(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive offices)
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to:
Mitchell
Nussbaum
Giovanni Caruso
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4000
(212) 407-4990 — Facsimile
|
Dan Brecher
Paul Lieberman
Scarinci & Hollenbeck,
LLC.
3 Park Avenue, 15th Floor
New York, New York 10016
(212) 784-6919
(212) 808-4155 –Facsimile
|
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box. ☑
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
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.
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☑
|
Smaller reporting company
|
☑
|
|
|
|
Emerging growth company
|
☑
|
If
an emerging growth company, 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.
☐
CALCULATION OF REGISTRATION FEE
|
Title of each Class of Security being registered
|
|
Amount
to be
Registered
|
|
|
Proposed
maximum
offering
price per
share
|
|
|
Proposed
Maximum
Aggregate
Offering
Price
(1)
|
|
|
Amount of
Registration
Fee
|
|
|
Units, each
consisting of one Ordinary Share, no par value, one Redeemable Warrant to acquire one-half (1/2) of one Ordinary Share, and
one Right to acquire one-tenth of an Ordinary Share
(2)
|
|
|
5,750,000
|
|
|
$
|
10.00
|
|
|
$
|
57,500,000.00
|
|
|
$
|
6,969.00
|
|
|
Ordinary Shares included as part of the
Units
(2)
|
|
|
5,750,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Redeemable Warrants
included as part of the Units
(2)
|
|
|
5,750,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Rights included as part of the Units
|
|
|
5,750,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
Ordinary Shares underlying
Rights included as part of Units
(2)
|
|
|
575,000
|
|
|
$
|
10.00
|
|
|
$
|
5,750,000.00
|
|
|
$
|
696.90
|
|
|
Representative’s Unit Purchase Option
|
|
|
1
|
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
|
0.01
|
|
|
Units underlying the Representative’s Unit Purchase
Option
|
|
|
575,000
|
|
|
$
|
11.50
|
|
|
$
|
6,612,500.00
|
|
|
$
|
801.44
|
|
|
Ordinary Shares underlying the Representative’s
Unit Purchase Option
|
|
|
575,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
(3)
|
|
Warrants underlying the Representative’s Unit
Purchase Option
|
|
|
575,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
(3)
|
|
Rights underlying the Representative’s Unit
Purchase
|
|
|
575,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
(3)
|
|
Ordinary Shares underlying the
Rights included as part of the Representative’s Unit Purchase Option
|
|
|
57,500
|
|
|
$
|
11.50
|
|
|
$
|
661,250.00
|
|
|
$
|
80.14
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
70,523,850.00
|
|
|
$
|
8,547.49
|
|
|
|
(1)
|
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
|
|
|
(2)
|
Includes (i) Units, (ii) Ordinary Shares, Redeemable Warrants and Rights underlying such Units and (iii) Ordinary Shares underlying the Redeemable Warrants and Rights included in such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any.
|
|
|
(3)
|
No fee pursuant to Rule 457(g).
|
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 Commission, acting pursuant
to said Section 8(a), may determine.
The information
in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
|
PRELIMINARY PROSPECTUS
|
SUBJECT
TO COMPLETION, DATED DECEMBER 21
, 2018
|
$50,000,000
WEALTHBRIDGE ACQUISITION LIMITED
5,000,000 UNITS
Wealthbridge Acquisition Limited is a British
Virgin Islands company incorporated as a blank check company for the purpose of entering into a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Our efforts
to identify a prospective target business will not be limited to a particular industry or geographic region, although the Company
intends to focus on operating businesses in and around the air transportation and aviation industry in China
.
This is an initial public offering
of our securities. Each unit that we are offering has a price of $10.00 and consists of one ordinary share, one redeemable warrant,
and one right to receive one-tenth (1/10) of an ordinary share upon the consummation of an initial business combination, as described
in more detail in this prospectus. Each redeemable warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary
share, and each ten rights entitle the holder thereof to receive one ordinary share at the closing of a business combination.
We will not issue fractional shares. As a result, you must (1) exercise warrants in multiples of two warrants, at a price of $11.50
per full share, subject to adjustment as described in this prospectus, to validly exercise your warrants; and (2) hold rights
in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination. Each warrant will
become exercisable on the later of the completion of an initial business combination and 12 months from the date of this prospectus,
and will expire five years from the effective date of this registration statement, or earlier upon redemption. The exercise price
of the warrants is $11.50 per full share.
We have granted Chardan Capital Markets,
LLC, the representative of the underwriters, a 45-day option to purchase up to 750,000 units (over and above the 5,000,000 units
referred to above) solely to cover over-allotments, if any.
Our sponsor, Oriental Holdings Limited,
which is jointly owned by our director, Jining Li, through Keen Nice Communications Limited, and our chief executive officer,
Yongsheng Liu, has committed to purchase from us an aggregate of 247,500 units, or “private units,” at $10.00 per
private unit (for a total purchase price of $2,475,000). These purchases will take place on a private placement basis simultaneously
with the consummation of this offering. All of the proceeds we receive from these purchases will be placed in the trust account
described below. Our sponsor has also agreed that if the over-allotment option is exercised by the underwriters, they will purchase
from us at a price of $10.00 per private unit an additional number of private units (up to a maximum of 22,500 private units)
pro rata
with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in
this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional
private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from
the exercise of the over-allotment option.
There is presently no public market
for our units, ordinary shares, warrants or rights. We have applied to have our units listed on the Nasdaq Capital Market, or
Nasdaq, under the symbol “HHHU” on or promptly after the date of this prospectus. We cannot guarantee that our securities
will be approved for listing on Nasdaq. The ordinary shares, warrants and rights comprising the units will begin separate trading
on the 90
th
day after the date of this prospectus unless Chardan Capital Markets LLC determines that an earlier date
is acceptable, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC, containing
an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing
when such separate trading will begin. Once the securities comprising the units begin separate trading, the ordinary shares, warrants
and rights will be traded on Nasdaq under the symbols “HHH,” “HHHW,” and “HHHR,” respectively.
We cannot assure you that our securities will continue to be listed on Nasdaq after this offering.
We are an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012 and have elected to comply with certain reduced public company reporting
requirements.
Investing in our securities involves
a high degree of risk. See “
Risk Factors
” beginning on page 17 of this prospectus for a discussion of information
that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
No offer or invitation to subscribe
for units may be made to the public in the British Virgin Islands.
|
|
|
Price to Public
|
|
|
Underwriting
Discounts and
Commissions
(1)
|
|
|
Proceeds, before
Expenses, to us
|
|
|
Per Unit
|
|
$
|
10.00
|
|
|
$
|
0.65
|
(2)
|
|
$
|
9.35
|
|
|
Total
|
|
$
|
50,000,000
|
|
|
$
|
3,250,000
|
|
|
$
|
46,750,000
|
|
|
(1)
|
For further information
relating to the underwriters’ compensation, please refer to the section entitled “
Underwriting
” on
page 97 of this prospectus.
|
|
(2)
|
Includes up to
$1,750,000, or $0.35 per unit, equal to 3.5% of the gross proceeds of this offering (or $2,012,500 if the underwriters’
over-allotment option is exercised in full) payable to the underwriters as deferred underwriting discounts and commissions
from the funds to be placed in the trust account described in this prospectus. The deferred underwriting discounts and commissions
will be released to the underwriters upon consummation of an initial business combination, as described in this prospectus.
If the business combination is not consummated, such deferred underwriting discounts and commissions will be forfeited by
the underwriters. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and
commissions
|
Upon consummation of the offering,
$10.00 per unit sold to the public in this offering (whether or not the over-allotment option has been exercised in full or part)
will be deposited into a United States-based account at Morgan Stanley maintained by Continental Stock Transfer & Trust Company
acting as trustee. Such amount includes $1,750,000, or $0.35 per unit (or $2,012,500 if the underwriters’ over-allotment
option is exercised in full), payable to the underwriters as deferred underwriting discounts and commissions. Except as described
in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business combination
and our liquidation upon our failure to consummate a business combination within the required time period.
We are offering the units for sale
on a firm-commitment basis. Chardan Capital Markets, LLC, acting as sole book-running manager and representative of the underwriters,
expects to deliver our securities to investors in the offering on or about __________, 2019.
Sole Book-Running Manager
Chardan
_______________, 2019
WEALTHBRIDGE ACQUISITION LIMITED
TABLE OF CONTENTS
PROSPECTUS SUMMARY
This summary highlights certain information
appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus
carefully, including the risk factors and the financial statements. Unless otherwise stated in this prospectus, references to:
|
|
●
|
“we,” “us” or “our company” refers to Wealthbridge Acquisition Limited;
|
|
|
●
|
“initial shareholders” refers to all of our shareholders immediately prior to the date of this prospectus, including all of our officers and directors to the extent they hold such shares;
|
|
|
●
|
“insider
shares” refers to the 1,437,500 ordinary shares held by our initial shareholders prior to this offering (including up
to an aggregate of 187,500 ordinary shares subject to forfeiture to the extent that the underwriters’ over-allotment
option is not exercised in full or in part);
|
|
|
●
|
“private
units” refer to the units we are selling privately to our sponsor upon consummation of this offering;
|
|
|
●
|
“sponsor”
refers to Oriental Holdings Limited, which is owned by our director, Jining Li, through Keen Nice Communications Limited,
and Yongsheng Liu;
|
|
|
●
|
“Private rights” refer to the rights underlying the private units;
|
|
|
●
|
“Private warrants” refer to the warrants underlying the private units;
|
|
|
●
|
“US Dollars” and “$” refer to the legal currency of the United States;
|
|
|
●
|
“Companies Law” refers to the British Virgin Islands Business Companies Act, 2004 as the same may be amended and supplemented from time to time;
|
|
|
●
|
the term “public shareholders” means the holders of the ordinary shares which are being sold as part of the units in this public offering, or “public shares,” whether they are purchased in the public offering or in the aftermarket, including any of our initial shareholders to the extent that they purchase such public shares (except that our initial shareholders will not have conversion or tender rights with respect to any public shares they own); and
|
|
|
●
|
the information in this prospectus assumes that the underwriters will not exercise their over-allotment option.
|
All references in this prospectus to
shares of the Company being forfeited shall take effect as surrenders for no consideration of such shares as a matter of the British
Virgin Islands law. All references to the conversion of ordinary shares shall take effect as a redemption of ordinary shares and
issuance of the corresponding ordinary shares as a matter of the British Virgin Islands law.
You should rely only on the information
contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer
of these securities in any jurisdiction where the offer is not permitted.
Unless the context otherwise
requires, share and per share number in this prospectus reflect a 5 for 4 share split that took place on October 15,
2018.
General
We are a blank check company incorporated
in the British Virgin Islands on May 2, 2018 as a business company with limited liability (meaning that our public shareholders
have no liability, as shareholders of our company, for the liabilities of our company over and above the amount paid for their
shares). We were formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization,
reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.”
Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location. We do
not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly,
contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction.
Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition
candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target business.
Background and Competitive Advantages
Together with our management team,
we believe we have a broad network of contacts and corporate relationships that makes us efficient at:
|
|
●
|
Sourcing and evaluating businesses, and
|
|
|
●
|
Adapting to cultural and economic differences between Asia and America to negotiate and execute a transaction in a timely and professional manner
|
By leveraging its industry expertise, performing
disciplined due diligence, being cautious downside protection, and our management team providing post-acquisition value-add capabilities,
we believe that we will be able to acquire a target business that will achieve significant returns for investors.
We will seek to acquire companies with
enterprise values of between $150 million and $300 million that are preferably already cash-generative.
Acquisition Strategy
Our acquisition will seek to capitalize
on the significant civil aviation industry, technology, M&A, and operational expertise and contacts of both our management
team and our board of directors, although we are not limited to any particular industry. There is no restriction in the geographic
location of targets that we can pursue, although we intend to initially prioritize geographic locations in China as our officers
and directors consist of successful entrepreneurs and senior executives with decades of operating and M&A experiences in the
region. We will also be interested in acquiring foreign subsidiaries of Chinese conglomerates or state-owned enterprises (SOE).
Investment Criteria
The focus of our management team is to
create shareholder value by leveraging its experience to improve the efficiency of the business while implementing strategies to
grow revenue and profits organically and/or through acquisitions. Consistent with our strategy, we have identified the following
general criteria and guidelines that we believe are important in evaluating prospective target businesses. While we intend to use
these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we
see fit to do so:
As a result of the Asia Pacific
region’s strong growth over the past several decades, the region has become home to a large number of small domestic and
regional companies, which are serving the ever-increasing needs of economies locally. While such companies have performed relatively
well, the vast majority of these companies suffer from a lack of insightful strategy, insufficient capital, operational inefficiencies
and various succession issues (as many companies are first-generation and family-owned). This has also resulted in a high degree
of market fragmentation, without any established regional market leaders. We will seek target businesses for which we can provide
strategic advice, access to sufficient capital and effective operational expertise, to grow the business.
|
|
●
|
Long-term Revenue Visibility with Defensible Market Position
|
We intend to seek target companies
that are at an inflection point, such as those requiring additional management expertise, are able to innovate by developing new
products or services, or where we believe we can drive improved financial performance and where an acquisition may help facilitate
growth.
|
|
●
|
Benefits from Being a U.S. Public Company (Value Creation and Marketing Opportunities)
|
We intend to seek target companies
that should offer attractive risk-adjusted equity returns for our shareholders. We intend to seek to acquire a target on terms
and in a manner that leverages our experience. We expect to evaluate financial returns based on (i) the potential for organic growth
in cash flows, (ii) the ability to achieve cost savings, (iii) the ability to accelerate growth, including through the opportunity
for follow-on acquisitions and (iv) the prospects for creating value through other value creation initiatives. Potential upside
from growth in the target business’ earnings and an improved capital structure will be weighed against any identified downside
risks.
|
|
●
|
Potential Benefit from Globalization Trends and Possession of Competitive Advantages
|
Target companies exhibit unrecognized
value or other characteristics that we believe have been misevaluated by the marketplace based on our company specific analysis
and due diligence review. For a potential target company, this process will include, among other things, a review and analysis
of the company’s capital structure, quality of earnings, potential for operational improvements, corporate governance, customers,
material contracts, and industry background and trends. We intend to leverage the operational experience and disciplined investment
approach of our team to identify opportunities to unlock value that our experience in complex situations allows us to pursue.
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these
general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Because of regulations in China restricting
foreign ownership of businesses in certain industries, including the airline industry, we may make use of structure like the ones
described in the section below entitled “Proposed Business-Alternative structures to comply with regulations in certain
Chinese industries” or page 51.
We will either (1) seek shareholder approval
of our initial business combination at a meeting called for such purpose at which public shareholders may seek to convert their
public shares, regardless of whether they vote for or against the proposed business combination, into their
pro rata
share
of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public shareholders with
the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote)
for an amount equal to their
pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes payable),
in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial shareholders have agreed,
pursuant to written letter agreements with us, not to convert any public shares held by them into their
pro rata
share of
the aggregate amount then on deposit in the trust account. The decision as to whether we will seek shareholder approval of our
proposed business combination or allow shareholders to sell their shares to us in a tender offer will be made by us, solely in
our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek shareholder approval. If we so choose and we are legally permitted to do so, we will have the
flexibility to avoid a shareholder vote and allow our shareholders to sell their shares pursuant to the tender offer rules of the
Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially
the same financial and other information about the initial business combination as is required under the SEC’s proxy rules.
We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor
of the business combination.
We will have until 12 months
from the consummation of this offering to consummate our initial business combination. However, if we anticipate that we may
not be able to consummate our initial business combination within 12 months, we may, but are not obligated to, extend the
period of time to consummate a business combination three times by an additional three months each time (for a total of up to
21 months to complete a business combination). Pursuant to the terms of our amended and restated memorandum and articles
of association and the trust agreement to be entered into between us and Continental Stock Transfer & Trust Company, LLC
on the date of this prospectus, in order to extend the time available for us to consummate our initial business combination,
our insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit
into the trust account for each three months extension, $500,000, or $575,000 if the underwriters’ over-allotment
option is exercised in full ($0.10 per share in either case), on or prior to the date of the applicable deadline. The
insiders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not
be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust
account to do so. Such notes would either be paid upon consummation of our initial business combination, or, at the
lender’s discretion, converted upon consummation of our business combination into additional private units at a price
of $10.00 per unit. Our shareholders have approved the issuance of the private units upon conversion of such notes, to the
extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. In the
event that we receive notice from our insiders five days prior to the applicable deadline of their intent to effect an
extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline.
In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had
been timely deposited. Our insiders and their affiliates or designees are not obligated to fund the trust account to extend
the time for us to complete our initial business combination. To the extent that some, but not all, of our insiders, decide
to extend the period of time to consummate our initial business combination, such insiders (or their affiliates or designees)
may deposit the entire amount required. If we are unable to consummate our initial business combination within such time
period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding
public shares for a pro rata portion of the funds held in the trust account, including a pro rata portion of any interest
earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes, and then seek
to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors which
may take priority over the claims of our public shareholders. In the event of our liquidation and subsequent dissolution, the
public rights will expire and will be worthless.
If we are unable to consummate our initial
business combination within this time period, we will liquidate the trust account and distribute the proceeds held therein to our
public shareholders and dissolve. If we are forced to liquidate, we anticipate that we would distribute to our public shareholders
the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued
interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by
our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public
shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may
be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent
of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation.
Pursuant to the Nasdaq listing rules,
our initial business combination must be with a target business or businesses whose collective fair market value is at least equal
to 80% of the balance in the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on
the income earned on the trust account) at the time of the execution of a definitive agreement for such business combination,
although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined
by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential
sales, earnings, cash flow and/or book value). Our board of directors will have broad discretion in choosing the standard used
to establish the fair market value of any prospective target business. The target business or businesses that we acquire may have
a collective fair market value substantially in excess of 80% of the trust account balance. We will not be required to comply
with the 80% fair market value requirement if we are delisted from NASDAQ.
We are not required to obtain an opinion
from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance
of the trust account unless our board of directors cannot make such determination on its own. We are also not required to obtain
an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial
point of view unless the target is affiliated with our officers, directors, initial shareholders or their affiliates.
We currently anticipate structuring our
initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however,
structure our initial business combination where we merge directly with the target business or where we acquire less than 100%
of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders
or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment
Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders
prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations
ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue
a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire
a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our shareholders
immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are
owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is
what will be valued for purposes of the 80% fair market value test.
Management Operating and Investing Experience
We believe that our executive officers
possess the experience, skills and contacts necessary to source, evaluate, and execute an attractive business combination. See
the section titled “Management” for complete information on the experience of our officers and directors. Notwithstanding
the foregoing, our officers and directors are not required to commit their full time to our affairs and will allocate their time
to other businesses, and the collective experience of our officers and with blank check companies like ours is not significant.
We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business
(which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their
time as we move into serious negotiations with a target business for a business combination). The past successes of our executive
officers and directors do not guarantee that we will successfully consummate an initial business combination. In addition, the
members of the management team may not remain with us subsequent to the consummation of a business combination.
As more fully discussed in “Management
— Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that
falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required
to present such business combination opportunity to such entity, subject to his or her fiduciary duties under the British Virgin
Islands law, prior to presenting such business combination opportunity to us. Most of our officers and directors currently have
certain pre-existing fiduciary duties or contractual obligations.
Emerging Growth Company Status and Other
Information
We are an emerging growth company as defined
in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups
Act of 2012 (which we refer to herein as the JOBS Act). As such, we are eligible to take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of
2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay
the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take
advantage of the benefits of this extended transition period.
We will remain an emerging growth company
until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the prior
June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
Private Placements
In May and July, 2018, 1,150,000 shares were sold. On October 15, 2018, the
Company affected a 5 for 4 share split resulting in an aggregate of 1,437,500 ordinary shares outstanding to certain of our initial shareholders, which we refer to throughout this prospectus as the “insider
shares,” for an aggregate purchase price of $25,100, or approximately $0.017 per share. The insider shares held by our
initial shareholders include an aggregate of up to 187,500 shares subject to forfeiture to the extent that the
underwriters’ over-allotment option is not exercised in full or in part, so that our initial shareholders will
collectively own 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and
assuming our initial shareholders do not purchase units in this offering). None of our initial shareholders has indicated any
intention to purchase units in this offering.
The insider shares are identical to
the ordinary shares included in the units being sold in this offering. However, our initial shareholders have agreed, pursuant
to written letter agreements with us, (A) to vote their insider shares (as well as any public shares acquired in or after this
offering) in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended
and restated memorandum and articles of association that would stop our public shareholders from converting or selling their shares
to us in connection with a business combination or affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete a business combination within 12 months from the closing of this offering (or 21 months, if we extend
the time to complete a business combination as described in this prospectus) unless we provide dissenting public shareholders
with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any
such vote, (C) not to convert any insider shares (as well as any other shares acquired in or after this offering) into the right
to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination
(or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to
amend the provisions of our amended and restated memorandum and articles of association relating to shareholders’ rights
or pre-business combination activity and (D) that the insider shares shall not participate in any liquidating distribution upon
winding up if a business combination is not consummated. Additionally, our initial shareholders have agreed not to transfer, assign
or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares,
the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing
price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination
and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of our initial
business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation,
merger, stock exchange or other similar transaction which results in all of our shareholders having the right to exchange their
ordinary shares for cash, securities or other property.
In addition, our sponsor, has committed
to purchase from us an aggregate of 247,500 private units at $10.00 per private unit (for a total purchase price of $2,475,000).
These purchases will take place on a private placement basis simultaneously with the consummation of this offering. All of the
proceeds we receive from these purchases will be placed in the trust account described below. Our sponsor has also agreed that
if the over-allotment option is exercised by the underwriters, it will purchase from us at a price of $10.00 per private unit
an additional number of private units (up to a maximum of 22,500 private units)
pro rata
with the amount of the over-allotment
option exercised so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether
the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement
that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The proceeds
from the private placement of the private units will be added to the proceeds of this offering and placed in an account in the
United States maintained by Continental Stock Transfer & Trust Company, as trustee.
The private units are identical to
the units sold in this offering except that the private warrants will be non-redeemable and may be exercised on a cashless basis,
in each case so long as they continue to be held by our sponsor or its permitted transferees. Additionally, because the private
units will be issued in a private transaction, our sponsor and its permitted transferees will be allowed to exercise the private
warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not
effective and receive unregistered ordinary shares. Furthermore, our sponsor has agreed (A) to vote the ordinary shares underlying
the private units, or “private shares,” in favor of any proposed business combination, (B) not to propose, or vote
in favor of, an amendment to our amended and restated memorandum and articles of association that would stop our public shareholders
from converting or selling their shares to us in connection with a business combination or affect the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete a business combination within 12 months from the closing
of this offering (or 21 months, as applicable) unless we provide dissenting public shareholders with the opportunity to convert
their public shares in connection with any such vote, (C) not to convert any private shares for cash from the trust account in
connection with a shareholder vote to approve our proposed initial business combination or a vote to amend the provisions of our
amended and restated memorandum and articles of association relating to shareholders’ rights or pre-business combination
activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination
is not consummated. Our sponsor has also agreed not to transfer, assign or sell any of the private units or underlying securities
(except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions
as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial
business combination.
If public units or shares are purchased
by any of our directors, officers or initial shareholders, they will be entitled to funds from the trust account to the same extent
as any public shareholder upon our liquidation but will not have redemption rights related thereto.
Corporate Information
Our principal executive office is located
Flat A, 6/F, Block A, Tonnochy Towers, No. 272 Jaffe Road, Wanchai, Hong Kong, and our telephone number is (86) 186-0217-2929.
The Offering
In making your decision on whether to invest
in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special
risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated
under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
You should carefully consider these and the other risks set forth in the section below entitled “
Risk Factors
”
beginning on page 17 of this prospectus.
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Securities
offered
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5,000,000
units, at $10.00 per unit, each unit consisting of one ordinary share, one redeemable
warrant, and one right. Each redeemable warrant entitles the holder thereof to purchase
one-half (1/2) of one ordinary share at a price of $11.50 per full share. Because the
warrants may only be exercised for whole numbers of shares, only an even number of warrants
may be exercised at any given time. Every ten rights entitles the holder to receive one
ordinary share upon consummation of our initial business combination.
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Listing
of our securities and proposed symbols
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We
anticipate the units, and the ordinary shares, warrants and rights, once they begin separate
trading, will be listed on Nasdaq under the symbols “HHHU,” “HHH,”
“HHHW,” and “HHHR,” respectively.
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Each
of the ordinary shares, warrants and rights may trade separately on the 90
th
day after the date of this prospectus
unless Chardan Capital Markets, LLC determines that an earlier date is acceptable (based upon, among other things, its assessment
of the relative strengths of the securities markets and small capitalization and blank check companies in general, and the
trading pattern of, and demand for, our securities in particular). In no event will Chardan Capital Markets, LLC allow separate
trading of the ordinary shares, warrants and rights until we file an audited balance sheet reflecting our receipt of the gross
proceeds of this offering.
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Once
the ordinary shares, warrants and rights commence separate trading, holders will have the option to continue to hold units
or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order
to separate the units into separately trading ordinary shares, warrants and rights.
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We
will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of
this offering, which is anticipated to take place three business days from the date the units commence trading. The audited
balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment
option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus,
we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise
of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information
indicating if Chardan Capital Markets, LLC has allowed separate trading of the ordinary shares, warrants and rights prior
to the 90
th
day after the date of this prospectus.
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Ordinary
shares:
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Number
issued and outstanding before this offering and the private placement
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1,437,500
shares(1)
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Number
to be issued and outstanding after this offering and sale of private units
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6,497,500
shares(2)
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(1)
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This
number includes an aggregate of up to 187,500 ordinary shares held by our initial shareholders that are subject to forfeiture
if the over-allotment option is not exercised by the underwriters in full.
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(2)
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Assumes
the over-allotment option has not been exercised and an aggregate of 187,500 ordinary shares held by our initial shareholders
have been forfeited. If the over-allotment option is exercised in full, there will be a total of 7,457,500 ordinary shares
issued and outstanding.
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Redeemable
Warrants:
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Number
issued and outstanding before this offering and the private placement
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0
warrants
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Number
to be issued and outstanding after this offering and sale of private units
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5,247,500
warrants(3)
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Exercisability
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Each
redeemable warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary
share at a price of $11.50 per full share, subject to adjustment as described in this
prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants
only for a whole number of shares. This means that only an even number of warrants may
be exercised at any given time by a warrant holder.
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(3)
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Assumes
the over-allotment option has not been exercised. If the over-allotment option is exercised in full, there will be a total
of 6,020,000 warrants, including an aggregate of 270,000 private warrants.
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Exercise
price
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$11.50
per whole share. No public warrants will be exercisable for cash unless we have an effective
and current registration statement covering the ordinary shares issuable upon exercise
of the warrants and a current prospectus relating to such ordinary shares. It is our
current intention to have an effective and current registration statement covering the
ordinary shares issuable upon exercise of the warrants and a current prospectus relating
to such ordinary shares in effect promptly following consummation of an initial business
combination. Notwithstanding the foregoing, if a registration statement covering the
ordinary shares issuable upon exercise of the public warrants is not effective within
90 days following the consummation of our initial business combination, public warrant
holders may, until such time as there is an effective registration statement and during
any period when we shall have failed to maintain an effective registration statement,
exercise warrants on a cashless basis pursuant to an available exemption from registration
under the Securities Act. In such event, each holder would pay the exercise price by
surrendering the warrants for that number of ordinary shares equal to the quotient obtained
by dividing (x) the product of the number of ordinary shares underlying the warrants,
multiplied by the difference between the exercise price of the warrants and the “fair
market value” (defined below) by (y) the fair market value. The “fair market
value” shall mean the average reported last sale price of the ordinary shares for
the 10 trading days ending on the day prior to the date of exercise. For example, if
a holder held 300 warrants to purchase 150 shares and the fair market value on the date
prior to exercise was $15.00, that holder would receive 35 shares without the payment
of any additional cash consideration. If an exemption from registration is not available,
holders will not be able to exercise their warrants on a cashless basis.
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Exercise
period
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The
warrants will become exercisable on the later of the completion of an initial business combination and 12 months from the
date of this prospectus. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of the effective
date of this registration statement, or earlier upon redemption.
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Redemption
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We
may redeem the outstanding warrants (excluding the private warrants but including any outstanding warrants issued upon exercise
of the unit purchase option issued to Chardan Capital Markets, LLC), in whole and not in part, at a price of $0.01 per warrant:
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●
at any time while the warrants are exercisable,
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upon
a minimum of 30 days’ prior written notice of redemption,
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●
if,
and only if, the last sales price of our ordinary shares equals or exceeds $16.50 per share for any 20 trading days within
a 30 trading day period ending three business days before we send the notice of redemption, and
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●
if,
and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until
the date of redemption.
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If
the foregoing conditions are satisfied and we issue a notice of redemption, each warrant
holder can exercise his, her or its warrant prior to the scheduled redemption date. However,
the price of the ordinary shares may fall below the $16.50 trigger price as well as the
$11.50 warrant exercise price per full share after the redemption notice is issued and
not limit our ability to complete the redemption.
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The
redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable
premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the
warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause
the share price to drop below the exercise price of the warrants.
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If
we call the warrants for redemption as described above, our management will have the option to require all holders that wish
to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by
surrendering the whole warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product
of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants
and the “fair market value” (defined below) by (y) the fair market value. The “fair market value”
shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the third trading
day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option
to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including
the price of our ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns
regarding dilutive share issuances.
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Rights:
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Number
issued and outstanding before this offering and the private placement
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0
rights
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Number
to be issued and outstanding after this offering and sale of private units
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5,247,500
rights
(4)
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Terms
of Rights
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Except
in cases where we are not the surviving company in a business combination, each holder of a right will automatically receive
one-tenth (1/10) of an ordinary share upon consummation of our initial business combination. In the event we will not be the
surviving company upon completion of our initial business combination, each holder of a right will be required to affirmatively
convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation
of the business combination. We will not issue fractional shares in connection with an exchange of rights. Fractional shares
will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions
of the British Virgin Islands law. As a result, you must hold rights in multiples of 10 in order to receive shares for all
of your rights upon closing of a business combination. If we are unable to complete an initial business combination within
the required time period and we redeem the public shares for the funds held in the trust account, holders of rights will not
receive any of such funds for their rights and the rights will expire worthless.
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Offering
proceeds to be held in trust
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$47,525,000
of the net proceeds of this offering (or $54,800,000 if the over-allotment option is
exercised in full), plus $2,475,000 we will receive from the sale of the private units
(or $2,700,000 if the over-allotment option is exercised in full), for an aggregate of
$50,000,000 (or an aggregate of $57,500,000 if the over-allotment option is exercised
in full), or $10.00 per unit sold to the public in this offering (regardless of whether
or not the over-allotment option is exercised in full or part) will be placed in a trust
account at Morgan Stanley in the United States, maintained by Continental Stock Transfer
& Trust Company, acting as trustee pursuant to an agreement to be signed on the date
of this prospectus. Such amount includes $1,750,000, or up to $0.35 per unit (or $2,012,500
if the underwriters’ over-allotment option is exercised in full), payable to the
underwriters as deferred underwriting discounts and commissions. Pursuant to the investment
management trust agreement that will govern the investment of such funds, the trustee,
upon our written instructions, will direct Morgan Stanley to invest the funds as set
forth in such written instructions and to custody the funds while invested and until
otherwise instructed in accordance with the investment management trust agreement. The
remaining $475,000 of net proceeds of this offering will not be held in the trust account
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Except
as set forth below, the proceeds in the trust account will not be released until the earlier of the completion of an initial
business combination within the required time period or our entry into liquidation if we have not completed a business combination
in the required time period. Therefore, unless and until an initial business combination is consummated, the proceeds held
in the trust account will not be available for our use for any expenses related to this offering or expenses which we may
incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target
business.
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(4)
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Assumes
the over-allotment option has not been exercised. If the over-allotment option is exercised in full, there will be a total
of 6,020,000 rights, including an aggregate of 270,000 private rights.
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Notwithstanding
the foregoing, there will be
released to us from the trust account any interest earned on the funds in the trust account
that we need to pay our income or other tax obligations. With these exceptions, expenses
incurred by us may be paid prior to a business combination only from the net proceeds
of this offering not held in the trust account (estimated to initially be $475,000);
provided, however, that in order to meet our working capital needs following the consummation
of this offering if the funds not held in the trust account are insufficient, our initial
shareholders, officers and directors or their affiliates may, but are not obligated to,
loan us funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion. Each loan would be evidenced by a promissory note. The notes
would either be paid upon consummation of our initial business combination, without interest,
or, at the lender’s discretion, up to $500,000 of the notes may be converted upon
consummation of our business combination into private units at a price of $10.00 per
unit (which, for example, would result in the holders being issued units to acquire 55,000
ordinary shares (which includes 5,000 ordinary shares issuable underlying rights) and
warrants to purchase 25,000 ordinary shares if $500,000 of notes were so converted).
If we do not complete a business combination, the loans would be repaid out of funds
not held in the trust account, and only to the extent available.
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Limited
payments to insiders
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Prior
to the consummation of a business combination, there will be no fees, reimbursements or other cash payments paid to our initial
shareholders, officers, directors or their affiliates prior to, or for any services they render in order to effectuate, the
consummation of a business combination (regardless of the type of transaction that it is) other than:
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repayment
at the closing of this offering of an aggregate of approximately $178,000 of loans made by Keen Nice Communications Limited,
which is owned by Jining Li, our director;
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payment of $10,000 per month to Oriental Holdings Limited, for office space and related services, subject to deferral as described
herein, of which HKD$50,000 (or approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19,
2018) per month will be paid to Yongsheng Liu, our Chief Executive Officer, for his services to us;
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repayment
at the closing of this offering of loans which may be made by our insiders, officers, directors or any of its or their affiliates
to finance transaction costs in connection with an initial business combination, the terms of which have not been determined;
and
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●
reimbursement
of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating
possible business targets and business combinations.
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There
is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses
exceed the available proceeds not deposited in the trust account, such expenses would not be reimbursed by us unless we consummate
an initial business combination. Our audit committee will review and approve all reimbursements and payments made to any initial
shareholder or member of our management team, or their respective affiliates, and any reimbursements and payments made to
members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining
from such review and approval.
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Shareholder
approval of, or tender offer in connection with, initial business combination
|
In
connection with any proposed initial business combination, we will either (1) seek shareholder
approval of such initial business combination at a meeting called for such purpose at
which public shareholders may seek to convert their public shares, regardless of whether
they vote for or against the proposed business combination, into their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable) or
(2) provide our public shareholders with the opportunity to sell their public shares
to us by means of a tender offer (and thereby avoid the need for a shareholder vote)
for an amount equal to their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), in each case subject to the limitations described
herein. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant
to written letter agreements with us, not to convert any public shares held by them into
their pro rata share of the aggregate amount then on deposit in the trust account. If
we determine to engage in a tender offer, such tender offer will be structured so that
each public shareholder may tender any or all of his, her or its public shares rather
than some pro rata portion of his, her or its shares. If enough shareholders tender their
shares so that we are unable to satisfy any applicable closing condition set forth in
the definitive agreement related to our initial business combination, or we are unable
to maintain net tangible assets of at least $5,000,001, we will not consummate such initial
business combination. The decision as to whether we will seek shareholder approval of
a proposed business combination or will allow shareholders to sell their shares to us
in a tender offer will be made by us based on a variety of factors such as the timing
of the transaction, or whether the terms of the transaction would otherwise require us
to seek shareholder approval. If we so choose and we are legally permitted to do so,
we will have the flexibility to avoid a shareholder vote and allow our shareholders to
sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange
Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that
case, we will file tender offer documents with the SEC which will contain substantially
the same financial and other information about the initial business combination as is
required under the SEC’s proxy rules. We will consummate our initial business combination
only if we have net tangible assets of at least $5,000,001 upon such consummation and,
solely if we seek shareholder approval, a majority of the issued and outstanding ordinary
shares voted are voted in favor of the business combination.
