegasus Warrants over its adjusted tax basis in such Pegasus Warrants and (B) the fair market value of such TopCo Warrants. For purposes of the preceding sentence, each of the TopCo Warrants and the TopCo Ordinary Shares will be allocated proportionally to the exchanged Pegasus Ordinary Shares, on the one hand, and Pegasus Warrants, on the other hand, according to the relative fair market values of such exchanged Pegasus Ordinary Shares and Pegasus Warrants. The above treatment is not free from doubt, and U.S. holders should consult their tax advisors regarding the treatment of the exchange of Pegasus Warrants and Pegasus Ordinary Shares under Section 351 of the Code.

Alternatively, it is also possible that, if the deemed transfer of Pegasus Ordinary Shares and Pegasus Warrants qualifies as part of a “reorganization” within the meaning of Section 368 of the Code, subject to Section 367(a) of the Code as well as the discussion regarding the “passive foreign investment company” rules, a U.S. holder of Pegasus Ordinary Shares and Pegasus Warrants generally should not recognize any gain or loss on any such deemed transfer of Pegasus Warrants, and such U.S. holder’s basis in the TopCo Warrants deemed received generally should be equal to the U.S. holder’s basis in its Pegasus Warrants deemed transferred.

Section 367(a) of the Code and the applicable Treasury regulations promulgated thereunder provide that where a U.S. holder exchanges certain property in a transaction that would qualify as a reorganization within the meaning of Section 368(a) of the Code, the U.S. holder is required to recognize gain, but not loss, realized on such exchange unless certain requirements are met. If the Merger is described in Section 351(a) or Section 368 of the Code but it is determined that Section 367(a) of the Code applies to the transfer of Pegasus Ordinary Shares (or that the U.S. holder is required to recognize gain on the transfer under the PFIC rules), then a U.S. holder would generally recognize gain (but not loss) to the extent that gain would have been recognized if such transfer did not qualify for non-recognition under Section 351(a) or Section 368 of the Code.

 

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In addition, a U.S. holder of Pegasus Ordinary Shares or Pegasus Warrants could be subject to additional adverse U.S. federal income tax consequences as a result of the Business Combination if Pegasus is a passive foreign investment company within the meaning of Section 1297 of the Code at any time during a U.S. holder’s holding period of Pegasus Ordinary Shares or Pegasus Warrants.

The Closing is not conditioned upon the receipt of an opinion of counsel that the Business Combination will qualify for tax-free treatment, and none of Pegasus, Schmid or TopCo intends to request a ruling from the IRS regarding the U.S. federal income tax treatment of the Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the tax-free treatment of the Business Combination or that a court will not sustain a challenge by the IRS.

The summary above is qualified in its entirety by the more detailed discussion provided in the section entitled “Certain Material U.S. Federal Income Tax Considerations.” We urge you to consult your tax advisors regarding the tax consequences to you of the Business Combination.

If TopCo is characterized as a PFIC, U.S. holders may suffer adverse tax consequences.

Based on the current and anticipated composition of the income, assets and operations of TopCo and its subsidiaries, TopCo does not believe it will be treated as a PFIC for the taxable year that includes the Business Combination, however there can be no assurances in this regard or any assurances that TopCo will not be treated as a PFIC in any future taxable year. Moreover, the application of the PFIC rules is subject to uncertainty in several respects, and TopCo cannot assure you that the IRS will not take a contrary position as to TopCo not being treated as a PFIC or that a court will not sustain such a challenge by the IRS.

Whether TopCo is a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of TopCo’s income and assets, the market value of its assets, and potentially the composition of the income and assets of one or more of TopCo’s subsidiaries and the market value of their assets in that year. Whether a TopCo subsidiary is a PFIC for any taxable year is likewise a factual determination that depends on, among other things, the composition of the subsidiary’s income and assets and the market value of such assets in that year. One or more changes in these factors may cause TopCo and/or one or more of its subsidiaries to become a PFIC for a taxable year even though it has not been a PFIC for one or more prior taxable years. Whether TopCo or a subsidiary is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and thus is subject to significant uncertainty.

If TopCo is a PFIC for any taxable year, a U.S. holder of TopCo Ordinary Shares may be subject to adverse tax consequences and may incur certain information reporting obligations (including with respect to any subsidiaries of TopCo that are treated as PFICs with respect to those U.S. holders). For a further discussion, see “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — Application of the PFIC Rules to the Business Combination.” U.S. holders of TopCo Ordinary Shares and TopCo Warrants are strongly encouraged to consult their own advisors regarding the potential application of these rules to TopCo and the ownership of TopCo Ordinary Shares and/or TopCo Warrants.