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We have determined not to consummate any business combination unless we have net tangible assets of at least $5,000,001 upon such consummation in order to avoid being subject to Rule 419 promulgated under the Securities Act. The $5,000,001 net tangible asset value would be determined once a target business is located and we can assess all of the assets and liabilities of the combined company.
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However, if we seek to consummate a business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such business combination, the net tangible asset requirement may limit our ability to consummate such a business combination and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all.
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Our
initial shareholders, officers and directors, have agreed (i) to vote their insider shares,
private shares and any public shares purchased in or after this offering in favor of
any proposed business combination and (ii) not to convert any shares (including the insider
shares) in connection with a shareholder vote to approve, or sell their shares to us
in any tender offer in connection with, a proposed initial business combination. As a
result, if we sought shareholder approval of a proposed transaction we could need as
little as 126,876 of our public shares (or approximately 2.5% of our public shares) to
be voted in favor of the transaction in order to have such transaction approved (assuming
the over-allotment option is not exercised and the initial shareholders do not purchase
any units in this offering or units or shares in the after-market). None of our officers,
directors, initial shareholders or their affiliates has indicated any intention to purchase
units in this offering or any units or ordinary shares in the open market or in private
transactions (other than the private units). However, if a significant number of shareholders
vote, or indicate an intention to vote, against a proposed business combination, our
officers, directors, initial shareholders or their affiliates could make such purchases
in the open market or in private transactions in order to influence the vote. There is
no limit on the amount of shares that may be purchased by the insiders. Any purchases
would be made in compliance with federal securities laws, including the fact that all
material information will be made public prior to such purchase, and no purchases would
be made if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange
Act, which are rules designed to stop potential manipulation of a company’s stock.
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Conversion
rights
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In
connection with a business combination, public shareholders will have the right to convert
their shares into an amount equal to (1) the number of public shares being converted
by such public holder divided by the total number of public shares multiplied by (2)
the amount then in the trust account (initially $10.00 per share), which includes the
deferred underwriting discounts and commissions plus a pro rata portion of any interest
earned on the funds held in the trust account less any amounts necessary to pay our taxes.
At any meeting called to approve an initial business combination, public shareholders
may elect to convert their share regardless of whether or not they vote to approve the
business combination.
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Whether we elect to effectuate our initial business combination via shareholder vote or tender offer, we may require public shareholders wishing to exercise conversion rights, whether they are a record holder or hold their shares in “street name,” to either tender the certificates they are seeking to convert to our transfer agent or to deliver the shares they are seeking to convert to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit / Withdrawal At Custodian) System, at the holder’s option, at any time at or prior to the vote on the business combination. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. The foregoing is different from the procedures used by traditional blank check companies. In order to perfect conversion rights in connection with their business combinations, many traditional blank check companies would distribute proxy materials for the shareholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise its conversion rights. After the business combination was approved, the company would contact such shareholder to arrange for it to deliver its certificate to verify ownership. As a result, the shareholder then had an “option window” after the consummation of the business combination during which it could monitor the price of the company’s stock in the market. If the price rose above the conversion price, it could sell its shares in the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to which shareholders were aware they needed to commit before the shareholder meeting, would become an “option” right surviving past the consummation of the business combination until the converting holder delivered its certificate. The requirement for physical or electronic delivery prior to the closing of the shareholder meeting ensures that a holder’s election to convert is irrevocable once the business combination is completed.
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Pursuant to our amended and restated memorandum and articles of association, we are required to give a minimum of only ten days’ notice for each general meeting. As a result, if we require public shareholders who wish to convert their ordinary shares into the right to receive a
pro rata
portion of the funds in the trust account to comply with the foregoing delivery requirements, holders may not have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors may not be able to exercise their conversion rights and may be forced to retain our securities when they otherwise would not want to.
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If we require public shareholders who wish to convert their ordinary shares to comply with specific delivery requirements for conversion described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public shareholders.
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Please see the risk factors titled “In connection with any shareholder meeting called to approve a proposed initial business combination, we may require shareholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights” and “If we require public shareholders who wish to convert their ordinary shares to comply with the delivery requirements for conversion, such converting shareholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.”
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Once the shares are converted by the holder, and effectively redeemed by us under the British Virgin Islands law, the transfer agent will then update our Register of Members to reflect all conversions.
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Automatic
liquidation if no business combination
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As
described above, if we fail to consummate a business combination within 12 months (or
21 months, if we extend the time to complete a business combination as described in this
prospectus) from the consummation of this offering, it will trigger our automatic winding
up, liquidation and subsequent dissolution pursuant to the terms of our amended and restated
memorandum and articles of association. As a result, this has the same effect as if we
had formally gone through a voluntary liquidation procedure under the Companies Law.
Accordingly, no vote would be required from our shareholders to commence such a voluntary
winding up, liquidation and subsequent dissolution. However, if we anticipate that we
may not be able to consummate our initial business combination within 12 months, we may,
but are not obligated to, extend the period of time to consummate a business combination
three times by an additional three months each time (for a total of up to 21 months to complete a business
combination). Pursuant to the terms of our amended and restated memorandum and articles
of association and the trust agreement to be entered into between us and Continental
Stock Transfer & Trust Company, LLC on the date of this prospectus, in order to extend
the time available for us to consummate our initial business combination, our insiders
or their affiliates or designees, upon five days advance notice prior to the applicable
deadline, must deposit into the trust account for each three months extension $500,000, or $575,000 if the underwriters’
over-allotment option is exercised in full ($0.10 per share in either case), on or prior
to the date of the applicable deadline. The insiders will receive a non-interest bearing,
unsecured promissory note equal to the amount of any such deposit that will not be repaid
in the event that we are unable to close a business combination unless there are funds
available outside the trust account to do so. Such notes would either be paid upon consummation
of our initial business combination, or, at the lender’s discretion, converted
upon consummation of our business combination into additional private units at a price
of $10.00 per unit. Our shareholders have approved the issuance of the private units
upon conversion of such notes, to the extent the holder wishes to so convert such notes
at the time of the consummation of our initial business combination. In the event that
we receive notice from our insiders five days prior to the applicable deadline of their
intent to effect an extension, we intend to issue a press release announcing such intention
at least three days prior to the applicable deadline.
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The
amount in the trust account (including the deferred underwriting compensation) under the Companies Law will be available for
distribution under the Companies Law provided that immediately following the date on which the proposed distribution is to
be made, we are able to pay our debts as they fall due in the ordinary course of business, and the value of the Company’s
assets exceed its liabilities. If we are forced to liquidate, we anticipate that we would distribute to our public shareholders
the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued
interest).
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Prior
to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors
for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders
with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially
brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions
received by them as voidable transaction in the event we enter an insolvent liquidation. Furthermore, while we will seek to
have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection
with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title,
interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they
will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they
will not seek recourse against the trust account or that a court would conclude that such agreements are legally enforceable.
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The
holders of the insider shares and private units will not participate in any liquidation distribution with respect to such
securities.
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Oriental
Holdings Limited, which is owned by our director, Jining Li, through Keen Nice Communications
Limited, and Yongsheng Liu, has contractually agreed pursuant to a written agreement
with us that, if we liquidate the trust account prior to the consummation of a business
combination, it will be liable to ensure that the proceeds in the trust account are not
reduced by the claims of target businesses or claims of vendors or other entities that
are owed money by us for services rendered or contracted for or products sold to us.
Accordingly, if a claim brought by a target business or vendor did not exceed the amount
of funds available to us outside of the trust account, Oriental Holdings Limited would
not have any obligation to indemnify such claims as they would be paid from such available
funds. However, if a claim exceeded such amounts, the only exceptions to Oriental Holdings
Limited’s obligations to pay such claim would be if the party executed an agreement
waiving any right, title, interest or claim of any kind it has in or to any monies held
in the trust account. We cannot assure you that Oriental Holdings Limited will be able
to satisfy these obligations if he is required to do so. Therefore, we cannot assure
you that the per-share distribution from the trust account, if we liquidate the trust
account because we have not completed a business combination within the required time
period, and assuming that we do not extend out life beyond 12 months prior to a business
combination, will not be less than $10.00.
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We
will pay the costs of liquidating the trust account from our remaining assets outside
of the trust account. If such funds are insufficient, Oriental Holdings Limited, which
is owned by our director, Jining Li, through Keen Nice Communications Limited, and Yongsheng
Liu, has contractually agreed to advance us the funds necessary to complete such liquidation
(currently anticipated to be no more than approximately $18,500) and has contractually agreed
not to seek repayment for such expenses.
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The
underwriters have agreed to waive their rights to the deferred underwriting discounts
and commissions held in the trust account in the event we do not consummate a business
combination within 12 months from the closing of this offering (or 21 months, as applicable)
and in such event, such amounts will be included with the funds held in the trust account
that will be available to fund the redemption of our public shares.
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RISKS
We are a blank check company that has conducted
no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and
will generate no operating revenues. In making your decision on whether to invest in our securities, you should take into account
not only the background of our management team, but also the special risks we face as a blank check company, as well as the fact
that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and, therefore, you
will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information
concerning how Rule 419 blank check offerings differ from this offering, please see “Proposed Business — Comparison
to offerings of blank check companies subject to Rule 419.” You should carefully consider these and the other risks set forth
in the section entitled “
Risk Factors
” beginning on page 17 of this prospectus.
SUMMARY FINANCIAL DATA
The following table summarizes the relevant
financial data for our business and should be read with our financial statements, which are included in this prospectus. We have
not had any significant operations to date, so only balance sheet data are presented.
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July 31, 2018
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September 30, 2018
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Actual
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Actual
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As Adjusted
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(Audited)
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(Unaudited)
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(Unaudited)
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Balance Sheet Data:
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Working capital
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$
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59,390
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$
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42,068
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$
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48,709,584
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Total assets
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$
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168,110
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$
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162,689
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$
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50,459,584
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Total liabilities
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$
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165,285
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$
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178,205
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$
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1,750,000
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(2)
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Value of ordinary shares subject to possible conversion/tender
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$
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-
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$
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-
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$
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43,709,580
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Shareholders’ equity (deficit)
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$
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2,825
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$
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(15,516
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)
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$
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5,000,004
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(1)
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Includes the $2,475,000
we will receive from the sale of the private units.
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(2)
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The “as adjusted”
total liabilities represents up to $1,750,000 of deferred underwriting discounts and commissions that would be payable in
the event that the maximum number of shareholders redeemed their shares. The actual liabilities of $178,205 at September 30,
2018 represents $178,205 of a related party loan from Keen Nice Communications Limited, which is owned by Jining Li, our director,
which will be repaid using the proceeds received from the offering on the date the offering is consummated. The $1,750,000
of deferred underwriting discounts is not due until an initial business combination is consummated, for which we have until
12 months from the closing of this offering to consummate (or 21 months if our time to complete a business combination is
extended as described herein).
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The “as adjusted” information
gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment
of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid.
The “as adjusted” working
capital amount includes the $50,000,000 to be held in the trust account, plus $475,000 in cash held outside the trust account,
less $15,516 of actual shareholders’ deficit at September 30, 2018, plus $100 for the sale of the unit purchase option,
and less the deferred underwriting discounts and commissions of up to $1,750,000 that would be payable in the event that the maximum
number of shareholders redeemed their shares, which, except for limited situations described in this prospectus, will be available
to us only upon the consummation of our initial business combination within the time period described in this prospectus.
The “as adjusted” total
assets amount includes the $50,000,000 to be held in the trust account, plus $475,000 in cash held outside the trust account,
less $15,516 of actual shareholders’ deficit at September 30, 2018, and plus $100 for the sale of the unit purchase option.
If our initial business combination is not consummated, the trust account, less amounts we are permitted to withdraw as described
in this prospectus, will be distributed solely to our public shareholders (subject to our obligations under British Virgin Islands
law to provide for claims of creditors). The actual deferred offering costs of $120,621 will be reclassified as a charge to additional
paid-in capital from the gross proceeds in connection with the consummation of the offering. Any additional offering costs will
also be charged to additional paid-in capital.
We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder
approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the business combination.
RISK FACTORS
An investment in our securities involves
a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material
risks related to the offering, together with the other information contained in this prospectus, before making a decision to invest
in our units. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the
risks described below.
Risks Associated with Our Business
We are a blank check company with
no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.
We are a blank check company with no operating
results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public offering
of our securities. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve
our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans,
arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest,
after the consummation of a business combination.
Our independent registered public
accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue
as a “going concern.”
As of September 30, 2018, we had $42,068
in cash and a working capital of $42,068. Further, we have incurred and expect to continue to incur significant costs in pursuit
of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the
section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our plans to raise capital and to consummate our initial business combination may not be successful. The report of our independent
registered public accountants on our financial statements includes an explanatory paragraph stating that our ability to continue
as a going concern is dependent on the consummation of this offering. The financial statements do not include any adjustments
that might result from our inability to consummate this offering or our ability to continue as a going concern. Moreover, there
is no assurance that we will consummate our initial business combination. These factors raise substantial doubt about our ability
to continue as a going concern.
If we are unable to consummate
a business combination, our public shareholders may be forced to wait more than 12 months (or 21 months if we have extended the
period of time as described in this prospectus) before receiving liquidation distributions.
We have 12 months from the consummation
of this offering in which to complete a business combination (or 21 months if we have extended the period of time as described
in this prospectus). We have no obligation to return funds to investors prior to such date unless we consummate a business combination
prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full
time period will public shareholders be entitled to liquidation distributions if we are unable to complete a business combination.
Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment, you may
be forced to sell your securities potentially at a loss.
The requirement that we complete
an initial business combination within a specific period of time may give potential target businesses leverage over us in negotiating
our initial business combination and may limit the amount of time we have to conduct due diligence on potential business combination
targets as we approach our dissolution deadline, which could undermine our ability to consummate our initial business combination
on terms that would produce value for our shareholders.
We have 12 months from the consummation
of this offering to complete an initial business combination (or 21 months if we have extended the period of time as described
in this prospectus). Any potential target business with which we enter into negotiations concerning a business combination will
be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination,
knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a
business combination with any other target business. This risk will increase as we get closer to the time limits referenced above.
In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that
we would have rejected upon a more comprehensive investigation.
You will not be entitled to protections
normally afforded to investors of blank check companies.
Since the net proceeds of this offering
are intended to be used to complete a business combination with a target business that has not been identified, we may be deemed
to be a “blank check” company under the United States securities laws. However, since we will have net tangible assets
in excess of $5,000,000 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank
check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which
would, for example, completely restrict the transferability of our securities, restrict the use of interest earned on the funds
held in the trust account and require us to complete a business combination within 21 months from the closing of the offering.
Because we are not subject to Rule 419, our units will be immediately tradable, we will be entitled to withdraw amounts from the
funds held in the trust account prior to the completion of a business combination and we may have more time to complete an initial
business combination.
We may issue additional ordinary
or preferred shares or debt securities to complete a business combination, which would reduce the equity interest of our shareholders
and likely cause a change in control of our ownership.
Our amended and restated memorandum and
articles of association currently authorize the issuance of an unlimited number of shares of a single class each with no par value.
Although we have no commitment as of the date of this offering, we may issue a substantial number of additional ordinary shares
or preferred shares, or a combination of ordinary shares and preferred shares, to complete a business combination. The issuance
of additional ordinary shares or preferred shares:
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may significantly reduce the equity interest of investors in this offering;
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●
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may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;
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●
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may cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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●
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may adversely affect prevailing market prices for our ordinary shares.
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Similarly, if we issue debt securities,
it could result in:
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default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.
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our inability to pay dividends on our ordinary shares;
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●
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We may be unable to obtain additional
financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could
compel us to restructure or abandon a particular business combination.
Since we have not yet identified any prospective
target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering
prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in
search of a target business, or the obligation to convert into cash (or purchase in any tender offer) a significant number of shares
from dissenting shareholders, we will be required to seek additional financing. Such financing may not be available on acceptable
terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business
combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek
an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required
to provide any financing to us in connection with or after a business combination.
If third parties bring claims
against us, the proceeds held in trust could be reduced and the per-share liquidation price received by shareholders may be less
than $10.00.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors
and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,
they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse
against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds
held in trust could be subject to claims which could take priority over those of our public shareholders. If we liquidate the
trust account before the completion of a business combination, Oriental Holdings Limited, which is owned by our director, Jining
Li, through Keen Nice Communications Limited, and Yongsheng Liu, has agreed that it will be liable to ensure that the proceeds
in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money
by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However,
it may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may
be less than $10.00, plus interest, due to such claims.
Additionally, if we are forced to file
a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory
or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders.
To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public shareholders at least
$10.00 per share.
Our shareholders may be held liable
for claims by third parties against us to the extent of distributions received by them.
Our amended and restated memorandum and
articles of association provide that we will continue in existence only until 18 (or 21) months from the consummation of this offering
if a business combination has not been consummated by such time. If we are unable to complete an initial business combination during
such time period, it will trigger our automatic winding up, liquidation and subsequent dissolution. As such, our shareholders could
potentially be liable for any claims to the extent of distributions received by them pursuant to such process and any liability
of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure you that third parties, or us
under the control of an official liquidator, will not seek to recover from our shareholders amounts owed to them by us.
If at any time we are deemed insolvent
for the purposes of the Insolvency Act, 2003 of the British Virgin Islands, as amended, or the Insolvency Act, we are required
to immediately enter insolvent liquidation. In these circumstances, a liquidator will be appointed who will give notice to our
creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims
and by placing a public advertisement in at least one newspaper published in the British Virgin Islands and in at least one newspaper
circulating in the location where the company has its principal place of business, and taking any other steps he or she considers
appropriate, after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete
its final report and accounts and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”).
The liquidator may determine that he or she requires additional time to evaluate creditors’ claims (particularly if there
is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition
with the British Virgin Islands Court which, if successful, may result in our liquidation being subject to the supervision of that
court. Such events might delay distribution of some or all of our assets to our public shareholders. In such liquidation proceedings,
the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over
the claims of our shareholders. To the extent any such claims deplete the trust account we cannot assure you we will be able to
return to our public shareholders the amounts otherwise payable to them.
If we are deemed insolvent, then there
are also limited circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable
transaction” for the purposes of the Insolvency Act if it was proved that immediately following the date on which the distribution
was made, we were unable to pay our debts as they fall due in the ordinary course of business. A voidable transaction would be,
for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment
was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin
Islands Court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part. Furthermore,
our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith,
thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our initial shareholders have waived
their right to participate in any liquidation distribution with respect to the initial shares. If we are unable to consummate
a transaction within the required time period, upon notice from us, the trustee of the trust account will distribute the amount
in our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment, from funds not held in trust,
our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose. If there
are insufficient funds held outside the trust account for such purpose, Oriental Holdings Limited, which is owned by our director,
Jining Li, through Keen Nice Communications Limited, and Yongsheng Liu, has agreed that it will be liable to ensure that the proceeds
in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money
by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However,
we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’
claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure
you that a creditor or shareholder will not file a petition with the British Virgin Islands Court which, if successful, may result
in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our
assets to our public shareholders.
Holders of warrants and rights will
not have redemption rights if we are unable to complete an initial business combination within the required time period.
If we are unable to complete an initial
business combination within the required time period and we redeem the funds held in the trust account, the warrants and rights
will expire and holders will not receive any of such proceeds with respect to the warrants or rights.
We have no obligation to net cash
settle the warrants or rights.
In no event will we have any obligation
to net cash settle the warrants or rights. Accordingly, the warrants and rights may expire worthless.
If we do not maintain a current and
effective prospectus relating to the ordinary shares issuable upon exercise of the redeemable warrants, public holders will only
be able to exercise such redeemable warrants on a “cashless basis” which would result in a fewer number of shares being
issued to the holder had such holder exercised the redeemable warrants for cash.
Except as set forth below, if we do not
maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants at the time
that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis,” provided
that an exemption from registration is available. As a result, the number of ordinary shares that a holder will receive upon exercise
of its warrants will be fewer than it would have been had such holder exercised its warrant for cash. Further, if an exemption
from registration is not available, holders would not be able to exercise their warrants on a cashless basis and would only be
able to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable upon exercise
of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions
and to maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants until
the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential
“upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless. Notwithstanding
the foregoing, the private warrants may be exercisable for unregistered ordinary shares for cash even if the prospectus relating
to the ordinary shares issuable upon exercise of the warrants is not current and effective.
An investor will only be able to
exercise warrants if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under
the securities laws of the state of residence of the holder of the warrants.
No warrants will be exercisable for cash
and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such exercise have been registered
or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time
that the warrants become exercisable, we expect to continue to be listed on a national securities exchange, which would provide
an exemption from registration in every state. However, we cannot assure you of this fact. If the ordinary shares issuable upon
exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants
reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if
they cannot be sold.
Our management’s ability to
require holders of our redeemable warrants to exercise such redeemable warrants on a cashless basis will cause holders to receive
fewer ordinary shares upon their exercise of the redeemable warrants than they would have received had they been able to exercise
their redeemable warrants for cash.
If we call our warrants for redemption
after the redemption criteria described elsewhere in this prospectus have been satisfied, our management will have the option to
require any holder that wishes to exercise his warrants (including any warrants held by our initial shareholders or their permitted
transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants
on a cashless basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had
such holder exercised his warrants for cash. This will have the effect of reducing the potential “upside” of the holder’s
investment in our company.
We may amend the terms of the warrants
in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants will be issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including
the private warrants) in order to make any change that adversely affects the interests of the registered holders.
Since we have not yet selected a particular industry
or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of
the industry or business in which we may ultimately operate.
While we intend to focus our search
for target businesses on specific locations and industries as described in this prospectus, we are not limited to those
locations and may consummate a business combination with a company in any location or industry we choose. Accordingly, there
is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately
operate or the target business which we may ultimately acquire. To the extent we complete a business combination with a
company in its development stage, we may be affected by numerous risks inherent in the business operations of those entities.
If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be affected
by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent
in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the
significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less
favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business.
The requirement that the target
business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the
funds in the trust account (less any deferred underwriting commissions and taxes payable on interest earned and less any interest
earned thereon that is released to us) at the time of the execution of a definitive agreement for our initial business combination
may limit the type and number of companies that we may complete such a business combination with.
Pursuant to the Nasdaq listing rules, the
target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of
the funds in the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned
on the trust account and less any interest earned thereon that is released to us for our taxes) at the time of the execution of
a definitive agreement for our initial business combination. This restriction may limit the type and number of companies with which
we may complete a business combination. If we are unable to locate a target business or businesses that satisfy this fair market
value test, we may be forced to liquidate and you will only be entitled to receive your
pro rata
portion of the funds in
the trust account.
If Nasdaq delists our securities from trading
on its exchange after this offering, we would not be required to satisfy the fair market value requirement described above and
could complete a business combination with a target business having a fair market value substantially below 80% of the balance
in the trust account.
Our ability to successfully effect
a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of
whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business
combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our ability to successfully effect a business
combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of
our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any of our key
personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required to commit
any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time
among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the
services of our key personnel could have a detrimental effect on us.
The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior
management or advisory positions following a business combination, it is likely that some or all of the management of the target
business will remain in place or be hired after consummation of the business combination. While we intend to closely scrutinize
any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove
to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to
have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming
and could lead to various regulatory issues which may adversely affect our operations.
Our officers and directors may not
have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
While we intend to focus our search for
target businesses within the locations and industries as described in this prospectus, we may consummate a business combination
with a target business in any geographic location or industry we choose. We cannot assure you that our officers and directors will
have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed
decision regarding a business combination. If we become aware of a potential business combination outside of the geographic location
or industry where our officers and directors have the most experience, our management may retain consultants and advisors with
experience in such industries to assist in the evaluation of such business combination and in our determination of whether or not
to proceed with such a business combination. However, our management is not required to engage consultants or advisors in any situation.
If they do not engage any consultants or advisors to assist them in the evaluation of a particular target business or business
combination, our management may not properly analyze the risks attendant with such target business or business combination. Even
if our management does engage consultants or advisors to assist in the evaluation of a particular target business or business combination,
we cannot assure you that such consultants or advisors will properly analyze the risks attendant with such target business or business
combination. As a result, we may enter into a business combination that is not in our shareholders’ best interests.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel will be able to remain
with the company after the consummation of a business combination only if they are able to negotiate employment or consulting agreements
or other arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to the company after the consummation of the business combination. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business.
Our officers and directors will allocate
their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest
could have a negative impact on our ability to consummate our initial business combination.
Our officers and directors are not required
to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations
and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe
is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business
to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not
intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors
are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If
our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to such
affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate
our initial business combination. We cannot assure you these conflicts will be resolved in our favor.
Our officers and directors have pre-existing
fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Our officers and directors have pre-existing
fiduciary and contractual obligations to other companies, including other companies that are engaged in business activities similar
to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in
conflict or competition with our consummation of our initial business combination. As a result, a potential target business may
be presented by our management team to another entity prior to its presentation to us and we may not be afforded the opportunity
to engage in a transaction with such target business. For a more detailed description of the pre-existing fiduciary and contractual
obligations of our management team, and the potential conflicts of interest that such obligations may present, see the section
titled “Management — Conflicts of Interest.”
Our officers’ and directors’
personal and financial interests may influence their motivation in determining whether a particular target business is appropriate
for a business combination.
Our officers and directors have waived
their right to convert (or sell to us in any tender offer) their insider shares or any other ordinary shares acquired in this
offering or thereafter (although none of these insiders have indicated any intention to purchase units in this offering or thereafter),
or to receive distributions with respect to their insider shares upon our liquidation if we are unable to consummate our initial
business combination. Our sponsor, has also waived its right to convert (or sell to us in any tender offer) its private shares
or any other ordinary shares acquired in this offering or thereafter (although it has not indicated any intention to purchase
units in this offering or thereafter), or to receive distributions with respect to their private shares upon our liquidation if
we are unable to consummate our initial business combination. Accordingly, these securities will be worthless if we do not consummate
our initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be
owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we
complete an initial business combination. The personal and financial interests of our directors and officers may influence their
motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’
and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when
determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders’
best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of British Virgin Islands
law and we might have a claim against such individuals. However, we might not ultimately be successful in any claim we may make
against them for such reason.
Nasdaq may delist our securities
from trading on its exchange which could limit investors’ ability to make transactions in our securities and subject us to
additional trading restrictions.
We anticipate that our securities will
be listed on the NASDAQ Capital Market, a national securities exchange, upon consummation of this offering. Although, after giving
effect to this offering, we meet on a pro forma basis the minimum initial listing standards of Nasdaq, which generally only requires
that we meet certain requirements relating to shareholders’ equity, market capitalization, aggregate market value of publicly
held shares and distribution requirements, we cannot assure you that our securities will continue to be listed on Nasdaq in the
future prior to an initial business combination. Additionally, in connection with our initial business combination, it is likely
that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its
more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If Nasdaq delists our securities from trading
on its exchange, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity with respect to our securities;
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a determination that our ordinary shares are “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;
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a limited amount of news and analyst coverage for our company; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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We may only be able to complete one
business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which
may have a limited number of products or services.
We may only be able to complete one business
combination with the proceeds of this offering. By consummating a business combination with only a single entity, our lack of diversification
may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to
complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects
for our success may be:
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solely dependent upon the performance of a single business, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to a business combination.
Alternatively, if we determine to simultaneously
acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that
our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more
difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these
risks, it could negatively impact our profitability and results of operations.
The ability of our public shareholders
to exercise their conversion rights or sell their public shares to us in a tender offer may not allow us to effectuate the most
desirable business combination or optimize our capital structure.
If our business combination requires us
to use substantially all of our cash to pay the purchase price, because we will not know how many public shareholders may exercise
conversion rights or seek to sell their public shares to us in a tender offer, we may either need to reserve part of the trust
account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business transaction.
In the event that the business combination involves the issuance of our shares as consideration, we may be required to issue a
higher percentage of our shares to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve
dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the
most attractive business combination available to us.
We may be unable to consummate a
business combination if a target business requires that we have cash in excess of the minimum amount we are required to have at
closing and public shareholders may have to remain shareholders of our company and wait until our liquidation to receive a pro
rata share of the trust account or attempt to sell their shares in the open market.
A potential target may make it a closing
condition to our business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets
we are required to have pursuant to our organizational documents available at the time of closing. If the number of our shareholders
electing to exercise their conversion rights or sell their shares to us in a tender offer has the effect of reducing the amount
of money available to us to consummate a business combination below such minimum amount required by the target business and we
are not able to locate an alternative source of funding, we will not be able to consummate such business combination and we may
not be able to locate another suitable target within the applicable time period, if at all. In that case, public shareholders may
have to remain shareholders of our company and wait the full 18 (or 21) months in order to be able to receive a
pro rata
portion
of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less
than a
pro rata
share of the trust account for their shares.
Our public shareholders may not be
afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination
even though a majority of our public shareholders do not support such a combination.
We intend to hold a shareholder vote before
we consummate our initial business combination. However, if a shareholder vote is not required, for business or legal reasons,
we may conduct conversions via a tender offer and not offer our shareholders the opportunity to vote on a proposed business combination.
Accordingly, we may consummate our initial business combination even if holders of a majority of our public shares do not approve
of the business combination.
In connection with any meeting held
to approve an initial business combination, we will offer each public shareholder the option to vote in favor of a proposed business
combination and still seek conversion of his, her or its public shares, which may make it more likely that we will consummate a
business combination.
In connection with any meeting held to
approve an initial business combination, we will offer each public shareholder the right to have his, her or its public shares
converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such shareholder votes
for or against such proposed business combination. Furthermore, we will consummate our initial business combination only if we
have net tangible assets of at least $5,000,001 upon such consummation and a majority of the issued and outstanding shares voted
are voted in favor of the business combination. Accordingly, public shareholders owning shares sold in this offering may exercise
their conversion rights and we could still consummate a proposed business combination so long as a majority of shares voted at
the meeting are voted in favor of the proposed business combination. This is different than other similarly structured blank check
companies where shareholders are offered the right to convert their shares only when they vote against a proposed business combination.
This is also different than other similarly structured blank check companies where there is a specific number of shares sold in
the offering which must not exercise conversion rights for the company to complete a business combination. The lack of such a threshold
and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will
consummate our initial business combination.
In connection with any shareholder
meeting called to approve a proposed initial business combination, we may require shareholders who wish to convert their public
shares to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion
rights prior to the deadline for exercising their rights.
In connection with any shareholder meeting
called to approve a proposed initial business combination, each public shareholder will have the right, regardless of whether it
is voting for or against such proposed business combination, to demand that we convert its public shares into a share of the trust
account. Such conversion will be effectuated under British Virgin Islands law and our amended and restated memorandum and articles
of association as a redemption of the shares, with the redemption price to be paid being the applicable
pro rata
portion
of the monies held in the trust account. We may require public shareholders who wish to convert their public shares in connection
with a proposed business combination to either tender their certificates (if any) to our transfer agent or to deliver their shares
to the transfer agent electronically using the Depository Trust Company’s (“DTC”) DWAC (Deposit/Withdrawal At
Custodian) System, at the holder’s option, at any time at or prior to the vote taken at the shareholder meeting relating
to such business combination. In order to obtain a physical share certificate, a shareholder’s broker and/or clearing broker,
DTC and our transfer agent will need to act to facilitate this request. It is our understanding that shareholders should generally
allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over
this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate.
It is also our understanding that it takes a short time to deliver shares through the DWAC System. However, this too may not be
the case. Accordingly, if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to
convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.
Investors may not have sufficient
time to comply with the delivery requirements for conversion.
Pursuant to our amended and restated memorandum
and articles of association, we are required to give a minimum of only ten days’ notice for each general meeting. As a result,
if we require public shareholders who wish to convert their public shares into the right to receive a
pro rata
portion of
the funds in the trust account to comply with specific delivery requirements for conversion, holders may not have sufficient time
to receive the notice and deliver their shares for conversion. Accordingly, investors may not be able to exercise their conversion
rights and may be forced to retain our securities when they otherwise would not want to.
If we require public shareholders
who wish to convert their public shares to comply with the delivery requirements for conversion, such converting shareholders may
be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.
If we require public shareholders who wish
to convert their public shares to comply with specific delivery requirements for conversion described above and such proposed business
combination is not consummated, we will promptly return such certificates to the tendering public shareholders. Accordingly, investors
who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition
until we have returned their securities to them. The market price for our shares may decline during this time and you may not be
able to sell your securities when you wish to, even while other shareholders that did not seek conversion may be able to sell their
securities.
Because of our limited resources
and structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense competition
from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged
buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive
experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess
greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire
with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by
our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of
certain target businesses. Furthermore, seeking shareholder approval of a business combination may delay or prevent the consummation
of a transaction, a risk a target business may not be willing to accept. Additionally, our outstanding warrants, rights and unit
purchase options, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.
Any of the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination.
Our initial shareholders control
a substantial interest in us and thus may influence certain actions requiring a shareholder vote, potentially in a manner that
you do not support.
Upon consummation of our offering and
the private placement, our initial shareholders will collectively own approximately 23.05% of our issued and outstanding ordinary
shares (assuming they do not purchase any units in this offering). Accordingly, they may exert a substantial influence on actions
requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our memorandum and articles
of association. None of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase
units in this offering or any units or ordinary shares from persons in the open market or in private transactions (other than
the private units). However, if our initial shareholders purchase any units in this offering or if our officers, directors, initial
shareholders or their affiliates determine in the future to make such purchases in the open market or in private transactions,
to the extent permitted by law, in order to assist us in consummating our initial business combination, this would increase their
control. Factors that would be considered in making such additional purchases would include consideration of the current trading
price of our ordinary shares. In connection with any vote for a proposed business combination, all of our initial shareholders,
as well as all of our officers and directors, have agreed to vote the ordinary shares owned by them immediately before this offering
as well as any ordinary shares acquired in this offering or in the aftermarket in favor of such proposed business combination.
There is no requirement under the Companies
Law for us to hold annual or general meetings to elect directors. Accordingly, shareholders would not have the right to such a
meeting or election of directors, unless the holders of not less than 10% of the voting rights of our company request such a meeting.
As a result, it is unlikely that there will be an annual general meeting to elect new directors prior to the consummation of a
business combination, in which case all of the current directors will continue in office until at least the consummation of the
business combination. Accordingly, you may not be able to exercise your voting rights for up to 21 months. If there is an annual
general meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors
will be considered for election and our initial shareholders, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our initial shareholders will continue to exert control at least until the consummation of
a business combination.
Our initial shareholders paid
an aggregate of $25,100, or approximately $0.017 per share, for the insider shares and, accordingly, you will experience immediate
and substantial dilution from the purchase of our ordinary shares.
The difference between the public offering
price per share and the pro forma net tangible book value per share after this offering constitutes the dilution to the investors
in this offering. Our initial shareholders acquired their insider shares at a nominal price, significantly contributing to this
dilution. Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution
of approximately 79.21% or $7.20 per share (the difference between the public offering price per share (including the ordinary
shares issuable upon conversion of rights) and the pro forma net tangible book value per share of $1.89 per share). This is because
investors in this offering will be contributing approximately 95.2% of the total amount paid to us for our outstanding securities
after this offering but will only own approximately 78.3% of our outstanding securities (including the ordinary shares underlying
the rights). Accordingly, the per-share purchase price you will be paying substantially exceeds our per share net tangible book
value.
Our outstanding warrants, rights
and unit purchase options may have an adverse effect on the market price of our ordinary shares and make it more difficult to effect
a business combination.
We will be issuing warrants that will
result in the issuance of up to 2,500,000 ordinary shares as part of the units offered by this prospectus and private warrants
that will result in the issuance of an additional 123,750 ordinary shares. We will also be issuing rights that will result in
the issuance of up to 500,000 ordinary shares as part of the units offered by this prospectus and private rights that will result
in the issuance of an additional 24,750 ordinary shares. We will also issue unit purchase options to purchase 500,000 units to
the representative of the underwriters which, if exercised, will result in the issuance of 550,000 ordinary shares (which includes
50,000 shares underlying rights) and warrants exercisable to purchase an additional 250,000 ordinary shares. The potential for
the issuance of a substantial number of additional shares upon exercise of the warrants and conversion of the rights could make
us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when converted, will increase the
number of issued and outstanding ordinary shares and reduce the value of the shares issued to complete the business combination.
Accordingly, our warrants, rights and unit purchase options may make it more difficult to effectuate a business combination or
increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying
the warrants, rights and unit purchase options could have an adverse effect on the market price for our securities or on our ability
to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings.
If our shareholders exercise their
registration rights with respect to their securities, it may have an adverse effect on the market price of our ordinary shares
and the existence of these rights may make it more difficult to effect a business combination.
Our initial shareholders are entitled
to make a demand that we register the resale of their insider shares (1,437,500 ordinary shares, including up to an aggregate
of 187,500 ordinary shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised
in full or in part) at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally,
the purchasers of the private units and our initial shareholders, officers and directors are entitled to demand that we register
the resale of the 247,500 ordinary shares (or
270,000
ordinary shares if the overallotment
is exercised in full) underlying the private units, 123,750 ordinary shares (or
135,000
ordinary shares if the overallotment is exercised in full) underlying the private warrants, and the 24,750 ordinary shares
(or
27,000
ordinary shares if the overallotment is exercised in full) underlying
the private rights and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment
of working capital loans or loans to extend our life made to us at any time after we consummate a business combination. The presence
of these additional securities trading in the public market may have an adverse effect on the market price of our securities.
In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost
of acquiring the target business, as the shareholders of the target business may be discouraged from entering into a business
combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights
may have on the trading market for our ordinary shares.
If we are deemed to be an investment
company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make
it difficult for us to complete a business combination.
A company that, among other things, is
or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning,
trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940.
Since we will invest the proceeds held in the trust account only in United States government treasury bills, notes or bonds having
a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940 and that invest solely in United States treasuries, we believe that we will not be considered to
be an investment company pursuant to the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940.
If we are nevertheless deemed to be an
investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult
for us to complete a business combination, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities.
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In addition, we may have imposed upon us
certain burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
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Compliance with these additional regulatory
burdens would require additional expense that we have not provided for.
We may not seek an opinion from an
unaffiliated third party as to the fair market value of the target business we acquire.
We are not required to obtain an opinion
from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance
of the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the
trust account) unless our board of directors cannot make such determination on its own. We are also not required to obtain an opinion
from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial point of
view unless the target is affiliated with our officers, directors, initial shareholders or their affiliates. If no opinion is obtained,
our shareholders will be relying on the judgment of our board of directors, whose collective experience in business evaluations
for blank check companies like ours is not significant. Furthermore, our directors may have a conflict of interest in analyzing
the transaction due to their personal and financial interests.
We may acquire a target business
that is affiliated with our officers, directors, initial shareholders or their affiliates.
While we do not currently intend to pursue
an initial business combination with a company that is affiliated with our officers, directors, initial shareholders or their affiliates,
we are not prohibited from pursuing such a transaction, nor are we prohibited from consummating a business combination where any
of our officers, directors, initial shareholders or their affiliates acquire a minority interest in the target business alongside
our acquisition, provided in each case we obtain an opinion from an unaffiliated third party indicating that the price we are paying
is fair to our shareholders from a financial point of view. These affiliations could cause our officers or directors to have a
conflict of interest in analyzing such transactions due to their personal and financial interests.
The determination of the offering
price of our units is more arbitrary than the pricing of securities for an operating company in a particular industry.
Prior to this offering there has been no
public market for any of our securities. The public offering price of the units and the terms of the warrants and rights were negotiated
between us and the representative of the underwriters. Factors considered in determining the prices and terms of the units, including
the ordinary shares, warrants and rights underlying the units, include:
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the history and prospects of companies whose principal business is the acquisition of other companies;
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prior offerings of those companies;
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our prospects for acquiring an operating business at attractive values;
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the per share amount of net proceeds being placed in the trust account;
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an assessment of our management and their experience in identifying operating companies; and
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general conditions of the securities markets at the time of the offering.
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However, although these factors were considered,
the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular
industry since we have no historical operations or financial results to compare them to.
Because we are incorporated under
the laws of the British Virgin Islands, you may face difficulties in protecting your interests, and your ability to protect your
rights through the U.S. Federal courts may be limited.
We are a company incorporated under the
laws of the British Virgin Islands and certain of our officers and directors are residents of jurisdictions outside the United
States. As a result, it may be difficult for investors to effect service of process within the United States upon our directors
or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs will be governed
by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended
from time to time) or the common law of the British Virgin Islands. The rights of shareholders to take action against the directors,
actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are
to a large extent governed by the Companies Laws and common law of the British Virgin Islands. The common law of the British Virgin
Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English
common law, and whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the
British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin
Islands law are different from statutes or judicial precedent in some jurisdictions in the United States. In particular, the British
Virgin Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware,
have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist
in British Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders in the British Virginia
Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The
circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any
such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders
of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe
that corporate wrongdoing has occurred.
We have been advised by our British Virgin
Islands legal counsel that the courts of the British Virgin Islands are unlikely:
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to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; and
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to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
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There is no statutory recognition in the
British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will in certain
circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at
common law so that no retrial of the issues would be necessary provided that:
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the U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;
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the U.S. judgment is final and for a liquidated sum;
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the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company;
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in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;
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recognition or enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and
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the
proceedings pursuant to which judgment was obtained were not contrary to natural justice.
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In appropriate circumstances, a British
Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory
orders, orders for performance of contracts and injunctions.
As a result of all of the above, public
shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the
board of directors or controlling shareholders than they would as public shareholders of a United States company.
Because we must furnish our shareholders
with financial statements of the target business prepared in accordance with U.S. GAAP or IFRS as issued by the IASB or reconciled
to U.S. GAAP, we may not be able to complete an initial business combination with some prospective target businesses.
We will be required to provide historical and pro forma financial statement disclosure relating to our
target business to our shareholders. These financial statements may be required to be prepared in accordance with, or be reconciled
to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards
as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United
States), or PCAOB. The financial statements may also be required to be prepared in accordance with U.S. GAAP for the Form 8-K announcing
the closing of an initial business combination, which would need to be filed within four business days after closing. These financial
statement requirements may limit the pool of potential target businesses we may acquire.
Compliance with the Sarbanes-Oxley
Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of
2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by
an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject
to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial
reports could harm our business. A target business may also not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure
to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our
financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have
a negative effect on the trading price of our securities.
We are an “emerging growth
company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make
our securities less attractive to investors.
We are an “emerging growth company,”
as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years. However, if our non-convertible
debt issued within a three-year period exceeds $1.0 billion or revenues exceeds $1.07 billion, or the market value of our ordinary
shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year,
we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not being
required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards
that have different effective dates for public and private companies until those standards apply to private companies. As such,
our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict
if investors will find our shares less attractive because we may rely on these provisions. If some investors find our shares less
attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required
to adopt the new or revised standard. This may make comparison of our financial statements with another public company which is
neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accountant standards used.
An investment in this offering may
involve adverse U.S. federal income tax consequences.
An investment in this offering may involve
adverse U.S. federal income tax consequences. For instance, there is a risk that an investor’s entitlement to receive payments
in excess of the investor’s initial tax basis in our ordinary shares upon exercise of the investor’s conversion right
or upon our liquidation of the trust account will result in constructive income to the investor, which could affect the timing
and character of income recognition and result in U.S. federal income tax liability to the investor without the investor’s
receipt of cash from us. Furthermore, because there are no authorities that directly address instruments similar to the units we
are issuing in this offering, the allocation an investor makes with respect to the purchase price of the unit between the ordinary
shares, warrants and rights included in the units could be challenged by the IRS or the courts. See the section titled “Taxation
United States Federal Income Taxation” for a summary of the material U.S. federal income tax consequences of an investment
in our securities. Prospective investors are urged to consult their own tax advisors with respect to these and other tax consequences
when purchasing, holding or disposing of our securities.
We have also not sought a ruling from the
Internal Revenue Service, or IRS, as to any U.S. federal income tax consequences described in this prospectus. The IRS may disagree
with the descriptions of U.S. federal income tax consequences described herein, and its determination may be upheld by a court.
Any such determination could subject an investor or our company to adverse U.S. federal income tax consequences that would be different
than those described in this prospectus. Accordingly, each prospective investor is urged to consult a tax advisor with respect
to the specific tax consequences of the acquisition, ownership and disposition of our securities, including the applicability and
effect of state, local, or foreign tax laws, as well as U.S. federal tax laws.
We may qualify as a passive foreign
investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors.
In general, we will be treated as a passive
foreign investment company (“PFIC”) for any taxable year in which either (1) at least 75% of our gross income (looking
through certain 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of our assets
(looking through certain 25% or more-owned corporate subsidiaries) is attributable to assets that produce, or are held for the
production of, passive income. Passive income generally includes, without limitation, dividends, interest, rents, royalties, and
gains from the disposition of passive assets. If we are determined to be a PFIC for any taxable year (or portion thereof) that
is included in the holding period of a U.S. Holder (as defined in the Section of this prospectus captioned “Taxation –
United States Federal Income Taxation – General”) of our securities, the U.S. Holder may be subject to increased U.S.
federal income tax liability and may be subject to additional reporting requirements. Our actual PFIC status for our current taxable
year may depend on whether we qualify for the PFIC start-up exception (see the section of this prospectus captioned “Taxation
— United States Federal Income Taxation — U.S. Holders - Passive Foreign Investment Company Rules”). Our actual
PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year (or after the end
of the start-up period, if later). Accordingly, there can be no assurance with respect to our status as a PFIC for our current
taxable year or any subsequent taxable year. We urge U.S. Holders to consult their own tax advisors regarding the possible application
of the PFIC rules.
If our management following a business
combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with
such laws which could lead to various regulatory issues.
Following a business combination, our management
will likely resign from their positions as officers of the company and the management of the target business at the time of the
business combination will remain in place. We cannot assure you that management of the target business will be familiar with United
States securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar
with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect
our operations.
If restrictions on repatriation of
earnings from the target business’ home jurisdiction to foreign entities are instituted, our business following a business
combination may be materially negatively affected.
It is possible that following an initial
business combination, the home jurisdiction of the target business may have restrictions on repatriations of earnings or additional
restrictions may be imposed in the future. If they were, it could have a material adverse effect on our operations.
Risks Associated with Acquiring
and Operating a Business Outside of the United States
We may effect a business combination
with a company located outside of the United States and if we do, we would be subject to a variety of additional risks that may
negatively impact our business operations and financial results.
If we consummate a business combination
with a target business located outside of the United States, we would be subject to any special considerations or risks associated
with companies operating in the target business’ governing jurisdiction, including any of the following:
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rules
and regulations or currency redemption or corporate withholding taxes on individuals;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles than in the United States;
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economic
policies and market conditions;
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unexpected
changes in regulatory requirements;
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challenges
in managing and staffing international operations;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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protection
of intellectual property; and
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employment
regulations.
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We cannot assure you that we would
be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
Because of the costs and difficulties
inherent in managing cross-border business operations, our results of operations may be negatively impacted.
Managing a business, operations, personnel
or assets in another country is challenging and costly. Any management that we may have (whether based abroad or in the U.S.)
may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes
and labor practices. Even with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border
business operations, personnel and assets can be significant (and much higher than in a purely domestic business) and may negatively
impact our financial and operational performance.
If social unrest, acts of terrorism,
regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments occur in a country in which
we may operate after we effect our initial business combination, it may result in a negative impact on our business.
Political events in another country
may significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime changes, changes in laws
and regulations, political upheaval, and policy changes or enactments could negatively impact our business in a particular country.
Many countries have difficult
and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience,
which may adversely impact our results of operations and financial condition.
Our ability to seek and enforce legal
protections, including with respect to intellectual property and other property rights, or to defend ourselves with regard to
legal actions taken against us in a given country, may be difficult or impossible, which could adversely impact our operations,
assets or financial condition.
Rules and regulations in many countries
are often ambiguous or open to differing interpretation by responsible individuals and agencies at the municipal, state, regional
and federal levels. The attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent.
Delay with respect to the enforcement
of particular rules and regulations, including those relating to customs, tax, environmental and labor, could cause serious disruption
to operations abroad and negatively impact our results.
If we effect a business combination
with a company located outside of the United States, the laws applicable to such company will likely govern all of our material
agreements and we may not be able to enforce our legal rights.
If we effect a business combination
with a company located outside of the United States, the laws of the country in which such company operates will govern almost
all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce
any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The
inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business
opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially
all of our assets would be located outside of the United States and some of our officers and directors might reside outside of
the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect
service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities
and criminal penalties of our directors and officers under Federal securities laws.
If relations between the United
States and foreign governments deteriorate, it could cause potential target businesses or their goods and services to become less
attractive.
The relationship between the United
States and foreign governments could be subject to sudden fluctuation and periodic tension. For instance, the United States may
announce its intention to impose quotas on certain imports. Such import quotas may adversely affect political relations between
the two countries and result in retaliatory countermeasures by the foreign government in industries that may affect our ultimate
target business. Changes in political conditions in foreign countries and changes in the state of U.S. relations with such countries
are difficult to predict and could adversely affect our operations or cause potential target businesses or their goods and services
to become less attractive. Because we are not limited to any specific industry, there is no basis for investors in this offering
to evaluate the possible extent of any impact on our ultimate operations if relations are strained between the United States and
a foreign country in which we acquire a target business or move our principal manufacturing or service operations.
If any dividend is declared in
the future and paid in a foreign currency, you may be taxed on a larger amount in U.S.
If you are a U.S. holder of our ordinary
shares, you will be taxed on the U.S. dollar value of your dividends, if any, at the time you receive them, even if you actually
receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend
is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your income as a
U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot rate of the foreign
currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether the payment
is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually convert the currency
into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately
receive.
If our management following our
initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming
familiar with such laws, which could lead to various regulatory issues.
Following our initial business combination,
certain members of our management team will likely resign from their positions as officers or directors of the company and the
management of the target business at the time of the business combination will remain in place. Management of the target business
may not be familiar with United States securities laws. If new management is unfamiliar with our laws, they may have to expend
time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory
issues, which may adversely affect our operations.
After our initial business combination,
substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our
operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to
the economic, political and legal policies, developments and conditions in the country in which we operate.
The economic, political and social
conditions, as well as government policies, of the country in which our operations are located could affect our business. The
economy in China differs from the economies of most developed countries in many respects. Such economic growth has been uneven,
both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future
such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending
in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability
to find an attractive target business with which to consummate our initial business combination and if we effect our initial business
combination, the ability of that target business to become profitable.
Currency policies may cause a
target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S.
target, all revenues and income would likely be received in a foreign currency, the dollar equivalent of our net assets and distributions,
if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target
regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative
value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation
of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates
in value against the dollar prior to the consummation of our initial business combination, the cost of a target business as measured
in dollars will increase, which may make it less likely that we are able to consummate such transaction.
Many of the economies in Asia
are experiencing substantial inflationary pressures which may prompt the governments to take action to control the growth of the
economy and inflation that could lead to a significant decrease in our profitability following our initial business combination.
While many of the economies in Asia
have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures. As governments
take steps to address the current inflationary pressures, there may be significant changes in the availability of bank credits,
interest rates, limitations on loans, restrictions on currency conversions and foreign investment. There also may be imposition
of price controls. If prices for the products of our ultimate target business rise at a rate that is insufficient to compensate
for the rise in the costs of supplies, it may have an adverse effect on our profitability. If these or other similar restrictions
are imposed by a government to influence the economy, it may lead to a slowing of economic growth. Because we are not limited
to any specific industry, the ultimate industry that we operate in may be affected more severely by such a slowing of economic
growth.
Many industries in Asia are subject
to government regulations that limit or prohibit foreign investments in such industries, which may limit the potential number
of acquisition candidates.
Governments in many Asian countries
have imposed regulations that limit foreign investors’ equity ownership or prohibit foreign investments altogether in companies
that operate in certain industries. As a result, the number of potential acquisition candidates available to us may be limited
or our ability to grow and sustain the business, which we ultimately acquire will be limited.
If a country in Asia enacts regulations
in industry segments that forbid or restrict foreign investment, our ability to consummate our initial business combination could
be severely impaired.
Many of the rules and regulations that
companies face concerning foreign ownership are not explicitly communicated. If new laws or regulations forbid or limit foreign
investment in industries in which we want to complete our initial business combination, they could severely impair our candidate
pool of potential target businesses. Additionally, if the relevant central and local authorities find us or the target business
with which we ultimately complete our initial business combination to be in violation of any existing or future laws or regulations,
they would have broad discretion in dealing with such a violation, including, without limitation:
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revoking our business and other licenses;
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requiring that we restructure our
ownership or operations; and
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requiring that we discontinue any
portion or all of our business.
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Any of the above could have an adverse
effect on our company post-business combination and could materially reduce the value of your investment.
Corporate governance standards
in Asia may not be as strict or developed as in the United States and such weakness may hide issues and operational practices
that are detrimental to a target business.
General corporate governance standards
in some countries are weak in that they do not prevent business practices that cause unfavorable related party transactions, over-leveraging,
improper accounting, family company interconnectivity and poor management. Local laws often do not go far enough to prevent improper
business practices. Therefore, shareholders may not be treated impartially and equally as a result of poor management practices,
asset shifting, conglomerate structures that result in preferential treatment to some parts of the overall company, and cronyism.
The lack of transparency and ambiguity in the regulatory process also may result in inadequate credit evaluation and weakness
that may precipitate or encourage financial crisis. In our evaluation of a business combination we will have to evaluate the corporate
governance of a target and the business environment, and in accordance with United States laws for reporting companies take steps
to implement practices that will cause compliance with all applicable rules and accounting practices. Notwithstanding these intended
efforts, there may be endemic practices and local laws that could add risk to an investment we ultimately make and that result
in an adverse effect on our operations and financial results.
Risks Associated with Acquiring
and Operating a Target Business with its Primary Operation in China
As set forth herein, our efforts in
identifying a prospective target business will not be limited to a particular country, although we intend to focus initially on
companies with operations located primarily in the People’s Republic of China (PRC). Accordingly, in addition to the risk
factors referred above, we have set forth some of the primary risks we have identified in seeking to consummate our initial business
combination with a company having its primary operations in the PRC.
As a result of merger and acquisition
regulations implemented on September 8, 2006 (amended on June 22, 2009) relating to acquisitions of assets and equity interests
of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject to economic scrutiny
by the PRC government authorities such that we may not be able to complete a transaction.
On September 8, 2006, the Ministry
of Commerce, together with several other government agencies, promulgated the Regulations on Merger and Acquisition of Domestic
Enterprises by Foreign Investors (the “M&A Regulations”, including its amendment on June 22, 2009), which implemented
a comprehensive set of regulations governing the approval process by which a Chinese company may participate in an acquisition
of its assets or its equity interests and by which a Chinese company may obtain public trading of its securities on a securities
exchange outside the PRC. Although there was a complex series of regulations in place prior to September 8, 2006 for approval
of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the M&A Regulations
have largely centralized and expanded the approval process to the Ministry of Commerce, the State Administration of Industry and
Commerce (SAIC), the State Administration of Foreign Exchange (SAFE) or its branch offices, the State Asset Supervision and Administration
Commission (SASAC), and the China Securities Regulatory Commission (CSRC). Depending on the structure of the transaction, these
M&A Regulations will require the Chinese parties to make a series of applications and supplemental applications to one or
more of the aforementioned agencies, some of which must be made within strict time limits and depending on approvals from one
or the other of the aforementioned agencies. The application process has been supplemented to require the presentation of economic
data concerning a transaction, including appraisals of the business to be acquired and evaluations of the acquirer which will
permit the government to assess the economics of a transaction in addition to the compliance with legal requirements. If obtained,
approvals will have expiration dates by which a transaction must be completed. Also, completed transactions must be reported to
the Ministry of Commerce and some of the other agencies within a short period after closing or be subject to an unwinding of the
transaction. Therefore, acquisitions in China may not be able to be completed because the terms of the transaction may not satisfy
aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted
by the approvals granted.
Compliance with the PRC Antitrust
law may limit our ability to effect our initial business combination.
The PRC Antitrust Law became effective
on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust Commission and other antitrust
authorities under the State Council. The PRC Antitrust Law regulates (1) monopoly agreements, including decisions or actions in
concert that preclude or impede competition, entered into by business operators; (2) abuse of dominant market position by business
operators; and (3) concentration of business operators that may have the effect of precluding or impeding competition. To implement
the Antitrust Law, in 2008, the State Council formulated the regulations that require filing of concentration of business operators,
pursuant to which concentration of business operators refers to (1) merger with other business operators; (2) gaining control
over other business operators through acquisition of equity interest or assets of other business operators; and (3) gaining control
over other business operators through exerting influence on other business operators through contracts or other means. In 2009,
the Ministry of Commerce, to which the Antitrust Commission is affiliated, promulgated the Measures for Filing of Concentration
of Business Operators (amended by the Guidelines for Filing of Concentration of Business Operators in 2014), which set forth the
criteria of concentration and the requirement of miscellaneous documents for the purpose of filing. The business combination we
contemplate may be considered the concentration of business operators, and to the extent required by the Antitrust Law and the
criteria established by the State Council, we must file with the antitrust authority under the PRC State Council prior to conducting
the contemplated business combination. If the antitrust authority decides not to further investigate whether the contemplated
business combination has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt
of relevant materials, we may proceed to consummate the contemplated business combination. If antitrust authority decides to prohibit
the contemplated business combination after further investigation, we must terminate such business combination and would then
be forced to either attempt to complete a new business combination if it was prior to 18 months from the closing of this offering
or we would be required to return any amounts which were held in the trust account to our shareholders. When we evaluate a potential
business combination, we will consider the need to comply with the Antitrust Law and other relevant regulations which may limit
our ability to effect an acquisition or may result in our modifying or not pursuing a particular transaction.
If, due to restrictions on foreign
investment in a target business, we have to acquire the business through the use of contractual arrangements and the PRC government
determines that such contractual arrangements do not comply with foreign investment regulations, or if these regulations or the
interpretation of existing regulations in the PRC change or new restrictive or prohibitive regulations come into force in the
future, we could be subject to significant penalties or be forced to relinquish our interests in those operations.
Because of the above mentioned industrial
restrictions, foreign investors often acquire control of PRC business through the use of contractual arrangements pursuant to
which they effectively control the PRC business. There are uncertainties as to whether such contractual arrangements comply with
the regulations prohibiting or restricting foreign ownership in certain industries. In addition, even if such arrangements are
not in violation of current regulations, such regulations are subject to change in the future and may be broadened to further
restrict foreign investments in new industries or new category of assets.
If we or any of our potential future
target businesses are found to be in violation of any existing or future local laws or regulations with respect to foreign investment
in local entities (for example, if we are deemed to be holding equity interests in certain of our affiliated entities in which
direct foreign ownership is prohibited), the relevant regulatory authorities might have the discretion to:
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revoke
the business and operating licenses of the potential future target business;
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confiscate
relevant income and impose fines and other penalties;
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discontinue
or restrict the operations of the potential future target business;
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require
us or potential future target business to restructure the relevant ownership structure
or operations;
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restrict
or prohibit our use of the proceeds of this offering to finance the target businesses
and its operations;
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impose
conditions or requirements with which we or potential future target business may not
be able to comply; or
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require
us to discontinue a portion or all of our business.
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The imposition of any of the above
penalties could result in a material and adverse effect on our ability to conduct our business as well as our financial situation
and we might be forced to relinquish our interests in operations.
If we have to acquire a target
business through contractual arrangements with, or which results in, one or more operating businesses in China, such contracts
may not be as effective in providing operational control as direct ownership of such businesses.
The government of the PRC has restricted
or limited foreign ownership of certain kinds of assets and companies operating in certain industries. The industry groups that
are restricted are wide ranging, including certain aspects of telecommunications, advertising, food production and heavy equipment
manufacturers, for example. In addition, there can be restrictions on the foreign ownership of businesses that are determined
from time to time to be in “important industries” that may affect the national economic security or having “famous
Chinese brand names” or “well established Chinese brand names.” Subject to the review and approval requirements
of the Ministry of Commerce and other relevant agencies as discussed elsewhere for acquisitions of assets and companies in the
PRC and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors
and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual
arrangements with permitted Chinese parties. To the extent such agreements are employed, they may be for control of specific assets
such as intellectual property or control of blocks of the equity ownership interests of a company which may provide exceptions
to the merger and acquisition regulations mentioned above since these types of arrangements typically do not involve a change
of equity ownership in PRC operating company. The agreements would be designed to provide our company with the economic benefits
of and control over the subject assets or equity interests similar to the rights of full ownership, while leaving the technical
ownership in the hands of Chinese parties who would be our nominees and, therefore, may exempt the transaction from the merger
and acquisition regulations, including the application process required thereunder. However, there has been limited implementation
guidance provided with respect to the merger and acquisition regulations. There can be no assurance the relevant government agencies
would not apply them to a business combination effected through contractual arrangements. If such an agency determines such an
application should have made, consequences may include levying fines, revoking business and other licenses, requiring restructure
of ownership or operations and requiring discontinuation of any portion of all of the acquired business. These agreements likely
also would provide for increased ownership or full ownership and control by us when and if permitted under PRC law and regulation.
If we choose to effect our initial business combination that employs the use of these types of control arrangements, we may have
difficulty in enforcing our rights. Therefore, these contractual arrangements may not be as effective in providing us with the
same economic benefits, accounting consolidation or control over a target business as would direct ownership. For example, if
the target business or any other entity fails to perform its obligations under these contractual arrangements, we may have to
incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal remedies under Chinese
law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be sufficient
to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the business combination.
Regulations relating to the transfer
of state-owned property rights in enterprises may increase the cost of our acquisitions and impose an additional administrative
burden on us.
The legislation governing the acquisition
of a China state-owned company contains stringent governmental regulations. The transfer of state-owned property rights in enterprises
must take place through a government approved “state-owned asset exchange,” and the value of the transferred property
rights must be evaluated by those Chinese appraisal firms qualified to do “state-owned assets evaluation.” The final
price must not be less than 90% of the appraisal price. Additionally, bidding/auction procedures are essential in the event that
there is more than one potential transferee. In the case of an acquisition by foreign investors of state-owned enterprises, the
acquirer and the seller must make a resettlement plan to properly resettle the employees, and the resettlement plan must be approved
by the Employees’ Representative Congress. The seller must pay all unpaid wages and social welfare payments from the existing
assets of the target company to the employees. These regulations may adversely effect our ability to acquire a state-owned business
or assets.
Exchange controls that exist
in the PRC may restrict or prevent us from using the proceeds of this offering to acquire a target company in PRC and limit our
ability to utilize our cash flow effectively following our initial business combination.
SAFE promulgated the Notice of the
State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested
Enterprises, or Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant Operating Issues Concerning
the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises,
or SAFE Circular 142, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening
the Administration of Foreign Exchange Businesses, or Circular 59, and the Circular on Further Clarification and Regulation of
the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses, or Circular 45. According to
Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise
loans or the repayment of banks loans that have been transferred to a third party. Although Circular 19 allows RMB capital converted
from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within
the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested
company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit
such capital to be used for equity investments in the PRC in actual practice. SAFE promulgated the Notice of the State Administration
of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular
16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against
using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted
loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19
and Circular 16 could result in administrative penalties.
As such, Circular 19 and Circular 16
may significantly limit our ability to transfer the proceeds of this offering to a PRC target company and the use of such proceeds
by the PRC target company.
In addition, following our initial
business combination with a PRC target company, we will be subject to the PRC’s rules and regulations on currency conversion.
In the PRC, the SAFE regulates the conversion of the Renminbi into foreign currencies. Currently, FIEs are required to apply to
the SAFE for “Foreign Exchange Registration Certificates for FIEs.” Following our initial business combination, we
will likely be an FIE as a result of our ownership structure. With such registration certificates, which need to be renewed annually,
FIEs are allowed to open foreign currency accounts including a “basic account” and “capital account.”
Currency conversion within the scope of the “basic account,” such as remittance of foreign currencies for payment
of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital
account,” including capital items such as direct investment, loans and securities, still require approval of the SAFE.
We cannot assure you the PRC regulatory
authorities will not impose further restrictions on the convertibility of the Renminbi. Any future restrictions on currency exchanges
may limit our ability to use the proceeds of this offering in an initial business combination with a PRC target company and the
use our cash flow for the distribution of dividends to our shareholders or to fund operations we may have outside of the PRC.
Our initial business combination
may be subject to national security review by the PRC government and we may have to spend additional resources and incur additional
time delays to complete any such business combination or be prevented from pursuing certain investment opportunities.
On February 3, 2011, the PRC government
issued a Notice Concerning the Establishment of Security Review Procedure on Mergers and Acquisitions of Domestic Enterprises
by Foreign Investors, or Security Review Regulations, which became effective on March 5, 2011. The Security Review Regulations
cover acquisitions by foreign investors of a broad range of PRC enterprises if such acquisitions could result in de facto control
by foreign investors and the enterprises are relating to military, national defense, important agriculture products, important
energy and natural resources, important infrastructures, important transportation services, key technologies and important equipment
manufacturing. The scope of the review includes whether the acquisition will impact the national security, economic and social
stability, and the research and development capabilities on key national security related technologies. Foreign investors should
submit a security review application to the Department of Commerce for its initial review for contemplated acquisition. If the
acquisition is considered to be within the scope of the Security Review Regulations, the Department of Commerce will transfer
the application to a joint security review committee within five business days for further review. The joint security review committee,
consisting of members from various PRC government agencies, will conduct a general review and seek comments from relevant government
agencies. The joint security review committee may initiate a further special review and request the termination or restructuring
of the contemplated acquisition if it determines that the acquisition will result in significant national security issue.
The Security Review Regulations will
potentially subject a large number of mergers and acquisitions transactions by foreign investors in China to an additional layer
of regulatory review. Currently, there is significant uncertainty as to the implication of the Security Review Regulations. Neither
the Department of Commerce nor other PRC government agencies have issued any detailed rules for the implementation of the Security
Review Regulations. If, for example, our potential initial business combination is with a target company operating in the PRC
in any of the sensitive sectors identified above, the transaction will be subject to the Security Review Regulations, and we may
have to spend additional resources and incur additional time delays to complete any such acquisition. We may also be prevented
from pursuing certain investment opportunities if the PRC government considers that the potential investments will result in a
significant national security issue.
In the event we successfully
consummated business combination with a target business with primary operation in PRC, we will be subject to restrictions on dividend
payments following consummation of our initial business combination.
After we consummate our initial business
combination, we may rely on dividends and other distributions from our operating company to provide us with cash flow and to meet
our other obligations. Current regulations in China would permit our operating company in China to pay dividends to us only out
of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations.
In addition, our operating company in China will be required to set aside at least 10% (up to an aggregate amount equal to half
of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash dividends. In
addition, if our operating company in China incurs debt on its own behalf in the future, the instruments governing the debt may
restrict its ability to pay dividends or make other payments to us.
If we make equity compensation
grants to persons who are PRC citizens, they may be required to register with the State Administration of Foreign Exchange of
the PRC (“SAFE”). We may also face regulatory uncertainties that could restrict our ability to adopt equity compensation
plans for our directors and employees and other parties under PRC laws.
On April 6, 2007, SAFE issued the “Operating
Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan
of An Overseas Listed Company, also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of
equity compensation plans or only those which provide for the granting of shares options. For any plans which are so covered and
are adopted by a non-PRC listed company, such as our company, after April 6, 2007, Circular 78 requires all participants who are
PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78
also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas
listed company’s covered equity compensation plan prior to April 6, 2007. We believe that the registration and approval
requirements contemplated in Circular 78 will be burdensome and time consuming.
Upon consummation of business combination
with a target business with primary operations in PRC, we may adopt an equity incentive plan and make shares option grants under
the plan to our officers, directors and employees, whom may be PRC citizens and be required to register with SAFE. If it is determined
that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and
participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to
grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity
compensation would be hindered and our business operations may be adversely affected.
Enhanced scrutiny over acquisition
transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.
The PRC tax authorities have enhanced
their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a
PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which
became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became
effective in February 2015.
Under Circular 698, where a non-resident
enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise”
indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor,
may be subject to PRC corporate income tax, if the indirect transfer is considered to be an abusive use of company structure without
reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of
up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident
enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make
a reasonable adjustment to the taxable income of the transaction.
In February 2015, the SAT issued Circular
7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly
different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under
Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate
holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes
and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities
market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay
for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring
the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise
being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant
tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard
the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose
of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC corporate
income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable
taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.
We face uncertainties on the reporting
and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer
of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident
enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries
to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject
to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable
resources to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should
not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
The PRC tax authorities have the discretion
under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between
the fair value of the taxable assets transferred and the cost of investment. Although we currently have no plans to pursue any
acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures.
If we are considered a non-resident enterprise under the PRC corporate income tax law and if the PRC tax authorities make adjustments
to the taxable income of the transactions under SAT Circular 59 or Circular 698 and Circular 7, our income tax costs associated
with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of
operations
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
The statements contained in this prospectus
that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to,
statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future.
In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predicts,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example,
statements about our:
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ability to identify or complete an initial business combination;
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limited operating history;
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success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
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potential ability to obtain additional financing to complete a business combination;
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pool of prospective target businesses;
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the ability of our officers and directors to generate potential investment opportunities;
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potential change in control if we acquire one or more target businesses for shares;
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our public securities’ potential liquidity and trading;
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regulatory or operational risks associated with acquiring a target business;
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use of proceeds not held in the trust account;
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financial performance following this offering; or
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listing or delisting of our securities from Nasdaq or the ability to have our securities listed on Nasdaq following our initial business combination.
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The forward-looking statements contained
in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects
on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause
actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.”
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required
under applicable securities laws.