If a United States person is treated as owning at least 10% of TopCo’s shares, such person may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of TopCo’s shares, such person may be treated as a “United States shareholder” ​(a “10% U.S. Shareholder”) with respect to TopCo. If 10% U.S. Shareholders collectively own more than 50% of the value or voting power of TopCo’s shares, then TopCo will be considered a controlled foreign corporation (a “CFC”). Additionally, as a result of complex attribution rules, a direct or indirect subsidiary of TopCo may be considered a CFC and a 10% U.S. Shareholder of TopCo may be subject to the CFC rules with respect to such TopCo subsidiary even if TopCo itself is not a CFC.

A 10% U.S. Shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of the CFC’s “Subpart F income” and (in computing its “global intangible low-taxed income”) “tested income” and a pro rata share of the amount of U.S. property (including certain stock in U.S. corporations and certain tangible assets located in the United States) held by the CFC regardless of

 

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whether such CFC makes any distributions. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such 10% U.S. Shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such 10% U.S. Shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due from starting. An individual that is a 10% U.S. Shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a 10% U.S. Shareholder that is a U.S. corporation.

TopCo cannot provide any assurances that it will assist holders in determining whether it, or any of its non-U.S. subsidiaries, are treated as a CFC or whether any holder is treated as a 10% U.S. Shareholder with respect to any of such CFC or furnish to any holder information that may be necessary to comply with reporting and tax paying obligations.

Risks Related to the Redemption

Pegasus does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Pegasus to complete a business combination with which a substantial majority of its shareholders do not agree.

The Pegasus Memorandum and Articles of Association does not provide a specified maximum redemption threshold, except that (i) a Pegasus Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a partnership, syndicate, or other group for the purposes of acquiring, holding, or disposing of Pegasus shares, will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Pegasus IPO, without the prior consent of Pegasus and (ii) in no event will Pegasus redeem Pegasus Class A Ordinary Shares in an amount that would cause its net tangible assets to be less than $5,000,001, such that Pegasus is not 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 the Business Combination. In this respect, the Business Combination Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount of cash in the Trust Account (net of any redeemed amounts) together with any amounts received from PIPE investors or other investors in aggregate being at least $35,000,000. As a result, Pegasus may be able to complete the Business Combination even though a substantial portion of Pegasus Public Shareholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to the Sponsor or Pegasus’s officers, directors, advisors or their affiliates.

If the Business Combination is not consummated, Pegasus will not redeem any shares, all Pegasus Class A Ordinary Shares submitted for redemption will be returned to the holders thereof, and Pegasus instead may search for an alternate business combination or be forced to liquidate.

Pegasus Public Shareholders who wish to redeem their shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption, which may make it difficult for them to exercise their redemption rights prior to the deadline. If shareholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Pegasus Class A Ordinary Shares for a pro rata portion of the funds held in the Trust Account.

This proxy statement/prospectus describes the various procedures that must be complied with by Pegasus Public Shareholders in order to validly redeem their Pegasus Class A Ordinary Shares. For example, Pegasus Public Shareholders seeking to exercise their redemption rights are required to either tender their certificates to the transfer agent, or to deliver their shares to the transfer agent electronically, in either case at least two business days prior to the vote on the proposal to approve the Business Combination. In the event that a Pegasus Public Shareholder fails to comply with these or any other procedures, its shares may not be redeemed. Please see the section entitled “Extraordinary General Meeting of Pegasus Shareholders — Redemption Rights” for additional information on how to exercise your redemption rights.

If a Pegasus Public Shareholder fails to receive notice of Pegasus’s offer to redeem its public shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

Pegasus will comply with the proxy rules when conducting redemptions in connection with the Business Combination. Despite Pegasus’s compliance with these rules, if a Pegasus Public Shareholder fails

 

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to receive Pegasus’s proxy materials, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy materials that Pegasus will furnish to holders of Pegasus Class A Ordinary Shares in connection with the Business Combination will describe the various procedures that must be complied with in order to validly redeem such shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.

If Pegasus is unable to consummate a business combination by December 31, 2023 the Pegasus Public Shareholders may be forced to wait beyond such date before redemption from the Trust Account.