NOTE REGARDING OUR CHOICE OF BRITISH
VIRGIN ISLANDS AND THE ENFORCEABILITY OF CIVIL LIABILITIES
Reasons for our Choice of Incorporating
in the British Virgin Islands
We are incorporated in the British Virgin
Islands because of the following benefits we believe are found there:
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political and economic stability;
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an effective and sophisticated judicial system with a dedicated Commercial Court;
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tax neutral treatment, with no tax levied against companies incorporated in the British Virgin Islands by the local tax authorities;
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the absence of exchange control or currency restrictions;
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the availability of professional and support services;
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commitment of the British Virgin Islands to implement best international practice and to comply with the requirements of the Organization of Economic Cooperation and Development (OECD) and the Financial Action Taskforce (FATF);
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the adoption of the English law concept of corporate separateness to mitigate the risk of the assets of a shareholder being used to satisfy the liabilities of the company; and
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confidentiality for shareholders.
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However, the British Virgin Islands has
a less developed body of securities laws as compared to the United States and provides significantly less protection to investors,
and British Virgin Islands companies may not have standing to sue before the federal courts of the United States.
We believe the disadvantages of incorporating
in the British Virgin Islands are outweighed by the benefits to us and our investors of such incorporation.
Enforceability of Civil Liabilities
We are a company incorporated under the
laws of the British Virgin Islands and therefore, located and administered from outside of the United States. The proceeds we receive
from this offering will be held in U.S. Dollars and deposited in a trust account at Morgan Stanley. in the United States maintained
by Continental Stock Transfer & Trust Company, as trustee. The trust account will be governed by an Investment Management Trust
Agreement between us and Continental Stock Transfer & Trust Company. Our U.S. agent for service of process is National Corp.
However, it may be difficult for investors to effect service of process on us or our officers or directors within the United States
in a way that will permit a U.S. court to have jurisdiction over us.
Our corporate affairs will be governed
by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended
from time to time) or the common law of the British Virgin Islands. The rights of shareholders to take action against the directors,
actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are
to a large extent governed by the Companies Laws and common law of the British Virgin Islands. The common law of the British Virgin
Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English
common law, and whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the
British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin
Islands law are different from statutes or judicial precedent in some jurisdictions in the United States. In particular, the British
Virgin Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware,
have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist
in British Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders in the British Virgin
Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The
circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any
such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders
of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe
that corporate wrongdoing has occurred.
Under British Virgin Islands law, the directors
owe fiduciary duties at both common law and under statute, including a statutory duty to act honestly, in good faith and with a
view to what the directors believe are our best interests. When exercising powers or performing duties as a director, the director
is required to exercise the care, diligence and skill that a reasonable director would exercise in the circumstances taking into
account, without limitation the nature of the company, the nature of the decision and the position of the director and the nature
of the responsibilities undertaken by him. In exercising the powers of a director, the directors must exercise their powers for
a proper purpose and shall not act or agree to the company acting in a manner that contravenes our memorandum and articles of association
or the Companies Act.
In certain limited circumstances, a shareholder
has the right to seek various remedies against the company in the event the directors are in breach of their duties under the Companies
Act. Pursuant to Section 184B of the Companies Act, if a company or director of a company engages in, proposes to engage in or
has engaged in, conduct that contravenes the provisions of the Companies Act or the memorandum or articles of association of the
company, the courts of the British Virgin Islands may, on application of a shareholder or director of the company, make an order
directing the company or director to comply with, or restraining the company or director from engaging in conduct that contravenes
the Companies Act or the memorandum or articles. Furthermore, pursuant to section 184I(1) of the Companies Act a shareholder of
a company who considers that the affairs of the company have been, are being or likely to be, conducted in a manner that is, or
any acts of the company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in that
capacity, may apply to the courts of the British Virgin Islands for an order which, inter alia, can require the company or any
other person to pay compensation to the shareholders.
If we are deemed insolvent for the purposes
of the Insolvency Act (i.e. (i) it fails to comply with the requirements of a statutory demand that has not been set aside under
section 157 of the Insolvency Act; (ii) the execution or other process issued on a judgment, decree or order of a British Virgin
Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the
company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), there are very limited
circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction”
for the purposes of the Insolvency Act. A voidable transaction would include, for these purposes, payments made as “unfair
preferences” or “transactions at an undervalue”. A liquidator appointed over an insolvent company who considers
that a particular transaction or payment is a voidable transaction under the Insolvency Act could apply to the British Virgin Islands
Courts for an order setting aside that payment or transaction in whole or in part.
We have been advised by our British Virgin
Islands legal counsel that the courts of the British Virgin Islands are unlikely:
|
|
●
|
to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; and
|
|
|
●
|
to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
|
The courts of the British Virgin Islands
will not necessarily enter judgments in original actions brought in those courts predicated on U.S. federal or state securities
laws. Additionally, we have been advised by British Virgin Islands Counsel that there is no statutory enforcement in the British
Virgin Islands of judgments obtained in the United States, however, the courts of the British Virgin Islands will in certain circumstances
recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so
that no retrial of the issues would be necessary provided that: (i) the U.S. court issuing the judgment had jurisdiction in the
matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and
was duly served with process; (ii) the U.S. judgment is final and for a liquidated sum; (iii) the judgment given by the U.S. court
was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; (iv) in obtaining judgment
there was no fraud on the part of the person in whose favor judgment was given or on the part of the court; (v) recognition or
enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and (vi) the proceedings pursuant
to which judgment was obtained were not contrary to natural justice.
In appropriate circumstances, a British
Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory
orders, orders for performance of contracts and injunctions.
As a result of all of the above, public
shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the
board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
In addition, many of our directors and
officers are nationals or residents of The People’s Republic of China, Hong Kong, Japan and Taiwan and all or a substantial
portion of their assets are located in the aforementioned locations.
USE OF PROCEEDS
We estimate that the net proceeds of this
offering, in addition to the funds we will receive from the sale of the private units (all of which will be deposited into the
trust account), will be as set forth in the following table:
|
|
|
Without
Over-
Allotment
Option
|
|
|
Over-Allotment
Option
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds
|
|
|
|
|
|
|
|
|
|
From offering
|
|
$
|
50,000,000
|
|
|
$
|
57,500,000
|
|
|
From private placement
|
|
|
2,475,000
|
|
|
|
2,700,000
|
|
|
Total gross proceeds
|
|
$
|
52,475,000
|
|
|
$
|
60,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering expenses
(1)
|
|
|
|
|
|
|
|
|
|
Non-contingent underwriting discount (3.0%
of gross proceeds from offering, which excludes the deferred underwriting discounts and commissions of up to 3.5% of gross
proceeds from offering)
|
|
$
|
1,500,000
|
(2)
|
|
$
|
1,725,000
|
(2)
|
|
Initial Trustee’s fee
|
|
|
6,500
|
|
|
|
6,500
|
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
|
300,000
|
|
|
Nasdaq listing fee
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Printing and engraving expenses
|
|
|
45,000
|
|
|
|
45,000
|
|
|
Accounting fees and expenses
|
|
|
40,000
|
|
|
|
40,000
|
|
|
FINRA filing fee
|
|
|
11,079
|
|
|
|
11,079
|
|
|
SEC registration fee
|
|
|
8,547
|
|
|
|
8,547
|
|
|
Miscellaneous expenses
|
|
|
38,874
|
|
|
|
38,874
|
|
|
Total offering expenses
(not including deferred underwriting discounts and commissions)
|
|
$
|
2,000,000
|
|
|
$
|
2,225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds of the offering and private placement
|
|
|
|
|
|
|
|
|
|
Held in trust
|
|
$
|
50,000,000
|
(3)
|
|
$
|
57,500,000
|
(3)
|
|
Not held in trust
|
|
|
475,000
|
|
|
|
475,000
|
|
|
Total net proceeds (including deferred underwriting discounts
and commissions)
|
|
$
|
50,475,000
|
|
|
$
|
57,975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of net proceeds not held in trust
(4)(5)
|
|
|
|
|
|
|
|
|
|
Legal, accounting and other third party
expenses attendant to the search for target businesses and to the due diligence investigation, structuring and negotiation
of a business combination
|
|
$
|
100,000
|
|
|
|
21.05
|
%
|
|
Due diligence of prospective target businesses by officers, directors and initial shareholders
|
|
|
70,000
|
|
|
|
14.74
|
%
|
|
Legal and accounting fees relating to SEC reporting obligations
|
|
|
40,000
|
|
|
|
8.42
|
%
|
|
Payment of administrative fee to Oriental
Holdings Limited ($10,000 per month for up to 12 months), subject to deferral as described herein
|
|
|
120,000
|
|
|
|
25.26
|
%
|
|
Working capital to
cover miscellaneous expenses, D&O insurance, general corporate purposes, liquidation obligations and reserves
|
|
|
145,000
|
|
|
|
30.53
|
%
|
|
Total
|
|
$
|
475,000
|
|
|
|
100.0
|
%
|
|
(1)
|
A portion of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable
portion of the Nasdaq listing fee and a portion of the legal and audit fees, have been paid from the funds we borrowed from our
Keen Nice Communications Limited, which is owned by Jining
Li, our director, described below. These funds will be repaid out of the proceeds of this offering available to us. If we determine
not to proceed with the offering, such amounts would not be repaid.
|
|
(2)
|
No discounts or commissions will be paid with respect to the purchase of the private units.
|
|
(3)
|
The funds held in the trust account may, but need not, be used to pay our expenses relating to completing our initial business combination, including deferred underwriting discounts and commissions payable to Chardan Capital Markets, LLC in an amount of up to 3.5% of the total gross proceeds raised in the offering described below.
|
|
(4)
|
The
amount of proceeds not held in trust will remain constant at $475,000 even if the over-allotment is exercised.
|
|
(5)
|
These are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of that business combination. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would be deducted from our excess working capital.
|
Our
sponsor has agreed to purchase an aggregate of 247,500 private units at a price of $10.00 per private unit ($2,475,000 in the
aggregate) in a private placement that will occur simultaneously with the closing of this offering. Our sponsor has further agreed
that if the over-allotment option is exercised by the underwriters, it will purchase from us at a price of $10.00 per private
unit an additional number of private units (up to a maximum of 22,500 private units)
pro rata
with the amount of the over-allotment
option exercised so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether
the over-allotment option is exercised in full or part. These additional private units will be purchased in a private placement
that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. All of the
proceeds we receive from these purchases will be placed in the trust account described below.
$50,000,000,
or $57,500,000 if the over-allotment option is exercised in full, of the net proceeds of this offering and the sale of the private
units will be placed in an account at Morgan Stanley in the United States, maintained by Continental Stock Transfer & Trust
Company, New York, New York, as trustee. Pursuant to the investment management trust agreement that will govern the investment
of such funds, the trustee, upon our written instructions, will direct Morgan Stanley to invest the funds as set forth in such
written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment
management trust agreement. The funds held in trust will be invested only in United States government treasury bills, bonds or
notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated
under the Investment Company Act of 1940 and that invest solely in United States government treasuries, so that we are not deemed
to be an investment company under the Investment Company Act. Except with respect to interest earned on the funds held in the
trust account that may be released to us to pay our income or other tax obligations, the proceeds will not be released from the
trust account until the earlier of the completion of a business combination or our liquidation. The proceeds held in the trust
account may be used as consideration to pay the sellers of a target business with which we complete a business combination to
the extent not used to pay converting shareholders. Any amounts not paid as consideration to the sellers of the target business
may be used to finance operations of the target business.
The
payment to Oriental Holdings Limited, a company owned by our director, Jining Li, through Keen Nice Communications Limited, and
Yongsheng Liu, of a monthly fee of $10,000 is for general and administrative services including office space, utilities and secretarial
support, of which HKD$50,000 (
or approximately USD$6,389 based on an exchange rate of HKD$7.83 to
USD$1.00 on December 19, 2018) per month will be paid to Yongsheng Liu, our Chief Executive Officer, for his services to us. However,
pursuant to the terms of such agreement, we may delay payment of such monthly fee upon a determination by our audit committee
that we lack sufficient funds held outside the trust to pay actual or anticipated expenses in connection with our initial business
combination. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation
of our initial business combination. This arrangement is being agreed to by Oriental Holdings Limited for our benefit. We believe
that the fee charged by Oriental Holdings Limited is at least as favorable as we could have obtained from an unaffiliated person.
This arrangement will terminate upon completion of our initial business combination or the distribution of the trust account to
our public shareholders. Other than the $10,000 per month fee, no compensation of any kind (including finder’s, consulting
or other similar fees) will be paid to any of our existing officers, directors, shareholders, or any of their affiliates, prior
to, or for any services they render in order to effectuate, the consummation of the business combination (regardless of the type
of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them
in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence
on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations
of prospective target businesses to examine their operations. Since the role of present management after a business combination
is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after a business combination.
Regardless
of whether the over-allotment option is exercised in full, the net proceeds from this offering available to us out of trust for
our working capital requirements in searching for a business combination will be approximately $475,000. We intend to use the
excess working capital available for miscellaneous expenses such as paying fees to consultants to assist us with our search for
a target business and for director and officer liability insurance premiums, with the balance being held in reserve in the event
due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates,
as well as for reimbursement of any out-of-pocket expenses incurred by our initial shareholders, officers and directors in connection
with activities on our behalf as described above. We will also be entitled to have interest earned on the funds held in the trust
account released to us to pay any tax obligations that we may owe.
The allocation of the net proceeds available
to us outside of the trust account, along with the interest earned on the funds held in the trust account available to us, represents
our best estimate of the intended uses of these funds. In the event that our assumptions prove to be inaccurate, we may reallocate
some of such proceeds within the above described categories. If our estimate of the costs of undertaking in-depth due diligence
and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available
from the trust account is insufficient as a result of the current low interest rate environment, we may be required to raise additional
capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional
capital through loans or additional investments from members of our management team, but such members of our management team are
not under any obligation to advance funds to, or invest in, us.
We will likely use a substantial portion
of the net proceeds of this offering, including the funds held in the trust account, to acquire a target business, to pay holders
who wish to convert or sell their shares to us for a portion of the funds held in the trust account and to pay our expenses relating
thereto. If the payment of our liabilities, including the deferred underwriting discounts and commissions payable to Chardan Capital
Markets, LLC in an amount up to 3.5% of the total gross proceeds raised in the offering, were to reduce the amount available to
us in trust necessary to pay all holders who wish to convert or sell their shares to us for a portion of the funds held in the
trust account, we would not be able to consummate such transaction. To the extent that our share capital is used in whole or in
part as consideration to effect a business combination, the proceeds held in the trust account which are not used to consummate
a business combination, to pay holders who wish to convert their shares into a portion of the funds held in the trust account or
pay our expenses relating thereto will be disbursed to the combined company and will, along with any other net proceeds not expended,
be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety
of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing,
research and development of existing or new products.
To the extent we are unable to consummate
a business combination, we will pay the costs of liquidating our trust account from our remaining assets outside of the trust
account. If such funds are insufficient, Oriental Holdings Limited, which is owned by
our
director, Jining Li, through Keen Nice Communications Limited, and Yongsheng Liu, has agreed to advance us the funds necessary
to complete such liquidation (currently anticipated to be no more than $18,500) and has agreed not to seek repayment of such expenses.
As
of September 30, 2018, Keen Nice Communications Limited, which is owned by Jining Li, our director, had loaned to us an aggregate
of $178,205 to be used to pay formation and a portion of the expenses of this offering. The loan is payable without interest on
the date on which we consummate our initial public offering. If we determine not to proceed with the offering, such amounts would
not be repaid.
In
order to meet our working capital needs following the consummation of this offering until completion of an initial business combination,
our initial shareholders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to
time or at any time, in whatever amount they deem reasonable in their sole discretion. The notes would either be paid upon consummation
of our initial business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be
converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for example,
would result in the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 shares issuable upon conversion
of rights) and warrants to purchase 25,000 ordinary shares if $500,000 of notes were so converted). If we do not complete our
initial business combination, the loans would be repaid out of funds not held in the trust account, and only to the extent available.
These notes would be in addition to any notes we issued in exchange for the funds necessary to extend our life.
A public shareholder will be entitled to
receive funds from the trust account (including interest earned on his, her or its portion of the trust account to the extent not
previously released to us to pay our tax obligations) only in the event of (i) our liquidation if we have not completed a business
combination within the required time period or (ii) if that public shareholder converts such public shares or sells them to us
in a tender offer in each case in connection with a business combination which we consummate or in connection with an amendment
to our amended and restated memorandum and articles of association prior to the consummation of an initial business combination.
In no other circumstances will a public shareholder have any right or interest of any kind to or in the trust account.
DIVIDEND POLICY
We have not paid any cash dividends on
our ordinary shares to date and do not intend to pay cash dividends prior to the completion of an initial business combination.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and
general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business
combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors
to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate
declaring any dividends in the foreseeable future. In addition, our board of directors is not currently contemplating and does
not anticipate declaring any share capitalizations in the foreseeable future, except if we increase the size of the offering pursuant
to Rule 462(b) under the Securities Act, in which case we will effect a share capitalizations immediately prior to the consummation
of the offering in such amount as to maintain our initial shareholders’ ownership at 20% of our issued and outstanding ordinary
shares upon the consummation of this offering (excluding ownership of the private units). Further, if we incur any indebtedness,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
DILUTION
The difference between the public offering
price per share, assuming no value is attributed to the redeemable warrants included in the units we are offering by this prospectus
and included in the private units, and the pro forma net tangible book value per share after this offering constitutes the dilution
to investors in this offering. Such calculation does not reflect any dilution associated with the sale and exercise of warrants,
including the private warrants. Net tangible book value per share is determined by dividing our net tangible book value, which
is our total tangible assets less total liabilities by the number of issued and outstanding ordinary shares.
At September 30, 2018, our net tangible
book value was a deficit of $136,137 or approximately $(0.09) per share after giving effect to the share split on October 15,
2018. For purposes of the dilution calculation, in order to present the maximum estimated dilution as a result of this offering,
we have assumed (i) the issuance of 0.10 of a share for each right outstanding, as such issuance will occur upon a business combination
without the payment of additional consideration and (ii) the number of shares included in the units offered hereby will be deemed
to be 5,500,000 (consisting of 5,000,000 shares included in the units we are offering by this prospectus and 500,000 shares for
the outstanding rights), and the price per share in this offering will be deemed to be $9.09. After giving effect to the sale
of 5,500,000 ordinary shares included in the units we are offering by this prospectus, the deduction of underwriting discounts
and estimated expenses of this offering, the sale of 272,250 ordinary shares (consisting of 247,500 ordinary shares included in
the private units and 24,750 shares for the outstanding rights) included in the private units, our pro forma net tangible book
value at September 30, 2018 would have been $5,000,004 or $1.89 per share, representing an immediate increase in net tangible
book value of $1.98 per share to the initial shareholders and an immediate dilution of 79.21% per share or $7.20 to new investors
not exercising their conversion/tender rights. For purposes of presentation, our pro forma net tangible book value after this
offering is $43,709,580 less than it otherwise would have been because if we effect a business combination, the ability of public
shareholders to exercise conversion rights or sell their shares to us in any tender offer may result in the conversion or tender
of up to 4,370,958 shares sold in this offering.
The following table illustrates the dilution
to the new investors on a per-share basis, assuming no value is attributed to the redeemable warrants, including the private warrants:
|
Public offering price
|
|
|
|
|
|
$
|
9.09
|
|
|
Net tangible book value before this offering
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
Increase attributable to new investors and private sales
|
|
|
1.98
|
|
|
|
|
|
|
Pro forma net tangible book value after this offering
|
|
|
|
|
|
|
1.89
|
|
|
Dilution to new investors
|
|
|
|
|
|
$
|
7.20
|
|
|
Percentage of dilution to new investors
|
|
|
|
|
|
|
79.21
|
%
|
The following table sets forth information with respect to our
initial shareholders and the new investors:
|
|
|
Shares
Purchased
|
|
|
Total
Consideration
|
|
|
Average
Price
|
|
|
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Per
Share
|
|
|
Initial shareholders
(1)
|
|
|
1,250,000
|
|
|
|
17.80
|
%
|
|
$
|
25,100
|
|
|
|
0.05
|
%
|
|
$
|
0.020
|
|
|
Shares underlying private unit
(2)
|
|
|
272,250
|
|
|
|
3.88
|
%
|
|
$
|
2,475,000
|
|
|
|
4.71
|
%
|
|
$
|
9.091
|
|
|
New investors
(3)
|
|
|
5,500,000
|
|
|
|
78.32
|
%
|
|
$
|
50,000,000
|
|
|
|
95.24
|
%
|
|
$
|
9.091
|
|
|
|
|
|
7,022,250
|
|
|
|
100
|
%
|
|
$
|
52,500,100
|
|
|
|
100
|
%
|
|
$
|
|
|
|
|
(1)
|
Assumes the over-allotment
option has not been exercised and an aggregate of 187,500 ordinary shares held by our initial shareholders have been forfeited
as a result thereof.
|
|
|
(2)
|
Includes the issuance
of an additional 24,750 shares underlying the rights contained in the private unit holders.
|
|
|
(3)
|
Includes the issuance
of an additional 500,000 shares underlying the rights contained in the new investors.
|
The pro forma net tangible book value after
the offering is calculated as follows:
|
Numerator:
(1)
|
|
|
|
|
Net tangible book value before this offering
|
|
$
|
(136,137
|
)
|
|
Offering costs paid in advance
|
|
$
|
120,621
|
|
|
Net proceeds from this offering and private placement of private units
|
|
$
|
50,475,000
|
|
|
Proceeds from unit purchase option
|
|
$
|
100
|
|
|
Less: Deferred underwriting discounts and commissions
|
|
$
|
(1,750,000
|
)(2)
|
|
Less: Proceeds held in trust subject to conversion/tender
|
|
$
|
(43,709,580
|
)
|
|
|
|
|
5,000,004
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Ordinary shares issued and outstanding prior to this offering(1)
|
|
|
1,250,000
|
|
|
Ordinary shares to be sold in this offering
|
|
|
5,000,000
|
|
|
Ordinary shares underlying the rights to be included in the public units
|
|
|
500,000
|
|
|
Ordinary shares included in the private units
|
|
|
247,500
|
|
|
Ordinary shares underlying the rights to be included in the private units
|
|
|
24,750
|
|
|
Less: Shares subject to conversion/tender
|
|
|
(4,370,958
|
)
|
|
|
|
|
2,651,292
|
|
(1) Assumes the over-allotment option
has not been exercised and an aggregate of 187,500 ordinary shares held by our initial shareholder have been forfeited by us as
a result thereof.
(2) Deferred underwriting discounts and
commission of 3.5%.
CAPITALIZATION
The following table sets forth our
capitalization at September 30, 2018 and as adjusted to give effect to the sale of our units and the private units and the application
of the estimated net proceeds derived from the sale of such securities.
|
|
|
As at
September 30, 2018
|
|
|
|
|
Actual
|
|
|
As Adjusted
(1)
|
|
|
Promissory
Note – related party
(2)
|
|
$
|
178,205
|
|
|
$
|
–
|
|
|
Deferred underwriting
discounts and commissions payable
|
|
|
–
|
|
|
|
1,750,000
|
|
|
Ordinary shares, no par value, and 4,370,958
shares are subject to possible conversion/tender
|
|
|
–
|
|
|
|
43,709,580
|
(4)
|
|
Ordinary shares, no par value, unlimited
shares authorized, 1,437,500 shares issued and outstanding as of September 30, 2018 (after giving effect to the 5 for 4 share
split on October 15, 2018); 6,497,500 shares issued and outstanding
(3)
(including 4,370,958 shares subject to possible
conversion/tender), as adjusted
|
|
|
25,100
|
|
|
|
5,040,620
|
|
|
Accumulated
deficit
|
|
|
(40,616
|
)
|
|
|
(40,616
|
)
|
|
Total
shareholders’ (deficit) / equity
|
|
|
(15,516
|
)
|
|
|
5,000,004
|
|
|
Total
capitalization
|
|
$
|
162,689
|
|
|
$
|
50,459,584
|
(5)
|
|
|
(1)
|
Includes
the $2,475,000 we will receive from the sale of the private units.
|
|
|
(2)
|
As of September
30, 2018, Keen Nice Communications Limited, which is owned by Jining Li, our director had loaned to us an aggregate of $178,205
to be used to pay formation and a portion of the expenses of this offering. The loan is payable without interest on the date
on which we consummate our initial public offering.
|
|
|
(3)
|
Assumes the over-allotment
option has not been exercised and an aggregate of 187,500 ordinary shares held by our initial shareholders have been forfeited
as a result thereof. Includes 247,500 shares underlying the private units purchased by our sponsor concurrent with this offering.
|
|
|
(4)
|
Derived by taking
4,370,958 shares which may be redeemed, representing the maximum number of shares that may be converted while maintaining
at least $5,000,001 in net tangible assets after the offering, multiplied by $10.00.
|
|
|
(5)
|
Derived by adding
deferred underwriting discounts and commissions payable, total shareholders’ equity and the value of ordinary shares
subject to possible conversion.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a blank check company incorporated
in the British Virgin Islands on May 2, 2018 with limited liability (meaning our public shareholders have no liability, as shareholders
of the Company, for the liabilities of the Company over and above the amount paid for their shares) to serve as a vehicle to effect
a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with
one or more target businesses. Our efforts to identify a prospective target business will not be limited to a particular industry
or geographic location. We intend to utilize cash derived from the proceeds of this offering, our securities, debt or a combination
of cash, securities and debt, in effecting a business combination. The issuance of additional ordinary shares or preferred shares:
|
|
●
|
may significantly reduce the equity interest of our shareholders;
|
|
|
●
|
may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;
|
|
|
●
|
will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors;
|
|
|
|
|
|
|
●
|
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
|
|
|
●
|
may adversely affect prevailing market prices for our securities.
|
Similarly, if we issue debt securities,
it could result in:
|
|
●
|
default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations;
|
|
|
●
|
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;
|
|
|
●
|
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
|
|
|
●
|
our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding;
|
|
|
|
|
|
|
●
|
our inability to pay dividends on our ordinary shares;
|
|
|
|
|
|
|
●
|
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
|
|
|
|
|
|
|
●
|
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
|
|
|
|
|
|
|
●
|
Increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
|
|
|
|
|
|
|
●
|
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt
|
Liquidity and Capital Resources
As indicated in the accompanying financial
statements, at September 30, 2018, we had $42,068 of cash and a working capital of $42,068. Further, we have incurred and expect
to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address
this uncertainty through this offering are discussed above. Our plans to raise capital or to consummate our initial business combination
may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
Our liquidity needs have been satisfied
to date through receipt of $25,100 from the sale of the insider shares and a loan from Keen Nice Communications Limited, which
is owned by Jining Li, our director, in an aggregate amount of approximately $178,205 that is more fully described below. We estimate
that the net proceeds from (1) the sale of the units in this offering, after deducting offering expenses of approximately $500,000
and underwriting discounts and commissions of $1,500,000 (or $1,725,000 if the over-allotment option is exercised in full) (not
including the deferred underwriting discounts and commissions) and (2) the sale of the private units for a purchase price of $2,475,000
(or $2,700,000 if the over-allotment option is exercised in full), will be $50,475,000 (or $57,975,000 if the over-allotment option
is exercised in full) (including the deferred underwriting discounts and commissions). Of this amount, $50,000,000 (or $57,500,000
if the over-allotment option is exercised in full) will be held in the trust account. The remaining $475,000 (whether or not the
over-allotment option is exercised in full) will not be held in the trust account.
We intend to use substantially all of the
net proceeds of this offering, including the funds held in the trust account, to acquire a target business or businesses and to
pay our expenses relating thereto, including deferred underwriting discounts and commissions payable to Chardan Capital Markets,
LLC in an amount up to 3.5% of the total gross proceeds raised in the offering upon consummation of our initial business combination.
To the extent that our share capital is used in whole or in part as consideration to effect our initial business combination, the
remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to
finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing
or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing
or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior
to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient
to cover such expenses.
Over the next 12 months (assuming a
business combination is not consummated prior thereto), we will be using the funds held outside of the trust account for identifying
and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling
to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material
agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating
the business combination. Out of the funds available outside the trust account, we anticipate that we will incur approximately:
|
|
●
|
$100,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of a business combination;
|
|
|
●
|
$70,000 of expenses for the due diligence and investigation of a target business by our officers, directors and initial shareholders;
|
|
|
●
|
$40,000 of expenses in legal and accounting fees relating to our SEC reporting obligations; and
|
|
|
●
|
$120,000
for the payment of the administrative fee to Oriental Holdings Limited, a company jointly owned by our director, Jining Li,
through Keen Nice Communications Limited, and Yongsheng Liu (of $10,000 per month for up to 12 months), subject to deferral
as described herein; and
|
|
|
●
|
$145,000 for general working capital that will
be used for miscellaneous expenses, including director and officer liability insurance premiums.
|
If our estimates of the costs of undertaking
in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the
amount of interest available to us from the trust account is less than we expect as a result of the current interest rate environment,
we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need
to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a
significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we
would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial
business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Related Party Transactions
As of September 30, 2018, Keen Nice
Communications Limited, which is owned by Jining Li, our director, loaned to us an aggregate of $178,205, respectively on a non-interest
bearing basis for payment of offering expenses on our behalf. The loans will be repaid out of the proceeds of this offering not
being placed in the trust account.
We are obligated, commencing on the date of this prospectus, to pay Oriental
Holdings Limited, our sponsor, a monthly fee of $10,000 for general and administrative services, of which HKD$50,000 (
or
approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month will be paid to Yongsheng
Liu, our Chief Executive Officer, for his services to us. However, pursuant to the terms of such agreement, we may delay payment
of such monthly fee upon a determination by our audit committee that we lack sufficient funds held outside the trust to pay actual
or anticipated expenses in connection with our initial business combination. Any such unpaid amount will accrue without interest
and be due and payable no later than the date of the consummation of our initial business combination.
Our sponsor has committed to purchase
from us an aggregate of 247,500 private units at $10.00 per private unit (for a total purchase price of $2,475,000). Our sponsor
has also agreed that if the over-allotment option is exercised by the underwriters, it will purchase from us at a price of $10.00
per private unit an additional number of private units (up to a maximum of 22,500 private units)
pro rata
with the amount
of the over-allotment option exercised so that at least $10.00 per share sold to the public in this offering is held in trust
regardless of whether the over-allotment option is exercised in full or part. These additional private units will be purchased
in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment
option.
If needed to finance transaction costs
in connection with searching for a target business or consummating an intended initial business combination, our initial shareholders,
officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the
initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay
such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by
promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or,
at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into
private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 55,000
ordinary shares (which includes 5,000 shares issuable upon conversion of rights) and warrants to purchase 25,000 ordinary shares
if $500,000 of notes were so converted). We believe the purchase price of these units will approximate the fair value of such
units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase
price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase
price in accordance with Accounting Standards Codification (“ASC”) 718 — Compensation — Stock Compensation.
Controls and Procedures
We are not currently required to maintain
an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with
the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2020. As of the date of this
prospectus, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to
assess the internal controls of our target business or businesses prior to the completion of our initial business combination
and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain
an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business combination may have
internal controls that need improvement in areas such as:
|
|
●
|
staffing for financial, accounting and external reporting areas, including segregation of duties;
|
|
|
●
|
reconciliation of accounts;
|
|
|
●
|
proper recording of expenses and liabilities in the period to which they relate;
|
|
|
●
|
evidence of internal review and approval of accounting transactions;
|
|
|
●
|
documentation of processes, assumptions and conclusions underlying significant estimates; and
|
|
|
●
|
documentation of accounting policies and procedures.
|
Because it will take time, management involvement
and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements
and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting
responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so
effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on internal
controls is complete, we will retain our independent auditors to audit and render an opinion on such report when, or if, required
by Section 404. The independent auditors may identify additional issues concerning a target business’s internal controls
while performing their audit of internal control over financial reporting.
Quantitative and Qualitative Disclosures
about Market Risk
The net proceeds of this offering, including
amounts in the trust account, will be invested in United States government treasury bills, bonds or notes having a maturity of
180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company
Act of 1940 and that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will
be no associated material exposure to interest rate risk.
Off-Balance Sheet Arrangements; Commitments
and Contractual Obligations; Quarterly Results
As of the date of this prospectus, we did
not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations
to date.
JOBS Act
On April 5, 2012, the JOBS Act was signed
into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public
companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new
or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to
delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards
on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial
statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of
evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions
set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be
required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our
system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that
may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act,(iii)
comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements(auditor discussion and analysis), and (iv)
disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years
following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.
PROPOSED BUSINESS
Introduction
We are a newly incorporated blank check
company in the British Virgin Islands as a business company with limited liability. Our shareholders have no additional liability
for the company’s liabilities over and above the amount paid for their shares. We were formed for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this prospectus as our initial business combination. Our efforts to identify a prospective target
business will not be limited to a particular industry or geographic region, although the Company intends to focus on operating
businesses in and around the air transportation and aviation industry in China
.
We do not have a definitive criteria on
the targets’ financial performance, but we intend to initially focus on companies that have achieved growth of over 25% per
annum in either their revenue or net profit for the past 2 years.
We do not have any specific business combination under consideration
or contemplation, and we have not, nor has anyone on our behalf, contacted any prospective target business or had any discussions,
formal or otherwise, with respect to such a transaction.
Background and Competitive Advantages
Together with our management team,
we believe we have a broad network of contacts and corporate relationships that makes us efficient at:
|
|
-
|
Sourcing and evaluating businesses, and
|
|
|
-
|
Adapting to cultural and economic differences between Asia and America to negotiate and execute a transaction in a timely and professional manner
|
By leveraging its industry expertise, performing
disciplined due diligence, being cautious downside protection, and our management team providing post-acquisition value-add capabilities,
we believe that we will be able to acquire a target business that will achieve significant returns for investors.
We will seek to acquire companies with
enterprise values of between $150 million and $300 million that are preferably already cash-generative.
Acquisition Strategy
Our acquisition strategy will seek to capitalize
on the significant civil aviation industry, technology, M&A, and operational expertise and contacts of both our management
team and our board of directors, although we are not limited to any particular industry. There is no restriction in the geographic
location of targets that we can pursue, although we intend to initially prioritize geographic locations in China as our officers
and directors consist of successful entrepreneurs and senior executives with decades of operating and M&A experiences in the
region. We will also be interested in acquiring foreign subsidiaries of Chinese conglomerates or state-owned enterprises (SOE).
The aviation industry plays a key role
in the global economy. According to Oxford Economics, the overall revenue for global aviation industry would have ranked 8th if
compared to the gross domestic product of the countries of the world. The civil aviation industry includes both airline industry
and general aviation. While airline industry is a large and integral part of the travel industry, the majority of the world’s
air traffic falls into general aviation flights, which refers to all civil aviation operations other than scheduled air services.
General aviation ranges from helicopters operations to corporate business jet flights. Most of the world’s airports serve
general aviation exclusively.
Airline Industry Opportunities in
China
According to the Airlines Industry
Market Research Report published by IBISWorld on July 2018, revenue for the airline industry in China is estimated to reach $80.6
billion in 2018. In the aftermath of the global financial crisis, the airline industry rebounded with strong growth in passenger
volumes. Total passenger volume was estimated at 606.0 million globally in 2018, up 10.2% from 2017. Airline industry in China
has three state-owned enterprises as the market leaders. However, there are a number of new, smaller airlines that are currently
operating in China. One of these new entrant airlines that can improve operation efficiency and leverage modern sales and branding
channels could be an attractive potential acquisition. In addition, aircraft parts and assembly manufacturing, air travel service,
or travel technology companies would fit within our target businesses.