If Pegasus is unable to consummate a business combination by December 31, 2023, Pegasus will distribute the aggregate amount then on deposit in the Trust Account (less up to $100,000 of interest to pay dissolution expenses), pro rata to the Pegasus Public Shareholders by way of redemption and cease all operations, except for the purposes of winding up Pegasus’s affairs. Any redemption of Pegasus Class A Ordinary Shares shall be effected automatically by function of the Pegasus Memorandum and Articles of Association prior to any voluntary winding up. If Pegasus is required to wind up, liquidate the Trust Account and distribute such amount therein, to the Pegasus Public Shareholders pro rata, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Cayman Companies Act. In that case, Pegasus shareholders may be forced to wait beyond December 31, 2023 before the redemption proceeds of the Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from the Trust Account. Pegasus has no obligation to return funds to shareholders prior to the date of the redemption or liquidation, unless it consummates a business combination prior thereto and only then in cases where shareholders have properly sought to redeem their Pegasus Class A Ordinary Shares. Only upon the redemption or any liquidation will Pegasus Public Shareholders be entitled to distributions if Pegasus is unable to complete a business combination.

There is no guarantee that a Pegasus Public Shareholder’s decision whether to redeem its Pegasus Class A Ordinary Shares for a pro rata portion of the Trust Account will put the shareholder in a better future economic position.

There is no assurance as to the price at which a Pegasus Public Shareholder may be able to sell its public shares in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in the share price, and may result in a lower value realized now than a Pegasus Public Shareholder might realize in the future had the shareholder not redeemed its Pegasus Class A Ordinary Shares. Similarly, if a Pegasus Public Shareholder does not redeem its Pegasus Class A Ordinary Shares, the shareholder will bear the risk of ownership of the public shares after the consummation of any initial business combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/​prospectus. A shareholder should consult the shareholder’s tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

Risks Related to Taxes

TopCo’s tax residency might change if Germany ratifies the MLI (as defined below) and changes its provisional election on the corporate residence tie-breaker.

TopCo’s sole tax residency in Germany for purposes of the convention between Germany and the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (the “German-Dutch tax treaty”) is subject to the application of the provisions on tax residency as stipulated in the German-Dutch tax treaty as effective as of the date of this proxy statement/prospectus. However, among others, Germany and the Netherlands entered into a Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). The MLI operates to amend bilateral tax treaties between participating states, provided there is a match between certain options made by the relevant states. The MLI provides, amongst others, for an amendment of relevant treaty rules regarding tax residency for purposes of relevant tax treaties. According to its elections, the Netherlands applies such deviating rules on tax residency, i.e., it did not opt out. However, currently, the MLI is not

 

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applicable between the Netherlands and Germany, because, inter alia, Germany has not included the German-Dutch tax treaty in the list of reservations and notifications attached to the Implementation Act of the MLI which entered into force on April 1, 2021.

Our ability to utilize our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations, including losses as a result of the Business Combination.

We have incurred and are likely to continue incurring significant tax losses, which may be limited in their usability under German and other tax laws, in particular following significant shareholder changes. Although we do neither expect the Business Combination nor any of the ownership changes in the course of past financing rounds to result in a forfeiture of our German tax loss attributes, the realization of future tax savings from such tax loss attributes depends on the tax authorities’ acceptance of their continued willingness and our ability to generate future taxable income in Germany against which such losses can be offset.

Future changes to tax laws could materially and adversely affect TopCo and reduce net returns to TopCo’s shareholders.

TopCo’s tax treatment is subject to changes in tax laws, regulations, and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration, and the practices of tax authorities in jurisdictions in which TopCo operates. The income and other tax rules in the jurisdictions in which TopCo operates are constantly under review by taxing authorities and other governmental bodies. Changes to tax laws (which changes may have retroactive application) could adversely affect TopCo or its shareholders. TopCo is unable to predict what tax proposals may be proposed or enacted in the future or what effect such changes would have on TopCo’s business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect TopCo’s financial position and overall or effective tax rates in the future in countries where TopCo has operations and where TopCo is organized or resident for tax purposes, and increase the complexity, burden and cost of tax compliance. TopCo urges investors to consult with their legal and tax advisors regarding the implication of potential changes in tax laws on an investment in TopCo Ordinary Shares.