General Aviation Opportunities in
China
General aviation includes, but is not
limited to, business flights, air charter, aerial photography, sightseeing, drone, aircraft leasing, adventure travel, and
crop dusting. According to the General Aviation and Business Aviation Information and Data Section on AeroWeb and the China Country
Commercial Guide published in July 2017, China’s general aviation sector is currently underdeveloped with a tiny fleet of
aircraft, approximately 1,472 by the end of 2016, which represents less than 1% of the fleet size in the United States. This offers
significant potential for future growth.
In recent years, the Chinese government
realized the significance of general aviation in optimizing China’s economic structure and stimulating economic growth.
China’s general aviation industry is gradually entering a developmental stage from preparing stage according to the report
of Development of General Aviation Market in China and Global 2018-2023 by ASKCI Consulting Co., Ltd. Enhanced transportation
capabilities, improved rescue and emergency medical care missions, better agricultural, environmental, and forestry related missions,
and better infrastructure development missions are just a few of the benefits of a healthy general aviation sector.
As a result, Chinese policymakers are
instituting reforms that are expected to create a more favorable operating environment and catalyze growth, which is forecast
to reach an annual rate of 20% by year by Booz & Co. Civil Aviation Administration of China (CAAC) recently announced its
13th Five Year Plan on general aviation development. By 2020, China plans to have more than 5,000 general aviation aircraft and
500 general aviation airports, and annual flight hours reaching 2 million. To facilitate that expansion, the government has been
encouraging private investment in building airports per the China Country Commercial Guide published in July 2017. It has also
committed to gradually opening access to low-altitude airspace and streamlining the examination, approval, and record-keeping
requirements for general aviation flights.
We believe changes to China’s regulatory
environment, market economics, and competitive landscape will create acquisition opportunities across the general aviation value
chain.
Deregulation
in Aviation and Airline Industry in China
Limited access to airspace, inadequate air
traffic management, a lack of coordinated regulations and policies across stakeholders, and time consuming and costly approval
processes for general aviation activities have hindered the Chinese aviation industry for many years. Since 1995, there have been
vast changes in the aviation industry in China with a focus on deregulation. In 2005, the CAAC opened its civil aviation sector
to private investors, and the number of private airlines has grown rapidly since. As recently as January 2018, the aviation industry
underwent further deregulation that gives Chinese carriers greater freedom to set fares. We believe that the CAAC will continue
making reforms leading to more flexibility for the entire industry. However, according to the Catalogue for the Guidance of Foreign
Investment Industry, foreign investment in Chinese general aviation companies typically requires a Chinese party as the controlling
shareholder. Should we pursue a general aviation company based in China for our acquisition target, we will be required to use
a structure described in the section below entitled “Proposed Business-Alternative structures to comply with regulations
in certain Chinese industries” or page 51.
Investment Criteria
The focus of our management team is to
create shareholder value by leveraging its experience to improve the efficiency of the business while implementing strategies to
grow revenue and profits organically and/or through acquisitions. Consistent with our strategy, we have identified the following
general criteria and guidelines that we believe are important in evaluating prospective target businesses. While we intend to use
these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we
see fit to do so:
|
|
●
|
Growth
Potential
|
|
|
|
|
|
|
|
As a
result of the Asia Pacific region’s strong growth over the past several decades, the
region has become home to a large number of small domestic and regional companies, which are
serving the ever-increasing needs of economies locally. While such companies have performed
relatively well, the vast majority of these companies suffer from a lack of insightful strategy,
insufficient capital, operational inefficiencies and various succession issues (as many companies
are first-generation and family-owned). This has also resulted in a high degree of market
fragmentation, without any established regional market leaders. We will seek target businesses
for which we can provide strategic advice, access to sufficient capital and effective operational
expertise, to grow the business.
|
|
|
●
|
Long-term Revenue Visibility with Defensible Market Position
|
|
|
|
|
|
|
|
We intend to seek target companies
that are at an inflection point, such as those requiring additional management expertise, are able to innovate by developing new
products or services, or where we believe we can drive improved financial performance and where an acquisition may help facilitate
growth.
|
|
|
●
|
Benefits from Being a U.S. Public Company (Value Creation and Marketing Opportunities)
|
|
|
|
|
|
|
|
We intend to seek target companies
that should offer attractive risk-adjusted equity returns for our shareholders. We intend to seek to acquire a target on terms
and in a manner that leverages our experience. We expect to evaluate financial returns based on (i) the potential for organic growth
in cash flows, (ii) the ability to achieve cost savings, (iii) the ability to accelerate growth, including through the opportunity
for follow-on acquisitions and (iv) the prospects for creating value through other value creation initiatives. Potential upside
from growth in the target business’ earnings and an improved capital structure will be weighed against any identified downside
risks.
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Potential Benefit from Globalization Trends and Possession of Competitive Advantages
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Target companies exhibit unrecognized
value or other characteristics that we believe have been misevaluated by the marketplace based on our company specific analysis
and due diligence review. For a potential target company, this process will include, among other things, a review and analysis
of the company’s capital structure, quality of earnings, potential for operational improvements, corporate governance, customers,
material contracts, and industry background and trends. We intend to leverage the operational experience and disciplined investment
approach of our team to identify opportunities to unlock value that our experience in complex situations allows us to pursue.
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These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these
general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Our Competitive Advantages
Status as a Publicly Listed Company
We believe our structure will make us an
attractive business combination partner to prospective target businesses. As a publicly listed company, we will offer a target
business an alternative to the traditional initial public offering. We believe that target businesses will favor this alternative,
which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering.
During an initial public offering, there are typically expenses incurred in marketing, which would be costlier than a business
combination with us. Furthermore, once a proposed business combination is approved by our shareholders (if applicable) and the
transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always
subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent the
offering from occurring. Once public, we believe the target business would have greater access to capital and additional means
of creating management incentives that are better aligned with shareholders’ interests than it would as a private company.
It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented management staffs.
Strong Financial Position and Flexibility
With the funds held in our trust account,
we can offer a target business a variety of options to facilitate a business combination and fund future expansion and growth of
its business. Because we are able to consummate a business combination using the cash proceeds from this offering, our share capital,
debt or a combination of the foregoing, we have the flexibility to use an efficient structure allowing us to tailor the consideration
to be paid to the target business to address the needs of the parties. However, if a business combination requires us to use substantially
all of our cash to pay for the purchase price, we may need to arrange third party financing to help fund our business combination.
Since we have no specific business combination under consideration, we have not taken any steps to secure third party financing.
Effecting a Business Combination
General
We are not presently engaged in, and we
will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to
utilize cash derived from the proceeds of this offering and the private placement of private units, our share capital, debt or
a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering and
the private placement of private units are intended to be applied generally toward effecting a business combination as described
in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in this
offering are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business
combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial
additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be
adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control
and compliance with various U.S. Federal and state securities laws. In the alternative, we may seek to consummate a business combination
with a company that may be in its early stages of development or growth. While we may seek to effect simultaneous business combinations
with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single
business combination.
We Have Not Identified a Target Business
To date, we have not selected any target
business on which to concentrate our search for a business combination. None of our officers, directors, initial shareholders and
other affiliates has engaged in discussions on our behalf with representatives of other companies regarding the possibility of
a potential merger, share exchange, asset acquisition or other similar business combination with us, nor have we, nor any of our
agents or affiliates, been approached by any candidates (or representatives of any candidates) with respect to a possible business
combination with our company.
Subject to the limitations that a target
business have a fair market value of at least 80% of the balance in the trust account (excluding any deferred underwriting discounts
and commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement
for our initial business combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying
and selecting a prospective acquisition candidate. We have not established any other specific attributes or criteria (financial
or otherwise) for prospective target businesses. Accordingly, there is no basis for investors in this offering to evaluate the
possible merits or risks of the target business with which we may ultimately complete a business combination. To the extent we
effect a business combination with a company or an entity in its early stage of development or growth, including entities without
established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of early
stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular
target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
Sources of Target Businesses
We anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds,
private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings which
will not commence until after the completion of this offering. These sources may also introduce us to target businesses they think
we may be interested in on an unsolicited basis, since many of these sources will have read this prospectus and know what types
of businesses we are targeting. Our officers and directors, as well as their respective affiliates, may also bring to our attention
target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries
or discussions they may have, as well as attending trade shows or conventions. While we do not presently anticipate engaging the
services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage
these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation
to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will any of
our existing officers, directors, special advisors or initial shareholders, or any entity with which they are affiliated, be paid
any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate,
the consummation of a business combination (regardless of the type of transaction), except that Yongsheng Liu, our Chief Executive
Officer will receive HKD$50,000 (
or approximately USD$6,389
based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month for his services to us. If we decide to enter
into a business combination with a target business that is affiliated with our officers, directors or initial shareholders, we
will do so only if we have obtained an opinion from an independent investment banking firm that the business combination is fair
to our unaffiliated shareholders from a financial point of view. However, as of the date of this prospectus, there is no affiliated
entity that we consider a business combination target.
Selection of a Target Business and
Structuring of a Business Combination
Subject to the limitations that a target
business have a fair market value of at least 80% of the balance in the trust account (excluding any deferred underwriting discounts
and commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement
for our initial business combination, as described below in more detail, our management will have virtually unrestricted flexibility
in identifying and selecting a prospective target business. We have not established any other specific attributes or criteria (financial
or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may consider a variety
of factors, including one or more of the following:
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financial condition and results of operation;
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experience and skill of management and availability of additional personnel;
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stage of development of its products, processes or services;
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degree of current or potential market acceptance of the products, processes or services;
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proprietary features and degree of intellectual property or other protection for its products, processes or services;
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regulatory environment of the industry; and
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costs associated with effecting the business combination.
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We believe such factors will be important
in evaluating prospective target businesses, regardless of the location or industry in which such target business operates. However,
this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business combination with a target business
that does not meet these criteria and guidelines.
Any evaluation relating to the merits of
a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed
relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective
target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent
management and inspection of facilities, as well as review of financial and other information which is made available to us. This
due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, although we have
no current intention to engage any such third parties.
The time and costs required to select and
evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree
of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which
a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise
complete a business combination.
Alternative
structures to comply with regulations in certain Chinese industries
We
may need to adopt alternative structures in the event that we elect to acquire a target company in certain Chinese industries,
including the airline industry. The Chinese government has restricted or limited direct foreign ownership of certain kinds of
assets and companies operating in a wide variety of industries, including certain aspects of telecommunications, advertising,
food production, airline, and heavy equipment manufacturers. The Chinese government may apply these restrictions in other industries
in the future. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to
time to be in “important industries” that may affect the national economic security or having “famous Chinese
brand names” or “well established Chinese brand names.” Subject to the review requirements of the Ministry of
Commerce and other relevant agencies as discussed elsewhere for acquisitions of assets and companies in China and subject to the
various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in
the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements
with permitted Chinese parties which could, for example, result in a structure where, in exchange for our payment of the acquisition
consideration, the target business would be majority or wholly owned by Chinese residents whom we designate, and the target business
would continue to hold the requisite licenses necessary to operate its business. To the extent such agreements are employed, they
may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of
a company. The agreements would be designed to secure for us economic benefits and to assume risk of losses and control over the
subject assets or equity interests similar to the rights of full ownership, while leaving the technical ownership in the hands
of Chinese parties.
For
example, these contracts could result in a structure where, in exchange for our payment of the acquisition consideration: (i)
the target company would be majority owned by Chinese residents whom would be likely designated by us and the target company would
continue to hold the requisite licenses for the target business and (ii) we would establish a new subsidiary in China which would
provide technology, technical support, consulting and related services to the target company in exchange for fees, which would
transfer to us substantially all of the economic benefits of ownership of the target company.
These
contractual arrangements would be designed to provide the following:
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Our
exercise of effective control over the target company;
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We
will assume economic benefits and risk of losses of the target company that are substantially
similar to full ownership;
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The
shareholders of the target company would grant us a pledged interest in all of the issued
and outstanding interests of the target company, including the right to vote such shares,
as security for the performance of the target company’s obligations under the contractual
arrangements;
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The
shareholders of the target company would grant us an irrevocable proxy for the maximum
period permitted by law, to vote the shareholders’ shares in the target company
in such manner and for or against such proposals as we may determine; and
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We,
or our designee, would have an exclusive option to purchase all or part of the equity
interests in the target company owned by the Chinese residents whom we designate, or
all or part of the assets of the target company, in each case when and to the extent
permitted by Chinese regulations.
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While
we cannot predict the terms of any such contract that we will be able to negotiate, at a minimum, any contractual arrangement
would need to provide us with effective control over the target’s operations and management either directly through board
control or through affirmative and/or negative covenants and veto rights with respect to matters such as entry into material agreements,
management changes and issuance of debt or equity securities, among other potential control provisions. We have not, however,
established specific provisions which must be in an agreement in order to meet the definition of business combination.
These
agreements likely also would provide for increased ownership or full ownership and control by us when and if permitted under Chinese
law and regulation. If we choose to effect our initial business combination that employs the use of these types of control arrangements,
we may have difficulty in enforcing our rights. Therefore, these contractual arrangements may not be as effective in providing
us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership through
a merger or shares exchange. For example, if the target business or any other entity fails to perform its obligations under these
contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements,
and rely on legal remedies under Chinese law, including seeking specific performance or injunctive relief, and claiming damages,
which we cannot assure you will be sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect
to receive from the business combination.
While
we believe under such contractual arrangement, we will be considered the primary beneficiary and be able to consolidate financial
results of the target company in our consolidated financial statements. In the event that in the future generally accepted accounting
policies in the United States and the SEC accounting regulations change and we are deemed not to be the primary beneficiary by
controlling the target company through such contractual arrangement, we would not be able to consolidate line by line the target
company’s financial results in our consolidated financial statements.
Moreover,
we expect that the contractual arrangements upon which we would be relying would be governed by Chinese law and would be the only
basis of providing resolution of disputes which may arise through either arbitration or litigation in China. Accordingly, these
contracts would be interpreted in accordance with Chinese law and any disputes would be resolved in accordance with Chinese legal
procedures. Uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements. In the
event we are unable to enforce these contractual arrangements, we may not be able to exert the effective level of control over
the target business.
We
have not selected any target business or target industry on which to concentrate our search for our initial business combination
and we are, therefore, unable to determine at this time what form an acquisition of a target business will take.
Fair Market Value of Target Business
Pursuant to Nasdaq listing rules, the
target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance
of the funds in the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income
earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, although
we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently
anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses.
We may, however, structure a business combination where we merge directly with the target business or where we acquire less than
100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders
or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us
in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of
new shares in exchange for all of the outstanding capital of a target. In this case, we could acquire a 100% controlling interest
in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior
to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial
business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired
by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% of net assets test, assuming that we obtain and maintain a listing for our securities on NASDAQ. In order
to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses
and/or seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business
combination under consideration, we have not entered into any such fund raising arrangement and have no current intention of doing
so. The fair market value of the target will be determined by our board of directors based upon one or more standards generally
accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board
is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion
from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions
on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required
to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation
opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently
determines that the target business complies with the 80% threshold.
We will not be required to comply with
the 80% fair market value requirement if we are delisted from NASDAQ.. If Nasdaq delists our securities from trading on its exchange
after this offering, we would not be required to satisfy the fair market value requirement described above and could complete
a business combination with a target business having a fair market value substantially below 80% of the balance in the trust account.
Lack of Business Diversification
Our business combination must be with a
target business or businesses that collectively satisfy the minimum valuation standard at the time of such acquisition, as discussed
above, although this process may entail the simultaneous acquisitions of several operating businesses at the same time. Therefore,
at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike
other entities which may have the resources to complete several business combinations of entities operating in multiple industries
or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity,
our lack of diversification may:
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subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and
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result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services.
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If we determine to simultaneously acquire
several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our
purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult
for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional
risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if
there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business.
Limited Ability to Evaluate the Target
Business’ Management
Although we intend to scrutinize the management
of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that
our assessment of the target business’ management will prove to be correct. In addition, we cannot assure you that the future
management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of our officers and directors, if any, in the target business following a business combination cannot presently be stated with
any certainty. While it is possible that some of our key personnel will remain associated in senior management or advisory positions
with us following a business combination, it is unlikely that they will devote their full time efforts to our affairs subsequent
to a business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination
if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations
would take place simultaneously with the negotiation of the business combination and could provide for them to receive compensation
in the form of cash payments and/or our securities for services they would render to the company after the consummation of the
business combination. While the personal and financial interests of our key personnel may influence their motivation in identifying
and selecting a target business, their ability to remain with the company after the consummation of a business combination will
not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally,
our officers and directors may not have significant experience or knowledge relating to the operations of the particular target
business.
Following a business combination, we may
seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders May Not Have the Ability
to Approve an Initial Business Combination
In connection with any proposed business
combination, we will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose
at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed
business combination, into their
pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes
payable) or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer
(and thereby avoid the need for a shareholder vote) for an amount equal to their
pro rata
share of the aggregate amount
then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding
the foregoing, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public
shares held by them into their
pro rata
share of the aggregate amount then on deposit in the trust account. If we determine
to engage in a tender offer, such tender offer will be structured so that each shareholder may tender any or all of his, her or
its public shares rather than some
pro rata
portion of his, her or its shares. The decision as to whether we will seek
shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer
will be made by us based on a variety of factors such as the timing of the transaction, or whether the terms of the transaction
would otherwise require us to seek shareholder approval. If we so choose and we are legally permitted to do so, we have the flexibility
to avoid a shareholder vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially
the same financial and other information about the initial business combination as is required under the SEC’s proxy rules.
We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor
of the business combination.
We chose our net tangible asset threshold
of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek
to consummate an initial business combination with a target business that imposes any type of working capital closing condition
or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination,
our net tangible asset threshold may limit our ability to consummate such initial business combination (as we may be required
to have a lesser number of shares converted or sold to us) and may force us to seek third party financing which may not be available
on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may
not be able to locate another suitable target within the applicable time period, if at all. Public shareholders may therefore
have to wait 12 months from the closing of this offering (or 21 months if we have extended the period of time as described in
this prospectus) in order to be able to receive a
pro rata
share of the trust account.
Our initial shareholders and our officers
and directors have agreed (1) to vote any ordinary shares owned by them in favor of any proposed business combination, (2) not
to convert any ordinary shares in connection with a shareholder vote to approve a proposed initial business combination and (3)
not sell any ordinary shares in any tender in connection with a proposed initial business combination. As a result, if we sought
shareholder approval of a proposed transaction we could need as little as 126,876 of our public shares (or approximately 2.5%
of our public shares) to be voted in favor of the transaction in order to have such transaction approved (assuming the over-allotment
option is not exercised and the initial shareholders do not purchase any units in this offering or units or shares in the after-market).
None of our officers, directors, initial
shareholders or their affiliates has indicated any intention to purchase units or ordinary shares in this offering or from persons
in the open market or in private transactions (other than the private units). However, if we hold a meeting to approve a proposed
business combination and a significant number of shareholders vote, or indicate an intention to vote, against such proposed business
combination, our officers, directors, initial shareholders or their affiliates could make such purchases in the open market or
in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors, initial shareholders
and their affiliates will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of
the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
Ability to Extend Time to Complete Business
Combination
If we anticipate that we may not
be able to consummate our initial business combination within 12 months, we may, but are not obligated to, extend the period
of time to consummate a business combination three times by an additional three months each time (for a total of up to 21
months to complete a business combination). Pursuant to the terms of our amended and restated memorandum and articles of
association and the trust agreement to be entered into between us and Continental Stock Transfer & Trust Company, LLC on
the date of this prospectus, in order to extend the time available for us to consummate our initial business combination, our
insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into
the trust account for each three month extension $500,000, or $575,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per
share in either case), on or prior to the date of the applicable deadline. The insiders will receive a non-interest
bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are
unable to close a business combination unless there are funds available outside the trust account to do so. Such notes would
either be paid upon consummation of our initial business combination, or, at the lender’s discretion, converted upon
consummation of our business combination into additional private units at a price of $10.00 per unit. Our shareholders have
approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such
notes at the time of the consummation of our initial business combination. In the event that we receive notice from our
insiders five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press
release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a
press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our
insiders and their affiliates or designees are not obligated to fund the trust account to extend the time for us to complete
our initial business combination. To the extent that some, but not all, of our insiders, decide to extend the period of time
to consummate our initial business combination, such insiders (or their affiliates or designees) may deposit the entire
amount required. Any notes issued pursuant to these loans would be in addition to any notes issued pursuant to working
capital loans made to us.
Conversion/Tender Rights
At any meeting called to approve an initial
business combination, public shareholders may seek to convert their public shares, regardless of whether they vote for or against
the proposed business combination, into their
pro rata
share of the aggregate amount then on deposit in the trust account,
less any taxes then due but not yet paid. Notwithstanding the foregoing, our initial shareholders have agreed, pursuant to written
letter agreements with us, not to convert any public shares held by them into their
pro rata
share of the aggregate amount
then on deposit in the trust account. The conversion rights will be effected under our amended and restated memorandum and articles
of association and British Virgin Islands law as redemptions. If we hold a meeting to approve an initial business combination,
a holder will always have the ability to vote against a proposed business combination and not seek conversion of his shares.
Alternatively, if we engage in a tender
offer, each public shareholder will be provided the opportunity to sell his public shares to us in such tender offer. The tender
offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of
time we would need to provide holders to determine whether they want to sell their public shares to us in the tender offer or remain
an investor in our company.
Our initial shareholders, officers and
directors will not have conversion rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired
prior to this offering or purchased by them in this offering or in the aftermarket.
We may also require public shareholders,
whether they are a record holder or hold their shares in “street name,” to either tender their certificates (if any)
to our transfer agent or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC
(Deposit/Withdrawal At Custodian) System, at the holder’s option, at any time at or prior to the vote on the business combination.
Once the shares are converted by the holder, and effectively redeemed by us under British Virgin Islands law, the transfer agent
will then update our Register of Members to reflect all conversions. The proxy solicitation materials that we will furnish to shareholders
in connection with the vote for any proposed business combination will indicate whether we are requiring shareholders to satisfy
such delivery requirements. Accordingly, a shareholder would have from the time our proxy statement is mailed through the vote
on the business combination to deliver his shares if he wishes to seek to exercise his conversion rights. Under our amended and
restated memorandum and articles of association, we are required to provide at least 10 days’ advance notice of any shareholder
meeting, which would be the minimum amount of time a shareholder would have to determine whether to exercise conversion rights.
As a result, if we require public shareholders who wish to convert their ordinary shares into the right to receive a
pro rata
portion of the funds in the trust account to comply with the foregoing delivery requirements, holders may not have sufficient
time to receive the notice and deliver their shares for conversion. Accordingly, investors may not be able to exercise their conversion
rights and may be forced to retain our securities when they otherwise would not want to.
There is a nominal cost associated with
this tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting
holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights.
The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must
be effectuated. However, in the event we require shareholders seeking to exercise conversion rights to deliver their shares prior
to the consummation of the proposed business combination and the proposed business combination is not consummated, this may result
in an increased cost to shareholders.
Any request to convert or tender such shares
once made, may be withdrawn at any time up to the vote on the proposed business combination or expiration of the tender offer.
Furthermore, if a holder of a public share delivered his certificate in connection with an election of their conversion or tender
and subsequently decides prior to the vote on the business combination or the expiration of the tender offer not to elect to exercise
such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is
not approved or completed for any reason, then our public shareholders who elected to exercise their conversion or tender rights
would not be entitled to convert their shares for the applicable
pro rata
share of the trust account. In such case, we will
promptly return any shares delivered by public holders.
Automatic Liquidation of Trust Account
if No Business Combination
If we do not complete a business
combination within 12 months (or 21 months, if we extend the time to complete a business combination as described in this
prospectus) from the consummation of this offering, it will trigger our automatic winding up, liquidation and subsequent
dissolution pursuant to the terms of our amended and restated memorandum and articles of association. As a result, this has
the same effect as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no
vote would be required from our shareholders to commence such a voluntary winding up, liquidation and subsequent dissolution.
However, if we anticipate that we may not be able to consummate our initial business combination within 12 months, we may,
but are not obligated to, extend the period of time to consummate a business combination three times by an additional three
months each time (for a total of up to 21 months to complete a business combination). Pursuant to the terms of our amended
and restated memorandum and articles of association and the trust agreement to be entered into between us and Continental
Stock Transfer & Trust Company, LLC on the date of this prospectus, in order to extend the time available for us to
consummate our initial business combination, our insiders or their affiliates or designees, upon five days advance notice
prior to the applicable deadline, must deposit into the trust account for each three month extension $500,000, or $575,000 if the underwriters’
over-allotment option is exercised in full ($0.10 per share in either case), on or prior to the date of the applicable
deadline. The insiders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit
that will not be repaid in the event that we are unable to close a business combination unless there are funds available
outside the trust account to do so. Such notes would either be paid upon consummation of our initial business combination,
or, at the lender’s discretion, converted upon consummation of our business combination into additional private units
at a price of $10.00 per unit. Our shareholders have approved the issuance of the private units upon conversion of such
notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business
combination. In the event that we receive notice from our insiders five days prior to the applicable deadline of their intent
to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the
applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether
or not the funds had been timely deposited. Our insiders and their affiliates or designees are not obligated to fund the
trust account to extend the time for us to complete our initial business combination. To the extent that some, but not all,
of our insiders, decide to extend the period of time to consummate our initial business combination, such insiders (or their
affiliates or designees) may deposit the entire amount required. If we are unable to consummate our initial business
combination within such time period, we will, as promptly as possible but not more than ten business days thereafter, redeem
100% of our outstanding public shares for a pro rata portion of the funds held in the trust account, including a pro rata
portion of any interest earned on the funds held in the trust account and not necessary to pay our taxes, then seek to
liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors which may
take priority over the claims of our public shareholders. In the event of our liquidation and subsequent dissolution, the
public rights will expire and will be worthless.
The amount in the trust account under the
Companies Law will be treated as funds distributable under the Companies Law provided that immediately following the date on which
the proposed distribution is proposed to be made, we are able to pay our debts as they fall due in the ordinary course of business.
If we are forced to liquidate the trust account, we anticipate that we would distribute to our public shareholders the amount in
the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior
to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for
amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with
respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially
brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions
received by them as an unlawful payment in the event we enter an insolvent liquidation. Furthermore, while we will seek to have
all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with
our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest
or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they will execute
such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse
against the trust account or that a court would conclude that such agreements are legally enforceable.
Each of our initial shareholders and our officers and directors have agreed to waive its rights to participate
in any liquidation of our trust account or other assets with respect to the insider shares and private units and to vote their
insider shares, private shares in favor of any dissolution and plan of distribution which we submit to a vote of shareholders.
There will be no distribution from the trust account with respect to our warrants or rights, which will expire worthless.
If
we are unable to complete an initial business combination and expend all of the net proceeds of this offering, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial
per-share distribution from the trust account would be $10.
00.
The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would be prior to the claims of our public shareholders. Although
we will seek to have all vendors, including lenders for money borrowed, prospective target businesses or other entities we engage
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account, including but not limited to, fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with a claim against our assets, including the funds held in the trust account.
If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform
an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would
be in the best interest of our shareholders if such third party refused to waive such claims. Examples of possible instances where
we may engage a third party that refused to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a provider of required services willing to provide the waiver. In any event,
our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third
party that did not execute a waiver if management believed that such third party’s engagement would be significantly more
beneficial to us than any alternative. In addition, there is no guarantee that such entities will agree to waive any claims they
may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the trust account for any reason.
Oriental
Holdings Limited, which is owned by our director, Jining Li, through Keen Nice Communications Limited, and Yongsheng Liu, has
agreed that, if we liquidate the trust account prior to the consummation of a business combination, it will be liable to pay debts
and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us in excess of the net proceeds of this offering not held in the trust account, but only to the extent
necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only if such parties have
not executed a waiver agreement. However, we cannot assure you that he will be able to satisfy those obligations if he is required
to do so. Accordingly, the actual per-share distribution could be less than $10.00 due to claims of creditors. Additionally, if
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject
to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete
the trust account, we cannot assure you we will be able to return to our public shareholders at least $10.00 per share.
Competition
In identifying, evaluating and selecting
a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of
these entities are well established and have extensive experience identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources
will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential
target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable
target businesses may be limited by our available financial resources.
The following also may not be viewed favorably
by certain target businesses:
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our obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent to shareholders in connection with such business combination may delay or prevent the completion of a transaction;
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our obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business combination;
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Nasdaq may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our securities following a business combination;
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our outstanding warrants, rights and unit purchase options and the potential future dilution they represent;
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our obligation to pay the deferred underwriting discounts and commissions to Chardan Capital Markets, LLC upon consummation of our initial business combination;
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our obligation to either repay or issue units upon conversion of up to $500,000 of working capital loans that may be made to us by our initial shareholders, officers, directors or their affiliates;
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our obligation to register the resale of the insider shares, as well as the private units (and underlying securities) and any securities issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital loans; and
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the impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending on developments involving us prior to the consummation of a business combination.
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Any of these factors may place us at a
competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status
as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held
entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable
terms.
If we succeed in effecting a business combination,
there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent
to a business combination, we will have the resources or ability to compete effectively.
Facilities
We
maintain our principal executive office at Flat A, 6/F, Block A, Tonnochy Towers, No. 272 Jaffe Road, Wanchai, Hong Kong. The
cost for this space is provided to us by Oriental Holdings Limited, which is owned by our director, Jining Li, through Keen Nice
Communications Limited, and Yongsheng Liu, as part of the $10,000 per month payment we make to it for office space and related
services. We consider our current office space adequate for our current operations.
Employees
We have three executive officers, one of
whom, Yongsheng Liu, our Chief Executive Officer, is also an employee. These individuals are not obligated to devote any specific
number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time
they will devote in any time period will vary based on whether a target business has been selected for the business combination
and the stage of the business combination process the company is in. Accordingly, once management locates a suitable target business
to acquire, they will spend more time investigating such target business and negotiating and processing the business combination
(and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We presently expect
our executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could range
from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into
serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior
to the consummation of a business combination.
Periodic Reporting and Audited Financial
Statements
We have registered our units, ordinary
shares, warrants and rights under the Exchange Act and have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain
financial statements audited and reported on by our independent registered public accountants.
We will provide shareholders with audited
financial statements of the prospective target business as part of any proxy solicitation sent to shareholders to assist them in
assessing the target business. In all likelihood, the financial information included in the proxy solicitation materials will need
to be prepared in accordance with U.S. GAAP or IFRS, depending on the circumstances, and the historical financial statements may
be required to be audited in accordance with the standards of the PCAOB. The financial statements may also be required to be prepared
in accordance with U.S. GAAP for the Form 8-K announcing the closing of an initial business combination, which would need to be
filed within four business days thereafter. We cannot assure you that any particular target business identified by us as a potential
acquisition candidate will have the necessary financial information. To the extent that this requirement cannot be met, we may
not be able to acquire the proposed target business.
We will be required to comply with
the internal control requirements of the Sarbanes-Oxley Act beginning for the fiscal year ending December 31, 2020. A target company
may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such acquisition.
We are an emerging growth company as defined
in in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may
be more volatile. We will remain such for up to five years. However, if our non-convertible debt issued within a three-year period
or our total revenues exceed $1.07 billion or the market value of our ordinary shares that are held by non-affiliates exceeds $700
million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company
as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take
advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards.
Legal Proceedings
There is no material litigation, arbitration
or governmental proceeding currently pending against us or any of our officers or directors in their capacity as such, and we
and our officers and directors have not been subject to any such proceeding in the 12 months preceding the date of this prospectus.
Comparison to Offerings of Blank Check
Companies Subject to Rule 419
The following table compares and contrasts
the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming
that the gross proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering
and that the underwriters will not exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to
this offering because we will be listed on a national securities exchange, we will have net tangible assets in excess of $5,000,001
upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet
demonstrating this fact.
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Terms
of the Offering
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Terms
Under a Rule 419 Offering
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Escrow of
offering proceeds
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$50,000,000
(or $57,500,000 if the underwriters’ over-allotment option is exercised in full) of the net offering proceeds and proceeds
from the sale of the private units will be deposited into a trust account in the United States, maintained by Continental
Stock Transfer & Trust Company, LLC, acting as trustee.
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$43,650,000
of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution
or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having
the beneficial interests in the account.
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Investment
of net proceeds
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The
$50,000,000 (or $57,500,000 if the underwriters’ over-allotment option is exercised in full) of the net offering proceeds
and proceeds from the sale of the private units held in trust will only be invested in United States government treasury bills,
bonds or notes with a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940 and that invest solely in United States government treasuries.
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Proceeds
could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act
of 1940 or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United
States.
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Limitation
on fair value or net assets of target business
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The
initial target business that we acquire must have a fair market value equal to at least
80% of the balance in our trust account (excluding any deferred underwriting discounts
and commissions and taxes payable on the income earned on the trust account) at the time
of the execution of a definitive agreement for our initial business combination.
We
will not be required to comply with the 80% fair market value requirement if we are delisted
from NASDAQ.
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We
would be restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent
at least 80% of the maximum offering proceeds.
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Terms of the Offering
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Terms Under a Rule 419 Offering
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Trading of securities issued
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The units may commence trading on or promptly after the date of this prospectus. The ordinary shares, warrants and rights comprising the units will begin to trade separately on the 90th day after the date of this prospectus unless Chardan Capital Markets, LLC informs us of its decision to allow earlier separate trading (based upon its assessment of the relative strengths of the securities markets and small capitalization and blank check companies in general, and the trading pattern of, and demand for, our securities in particular), provided we have filed with the SEC a Current Report on Form 8-K, which includes an audited balance sheet reflecting our receipt of the proceeds of this offering.
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No trading of the units or the underlying securities would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account.
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Exercise of the warrants
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The warrants cannot be exercised until the completion of a business combination and, accordingly, will be exercised only after the trust account has been terminated and distributed.
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The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account.
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Election to remain an investor
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We will either (1) give our shareholders the opportunity to vote on the business combination or (2) provide our public shareholders with the opportunity to sell their public shares to us in a tender offer for cash equal to their
pro rata
share of the aggregate amount then on deposit in the trust account less taxes. If we hold a meeting to approve a proposed business combination, we will send each shareholder a proxy statement containing information required by the SEC. Under our amended and restated memorandum and articles of association, we must provide at least 10 days advance notice of any meeting of shareholders. Accordingly, this is the minimum amount of time we would need to provide holders to determine whether to exercise their rights to convert their shares into cash at such a meeting or to remain an investor in our company. Alternatively, if we do not hold a meeting and instead conduct a tender offer, we will conduct such tender offer in accordance with the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as we would have included in a proxy statement. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum amount of time we would need to provide holders to determine whether they want to sell their shares to us in the tender offer or remain an investor in our company.
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A prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company, in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective amendment, to decide whether he or she elects to remain a shareholder of the company or require the return of his or her investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account would automatically be returned to the shareholder. Unless a sufficient number of investors elect to remain investors, all of the deposited funds in the escrow account must be returned to all investors and none of the securities will be issued.
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Terms
of the Offering
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Terms
Under a Rule 419 Offering
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Business combination
deadline
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Pursuant
to our amended and restated memorandum and articles of association, if we do not complete an initial business combination
within 12 months from the consummation of this offering (or 21 months as described elsewhere herein), it will trigger our
automatic winding up, liquidation and subsequent dissolution.