 

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GENERAL INFORMATION

Presentation of Financial Information

This proxy statement/prospectus contains:

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the audited combined financial statements of Schmid as of and for the years ended December 31, 2022 and 2021, prepared in accordance with IFRS as issued by the IASB in its presentation and reporting currency of the Euro (€);

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the audited financial statements of Pegasus as of and for the years ended December 31, 2022 and 2021, prepared in accordance with U.S. GAAP in its presentation and reporting currency of United States dollars ($); and

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the unaudited pro forma condensed combined financial statements of TopCo as of and for the year ended December 31, 2022, prepared in accordance with the measurement principles of IFRS and in accordance with Article 11 of Regulation S-X.

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The financial statements of Pegasus have been translated into Euros for the purposes of presentation in the unaudited pro forma condensed combined financial information using the following exchange rates:

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at the period end exchange rate as of December 31, 2022 of $1.00 to €0.9376 for the statement of financial position; and

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the average exchange rate for the year ended December 31, 2022 of $1.00 to €0.9497 for the statement of profit or loss for the period ending on that date.

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TopCo was incorporated on February 7, 2023 for the purpose of effectuating the Business Combination described herein. TopCo has no material assets and does not operate any businesses. Accordingly, no financial statements of TopCo have been included in this proxy statement/prospectus.

 

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•

The occurrence of any event, change or other circumstance that could give rise to the termination of the Business Combination Agreement;

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The Business Combination disrupts Schmid’s current business plans and operations or potential difficulties in Schmid employee retention as a result of the Business Combination;

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The outcome of any legal proceedings that may be instituted against Pegasus, TopCo or Schmid related to the Business Combination;

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TopCo’s ability to obtain or maintain TopCo’s securities listing on the NYSE;

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Difficulties in protecting investor interests because of Pegasus’s incorporation in the Cayman Islands;

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The market price of Pegasus’s and (post-closing) TopCo’s securities may be volatile due to a variety of factors, such as changes in the competitive environment in which TopCo will operate, the regulatory framework of the industry in which TopCo will operate, developments in TopCo’s business and operations, and changes in the capital structure;

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The failure to retain existing key customers, or the failure of our key customers to grow their own sales in the future.

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The post-combination company will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all;

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Any disruptions to our supply, chain significant increase in material cost, or shortages of critical components;

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Schmid’s inability to secure or protect its intellectual property;

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Negative publicity about Schmid, its employees, directors, management, shareholders, affiliated parties or Schmid’s founders; and

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Significant political and economic uncertainties in the foreign jurisdictions in which we have operations.

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Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in this proxy statement/prospectus. Accordingly, you should not rely on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus. TopCo undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this proxy statement/​prospectus or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks TopCo describes in the reports it will file from time to time with the SEC after the date of this proxy statement/prospectus.

In addition, statements that “TopCo believes” and similar statements reflect TopCo’s beliefs and opinions on the relevant subject. These statements are based on information available to TopCo as of the date of this proxy statement/prospectus. And while TopCo believes that information provides a reasonable basis for these statements, that information may be limited or incomplete. TopCo’s statements should not be read to indicate that it has conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely on these statements.

Although TopCo believes the expectations reflected in the forward-looking statements were reasonable at the time made, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither TopCo nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should carefully consider the cautionary statements contained or referred to in this section in connection with the forward-looking statements contained in this proxy statement/​prospectus and any subsequent written or oral forward-looking statements that may be issued by TopCo or persons acting on its behalf.

 

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You will be permitted to attend the Extraordinary General Meeting in person at the offices of Clifford Chance PmbB at Junghofstrasse 14, 60313 Frankfurt am Main, Germany only to the extent consistent with, or permitted by, applicable law and directives of public health authorities. The virtual meeting format allows attendance from any location in the world. You will be able to attend the Extraordinary General Meeting virtually online, vote and submit your questions during the Extraordinary General Meeting by visiting                 and entering the 12-digit control number found on your proxy card or notice of the Extraordinary General Meeting.

Proposals at the Extraordinary General Meeting

At the Extraordinary General Meeting, Pegasus shareholders will vote on the following proposals:

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Proposal No. 1 — Business Combination Proposal — A proposal, by an ordinary resolution, to adopt and approve the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A-1 (Original Business Combination Agreement) and Annex A-2 (First Amendment to Business Combination Agreement), and the transactions contemplated thereby, including the Business Combination;

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Proposal No. 2 — Merger Proposal — A proposal, by a special resolution, to authorize and approve the Plan of Merger, a copy of which is attached to this proxy statement/prospectus as Annex B, pursuant to which Pegasus will merge with Merger Sub, with Pegasus as the surviving company in accordance with the relevant provisions of the Cayman Companies Act; and