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If
an acquisition has not been consummated within 21 months after the effective date of the initial registration statement, funds
held in the trust or escrow account would be returned to investors.
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Interest earned
on the funds in the trust account
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There
can be released to us, from time to time any interest earned on the funds in the trust account that we may need to pay our
tax obligations. The remaining interest earned on the funds in the trust account will not be released until the earlier of
the completion of a business combination and our entry into liquidation upon failure to effect a business combination within
the allotted time.
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All
interest earned on the funds in the trust account will be held in trust for the benefit of public shareholders until the earlier
of the completion of a business combination and our liquidation upon failure to effect a business combination within the allotted
time.
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Release of
funds
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Except
for interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds
held in the trust account will not be released until the earlier of the completion of a business combination (in which case,
the proceeds released to us will be net of the funds used to pay converting or tendering shareholders, as the trustee will
directly send the appropriate portion of the amount held in trust to the converting or tendering shareholders at the time
of the business combination) and the liquidation of our trust account upon failure to effect a business combination within
the allotted time.
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The
proceeds held in the escrow account would not be released until the earlier of the completion of a business combination or
the failure to effect a business combination within the allotted time.
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MANAGEMENT
Directors and Executive Officers
Our current directors and executive officers,
their ages and positions are as follows:
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Name
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Age
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Position
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Yongsheng Liu
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49
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Director, Chief Executive Officer, and Chairman
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Xiaoyan Tang
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48
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Chief Financial Officer
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Ray Chen
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53
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Chief Operating Officer
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Jining Li
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61
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Director
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Kinpui Choi
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64
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Independent Director
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Weiping Chen
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61
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Independent Director
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Simin Xie
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62
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Independent Director
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Below is a summary of the business experience
of each our executive officers and directors:
Yongsheng Liu.
Mr. Liu has
been our Chief Executive Officer and Chairman of our Board since our inception. Throughout the past 20 years, Mr. Liu has assumed
various corporate leadership positions and demonstrated his strong execution ability and in-depth knowledge in private equity and
corporate M&A transactions across a wide range of sectors including aviation, consumer, financial institutions, and technology.
From March 2017 to April 2018, Mr. Liu served as Chairman and CEO of Royal China Holdings Limited (HKEx: 01683), during which he
spearheaded the company’s international growth strategy focused at acquiring targets in aviation industry and finance sector.
From the beginning of 2013 to March 2017, Mr. Liu was the Chairman of Joy Air General Aviation, Chairman of Cambodia Bayon Airlines,
Vice Chairman of Everbright and Joy International Leasing Company, and President of General Aviation Investment Company (Shanghai).
From April 2004 to August 2008, Mr. Liu also served as Chief Strategy Officer of United Eagle Airlines (subsequently renamed to
Chengdu Airlines). From December 1994 to June 2000, Mr. Liu was a manager of China Southern Airlines responsible for ground staff
training. Mr. Liu received his Master degree from University of Ottawa.
Ray Chen.
Mr. Chen has
been our Chief Operating Officer since June 2018. Mr. Chen served as Chief Executive Officer at Fortissimo Film International
Ltd., a privately-owned film development and production company from August 2016 till June 2018. From March 2013 to February 2016,
Mr. Chen was the Chief Executive Officer of Beijing Galloping Horse Film & TV Production Co., Ltd. From January 2010 to March
2013, Mr. Chen was the Head of Sales in the Beijing Office of Star Jet Co., Ltd.. Prior to his Star Jet experience, Mr. Chen was
the Executive Board Member and Head of Sales in Asia Jet Partners Limited, a privately-owned holding company specializing in general
aviation and aircraft leasing. Mr. Chen joined Asia Jet after his service as Chief Executive Officer at ABC International Inc.,
a business consulting company based in Cleveland, Ohio. Mr. Chen holds a graduate certificate in Marketing from Cleveland State
University.
Xiaoyan
Tang.
Ms. Tang has been our Chief Financial Officer since July 2018. Since December 2017, Ms. Tang has been a Managing
Director and Chief Financial Officer of Hubei Weizi Investment Co. Ltd. From April 2014 to Nov 2017, Ms. Tang served as Chief
Financial Officer and Vice President in Beijing CNLive Culture Media Inc. From July 2012 to March 2014, Ms. Tang served as Board
Secretary and Chief Financial Officer in Beijing Konruns Pharmaceutical Ltd. From January 2011 to July 2012, Ms. Tang served as
Board Secretary and Chief Financial Officer in R&G Pharma Studies Co., Ltd. From Jan 2005 to Dec 2010, Ms. Tang served as
Chief Financial Officer in Wanmo Co. Ltd. From Aug 2001 to Dec 2004, Ms. Tang was a senior analyst in Da Gong International Credit
Rating Co. Ltd. From March 1998 to July 2001, Ms. Tang worked as an investment analyst in Hai Nan-Hong Kong-Macao International
Trust Investment Co Ltd (later known as BOC International (China) Co. Ltd). From July 1992 to Aug 1995, Ms. Tang was a researcher
in Beijing Qinyun Aviation Instrument Co. Ltd. Ms. Tang received her Master degree from Renmin University in China.
Jining
Li.
Mr. Li has served as a Director of our Board since September 2018. Mr. Li is the Founder and has acted as the
Chairman of Star Jet Co., Ltd in Shanghai, China, since 2008. Prior to Star Jet, Mr. Li founded United Eagle Airlines as the first
non-government-owned airline company in the history of Chinese aviation industry in 2004. From 2004 to 2008, Mr. Li was the Chairman
of United Eagle Airlines. He served as the Chairman of China Internet Investment Finance Holdings Limited (HKEx: 00810) from 2005
to 2007. In 2004, He was named as the Top Ten Most Influential People in China for his pioneer achievements in aviation industry.
In 1998, Mr. Li founded Guangdong Ying Lian Tong Telecommunication Services Co., Ltd and served as Chairman until 2004. From 1990
to 1998, Mr. Li served as Chairman of Huahui Import and Export Trading Company. From 1988 to 1990, Mr. Li served as a manager in
Guangdong Branch of China Council for the Promotion of International Trade.
Kinpui Choi
. Mr. Choi has
served as a Director since September 2018. He has over 24 years of senior management experience in telecom companies in Hong Kong,
U.S. and China. From 2002 to 2006, he was the President and Chief Executive Officer of Elephant Talk Communications Inc. Mr. Choi
founded Elephant Talk Limited in 1994, a wholly-owned subsidiary of Elephant Talk Communications Inc. From April 1994 to August
2002, Mr. Choi was the Chief Executive Officer of Elephant Talk Limited. From March 2003 to present, Mr. Choi has been the independent
director of Success Universe Group Limited (HKEx:00487) Previously, he also served as the Chairman of ET Network Services Limited
(later known as Guangdong Ming Ying Financial Leasing Co Limited), a Hong Kong-based company which specializes in providing telecommunication
services in China.
Weiping Chen.
Mr. Chen has
served as a Director since September 2018. Since February 2009, Mr. Chen has served as Chairman and CEO of Shanghai Leadersco Co.
Ltd. From September 2000 to December 2008, Mr. Chen was a Managing Director in Shanghai Li Shang Trading company. From July 1993
to August 2000, Mr. Chen was the manager of QianHe Import and Export Trading Co., Ltd. From November 1989 to July 1993, Mr. Chen
served as CEO in Yantai Renewable Resources Corporation.
Simin Xie.
Mr. Xie has served
as a Director since September 2018. Since May 2017, Mr. Xie has been an independent director of China Minzu Securities Co., Ltd.
Since October 2015, Mr. Xie has served as an external supervisor in Mod’s Hair Group (a JASDAQ listed company). Since November
2011, Mr. Chen has served as independent director in China Automotive Engineering Research Institute Co., Ltd. (SSE: 601965). From
2010 to 2012, Mr. Xie was an independent director for Chongqing Min Sheng Energy Co., Ltd. From 2007 to 2015, Mr. Xie served as
director for Shandong Yocaly Information Science & Technology Co., Ltd. From 2003 to 2009, Mr. Xie was as independent director
in Tande Co., Ltd.(SSE: 600665). Since 2014, Mr. Xie has been a partner in Shenzhen NSEW Fund Management Co., Ltd. In 1995, Mr.
Xie founded C&I Partners (Beijing Xinli Law Firm) and he has been a senior partner and managing partner of the firm ever since.
Mr. Xie received his Bachelor degree in Law from Peking University in 1982 and Ph.D. from Kobe University in Japan in 1988.
Executive Officer and Director Compensation
No
executive officer has received any cash compensation for services rendered to us. Other than the $10,000 per month administrative
fee paid to Oriental Holdings Limited, a company jointly owned by our director, Jining Li, through Keen Nice Communications Limited,
and Yongsheng Liu, of which HKD$50,000 (
or approximately USD$6,389 based on an exchange rate of
HKD$7.83 to USD$1.00 on December 19, 2018) per month will be paid to Yongsheng Liu, our Chief Executive Officer, for his services
to us, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders,
including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate,
the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses incurred
in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness
of the expenses by anyone other than our board of directors and audit committee, which includes persons who may seek reimbursement,
or a court of competent jurisdiction if such reimbursement is challenged.
After the completion of our initial business
combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from
the combined company. All the these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer
materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It
is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will
be responsible for determining executive officer and director compensation. Any compensation to be paid to our executive officers
will be determined by a compensation committee constituted solely of independent directors.
We do not intend to take any action to
ensure that members of our management team maintain their positions with us after the consummation of our initial business combination,
although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements
to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements
to retain their positions with us may influence our management’s motivation in identifying or selecting a target business
but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination
will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements
with our executive officers and directors that provide for benefits upon termination of employment.
Director Independence
Nasdaq requires that a majority of our
board must be composed of “independent directors.” Currently, Kinpui Choi, Weiping Chen and Simin Xie would each be
considered an “independent director” under the Nasdaq listing rules, which is defined generally as a person other than
an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion
of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying
out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent
directors are present.
We will only enter into a business combination
if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers
and directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent
parties. Any related-party transactions must also be approved by our audit committee and a majority of disinterested independent
directors.
Audit Committee
Under the Nasdaq listing standards
and applicable SEC rules, we are required to have three members of the audit committee all of whom must be independent. Effective
as of the date of this prospectus, we have established an audit committee of the board of directors, which will consist of Kinpui
Choi, Weiping Chen and Simin Xie, each of whom is an independent director under Nasdaq’s listing standards. Simin Xie is
the Chairperson of the audit committee. The audit committee’s duties, which are specified in our Audit Committee Charter,
include, but are not limited to:
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reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K;
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discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
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discussing with management major risk assessment and risk management policies;
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monitoring the independence of the independent auditor;
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verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
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reviewing and approving all related-party transactions;
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inquiring and discussing with management our compliance with applicable laws and regulations;
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pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;
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appointing or replacing the independent auditor;
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determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
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approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
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Financial Experts on Audit Committee
The audit committee will at all times be
composed exclusively of “independent directors” who are “financially literate” as defined under Nasdaq
listing standards. Nasdaq listing standards define “financially literate” as being able to read and understand fundamental
financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify to Nasdaq
that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting,
requisite professional certification in accounting, or other comparable experience or background that results in the individual’s
financial sophistication. The board of directors has determined that Kinpui Choi qualified as an “audit committee financial
expert,” as defined under rules and regulations of the SEC.
Nominating Committee
Effective as of the date of this prospectus,
we have established a nominating committee of the board of directors, which will consist of Kinpui Choi, Weiping Chen and Simin
Xie, each of whom is an independent director under Nasdaq’s listing standards. Kinpui Choi is the Chairperson of the nominating
committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board
of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers
and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees,
which are specified in the Nominating Committee Charter, generally provide that persons to be nominated:
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should have demonstrated notable or significant achievements in business, education or public service;
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should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
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should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
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The nominating committee will consider
a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating
a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes,
such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the
overall experience and makeup of its members to obtain a broad and diverse mix of board members. The board of directors will also
consider director candidates recommended for nomination by our shareholders during such times as they are seeking proposed nominees
to stand for election at the next annual meeting of shareholders (or, if applicable, a special meeting of shareholders). Our shareholders
that wish to nominate a director for election to the Board should follow the procedures set forth in our memorandum and articles
of association. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation Committee
Effective as of the date of this prospectus,
we will establish a compensation committee of the board of directors, which will consist of Kinpui Choi, Weiping Chen and Simin
Xie, each of whom is an independent director under Nasdaq’s listing standards. Kinpui Choi is the Chairperson of the compensation
committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but
are not limited to:
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation;
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reviewing and approving the compensation of all of our other executive officers;
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reviewing our executive compensation policies and plans;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
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if required, producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
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Notwithstanding the foregoing, as indicated
above, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders,
including our directors (other than the HKD$50,000 (
or
approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month that will be paid to
Yongsheng Liu, our Chief Executive Officer, for his services to us), or any of their respective affiliates, prior to, or for any
services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior
to the consummation of an initial business combination, the compensation committee will only be responsible for the review and
recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
Code of Ethics
Upon consummation of this offering, we
will adopt a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies
the business and ethical principles that govern all aspects of our business.
Conflicts of Interest
Potential investors should be aware of
the following potential conflicts of interest:
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None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.
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In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
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Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company.
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The insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully completed and subject to certain other limitations. Additionally, our officers and directors will not receive distributions from the trust account with respect to any of their insider shares if we do not complete a business combination. Furthermore, our initial shareholders have agreed that the private units will not be sold or transferred by them until after we have completed our initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. For the foregoing reasons, the personal and financial interests of our directors and executive officers may influence their motivation in identifying and selecting a target business, completing a business combination in a timely manner and securing the release of their shares.
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Under British Virgin Islands law, directors
owe the following fiduciary duties:
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(i)
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duty to act in good faith in what the director believes to be in the best interests of the company as a whole;
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(ii)
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duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
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(iii)
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directors should not improperly fetter the exercise of future discretion;
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(iv)
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duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and
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(v)
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duty to exercise independent judgment.
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In addition to the above, directors also
owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent
person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same
functions as are carried out by that director in relation to the company and the general knowledge skill and experience which that
director has.
As set out above, directors have a duty
not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit
as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or
authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission
granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general
meetings.
Accordingly, as a result of multiple business
affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting
the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular
business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts
will be resolved in our favor. Furthermore, most of our officers and directors have pre-existing fiduciary obligations to other
businesses of which they are officers or directors. To the extent they identify business opportunities which may be suitable for
the entities to which they owe pre-existing fiduciary obligations, our officers and directors will honor those fiduciary obligations.
Accordingly, it is possible they may not present opportunities to us that otherwise may be attractive to us unless the entities
to which they owe pre-existing fiduciary obligations and any successors to such entities have declined to accept such opportunities.
In order to minimize potential conflicts
of interest which may arise from multiple corporate affiliations, each of our officers and directors has contractually agreed,
pursuant to a written agreement with us, until the earliest of a business combination, our liquidation or such time as he ceases
to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable
business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual
obligations he might have.
The following table summarizes the other
relevant pre-existing fiduciary or contractual obligations of our officers and directors:
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Name of Individual
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Name of Affiliated Company
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Affiliation
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Priority/Preference relative to
Wealthbridge Acquisition
Limited
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Jining Li
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Star Jet Co., Ltd.
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Founder and Chairman
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Weiping Chen
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Shanghai Leadersco Co., Ltd.
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Chairman and CEO
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Simin Xie
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China Minzu Securities Co., Ltd.
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Independent Director
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Mod’s Hair Group
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External Supervisor
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China Automotive Engineering Research Institute Co., Ltd.
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Independent Director
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C&I Partners
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Senior Partner and Managing Partner
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In connection with the vote required for
any business combination, all of our existing shareholders, including all of our officers and directors, have agreed to vote their
respective insider shares and private shares in favor of any proposed business combination. In addition, they have agreed to waive
their respective rights to participate in any liquidation distribution with respect to those ordinary shares acquired by them prior
to this offering. If they purchase ordinary shares in this offering or in the open market, however, they would be entitled to participate
in any liquidation distribution in respect of such shares but have agreed not to convert such shares (or sell their shares in any
tender offer) in connection with the consummation of our initial business combination or an amendment to our amended and restated
memorandum and articles of association relating to pre-business combination activity.
All ongoing and future transactions between
us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable
to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee
and a majority of our uninterested “independent” directors, or the members of our board who do not have an interest
in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter
into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine
that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a
transaction from unaffiliated third parties.
To further minimize conflicts of interest,
we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers,
directors or initial shareholders, unless we have obtained (i) an opinion from an independent investment banking firm that the
business combination is fair to our unaffiliated shareholders from a financial point of view and (ii) the approval of a majority
of our disinterested and independent directors (if we have any at that time). Furthermore, in no event will any of our initial
shareholders, officers, directors, special advisors or their respective affiliates be paid any finder’s fee, consulting
fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial
business combination, except that Yongsheng Liu, our Chief Executive Officer will receive HKD$50,000 (
or
approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month for his service to us.
Such payments began in July 2018.
Limitation on Liability and Indemnification
of Officers and Directors.
Our memorandum and articles of association
provide that, subject to certain limitations, the company shall indemnify its directors and officers against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative
or investigative proceedings. Such indemnity only applies if the person acted honestly and in good faith with a view to what the
person believes is in the best interests of the company and, in the case of criminal proceedings, the person had no reasonable
cause to believe that their conduct was unlawful. The decision of the directors as to whether the person acted honestly and in
good faith and with a view to the best interests of the company and as to whether the person had no reasonable cause to believe
that his conduct was unlawful and is, in the absence of fraud, sufficient for the purposes of the memorandum and articles of association,
unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the
entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and
with a view to the best interests of the company or that the person had reasonable cause to believe that his conduct was unlawful.
We will enter into agreements with our
officers and directors to provide contractual indemnification in addition to the indemnification provided for in our memorandum
and articles of association. Our memorandum and articles of association also will permit us to purchase and maintain insurance
on behalf of any officer or director who at the request of the Company is or was serving as a director or officer of, or in any
other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, against any liability
asserted against the person and incurred by the person in that capacity, whether or not the company has or would have had the power
to indemnify the person against the liability as provided in the memorandum and articles of association. We will purchase a policy
of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense,
settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and
directors.
These provisions may discourage shareholders
from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of
reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might
otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance
and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is theretofore unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth information
regarding the beneficial ownership of our ordinary shares as of the date of this prospectus and as adjusted to reflect the sale
of our ordinary shares included in the units offered by this prospectus (assuming none of the individuals listed purchase units
in this offering), by:
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each person known by us to be the beneficial owner of more than 5% of our issued and outstanding ordinary shares;
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each of our officers and directors; and
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all of our officers and directors as a group.
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Unless otherwise indicated, we believe
that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned
by them. The following table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of the
warrants or conversion of rights as the warrants are not exercisable within 60 days of the date of this prospectus and the rights
are not convertible within sixty days of the date of this prospectus.
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Prior
to Offering
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After
Offering
(2)
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Name and Address of Beneficial Owner
(1)
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Amount
and
Nature of
Beneficial
Ownership
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Approximate
Percentage of
Outstanding
Ordinary
Shares
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Amount
and
Nature of
Beneficial
Ownership
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Approximate
Percentage of
Outstanding
Ordinary
Shares
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Oriental Holdings Limited (3)
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1,200,000
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83.48%
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1,266,229
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19.49%
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Yongsheng Liu
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143,750
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10.00%
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149,751
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2.30%
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Xiaoyan Tang
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12,500
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*
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10869
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*
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Ray Chen
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6,250
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*
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5435
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*
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Jining Li (4)
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1,200,000
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83.48%
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1,268,479
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19.49%
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Kinpui Choi
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12,500
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*
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10869
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*
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Weiping Chen
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12,500
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*
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10869
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*
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Simin Xie
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12,500
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*
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10869
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*
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Yuehai Zhou
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12,500
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*
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10869
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*
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Zhean Bao
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25,000
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1.74%
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21740
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*
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All directors and executive officers (seven individuals) as a group
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1,400,000
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97.39%
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1,464,891
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22.55%
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All initial shareholders (nine individuals) as a group
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1,437,500
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100.00%
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1,497,500
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23.05%
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* Less
than 1%.
(1) Unless
otherwise indicated, the business address of each of the individuals is c/o Wealthbridge Acquisition Limited, Flat A, 6/F, Block
A, Tonnochy Towers, No. 272 Jaffe Road, Wanchai, Hong Kong.
(2) Assumes
no exercise of the over-allotment option and, therefore, an aggregate of 187,500 ordinary shares held by our initial shareholders
are forfeited.
(3) Jining
Li and Yongsheng Liu jointly own, and Jining Li controls, Oriental Holdings Limited, our sponsor.
(4) Consists
of shares owned by Oriental Holdings Limited, our sponsor.
Immediately
after this offering, our initial shareholders will beneficially own approximately 23.05% of the then issued and outstanding ordinary
shares (assuming none of them purchase any units offered by this prospectus). None of our initial shareholders, officers and directors
has indicated to us that he intends to purchase securities in this offering. Because of the ownership block held by our initial
shareholders, such individuals may be able to effectively exercise control over all matters requiring approval by our shareholders,
including the election of directors and approval of significant corporate transactions other than approval of our initial business
combination.
If
the underwriters do not exercise all or a portion of the over-allotment option, our initial shareholders will have up to an aggregate
of
187,500
ordinary shares subject to forfeiture as required by British Virgin Islands
law. Our initial shareholders will be required to have redeemed by us only a number of shares necessary to maintain their collective
20% ownership interest in our ordinary shares (excluding the private units) after giving effect to the offering and the exercise,
if any, of the underwriters’ over-allotment option.
All of the insider shares issued and
outstanding prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company,
as escrow agent, until (1) with respect to 50% of the insider shares, the earlier of six months after the date of the consummation
of our initial business combination and the date on which the closing price of our ordinary shares equals or exceeds $12.50 per
share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within
any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider
shares, six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent
to our initial business combination, we consummate a liquidation, merger, share exchange or other similar transaction which results
in all of our shareholders having the right to exchange their shares for cash, securities or other property. Up to
187,500
of the insider shares may also be released from escrow earlier than this date for forfeiture and cancellation if the over-allotment
option is not exercised in full as described above.
During the escrow period, the holders
of these shares will not be able to sell or transfer their securities except (i) for transfers to our officers, directors or their
respective affiliates (including for transfers to an entity’s members upon its liquidation), (ii) to relatives and trusts
for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified
domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities,
(vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which
the shares were originally purchased or (vii) to us for no value for cancellation in connection with the consummation of our initial
business combination, in each case (except for clause (vii)) where the transferee agrees to the terms of the escrow agreement,
but will retain all other rights as our shareholders, including, without limitation, the right to vote their ordinary shares and
the right to receive cash dividends, if declared. If dividends are declared and payable in ordinary shares, such dividends will
also be placed in escrow. If we are unable to effect a business combination and liquidate the trust account, none of our initial
shareholders will receive any portion of the liquidation proceeds with respect to their insider shares.
Our sponsor has committed to purchase
from us an aggregate of 247,500
private units
at $10.00 per private unit (for a total
purchase price of $
2,475,000
). These purchases will take place on a private placement
basis simultaneously with the consummation of this offering. All of the proceeds we receive from these purchases will be placed
in the trust account described below. Our sponsor has also agreed that if the over-allotment option is exercised by the underwriters,
they will purchase from us at a price of $10.00 per private unit an additional number of private units (up to a maximum of 22,500
private units)
pro rata
with the amount of the over-allotment option exercised so that at least $10.00 per share sold to
the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These
additional private units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting
from the exercise of the over-allotment option. The private units are identical to the units sold in this offering except the
private warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be
held by the initial purchasers or their permitted transferees. Additionally, because the private units will be issued in a private
transaction, the holders of the private warrants and their transferees will be allowed to exercise such warrants for cash even
if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive
unregistered ordinary shares. Furthermore, our sponsor has agreed (A) to vote the ordinary shares underlying the private units,
or “private shares,” in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment
to our amended and restated memorandum and articles of association that would stop our public shareholders from converting or
selling their shares to us in connection with a business combination or affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete a business combination within 12 months (or 21 months if we have extended the
period of time as described in this prospectus) from the closing of this offering unless we provide dissenting public shareholders
with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any private shares for
cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination or a vote
to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders’ rights
or pre-business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon
winding up if a business combination is not consummated. The purchasers of the private units have also agreed not to transfer,
assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares)
until the completion of our initial business combination.
In order to meet our working capital
needs following the consummation of this offering, our initial shareholders, officers and directors or their affiliates may, but
are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion.
Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination,
without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of our
business combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued
units to acquire 55,000 ordinary shares (which includes 5,000 shares issuable upon conversion of rights) and warrants to purchase
25,000 ordinary shares if $500,000 of notes were so converted). Our shareholders have approved the issuance of the units and underlying
securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of
our initial business combination. If we do not complete a business combination, the loans will not be repaid.
Our sponsor and our executive officers
and directors are deemed to be our “promoters,” as that term is defined under the Federal securities laws.
CERTAIN TRANSACTIONS
In
May and July 2018, 1,150,000 shares were sold. On October 15, 2018, the Company affected a 5 for 4 share split resulting
in an aggregate of 1,437,500 ordinary shares outstanding to certain of our initial shareholders for $25,100 in cash, at a purchase price of $0.017 share. On November
6, Keen Nice Communications Limited transferred all 1,200,000 shares it owned of the Company to the sponsor.
If
the underwriters do not exercise all or a portion of their over-allotment option, our initial shareholders have agreed that up
to an aggregate of
187,500
ordinary shares in proportion to the portion of the over-allotment
option that was not exercised are subject to forfeiture and would be immediately cancelled.
If
the underwriters determine the size of the offering should be increased (including pursuant to Rule 462(b) under the Securities
Act) or decreased, a share capitalizations or a contribution back to capital, as applicable, would be effectuated in order to
maintain our initial shareholder’s ownership at a percentage of the number of shares to be sold in this offering.
Our
sponsor has committed to purchase from us an aggregate of 247,500
private units
at
$10.00 per private unit (for a total purchase price of $
2,475,000
). These purchases
will take place on a private placement basis simultaneously with the consummation of this offering. All of the proceeds we receive
from these purchases will be placed in the trust account described below. Our sponsor has also agreed that if the over-allotment
option is exercised by the underwriters, they will purchase from us at a price of $10.00 per private unit an additional number
of private units (up to a maximum of 22,500 private units)
pro rata
with the amount of the over-allotment option exercised
so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether the over-allotment
option is exercised in full or part. These additional private units will be purchased in a private placement that will occur simultaneously
with the purchase of units resulting from the exercise of the over-allotment option. The purchase price for the private units
being purchased by our sponsor will be delivered to Loeb & Loeb LLP, our counsel in connection with this offering, who will
also be acting solely as escrow agent in connection with the private sale of such units, at least 24 hours prior to the date of
this prospectus to hold in a non-interest bearing account until we consummate this offering. Loeb & Loeb LLP will deposit
the purchase price into the trust account simultaneously with the consummation of the offering. The private units are identical
to the units sold in this offering except as otherwise described in this prospectus. The purchasers have agreed not to transfer,
assign or sell any of the private units or the underlying securities (except to the same permitted transferees as the insider
shares) until the completion of our initial business combination.
In order to meet our working capital
needs following the consummation of this offering, our initial shareholders, officers and directors and their respective affiliates
may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their
sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial
business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon
consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in
the holders being issued units to acquire 55,000 ordinary shares (which includes 5,000 shares issuable upon conversion of rights)
and warrants to purchase 25,000 ordinary shares if $500,000 of notes were so converted). Our shareholders have approved the issuance
of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the
time of the consummation of our initial business combination. If we do not complete a business combination, the loans would be
repaid out of funds not held in the trust account, and only to the extent available.
The holders of our insider shares issued and
outstanding on the date of this prospectus, as well as the holders of the private units (and all underlying securities) and any
securities our initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans
or loans to extend our life made to us, will be entitled to registration rights pursuant to an agreement to be signed prior to
or on the effective date of this offering. The holders of a majority of these securities are entitled to make up to two demands
that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights
at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders
of a majority of the private units or securities issued in payment of working capital loans or loans to extend our life made to
us can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation
of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
As of September 30, 2018, Keen Nice Communications Limited, which is owned by Jining
Li, our director, had loaned us an aggregate of $178,205 to be used to pay formation expenses and a portion of the expenses of
this offering. The loan is payable without interest on the date on which we consummate our initial public offering. We intend
to repay this loan from the proceeds of this offering not being placed in the trust account. If we determine not to proceed with
the offering, such amounts would not be repaid.
Oriental Holdings Limited, a company
jointly owned our director, Jining Li, through Keen Nice Communications Limited, and Yongsheng Liu, has agreed that, commencing
on the date of this prospectus through the earlier of our consummation of our initial business combination or our liquidation,
it will make available to us certain general and administrative services, including office space, utilities and administrative
support, as we may require from time to time. We have agreed to pay $10,000 per month for these services, of which HKD$50,000
(
or approximately USD$6,389 based on an exchange rate
of HKD$7.83 to USD$1.00 on December 19, 2018) per month will be paid to Yongsheng Liu, our Chief Executive Officer, for his services
to us. Such payments began in July 2018, and will be paid out of the administrative services fee payments after the closing of
our offering. However, pursuant to the terms of such agreement, we may delay payment of such monthly fee upon a determination
by our audit committee that we lack sufficient funds held outside the trust to pay actual or anticipated expenses in connection
with our initial business combination. Any such unpaid amount will accrue without interest and be due and payable no later than
the date of the consummation of our initial business combination. We believe that the fee charged by Oriental Holdings Limited
is at least as favorable as we could have obtained from an unaffiliated person.
Other than the fees described above, no
compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, will be paid to
any of our initial shareholders, officers or directors who owned our ordinary shares prior to this offering, or to any of their
respective affiliates, prior to or with respect to the business combination (regardless of the type of transaction that it is).
We will reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by
them in connection with certain activities on our behalf such as identifying and investigating possible target businesses and business
combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent
such expenses exceed the available proceeds not deposited in the trust account, such expenses would not be reimbursed by us unless
we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made
to any initial shareholder or member of our management team, or our or their respective affiliates, and any reimbursements and
payments made to members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director
abstaining from such review and approval.
All ongoing and future transactions between
us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable
to us than are available from unaffiliated third parties. Such transactions, including the payment of any compensation, will require
prior approval by a majority of our uninterested “independent” directors (to the extent we have any) or the members
of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or
independent legal counsel. We will not enter into any such transaction unless our disinterested “independent” directors
(or, if there are no “independent” directors, our disinterested directors) determine that the terms of such transaction
are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third
parties.
Related Party Policy
Our Code of Ethics, which we will adopt
upon consummation of this offering, will require us to avoid, wherever possible, all related party transactions that could result
in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee).
Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed
$120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director
or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate family member,
of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as
a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise
when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively.
Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result
of his or her position.
We also require each of our directors and
executive officers to annually complete a directors’ and officers’ questionnaire that elicits information about related
party transactions.
Our audit committee, pursuant to its written
charter, will be responsible for reviewing and approving related-party transactions to the extent we enter into such transactions.
All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on
terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require
prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of
our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent
legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent”
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with
respect to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers
to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine
whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part
of a director, employee or officer.
To further minimize potential conflicts
of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial
shareholders unless we obtain an opinion from an independent investment banking firm that the business combination is fair to
our unaffiliated shareholders from a financial point of view. Furthermore, in no event will any of our existing officers, directors
or initial shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other
compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination, except
that Yongsheng Liu, our Chief Executive Officer will receive HKD$50,000 (
or
approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month for his service to us.
DESCRIPTION OF SECURITIES
General
We are a company incorporated in the
British Virgin Islands as a BVI business company (company number 1977965) and our affairs are governed by our memorandum and articles
of association, the Companies Act and the common law of the British Virgin Islands. We are currently authorized to issue an unlimited
number of shares of a single class, each with no par value. As of the date of this prospectus, 1,437,500 ordinary shares are issued
and outstanding, held by our initial shareholders. No preferred shares are issued or outstanding. The following description summarizes
certain terms of our shares as set out more particularly in our memorandum and articles of association. Because it is only a summary,
it may not contain all the information that is important to you.
Units
Each unit consists of one ordinary
share, one redeemable warrant and one right. Each redeemable warrant entitles the holder thereof to purchase one-half (1/2) of
one ordinary share. Each redeemable warrant has an exercise price $11.50 per full share and shall expire on the five year anniversary
of the effective date of the registration statement of which this prospectus forms a part. Pursuant to the warrant agreement,
a warrant holder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants
may be exercised at any given time by a warrant holder. For example, if a warrant holder holds one warrant to purchase one-half
(1/2) of one share, such warrant shall not be exercisable. If a warrant holder holds two warrants, such warrants will be exercisable
for one share. Each right entitles the holder thereof to receive one-tenth (1/10) of an ordinary share upon consummation of our
initial business combination. In addition, we will not issue fractional shares in connection with an exchange of rights. Fractional
shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions
of British Virgin Islands Law. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your
rights upon closing of a business combination.
The ordinary shares, warrants and rights
will begin to trade separately on the 90
th
day after the date of this prospectus unless Chardan Capital Markets, LLC
determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the
securities markets and small capitalization companies in general, and the trading pattern of, and demand for, our securities in
particular). In no event will Chardan Capital Markets, LLC allow separate trading of the ordinary shares, warrants and rights until
we file an audited balance sheet reflecting our receipt of the gross proceeds of this offering.
We will file a Current Report on Form 8-K
which includes an audited balance sheet promptly upon the consummation of this offering. The audited balance sheet will reflect
proceeds we receive from the exercise of the over-allotment option, if the over-allotment option is exercised on the date of this
prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form
8-K, or a new Form 8-K, to provide updated financial information to reflect the exercise of the over-allotment option. We will
also include in this Form 8-K, an amendment thereto, or in a subsequent Form 8-K information indicating when separate trading of
the ordinary shares, warrants and rights has commenced.
Ordinary Shares
Our shareholders of record are entitled
to one vote for each share held on all matters to be voted on by shareholders. In connection with any vote held to approve our
initial business combination, all of our initial shareholders, as well as all of our officers and directors, have agreed to vote
their respective ordinary shares owned by them immediately prior to this offering and any shares purchased in this offering or
following this offering in the open market in favor of the proposed business combination.
We will proceed with the business combination
only if we have net tangible assets of at least $5,000,001 upon consummation of such business combination and a majority of the
ordinary shares voted are voted in favor of the business combination. At least five days’ notice must be given for each general
meeting (although we will provide whatever minimum number of days are required under Federal securities laws). Shareholders may
vote at meetings in person or by proxy.
The members of our Board of Directors serve
until the next annual general meeting. There is no cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares eligible to vote for the election of directors can elect all of the directors.
Pursuant to our amended and restated
memorandum and articles of association, if we do not consummate a business combination by 12 months from the consummation of this
offering (or 21 months if we have extended the period of time as described in this prospectus), it will trigger our automatic
winding up, liquidation and subsequent dissolution. Our initial shareholders have agreed to waive their rights to share in any
distribution from the trust account with respect to their insider shares upon our winding up, liquidation and subsequent dissolution.
Our shareholders have no conversion, preemptive
or other subscription rights and there are no sinking fund or redemption provisions applicable to the ordinary shares, except that
public shareholders have the right to have their public shares converted to cash equal to their
pro rata
share of the trust
account if they vote on the proposed business combination and the business combination is completed. Public shareholders who convert
their public shares into their portion of the trust account still have the right to exercise the redeemable warrants that they
received as part of the units.
Register of Members
Under
the Companies Law, the ordinary shares are deemed to be issued when the name of the shareholder is entered in our register of members.
Our register of members will be maintained by our transfer agent Continental Stock Transfer & Trust Company, which will enter
the name of Cede & Co
in our register of members on the
closing of this offering as nominee for each of the respective public shareholders. If (a) information that is required to be entered
in the register of members is omitted from the register or is inaccurately entered in the register, or (b) there is unreasonable
delay in entering information in the register, a shareholder of the company, or any person who is aggrieved by the omission, inaccuracy
or delay, may apply to the British Virgin Islands courts for an order that the register be rectified, and the court may either
refuse the application or order the rectification of the register, and may direct the company to pay all costs of the application
and any damages the applicant may have sustained.
Redeemable Warrants
No warrants are currently outstanding.
Each redeemable warrant entitles the registered holder to purchase one-half (1/2) of one ordinary share at a price of $11.50 per
share, subject to adjustment as discussed below, at any time commencing on the later of the completion of an initial business
combination and 12 months from the date of this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its
warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time
by a warrant holder. However, except as set forth below, no warrants will be exercisable for cash unless we have an effective
and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus
relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable
upon exercise of the warrants is not effective within 90 days from the consummation of our initial business combination, warrant
holders may, until such time as there is an effective registration statement and during any period when we shall have failed to
maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration
provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration
is not available, holders will not be able to exercise their warrants on a cashless basis. The warrants will expire five years
from the effective date of the registration statement of which this prospectus forms a part at 5:00 p.m., Eastern Standard Time.
We may call the warrants for redemption
(excluding the private warrants but including any outstanding warrants issued upon exercise of the unit purchase option issued
to Chardan Capital Markets, LLC and its designees), in whole and not in part, at a price of $0.01 per warrant:
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at any time while the warrants are exercisable,
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upon not less than 30 days’ prior written notice of redemption to each warrant holder,
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if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for
any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant
holders (the “Force-Call Provision”), and
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if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
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The right to exercise will be forfeited
unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a
record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon
surrender of such warrant.
The redemption criteria for our warrants
have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price
and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share
price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price
of the warrants.
If we call the warrants for redemption
as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless
basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of ordinary
shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied
by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the
fair market value. The “fair market value” shall mean the volume weighted average price of the ordinary shares for
the 20 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders
of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis”
will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption,
our cash needs at such time and concerns regarding dilutive share issuances.
The warrants will be issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision, but requires the approval, by written consent or vote, of the holders of a majority of the then outstanding warrants
in order to make any change that adversely affects the interests of the registered holders.
The exercise price and number of ordinary
shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share capitalizations,
extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted
for issuances of ordinary shares at a price below their respective exercise prices.
The warrants may be exercised upon surrender
of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the
reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price,
by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have
the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive ordinary
shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by shareholders.
Except as described above, no warrants
will be exercisable and we will not be obligated to issue ordinary shares unless at the time a holder seeks to exercise such warrant,
a prospectus relating to the ordinary shares issuable upon exercise of the warrants is current and the ordinary shares have been
registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants.
Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current
prospectus relating to the ordinary shares issuable upon exercise of the warrants until the expiration of the warrants. However,
we cannot assure you that we will be able to do so and, if we do not maintain a current prospectus relating to the ordinary shares
issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not be required to settle
any such warrant exercise. If the prospectus relating to the ordinary shares issuable upon the exercise of the warrants is not
current or if the ordinary shares is not qualified or exempt from qualification in the jurisdictions in which the holders of the
warrants reside, we will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value,
the market for the warrants may be limited and the warrants may expire worthless.
Warrant holders may elect to be subject
to a restriction on the exercise of their warrants such that an electing warrant holder (and his, her or its affiliates) would
not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder (and his, her or its
affiliates) would beneficially own in excess of 9.8% of the ordinary shares issued and outstanding. Notwithstanding the foregoing,
any person who acquires a warrant with the purpose or effect of changing or influencing the control of our company, or in connection
with or as a participant in any transaction having such purpose or effect, immediately upon such acquisition will be deemed to
be the beneficial owner of the underlying ordinary shares and not be able to take advantage of this provision.
No fractional shares will be issued upon
exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share
(as a result of a subsequent share capitalizations payable in ordinary shares, or by a split up of the ordinary shares or other
similar event), we will, upon exercise, round up or down to the nearest whole number the number of ordinary shares to be issued
to the warrant holder.
Contractual Arrangements with respect
to the Private Warrants
We have agreed that so long as the private
warrants are still held by the initial purchasers or their affiliates, we will not redeem such warrants and we will allow the holders
to exercise such warrants on a cashless basis (even if a registration statement covering the ordinary shares issuable upon exercise
of such warrants is not effective). However, once any of the foregoing warrants are transferred from the initial purchasers or
their affiliates, these arrangements will no longer apply. Additionally, the representative of the underwriters has agreed that
it will not be permitted to exercise any warrants underlying the purchase option to be issued to it and/or its designees upon consummation
of this offering after the five year anniversary of the effective date of the registration statement of which this prospectus forms
a part. Furthermore, because the private warrants will be issued in a private transaction, the holders and their transferees will
be allowed to exercise the private warrants for cash even if a registration statement covering the ordinary shares issuable upon
exercise of such warrants is not effective and receive unregistered ordinary shares.
Rights
Except in cases where we are not the surviving
company in a business combination, each holder of a right will automatically receive one-tenth (1/10) of an ordinary share upon
consummation of our initial business combination, even if the holder of a public right converted all ordinary shares held by him,
her or it in connection with the initial business combination or an amendment to our amended and restated memorandum and articles
of association with respect to our pre-business combination activities. In the event we will not be the surviving company upon
completion of our initial business combination, each holder of a right will be required to affirmatively convert his, her or its
rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the business combination.
No additional consideration will be required to be paid by a holder of rights in order to receive his, her or its additional ordinary
shares upon consummation of an initial business combination. The shares issuable upon exchange of the rights will be freely tradable
(except to the extent held by affiliates of ours). If we enter into a definitive agreement for a business combination in which
we will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share
consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary shares basis.
We will not issue fractional shares in
connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed
in accordance with the applicable provisions of British Virgin Islands Law. As a result, you must hold rights in multiples of 10
in order to receive shares for all of your rights upon closing of a business combination. If we are unable to complete an initial
business combination within the required time period and we liquidate the funds held in the trust account, holders of rights will
not receive any of such funds with respect to their rights, nor will they receive any distribution from our assets held outside
of the trust account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties
for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Additionally,
in no event will we be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Unit Purchase Option
We
have agreed to sell to Chardan Capital Markets, LLC an option for $100 to purchase up to a total of 500,000
units
(or 575,000 units if the over-allotment option is exercised in full) at
$11.50
per unit. The units issuable upon exercise of this option are identical to those offered by this prospectus. For a more complete
description of the unit purchase option, see the section below entitled “Underwriting — Unit Purchase Option.”
Dividends
We have not paid any cash dividends on
our ordinary shares to date and do not intend to pay cash dividends prior to the completion of a business combination. The payment
of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination
will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all
earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in
the foreseeable future.
Our Transfer Agent, Warrant Agent and
Rights Agent
The transfer agent for our ordinary shares,
warrant agent for our warrants, and rights agent for our rights is Continental Stock Transfer & Trust Company, LLC, 6201 15th
Avenue, Brooklyn, NY 11219.
Listing of our Securities
There
is presently no public market for our units, ordinary shares, warrants or rights. We have applied to have the units, and the ordinary
shares, warrants and rights once they begin separate trading, listed on Nasdaq under the symbols “HHHU,” “HHH,”
“HHHW,” and “HHHR,” respectively. Although, after giving effect to this offering, we meet on a pro forma
basis the minimum initial listing standards of Nasdaq, which generally only requires that we meet certain requirements relating
to shareholders’ equity, market capitalization, aggregate market value of publicly held shares and distribution requirements,
we cannot assure you that our securities will continue to be listed on Nasdaq as we might not meet certain continued listing standards.
BRITISH VIRGIN ISLANDS COMPANY CONSIDERATIONS
Our corporate affairs are governed by our
Amended and Restated Memorandum and Articles of Association and by the BVI Business Companies Act. The BVI Business Companies Act
contains many English law principles but does not follow recent English law statutory enactments and differs from laws applicable
to U.S. corporations and their shareholders. Set forth below is a summary of some significant differences between the provisions
of the BVI Business Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their
shareholders. A brief discussion of the procedure for mergers and similar arrangements in the British Virgin Islands also follows.
There have been few, if any, court cases
interpreting the BVI Business Companies Act in the British Virgin Islands, and we cannot predict whether British Virgin Islands
courts would reach the same conclusions as U.S. courts. Therefore, you may have more difficulty in protecting your interests in
the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated
in a U.S. jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the
statutory provisions of the BVI Business Companies Act and the Delaware General Corporation Law relating to shareholders’
rights.
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British Virgin Islands
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Delaware
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Shareholder Meetings
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Held at a time and place as designated in the Articles of Association. Our Articles of Association provide that our board may designate such time and place.
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Held at such time or place as designated in the certificate of incorporation or the by-laws, or if not so designated, as determined by the board of directors
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May be held within or without the British Virgin Islands
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May be held within or without Delaware
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Notice:
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Notice:
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o
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Whenever shareholders are required to take action at a meeting, written notice shall state the place, date and hour of the meeting and indicate that it is being issued by or at the direction of the person calling the meeting.
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Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any.
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A copy of the notice of any meeting shall be given personally or sent by mail as designated in the Articles of Association.
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Written notice shall be given not less than 10 nor more than 60 days before the meeting.
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Notice of not less than 7 days before the meeting
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Shareholders’ Voting Rights
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Any action required to be taken by meeting of shareholders may be taken without meeting if consent is in writing and is signed by a majority of the shareholders entitled to vote if permitted by the articles of association. Our Articles of Association provide for such consent in writing.
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Any action required to be taken by meeting of shareholders may be taken without meeting if consent is in writing and is signed by all the shareholders entitled to vote
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British Virgin Islands
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Delaware
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Any person authorized to vote may authorize another person or persons to act for him by proxy if permitted by the Articles of Association. Our Articles of Association permit such proxies.
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Any person authorized to vote may authorize another person or persons to act for him by proxy.
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Quorum is as designated in the Articles of Association. Quorum in our Articles of Association is shareholders representing not less than one-half of the votes of the public shares entitled to vote on resolutions of members to be considered at the meeting.
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For stock corporations, certificate of incorporation or by-laws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum.
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The Amended and Restated Memorandum and Articles of Association may provide for cumulative voting in the election of directors. Our Articles of Association do not provide for cumulative voting.
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The certificate of incorporation may provide for cumulative voting.
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Changes in the rights of shareholders as set forth in the amended and restated memorandum and articles of association require approval of at least 50% of the shareholders
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Directors
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Board must consist of at least one member. Our Articles of Association provide that there shall be no less than two directors.
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Board must consist of at least one member.
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Maximum number of directors can be changed by an amendment to the Articles of Association. Our Articles of Association do not provide for a maximum number.
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Number of board members shall be fixed by the by-laws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by amendment of the certificate.
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If the board is authorized to change the number of directors actually appointed, provided that the number still falls within the maximum and the minimum number of directors as set out in the Articles of Association, it can do so provided that it complies with the procedure set out in the Articles of Association. Our Articles of Association permit our board to appoint additional directors.
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British Virgin Islands
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Delaware
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Fiduciary Duties
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In summary, directors and officers owe the following fiduciary duties:
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Directors and officers must act in good faith, with the care of a prudent person, and in the best interest of the corporation as a whole.
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Duty to act in good faith in what the directors believe to be in the best interests of the company as a whole;
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Directors and officers must refrain from self-dealing, usurping corporate opportunities and receiving improper personal benefits.
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Duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
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Decisions made by directors and officers on an informed basis, in good faith and in the honest belief that the action was taken in the best interest of the corporation will be protected by the “business judgment rule.”
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Directors should not improperly fetter the exercise of future discretion;
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Duty to exercise powers fairly as between different groups of shareholders;
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Duty not to put himself in a position of conflict between their duty to the company and their personal interests; and
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Duty to exercise independent judgment.
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In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as “a reasonably diligent person having both:
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the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and
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the nature of the company, the nature of the decision and the position of the director and the responsibilities undertaken.
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As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of his position. However, in some instances a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the Articles of Association or alternatively by shareholder approval at general meetings.
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British Virgin Islands
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Delaware
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Shareholders’ Derivative Actions
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Generally speaking, the company is the proper plaintiff in any action. Derivative actions brought by one or more of the registered shareholders may only be brought with the leave of the Supreme Court where the following circumstances apply:
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In any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law.
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Those who control the company have refused a request by the shareholders to move the company to bring the action;
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Complaint shall set forth with particularity the efforts of the plaintiff to obtain the action by the board or the reasons for not making such effort.
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Those who control the company have refused to do so for improper reasons such that they are perpetrating a “fraud on the minority” (this is a legal concept and is different to “fraud” in the sense of dishonesty);
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Such action shall not be dismissed or compromised without the approval of the Chancery Court.
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a company is acting or proposing to act illegally or beyond the scope of its authority;
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Shareholders of a Delaware corporation that redeemed their shares, or whose shares were canceled in connection with dissolution, would not be able to bring a derivative action against the corporation after the shares have been redeemed or canceled.
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the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; or
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the individual rights of the plaintiff shareholder have been infringed or are about to be infringed.
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Once a shareholder has relinquished his, her or its shares (whether by redemption or otherwise), it is generally the case that they could no longer bring a derivative action as they would no longer be a registered shareholder.
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Material Differences in British Virgin Islands and Delaware
Law
We believe that the material differences
between British Virgin Islands and Delaware corporate law are as follows:
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Shareholder Notice
. Delaware law requires written notice of shareholders meetings of between 10 and 60 days. British Virgin Islands law permits a company’s articles to have 7 days’ notice. Our Amended and Restated Memorandum and Articles of Association provide that we must give shareholders 10 days’ (exclusive of the date that notice is given and the date on which event for which notice is given is to take effect) notice of shareholders meetings, which is equivalent to what is required by Delaware law.
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Quorum.
Delaware law requires a minimum quorum of one-third of the issued and outstanding shares for a shareholders meeting, whereas British Virgin Islands law enables a company’s articles to designate the minimum quorum. Our Amended and Restated Memorandum and Articles of Association provide that a quorum consists of shareholders representing not less than one-half of the votes of the public shares entitled to vote on resolutions of members to be considered at the meeting.
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Shareholder Derivative Suits
. Delaware generally allows shareholders to commence derivative actions in their own name. Under British Virgin Islands law, derivative actions are normally instituted by a shareholder in the name of the company and require leave of the Supreme Court. Accordingly, British Virgin Islands law is more restrictive that Delaware law and shareholders may be restricted from initiating shareholder derivative suits in their own name.
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Certain Differences in Corporate Law
Our corporate affairs are governed by our
amended and restated memorandum and articles of association and the provisions of applicable British Virgin Islands law, including
the Companies Law. The Companies Law differs from laws applicable to United States corporations and their shareholders. Set forth
below is a summary of the material differences between the provisions of the Companies Law applicable to us and the laws applicable
to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements
.
The Companies Law provides for mergers as that expression is understood under United States corporate law. Under the Companies
Law, two or more companies may either merge into one of such existing companies (the “surviving company”) or consolidate
with both existing companies ceasing to exist and forming a new company (the “consolidated company”). The procedure
for a merger or consolidation between the company and another company (which need not be a British Virgin Islands company, and
which may be the company’s parent or subsidiary, but need not be) is set out in the Companies Law. The directors of the British
Virgin Islands company or British Virgin Islands companies which are to merge or consolidate must approve a written plan of merger
or consolidation which., with the exception of a merger between a parent company and its subsidiary, must also be approved by a
resolution of a majority of the shareholders who are entitled to vote and actually vote at a quorate meeting of shareholders or
by written resolution of the shareholders of the British Virgin Islands company or British Virgin Islands companies which are to
merge. A foreign company which is able under the laws of its foreign jurisdiction to participate in the merger or consolidation
is required by the Companies Law to comply with the laws of that foreign jurisdiction in relation to the merger or consolidation.
The company must then execute articles of merger or consolidation, containing certain prescribed details. The plan and articles
of merger or consolidation are then filed with the Registrar of Corporate Affairs in the British Virgin Islands. The Registrar
then registers the articles of merger or consolidation and any amendment to the memorandum and articles of the surviving company
in a merger or the memorandum and articles of association of the new consolidated company in a consolidation and issue a certificate
of merger or consolidation (which is conclusive evidence of compliance with all requirements of the Companies Law in respect of
the merger or consolidation). The merger is effective on the date that the articles of merger are registered with the Registrar
or on such subsequent date, not exceeding thirty days, as is stated in the articles of merger or consolidation.
As soon as a merger becomes effective:
(a) the surviving company or consolidated company (so far as is consistent with its memorandum and articles of association, , as
amended or established by the articles of merger or consolidation) has all rights, privileges, immunities, powers, objects and
purposes of each of the constituent companies; (b) in the case of a merger, the memorandum and articles of association of any surviving
company are automatically amended to the extent, if any, that changes to its amended memorandum and articles of association are
contained in the articles of merger or, in the case of a consolidation, the memorandum and articles of association filed with the
articles of consolidation are the memorandum and articles of the consolidated company; (c) assets of every description, including
choses-in-action and the business of each of the constituent companies, immediately vest in the surviving company or consolidated
company; (d) the surviving company or consolidated company is liable for all claims, debts, liabilities and obligations of each
of the constituent companies; (e) no conviction, judgment, ruling, order, claim, debt, liability or obligation due or to become
due, and no cause existing, against a constituent company or against any member, director, officer or agent thereof, is released
or impaired by the merger or consolidation; and (f) no proceedings, whether civil or criminal, pending at the time of a merger
by or against a constituent company, or against any member, director, officer or agent thereof, are abated or discontinued by the
merger or consolidation; but: (i) the proceedings may be enforced, prosecuted, settled or compromised by or against the surviving
company or consolidated company or against the member, director, officer or agent thereof; as the case may be; or (ii) the surviving
company or consolidated company may be substituted in the proceedings for a constituent company. The Registrar shall strike off
the register of companies each constituent company that is not the surviving company in the case of a merger and all constituent
companies in the case of a consolidation.
If the directors determine it to be in
the best interests of the company, it is also possible for a merger to be approved as a Court approved plan of arrangement or scheme
of arrangement in accordance with the Companies Law. However, we do not anticipate the use of such statutory provisions because
we expect the required terms of the initial business combination will be capable of being achieved through other means, such as
a merger or consolidation (as described above), a share exchange, asset acquisition or control, through contractual arrangements,
of an operating business.
Poison Pill Defenses.
Under
the Companies Law there are no provisions, which specifically prevent the issuance of preferred shares or any such other ‘poison
pill’ measures. The memorandum and articles of association of the company also do not contain any express prohibitions on
the issuance of any preferred shares. Therefore, the directors without the approval of the holders of ordinary shares may issue
preferred shares that have characteristics that may be deemed to be anti-takeover. Additionally, such a designation of shares may
be used in connection with plans that are poison pill plans. However, as noted above under the Companies Law, a director in the
exercise of his powers and performance of his duties is required to act honestly and in good faith in what the director believes
to be the best interests of the company.
Directors.
Our directors are
appointed by our shareholders and are subject to rotational retirement every two years. The initial terms of office of the Class
I and Class II directors have been staggered over a period of two years to ensure that all directors of the company do not face
re-election in the same year. However, the directors may by resolution appoint a replacement director to fill a casual vacancy
arising on the resignation, disqualification or death of a director. The replacement director will then hold office until the next
annual general meeting at which the director he replaces would have been subject to retirement by rotation. Under our amended and
restated memorandum and articles of association, a director may not be removed from office by a resolution of our shareholders
prior to the consummation of our business combination. There is nothing under the laws of the British Virgin Islands, which specifically
prohibits or restricts the creation of cumulative voting rights for the election of our directors. Our amended and restated memorandum
and articles of association do not provide for cumulative voting for such elections.
There are no share ownership qualifications
for directors. Meetings of our board of directors may be convened at any time by any of our directors.
A meeting of our board of directors will
be quorate if at least a majority of the directors are present. At any meeting of our directors, each director, by his or her presence,
is entitled to one vote. Questions arising at a meeting of our board of directors are required to be decided by simple majority
votes of the directors present or represented at the meeting. In the case of an equality of votes, the chairman of the meeting
shall have a second or deciding vote. Our board of directors also may pass resolutions without a meeting.
Agents.
Our board of directors has
the power to appoint any person (whether or not a director or other officer of the company) to be an agent of the company. The
resolution of directors appointing the agent may authorize the agent to appoint one or more substitutes or delegates to exercise
some or all of the powers conferred on the agent. Our directors may remove an agent and may revoke or vary a power conferred on
him.
Indemnification of Directors.
Our
amended and restated memorandum and articles of association provide that, subject to certain limitations, the company shall indemnify
its directors and officers against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement
and reasonably incurred in connection with legal, administrative or investigative proceedings. Such indemnity only applies if the
person acted honestly and in good faith with a view to what the person believed were in the best interests of the company and,
in the case of criminal proceedings, the person had no reasonable cause to believe that their conduct was unlawful. The decision
of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the company
and as to whether the person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient
for the purposes of the memorandum and articles of association, unless a question of law is involved. The termination of any proceedings
by any judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that
the person did not act honestly and in good faith and with a view to the best interests of the company or that the person had reasonable
cause to believe that his conduct was unlawful.
Directors and Conflicts of Interest
. As
noted in the table above, pursuant to the Companies Law and the company’s memorandum and articles of association, a director
of a company who has an interest in a transaction and who has declared such interest to the other directors, may:
(a) vote
on a matter relating to the transaction;
(b) attend
a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the
meeting for the purposes of a quorum; and
(c) sign
a document on behalf of the company, or do any other thing in his capacity as a director, that relates to the transaction.
Shareholders’ Suits.
Our
British Virgin Islands counsel is not aware of any reported class action having been brought in a British Virgin Islands court.
The enforcement of the company’s rights will ordinarily be a matter for its directors.
In certain limited circumstances, a shareholder
has the right to seek various remedies against the company in the event the directors are in breach of their duties under the Companies
Law. Pursuant to Section 184B of the Companies Law, if a company or director of a company engages in, or proposes to engage in
or has engaged in, conduct that contravenes the provisions of the Companies Law or the memorandum or articles of association of
the company, the British Virgin Islands Court may, on application of a shareholder or director of the company, make an order directing
the company or director to comply with, or restraining the company or director from engaging in conduct that contravenes the Companies
Law or the memorandum or articles. Furthermore, pursuant to section 184I(1) of the Companies Law a shareholder of a company who
considers that the affairs of the company have been, are being or likely to be, conducted in a manner that is, or any acts of the
company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity, may
apply to the British Virgin Islands Court for an order which, inter alia, can require the company or any other person to pay compensation
to the shareholders.
The Companies Law provides for a series
of remedies available to shareholders. Where a company incorporated under the Companies Law conducts some activity, which breaches
the Act or the company’s memorandum and articles of association, the court can issue a restraining or compliance order. Under
the Companies Law, a shareholder of a company may bring an action against the company for breach of a duty owed by the company
to him as a member. A shareholder also may, with the permission of the British Virgin Islands Court, bring an action or intervene
in a matter in the name of the company, in certain circumstances. Such actions are known as derivative actions. As noted above,
the British Virgin Islands Court may only grant permission to bring a derivative action where the following circumstances apply:
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the company does not intend to bring, diligently continue or defend or discontinue proceedings; and
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it is in the interests of the company that the conduct of the proceedings not be left to the directors or to the determination of the shareholders as a whole.
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When considering whether to grant leave,
the British Virgin Islands Court is also required to have regard to the following matters:
whether the shareholder is acting in good
faith;
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whether a derivative action is in the company’s best interests, taking into account the directors’ views on commercial matters;
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whether the action is likely to proceed;
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the costs of the proceedings; and
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whether an alternative remedy is available.
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Any member of a company may apply to the
British Virgin Islands Court under the Insolvency Act for the appointment of a liquidator to liquidate the company and the court
may appoint a liquidator for the company if it is of the opinion that it is just and equitable to do so.
The Companies Law provides that any shareholder
of a company is entitled to payment of the fair value of his shares upon dissenting from any of the following: (a) a merger if
the company is a constituent company, unless the company is the surviving company and the member continues to hold the same or
similar shares; (b) a consolidation if the company is a constituent company; (c) any sale, transfer, lease, exchange or other disposition
of more than 50 per cent in value of the assets or business of the company if not made in the usual or regular course of the business
carried on by the company but not including: (i) a disposition pursuant to an order of the court having jurisdiction in the matter,
(ii) a disposition for money on terms requiring all or substantially all net proceeds to be distributed to the members in accordance
with their respective interest within one year after the date of disposition, or (iii) a transfer pursuant to the power of the
directors to transfer assets for the protection thereof; (d) a compulsory redemption of 10 per cent, or fewer of the issued shares
of the company required by the holders of 90 percent, or more of the shares of the company pursuant to the terms of the Act; and
(e) a plan of arrangement, if permitted by the British Virgin Islands Court.
Generally any other claims against a company by its shareholders must be based on the general laws of contract
or tort applicable in the British Virgin Islands or their individual rights as shareholders as established by the company’s
memorandum and articles of association. There are common law rights for the protection of shareholders that may be invoked, largely
derived from English common law. Under the general English company law known as the rule in
Foss v. Harbottle
, a court
will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express
dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors. However, every shareholder
is entitled to seek to have the affairs of the company conducted properly according to law and the constituent documents of the
corporation. As such, if those who control the company have persistently disregarded the requirements of company law or the provisions
of the company’s memorandum and articles of association, then the courts may grant relief. Generally, the areas in which
the courts will intervene are the following:
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a company is acting or proposing to act illegally or beyond the scope of its authority;
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the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained;
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the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or
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those who control the company are perpetrating a “fraud on the minority.”
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Under the law of Delaware, the rights of
minority shareholders are similar to that which will be applicable to the shareholders of the company.
Compulsory Acquisition.
Under
the Companies Law, subject to any limitations in a company’s memorandum or articles, members holding 90% of the votes of
the outstanding shares entitled to vote, and members holding 90% of the votes of the outstanding shares of each class of shares
entitled to vote, may give a written instruction to the company directing the company to redeem the shares held by the remaining
members. Upon receipt of such written instruction, the company shall redeem the shares specified in the written instruction, irrespective
of whether or not the shares are by their terms redeemable. The company shall give written notice to each member whose shares are
to be redeemed stating the redemption price and the manner in which the redemption is to be effected. A member whose shares are
to be so redeemed is entitled to dissent from such redemption, and to be paid the fair value of his shares, as described under
“Shareholders’ Suits” above.
Share Repurchases and Redemptions
. As
permitted by the Companies Law and our amended and restated memorandum and articles of association, shares may be repurchased,
redeemed or otherwise acquired by us. Depending on the circumstances of the redemption or repurchase, our directors may need to
determine that immediately following the redemption or repurchase we will be able to satisfy our debts as they fall due and the
value of our assets exceeds our liabilities. Our directors may only exercise this power on our behalf, subject to the Companies
Law, our amended and restated memorandum and articles of association and to any applicable requirements imposed from time to time
by the SEC, the Nasdaq Capital Market or any other stock exchange on which our securities are listed.
Dividends
. Subject to the Companies
Law and our amended and restated memorandum and articles of association, our directors may declare dividends at a time and amount
they think fit if they are satisfied, on reasonable grounds, that, immediately after distribution of the dividend, the value of
our assets will exceed our liabilities and we will be able to pay our debts as they fall due. No dividend shall carry interest
against us.
Rights of Non-resident or Foreign Shareholders
and Disclosure of Substantial Shareholdings.
There are no limitations imposed by our amended and restated memorandum and
articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares.
In addition, there are no provisions in our amended and restated memorandum and articles of association governing the ownership
threshold above which shareholder ownership must be disclosed.
Untraceable Shareholders.
Under
our amended and restated memorandum and articles of association, we are entitled to sell any shares of a shareholder who is untraceable,
as long as: (a) all checks, not being less than three in total number, for any sums payable in cash to the holder of such shares
have remained uncashed for a period of 12 years; (b) we have not during that time or before the expiry of the three-month period
referred to in (c) below received any indication of the existence of the shareholder or person entitled to such shares by death,
bankruptcy or operation of law; and (c) upon expiration of the 12-year period, we have caused an advertisement to be published
in newspapers, giving notice of our intention to sell these shares, and a period of three months or such shorter period has elapsed
since the date of such advertisement. The net proceeds of any such sale shall belong to us, and when we receive these net proceeds
we shall become indebted to the former shareholder for an amount equal to such net proceeds.
Transfer of Shares
. Subject
to any applicable restrictions set forth in our amended and restated memorandum and articles of association, any of our shareholders
may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or in any other form which
our directors may approve.
Inspection of Books and Records
. Under
the Companies Law, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company
available at the office of the Registrar which will include the company’s certificate of incorporation, its memorandum and
articles of association (with any amendments) and records of license fees paid to date and will also disclose any articles of dissolution,
articles of merger and a register of charges if the company has elected to file such a register. A member of a company is entitled,
on giving written notice to the company, to inspect: (a) the memorandum and articles; (b) the register of members; (c) the
register of directors; and (d) the minutes of meetings and resolutions of members and of those classes of members of which
he is a member; and to make copies of or take extracts from the documents and records referred to in (a) to (d) above.
Subject to the amended and restated memorandum
and articles of association, the directors may, if they are satisfied that it would be contrary to the company’s interests
to allow a member to inspect any document, or part of a document, specified in (b), (c) or (d) above, refuse to permit the member
to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts
from the records.
Where a company fails or refuses to permit
a member to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the British
Virgin Islands Court for an order that he should be permitted to inspect the document or to inspect the document without limitation.
Dissolution; Winding Up.
As
permitted by the Companies Law and our amended and restated memorandum and articles of association, we may be voluntarily liquidated
under Part XII of the Companies Law by resolution of directors and resolution of shareholders if we have no liabilities or we are
able to pay our debts as they fall due.
We also may be wound up in circumstances
where we are insolvent in accordance with the terms of the Insolvency Act.
Memorandum and Articles of Association
As set forth in the memorandum of association,
the objects for which are established are unrestricted and we shall have full power and authority to carry out any object not prohibited
by the Companies Law or as the same may be revised from time to time, or any other law of the British Virgin Islands.
Our
amended and restated memorandum and articles of association contains provisions designed to provide certain rights and protections
to our ordinary shareholders prior to the consummation of our initial business combination. These provisions cannot be amended
without the approval of 50% of our outstanding ordinary shares attending and voting on such amendment. Our initial shareholders,
who will beneficially own 23.05% of our ordinary shares upon the closing of this offering (assuming they do not purchase any units
in this offering), will participate in any vote to amend our amended and restated memorandum and articles of association and will
have the discretion to vote in any manner they choose. Prior to our initial business combination, if we seek to amend any provisions
of our amended and restated memorandum and articles of association relating to shareholders’ rights or pre-business combination
activity, we will provide dissenting public shareholders with the opportunity to redeem their public shares in connection with
any such vote on any proposed amendments to our amended and restated memorandum and articles of association. We and our directors
and officers have agreed not to propose any amendment to our amended and restated memorandum and articles of association that
would affect the substance and timing of our obligation to redeem our public shares if we are unable to consummate our initial
business combination within 12 months (or 21 months, as applicable) from the closing of this offering. Our initial shareholders
have agreed to waive any redemption rights with respect to any founder shares and any public shares they may hold in connection
with any vote to amend our amended and restated memorandum and articles of association prior to our initial business combination.
Specifically, our amended and restated
memorandum and articles of association provide, among other things, that:
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if
we are unable to consummate our initial business combination within 12 months (or 21 months, as applicable) from the closing
of this offering, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute
the aggregate amount then on deposit in the trust account (net of taxes payable any less interest earned thereon that is released
to us), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding
up of our affairs. This redemption of public shareholders from the trust account shall be effected as required by function
of our amended and restated memorandum and articles of association and prior to commencing any voluntary liquidation; and
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except in connection with the consummation of our initial business combination, prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination; and
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we must (1) seek shareholder approval of such initial business combination at a meeting called for such purpose pursuant to a proxy statement meeting the requirements of Regulation 14A under the Exchange Act, or (2) provide our public shareholders with the opportunity to sell their public shares to us by means of a tender offer, the documents for which will contain substantially the same financial and other information about the initial business combination as is required under Regulation 14A under the Exchange Act; and
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although
we do not intend to enter into our initial business combination with a target business that is affiliated with our sponsor,
our directors or officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA that
such our initial business combination is fair to our shareholders from a financial point of view; and
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we will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
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In addition, our amended and restated memorandum
and articles of association provide that under no circumstances will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001.
Anti-Money Laundering — British
Virgin Islands
In order to comply with legislation or
regulations aimed at the prevention of money laundering we are required to adopt and maintain anti-money laundering procedures,
and may require subscribers to provide evidence to verify their identity. Where permitted, and subject to certain conditions, we
also may delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information)
to a suitable person.
We reserve the right to request such information
as is necessary to verify the identity of a subscriber. In the event of delay or failure on the part of the subscriber in producing
any information required for verification purposes, we may refuse to accept the application, in which case any funds received will
be returned without interest to the account from which they were originally debited.
If any person resident in the British Virgin
Islands knows or suspects that another person is engaged in money laundering or terrorist financing and the information for that
knowledge or suspicion came to their attention in the course of their business the person will be required to report his belief
or suspicion to the Financial Investigation Agency of the British Virgin Islands, pursuant to the Proceeds of Criminal Conduct
Act 1997 (as amended). Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of
information imposed by any enactment or otherwise.
SHARES ELIGIBLE FOR FUTURE SALE
Immediately
after this offering, we will have
6,497,500
ordinary shares issued and outstanding,
or
7,457,500
shares if the over-allotment option is exercised in full. Of these shares,
the
5,000,000
shares sold in this offering, or
5,750,000
shares if the over-allotment option is exercised in full, will be freely tradable without restriction or further registration
under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities
Act. All of the remaining shares are restricted securities under Rule 144, in that they were issued in private transactions not
involving a public offering. All of those shares will not be transferable except in limited circumstances described elsewhere
in this prospectus.
Rule 144
Pursuant to Rule 144, a person who has
beneficially owned restricted ordinary shares or warrants for at least six months would be entitled to sell their securities provided
that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding,
a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Persons
who have beneficially owned restricted ordinary shares for at least six months but who are our affiliates at the time of, or any
time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled
to sell within any three-month period a number of shares that does not exceed the greater of:
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1% of the number
of ordinary shares then issued and outstanding, which will equal
64,975
shares
immediately after this offering (or
74,575
if the over-allotment option is exercised
in full); and
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the average weekly trading volume of the ordinary shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
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Sales under Rule 144 are also limited by
manner of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144
by Shell Companies or Former Shell Companies
Historically, the SEC staff had taken the
position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were,
blank check companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting
the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies)
or any issuer that has been at any time previously a shell company.
The SEC has provided an important exception
to this prohibition, however, if the following conditions are met:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
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at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
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As a result, it is likely that pursuant
to Rule 144, our initial shareholders will be able to sell their insider shares freely without registration one year after we have
completed our initial business combination assuming they are not an affiliate of ours at that time.
Registration Rights
The holders of our insider shares issued and outstanding on the date of this prospectus, as well as the holders
of the private units (and underlying securities) and any securities issued to our initial shareholders, officers, directors or
their affiliates in payment of working capital loans made to us, will be entitled to registration rights pursuant to an agreement
to be signed prior to or on the effective date of this offering. The holders of a majority of these securities are entitled to
make up to two demands that we register such securities. The holders of the majority of the insider shares can elect to exercise
these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released
from escrow. The holders of a majority of the private units (and underlying securities) and securities issued in payment of working
capital loans (or underlying securities) or loans to extend our life (or underlying securities) can elect to exercise these registration
rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the
expenses incurred in connection with the filing of any such registration statements.
TAXATION
The following summary of the material British
Virgin Islands and U.S. federal income tax consequences of an investment in our units, ordinary shares, rights and warrants to
acquire our ordinary shares, sometimes referred to, individually or collectively, in this summary as our “securities,”
is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to
change. This summary does not deal with all possible tax consequences relating to an investment in our securities, such as the
tax consequences under state, local and other tax laws.
British Virgin Islands Taxation
The Government of the British Virgin Islands
will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax
or withholding tax upon our Company or our security holders who are not tax resident in the British Virgin Islands.
Our company and all distributions, interest
and other amounts paid by our company to persons who are not tax resident in the British Virgin Islands will not be subject to
any income, withholding or capital gains taxes in the British Virgin Islands, with respect to the shares in our company owned by
them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands.
No estate, inheritance, succession or gift
tax, rate, duty, levy or other charge is payable by persons who are not tax resident in the British Virgin Islands with respect
to any shares, debt obligations or other securities of our company.
Except to the extent that we have any interest
in real property in the British Virgin Islands, all instruments relating to transactions in respect of the shares, debt obligations
or other securities of our company and all instruments relating to other transactions relating to the business of our company are
exempt from the payment of stamp duty in the British Virgin Islands.
There are currently no withholding taxes
or exchange control regulations in the British Virgin Islands applicable to our company or our security holders.
United States Federal Income Taxation
General
This section is a general summary of the
material U.S. federal income tax provisions relating to the acquisition, ownership and disposition of our securities issued pursuant
to this offering. This section does not address any aspect of U.S. federal gift or estate tax, or the state, local or non-U.S.
tax consequences of an investment in our securities, nor does it provide any actual representations as to any tax consequences
of the acquisition, ownership or disposition of our securities.
Because the components of a unit are separable
at the option of the holder within a short period of time after the date of this prospectus, the holder of a unit generally should
be treated, for U.S. federal income tax purposes, as the owner of the underlying ordinary share, warrant and right components of
the unit, as the case may be. As a result, the discussion below of the U.S. federal income tax consequences with respect to actual
holders of ordinary shares, warrants and rights should also apply to holders of units (as the deemed owners of the underlying ordinary
shares, warrants and rights that comprise the units).
The discussion below of the U.S. federal
income tax consequences to “U.S. Holders” will apply to a beneficial owner of our securities that is for U.S. federal
income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one
or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect
under applicable U.S. Treasury regulations to be treated as a U.S. person.
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If a beneficial owner of our securities
is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income
tax purposes, such owner will be considered a “Non-U.S. Holder.” The material U.S. federal income tax consequences
of the acquisition ownership and disposition of our securities applicable specifically to Non-U.S. Holders are described below
under the heading “Non-U.S. Holders.”
This discussion is based on the Internal
Revenue Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations promulgated thereunder,
published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations,
possibly on a retroactive basis.
This discussion assumes that the ordinary
shares, warrants and rights will trade separately and does not address all aspects of U.S. federal income taxation that may be
relevant to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers
only holders purchase units pursuant to this offering and own and hold our securities as capital assets within the meaning of Section
1221 of the Code, and does not address the potential application of the alternative minimum tax. In addition, this discussion does
not address the U.S. federal income tax consequences to holders that are subject to special rules, including:
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financial institutions or financial services entities;
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taxpayers that are subject to the mark-to-market accounting rules under Section 475 of the Code;
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governments or agencies or instrumentalities thereof;
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regulated investment companies;
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real estate investment trusts;
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expatriates or former long-term residents of the United States;
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persons that actually or constructively own 5 percent or more of our voting shares;
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persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;
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persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;
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persons whose functional currency is not the U.S. dollar;
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controlled foreign corporations; or
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passive foreign investment companies.
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This discussion does not address any aspect
of U.S. federal non-income tax laws, such as gift or estate tax laws, state, local or non-U.S. tax laws or, except as discussed
herein, any tax reporting obligations of a holder of our securities. Additionally, this discussion does not consider the tax treatment
of partnerships or other pass-through entities or persons who hold our securities through such entities. If a partnership (or other
entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our securities, the U.S. federal
income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the
partnership. This discussion also assumes that any distributions made (or deemed made) by us on our securities shares and any consideration
received (or deemed received) by a holder in consideration for the sale or other disposition of our securities will be in U.S.
dollars. In addition, this discussion assumes that a holder will own a sufficient number of rights (in multiples of 10) such that
upon conversion of the rights, the holder will acquire only a whole number of ordinary shares and will not forfeit any fractional
securities.
We have not sought, and will not seek,
a ruling from the IRS of an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree
with the descriptions herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation,
regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
THIS DISCUSSION IS ONLY A SUMMARY OF THE
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. IT DOES NOT PROVIDE
ANY ACTUAL REPRESENTATIONS AS TO ANY TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES AND WE HAVE
NOT OBTAINED ANY OPINION OF COUNSEL WITH RESPECT TO SUCH TAX CONSEQUENCES. AS A RESULT, EACH PROSPECTIVE INVESTOR IN OUR SECURITIES
IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP
AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS
U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.
Allocation of Purchase Price and
Characterization of a Unit
There
is no authority addressing the treatment, for U.S. federal income tax purposes, of securities with terms substantially the same
as the units, and, therefore, that treatment is not entirely clear. Each unit should be treated for U.S. federal income tax purposes
as an investment unit consisting of one ordinary share, one warrant to acquire one-half (1/2) of one ordinary share and one right
to acquire one-tenth (1/10) of one ordinary share. For U.S. federal income tax purposes, each holder of a unit generally must
allocate the purchase price of a unit among the ordinary share, one warrant and right that comprise the unit based on the relative
fair market value of each at the time of issuance. The price allocated to each ordinary share, one warrant and right generally
will be the holder’s tax basis in such share, one warrant or right, as the case may be.
In addition, although we intend to treat
the rights for U.S. federal income tax purposes in a manner similar to options to acquire our ordinary shares in the future, there
is a risk that alternate characterizations of the rights could result in U.S. federal income tax consequences to the holders of
the rights that differ from those described below.
The foregoing treatment of our ordinary
shares, warrants and rights and a holder’s purchase price allocation are not binding on the IRS or the courts. Because there
are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the
courts will agree with the characterization described above or the discussion below. Accordingly, each holder is advised to consult
its own tax advisor regarding the risks associated with an investment in a unit (including alternative characterizations of a unit
or the components thereof) and regarding an allocation of the purchase price among the components of a unit. The balance of this
discussion assumes that the characterization of the units (and the components thereof) and any allocations of the purchase price
of a unit as described above is respected for U.S. federal income tax purposes.
U.S. Holders
Tax Reporting
Certain U.S. Holders may be required to
file an IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of property (including
cash) to us. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement. Each U.S.
Holder is urged to consult with its own tax advisor regarding this reporting obligation.
Taxation of Distributions
Paid on Ordinary Shares
Subject to the passive foreign investment
company (“PFIC”) rules discussed below, a U.S. Holder generally will be required to include in gross income as dividends
the amount of any cash dividend paid on our ordinary shares. A cash distribution on such shares generally will be treated as a
dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings
and profits (as determined under U.S. federal income tax principles). Such dividends paid by us will be taxable to a corporate
U.S. holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations
in respect of dividends received from other domestic corporations. Distributions in excess of such earnings and profits generally
will be applied against and reduce the U.S. Holder’s basis in its ordinary shares (but not below zero) and, to the extent
in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares. With respect to non-corporate
U.S. Holders, dividends may be subject to the lower applicable long-term capital gains tax rate (see “— Taxation on
the Disposition of Securities” below) if our ordinary shares are readily tradeable on an established securities market in
the United States and certain other requirements are met. U.S. Holders should consult their own tax advisors regarding the availability
of the lower rate for any cash dividends paid with respect to our ordinary shares.
Possible Constructive
Distributions
The terms of each warrant provide for an
adjustment to the number of shares for which the warrant may be exercised or to the exercise price of the warrant in certain events.
An adjustment which has the effect of preventing dilution generally is not taxable. However, the U.S. Holders of the warrants would
be treated as receiving a constructive distribution from us if, for example, the adjustment increases the warrant holders’
proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of ordinary shares that would
be obtained upon exercise) as a result of a distribution of cash to the holders of our ordinary shares which is taxable to the
U.S. Holders of such ordinary shares as described under “— Taxation of Distributions Paid on Ordinary Shares”
above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S.
Holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest.
Taxation on the
Disposition of Securities
Upon a sale or other taxable disposition
of our securities (which, in general, would include a redemption of ordinary shares, as discussed below, and including as a result
of a liquidation and subsequent dissolution in the event we do not consummate an initial business combination within the required
time), and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the securities.
The regular U.S. federal income tax rate
on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income,
except that under tax law currently in effect long-term capital gains recognized by non-corporate U.S. Holders are generally subject
to U.S. federal income tax at reduced rates. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s
holding period for the securities exceeds one year. The deductibility of capital losses is subject to various limitations. U.S.
Holders who recognize losses with respect to a disposition of our securities should consult their own tax advisors regarding the
tax treatment of such losses.
Redemption of
Ordinary Shares
Subject to the PFIC rules described below,
if a U.S. Holder converts ordinary shares into the right to receive cash pursuant to the exercise of a shareholder conversion right
or sells its ordinary shares to us pursuant to a tender offer, for U.S. federal income tax purposes, such conversion or sale generally
will be treated as a redemption and will be subject to the following rules. If the redemption qualifies as a sale of the ordinary
shares under Section 302 of the Code, the tax treatment of such redemption will be as described under “— Taxation on
the Disposition of Securities” above. If the redemption does not qualify as a sale of ordinary shares under Section 302 of
the Code, a U.S. Holder will be treated as receiving a distribution with the tax consequences described below. Whether redemption
of our shares qualifies for sale treatment will depend largely on the total number of our ordinary shares treated as held by such
U.S. Holder. The redemption of ordinary shares generally will be treated as a sale or exchange of the ordinary shares (rather than
as a distribution) if the receipt of cash upon the redemption (i) is “substantially disproportionate” with respect
to a U.S. Holder, (ii) results in a “complete termination” of such holder’s interest in us or (iii) is “not
essentially equivalent to a dividend” with respect to such holder. These tests are explained more fully below.
In determining whether any of the foregoing
tests are satisfied, a U.S. Holder must take into account not only our ordinary shares actually owned by such holder, but also
our ordinary shares that are constructively owned by such holder. A U.S. Holder may constructively own, in addition to our ordinary
shares owned directly, ordinary shares owned by related individuals and entities in which such holder has an interest or that have
an interest in such holder, as well as any ordinary shares such holder has a right to acquire by exercise of an option, which would
generally include ordinary shares which could be acquired pursuant to the exercise of warrants. In order to meet the substantially
disproportionate test, the percentage of our issued and outstanding voting shares actually and constructively owned by a U.S. Holder
immediately following the redemption of our ordinary shares must, among other requirements, be less than 80% of the percentage
of our issued and outstanding voting and ordinary shares actually and constructively owned by such holder immediately before the
redemption. There will be a complete termination of a U.S. Holder’s interest if either (i) all of our ordinary shares actually
and constructively owned by such U.S. Holder are redeemed or (ii) all of our ordinary shares actually owned by such U.S. Holder
are redeemed and such holder is eligible to waive, and effectively waives, in accordance with specific rules, the attribution of
shares owned by family members and such holder does not constructively own any other shares. The redemption of the ordinary shares
will not be essentially equivalent to a dividend if such redemption results in a “meaningful reduction” of a U.S. Holder’s
proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate
interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that
even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises
no control over corporate affairs may constitute such a “meaningful reduction.” U.S. Holders should consult with their
own tax advisors as to the tax consequences of any such redemption.
If none of the foregoing tests are satisfied,
then the redemption may be treated as a distribution and the tax effects will be as described under “— Taxation of
Distributions Paid on Ordinary Shares,” above. After the application of those rules, any remaining tax basis a U.S. Holder
has in the redeemed ordinary shares will be added to the adjusted tax basis in such holder’s remaining ordinary shares. If
there are no remaining ordinary shares, a U.S. Holder should consult its own tax advisors as to the allocation of any remaining
basis.
Certain U.S. Holders may be subject to
special reporting requirements with respect to a redemption of ordinary shares, and such holders should consult with their own
tax advisors with respect to their reporting requirements.
Exercise or Lapse
of a Warrant
Subject
to the PFIC rules discussed below, a U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary
share from the exercise of two warrants for cash. An ordinary share acquired pursuant to the exercise of two warrants for cash
generally will have a tax basis equal to the U.S. Holder’s tax basis in the warrant, increased by the amount paid to exercise
the warrant. The holding period of such ordinary share generally would begin on the day after the date of exercise of the warrant
and will not include the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised, a
U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise
of warrants are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a realization
event (i.e., not a transaction in which gain or loss is realized) or because the exercise is treated as a recapitalization for
U.S. federal income tax purposes. In either tax-free situation, a U.S. Holder’s basis in the ordinary shares received would
equal the holder’s basis in the warrants. If the cashless exercise were treated as not being a realization event, a U.S.
Holder’s holding period in the ordinary shares should be treated as commencing on the date following the date of exercise
of the warrants. If the cashless exercise were treated as a recapitalization, the holding period of the ordinary shares received
would include the holding period of the warrants. It is also possible that a cashless exercise could be treated as a taxable exchange
in which gain or loss would be recognized. In such event, a U.S. Holder could be deemed to have surrendered a number of warrants
with a fair market value equal to the exercise price for the number of warrants deemed exercised. For this purpose, the number
of warrants deemed exercised would be equal to the amount needed to receive on exercise the number of ordinary shares issued pursuant
to the cashless exercise. In this situation, the U.S. Holder would recognize capital gain or loss in an amount equal to the difference
between the fair market value of the warrants deemed surrendered to pay the exercise price and the U.S. Holder’s tax basis
in the warrants deemed surrendered. Such gain or loss would be long-term or short-term depending on the U.S. Holder’s holding
period in the warrants. In this case, a U.S. Holder’s tax basis in the ordinary shares received would equal the sum of the
fair market value of the warrants deemed surrendered and the U.S. Holder’s tax basis in the warrants deemed exercised. A
U.S. Holder’s holding period for the ordinary shares should commence on the date following the date of exercise of the warrants.
There may also be alternative characterizations of any such taxable exchange that would result in similar tax consequences, except
that a U.S. Holder’s gain or loss would be short-term. Due to the absence of authority on the U.S. federal income tax treatment
of a cashless exercise, there can be no assurance which, if any, of the alternative tax consequences described above would be
adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences
of a cashless exercise of the warrants.
Conversion or
Lapse of Rights
Subject to the PFIC rules discussed below,
a U.S. Holder generally should not recognize gain or loss upon the acquisition of ordinary shares on the conversion of the rights,
such ordinary shares should have a tax basis equal to such holder’s tax basis in the rights, and the holding period of such
shares should begin on the day after such conversion. In addition, a U.S. Holder generally should recognize a capital loss on the
lapse of the rights equal to such holder’s tax basis in the rights.
Unearned Income
Medicare Tax
Under current tax law, U.S. Holders that
are individual, estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution
tax on unearned income, including, among other things, dividends on, and gains from the sale or other disposition of, our securities,
subject to certain limitations and exceptions. Under current regulations, in the absence of a special election, such unearned income
generally would not include income inclusions under the qualified election fund (“QEF”) rules discussed below under
“Passive Foreign Investment Company Rules,” but would include distributions of earnings and profits from a QEF. U.S.
Holders should consult their own tax advisors regarding the effect, if any, of such tax on their ownership and disposition or our
securities.
Passive Foreign
Investment Company Rules
A foreign (i.e., non-U.S.) corporation
will be a PFIC for U.S. federal income tax purposes if at least 75% of its gross income in a taxable year of such foreign corporation,
including its
pro rata
share of the gross income of any corporation in which it is considered to own at least 25% of the
shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable
year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including
its
pro rata
share of the assets of any corporation in which it is considered to own at least 25% of the shares by value,
are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties
(other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of
passive assets.
Because we are a blank check company, with
no current active business, we believe that it is likely that we will meet the PFIC asset or income test for our current taxable
year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has
gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a
PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either
of those years. The applicability of the start-up exception to us is uncertain. After the acquisition of a company or assets in
a business combination, we may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of our
passive income and assets as well as the passive income and assets of the acquired business. If the company that we acquire in
a business combination is a PFIC, then we will likely not qualify for the start-up exception and will be a PFIC for our current
taxable year. Our actual PFIC status for our current taxable year or any subsequent taxable year, however, will not be determinable
until after the end of such taxable year. Accordingly, there can be no assurance with respect to our status as a PFIC for our current
taxable year or any future taxable year.
If we are determined to be a PFIC for any
taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our securities and, in the case of
our ordinary shares, the U.S. Holder did not make a timely QEF election for our first taxable year as a PFIC in which the U.S.
Holder held (or was deemed to hold) such ordinary shares, a QEF election along with a deemed sale (or purging) election, or a “mark-to-market”
election, each as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes
with respect to:
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any gain recognized by the U.S. Holder on the sale or other disposition of our securities; and
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any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of our securities during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for our securities).
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Under these rules,
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the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for our securities;
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the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;
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the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
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the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.
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In general, if we are determined to be
a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares by making a timely
QEF election (or a QEF election along with a purging election). Pursuant to the QEF election, a U.S. Holder generally will be required
to include in income its
pro rata
share of our net capital gains (as long-term capital gain) and other earnings and profits
(as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which
or with which our taxable year ends if we are treated as a PFIC for that taxable year. A U.S. Holder may make a separate election
to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject
to an interest charge.
A U.S. Holder may not make a QEF election
with respect to its warrants or rights to acquire our ordinary shares. As a result, if a U.S. Holder sells or otherwise disposes
of such warrants or rights (other than upon exercise of such warrants or conversion of such rights), any gain recognized generally
will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if
we were a PFIC at any time during the period the U.S. Holder held the warrants or rights. If a U.S. Holder that exercises such
warrants or converts such rights properly makes a QEF election with respect to the newly acquired ordinary shares (or has previously
made a QEF election with respect to our ordinary shares), the QEF election will apply to the newly acquired ordinary shares, but
the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from
the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed to
have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the warrants or rights), unless
the U.S. Holder makes a purging election under the PFIC rules. The purging election creates a deemed sale of such shares at their
fair market value. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating
the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the
adjusted tax basis in its ordinary shares acquired upon the exercise of the warrants or the conversion of the rights by the gain
recognized and will also have a new holding period in such ordinary shares for purposes of the PFIC rules.
The QEF election is made on a shareholder-by-shareholder
basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching
a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign investment Company or Qualified Electing Fund),
including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for
the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement
with such return and if certain other conditions are met or with the consent of the IRS. U.S. Holders should consult their own
tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the requirements
of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any
taxable year, we will endeavor to provide to a U.S. Holder upon request such information as the IRS may require, including a PFIC
annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance
that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided.
If a U.S. Holder has made a QEF election
with respect to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely
QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge
of the PFIC taint pursuant to a purging election, as described above), any gain recognized on the sale of our ordinary shares generally
will be taxable as capital gain and no interest charge will be imposed. As discussed above, for regular U.S. federal income tax
purposes, U.S. Holders of a QEF generally are currently taxed on their
pro rata
shares of its earnings and profits, whether
or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income
generally should not be taxable as a dividend to such U.S. Holders. The adjusted tax basis of a U.S. Holder’s shares in a
QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends,
under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated
under the applicable attribution rules as owning shares in a QEF.
Although a determination as to our PFIC
status will be made annually, an initial determination we are a PFIC will generally apply for subsequent years to a U.S. Holder
who held our securities while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S.
Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed
to hold) our ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect
to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any
of our taxable years that end within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand,
if the QEF election is not effective for each of our taxable years in which we are a PFIC and the U.S. Holder holds (or is deemed
to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder files on a
timely filed U.S. federal income tax return (including extensions) a QEF election and a purging election to recognize under the
rules of Section 1291 of the Code any gain that the U.S. Holder would otherwise recognize if the U.S. Holder had sold our shares
for their fair market value on the “qualification date.” The qualification date is the first day of our tax year in
which we qualify as a QEF with respect to such U.S. Holder. The purging election can only be made if such U.S. Holder held our
shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge
rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will
increase the adjusted tax basis in our shares by the amount of the gain recognized and will also have a new holding period in the
shares for purposes of the PFIC rules.
Alternatively, if a U.S. Holder, at the
close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder may
make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market
election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) our ordinary shares
and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect
to its ordinary shares as long as such shares continue to be treated as marketable shares. Instead, in general, the U.S. Holder
will include as ordinary income for each year that we are treated as a PFIC the excess, if any, of the fair market value of its
ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed
to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value
of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as
a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its ordinary shares will be adjusted to
reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary
shares in a taxable year in which we are treated as a PFIC will be treated as ordinary income. Special tax rules may also apply
if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S. Holder holds
(or is deemed to hold) its ordinary shares and for which we are treated as a PFIC. Currently, a mark-to-market election may not
be made with respect to our warrants or rights.
The mark-to-market election is available
only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission,
including the Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure
that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding
the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances.
If we are a PFIC and, at any time, have
a foreign subsidiary that is classified as a PFIC, U.S. Holders of our shares generally would be deemed to own a portion of the
shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if
we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise
were deemed to have disposed of an interest in the lower-tier PFIC. Upon request, we will endeavor to cause any lower-tier PFIC
to provide to a U.S. Holder the information that may be required to make or maintain a QEF election with respect to the lower-tier
PFIC. However, there is no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition,
we may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause
the lower-tier PFIC to provide the required information. A mark-to-market election generally would not be available with respect
to such lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier
PFICs.
A U.S. Holder that owns (or is deemed to
own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether or not a QEF or mark-to-market
election is or has been made) with such U.S. Holder’s U.S. federal income tax return and provide such other information as
may be required by the U.S. Treasury Department.
The rules dealing with PFICs and with the
QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly,
U.S. Holders of our securities should consult their own tax advisors concerning the application of the PFIC rules to our securities
under their particular circumstances.
Non-U.S. Holders
Dividends (including constructive dividends)
paid or deemed paid to a Non-U.S. Holder in respect to our securities generally will not be subject to U.S. federal income tax,
unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United
States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such
holder maintains or maintained in the United States).
In addition, a Non-U.S. Holder generally
will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our securities unless
such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable
income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United
States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of
sale or other disposition and certain other conditions are met (in which case, such gain from United States sources generally is
subject to tax at a 30% rate or a lower applicable tax treaty rate).
Dividends and gains that are effectively
connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable
income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the
United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates applicable
to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may
also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
Backup Withholding and Information
Reporting
In general, information reporting for U.S.
federal income tax purposes should apply to distributions made on our ordinary shares within the United States to a U.S. Holder
(other than an exempt recipient) and to the proceeds from sales and other dispositions of our securities by a U.S. Holder (other
than an exempt recipient) to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at
an office) outside the United States will be subject to information reporting in limited circumstances. In addition, certain information
concerning a U.S. Holder’s adjusted tax basis in its securities and whether any gain or loss with respect to such securities
in long-term or short-term may be required to be reported to the IRS, and certain holders may be required to file an IRS Form 8938
(Statement of Specified Foreign Financial Assets) to report their interest in our securities.
Moreover, backup withholding of U.S. federal
income tax, currently at a rate of 24%, generally will apply to dividends paid on our securities to a U.S. Holder (other than an
exempt recipient) and the proceeds from sales and other dispositions of our securities by a U.S. Holder (other than an exempt recipient),
in each case who:
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fails to provide an accurate taxpayer identification number;
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is notified by the IRS that backup withholding is required; or
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fails to comply with applicable certification requirements.
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A Non-U.S. Holder generally may eliminate
the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties
of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
We will withhold all taxes required to
be withheld by law from any amounts otherwise payable to any holder of our securities, including tax withholding required by the
backup withholding rules. Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed
as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder
to a refund, provided that the requisite information is timely furnished to the IRS. Holders are urged to consult their own tax
advisors regarding the application of backup withholding and the availability of and procedure for obtaining an exemption from
backup withholding in their particular circumstances.
UNDERWRITING
We intend to offer our securities described
in this prospectus through the underwriters named below. Chardan Capital Markets, LLC (“Chardan” or the “Representative”)
is acting as the sole book-running manager of the offering and as the representative of the underwriters named below. We will
enter into an underwriting agreement with the Representative. Subject to the terms and conditions of the underwriting agreement,
the underwriters, through the Representative, have each severally agreed to purchase from us, on a firm commitment basis, the
number of units listed next to its name in the following table at the public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus:
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Underwriters
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Number of
Units
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Chardan Capital Markets, LLC
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5,000,000
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Total
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5,000,000
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A copy of the form of underwriting agreement
has been filed as an exhibit to the registration statement of which this prospectus forms a part.
Listing of our Securities
We
expect our units, ordinary shares, warrants and rights to be listed on Nasdaq under the symbols “HHHU,” “HHH,”
“HHHW” and “HHHR,” respectively. We anticipate that our units will be listed on Nasdaq on or promptly
after the effective date of the registration statement. Following the date our ordinary shares, warrants and rights are eligible
to trade separately, we anticipate that the ordinary shares, warrants and rights will be listed separately and as a unit on Nasdaq.
We cannot guarantee that our securities will be approved for listing on Nasdaq or that they will continue to be listed on Nasdaq
after this offering.
Pricing of this Offering
We have been advised by the Representative
that the underwriters propose to offer the units to the public at the offering price set forth on the cover page of this prospectus.
They may allow some dealers concessions not in excess of $0.10 per unit.
Prior to this offering there has been no
public market for our securities. The public offering price of the units was negotiated between us and the representative of the
underwriters. Factors considered in determining the prices and terms of the units include:
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the history of other similarly structured blank check companies;
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prior offerings of those companies;
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our prospects for consummating our initial business combination with an operating business at attractive values;
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securities exchange listing requirements;
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expected liquidity of our securities; and
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general conditions of the securities markets at the time of the offering.
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However, although these factors were considered,
the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular
industry since the underwriters are unable to compare our financial results and prospects with those of public companies operating
in the same industry.
Over-allotment Option
We
have granted the underwriters an option to purchase up to 750,000 additional units at the initial public offering price, less
underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments,
if any, made in connection with this offering. The underwriters have 45 days from the effective date of the registration statement
of which this prospectus forms a part in which to exercise this option. If the underwriters exercise this option, they will each
purchase additional units approximately in proportion to the amounts specified in the table above.
Commissions and Discounts
The following table shows the public offering
price, underwriting discount to be paid by us to the underwriters and the proceeds, before expenses, to us. This information assumes
either no exercise or full exercise by the representative of the underwriters of its over-allotment option.
|
|
|
Per
Unit
|
|
|
Without
Over-
allotment
|
|
|
With
Over-
allotment
|
|
|
Public offering price
|
|
$
|
10.00
|
|
|
$
|
50,000,000
|
|
|
$
|
57,500,000
|
|
|
Discount
(1)
|
|
$
|
0.65
|
|
|
$
|
3,250,000
|
|
|
$
|
3,737,500
|
|
|
Proceeds before expenses
(2)(3)
|
|
$
|
9.35
|
|
|
$
|
46,750,000
|
|
|
$
|
53,762,500
|
|
|
(1)
|
Such amount includes
up to
$1,750,000
, or $
0.35
per unit,
(or
$2,012,500
if the underwriters’ over-allotment option is exercised
in full) payable to Chardan for deferred underwriting discounts and commissions upon completion of a business combination.
|
|
(2)
|
The offering expenses are estimated at approximately
$500,000.
|
|
|
|
|
(3)
|
The deferred underwriting discounts and commissions, the unit purchase option, the right
of first refusal and the warrant solicitation fee shall solely be issued and paid to Chardan for its own account.
|
In addition to the underwriting discount,
we paid Chardan $50,000, upon the execution of the engagement letter, as an advance against out-of-pocket accountable expenses
actually anticipated to be incurred by the underwriters, which is reimbursable to the extent not actually incurred, and we have
agreed to pay to the underwriters for the FINRA-related fees, travel, lodging and other “road show” expenses, expenses
of the underwriters’ legal counsel and certain diligence and other fees, including the preparation, binding and delivery
of bound volumes in form and style reasonably satisfactory to the Representative, transaction Lucite cubes or similar commemorative
items in a style as reasonably requested by the Representative, and reimbursement for background checks on our directors, director
nominees and executive officers, which such fees and expenses are capped at an aggregate of $150,000.
No discounts or commissions will be paid
on the sale of the private units.
Unit Purchase Option
We have agreed to sell to Chardan (and/or
its designees), for $100, an option to purchase up to a total of 500,000
units
(or
575,000 units if the over-allotment option is exercised in full) exercisable, in whole or in part, at $
11.50
per unit (or an aggregate exercise price of $
5,750,000
) commencing on the
later of the consummation of a business combination and six months from the date of this prospectus. Since the option is not exercisable
until at the earliest the consummation of a business combination, and the rights will automatically result in the offering of
ordinary shares upon consummation of a business combination, assuming that the over-allotment option is not exercised, the option
will effectively represent the right to purchase
550,000
ordinary shares (which includes
the
50,000
ordinary shares issuable for the rights included in the units) and warrants
to purchase 250,000 ordinary shares, for $
5,750,000
. The purchase option may be exercised
for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date of the registration
statement of which this prospectus forms a part. The option and the
underlying securities
that may be issued upon exercise of the option, have been deemed compensation by FINRA and are therefore subject to a lock-up
for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms
a part or the commencement of sales in this offering pursuant to Rule 5110(g)(1) of FINRA’s Rules, during which time the
option may not be sold, transferred, assigned, pledged or hypothecated, or be subject of any hedging, short sale, derivative or
put or call transaction that would result in the economic disposition of the securities. Additionally, the option may not be sold,
transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date
of this prospectus except to any underwriters and selected dealer participating in the offering and their bona fide officers or
partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively,
from the effective date of the registration statement of which this prospectus forms a part with respect to the registration under
the Securities Act of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses
attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves.
The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including
in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will not
be adjusted for issuances of ordinary shares at a price below its exercise price.
Right of First Refusal
Subject
to certain conditions, we granted Chardan, for a period of
24
months after the date
of the consummation of our business combination, a right of first refusal to act as lead underwriters or minimally as a co-manager,
with at least 30% of the economics; or, in the case of a three-handed deal 20% of the economics, for any and all future public
and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have
a duration of more than three years from the effective date of the registration statement of which this prospectus forms a part.
Warrant Solicitation Fee
We
have agreed to pay Chardan a warrant solicitation fee of five percent (5%) of the exercise price of each public warrant exercised
during the period commencing 12 months from the closing of our initial business combination other than (a) in conjunction with
the force-call provision, or (b) in the case that all solicitations to warrant holders are made exclusively by us and/or our sponsor
without third party assistance on an engaged or non-engaged basis. The warrant solicitation fee will be payable in cash. There
is no limitation on the maximum warrant solicitation fee payable to Chardan except to the extent it is limited by the number of
warrants outstanding.
Regulatory Restrictions on Purchase of Securities
Rules of the SEC may limit the ability
of the underwriters to bid for or purchase our units before the distribution of the units is completed. However, the underwriters
may engage in the following activities in accordance with the rules:
|
|
●
|
Stabilizing Transactions. The underwriters may make bids or purchases solely for the purpose of preventing or retarding a decline in the price of our units, as long as stabilizing bids do not exceed the offering price of $10.00 and the underwriters comply with all other applicable rules.
|
|
|
●
|
Over-Allotments and Syndicate Coverage Transactions. The underwriters may create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus up to the amount of the over-allotment option. This is known as a covered short position. The underwriters may also create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus and the units allowed by the over-allotment option. This is known as a naked short position. If the underwriters create a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our units in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option. Determining what method to use in reducing the short position depends on how the units trade in the aftermarket following the offering. If the unit price drops following the offering, the short position is usually covered with shares purchased by the underwriters in the aftermarket. However, the underwriters may cover a short position by exercising the over-allotment option even if the unit price drops following the offering. If the unit price rises after the offering, then the over-allotment option is used to cover the short position. If the short position is more than the over-allotment option, the naked short must be covered by purchases in the aftermarket, which could be at prices above the offering price.
|
|
|
●
|
Penalty Bids. The representative may reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
|
Stabilization and syndicate covering transactions
may cause the price of our securities to be higher than they would be in the absence of these transactions. The imposition of a
penalty bid might also have an effect on the prices of our securities if it discourages resales of our securities.
Neither we nor the underwriters make any
representation or prediction as to the effect that the transactions described above may have on the price of our securities. These
transactions may occur on Nasdaq, in the over-the-counter market or on any trading market. If any of these transactions are commenced,
they may be discontinued without notice at any time.
Other Terms
Except as set forth above, we are not under
any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present
intent to do so. However, any of the underwriters may, among other things, introduce us to potential target businesses or assist
us in raising additional capital, as needs may arise in the future. If any underwriter provides services to us after this offering,
we may pay the underwriters fair and reasonable fees that would be determined at that time in an arm’s length negotiation;
provided that no agreement will be entered into with the underwriters and no fees for such services will be paid to the underwriters
prior to the date which is 90 days after the date of this prospectus, unless FINRA determines that such payment would not be deemed
underwriter’s compensation in connection with this offering.
Indemnification
We have agreed to indemnify the underwriters
against some liabilities, including civil liabilities under the Securities Act, or to contribute to payments the underwriters may
be required to make in this respect.
Selling Restrictions
Canada
Resale Restrictions
We intend to distribute our securities
in the Province of Ontario, Canada (the “Canadian Offering Jurisdiction”) by way of a private placement and exempt
from the requirement that we prepare and file a prospectus with the securities regulatory authorities in such Canadian Offering
Jurisdiction. Any resale of our securities in Canada must be made under applicable securities laws that will vary depending on
the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary
exemption granted by the applicable Canadian securities regulatory authority. Canadian resale restrictions in some circumstances
may apply to resales of interests made outside of Canada. Canadian purchasers are advised to seek legal advice prior to any resale
of our securities. We may never be a “reporting issuer”, as such term is defined under applicable Canadian securities
legislation, in any province or territory of Canada in which our securities will be offered and there currently is no public market
for any of the securities in Canada, and one may never develop. Canadian investors are advised that we have no intention to file
a prospectus or similar document with any securities regulatory authority in Canada qualifying the resale of the securities to
the public in any province or territory in Canada.
Representations
of Purchasers
A Canadian purchaser will be required to
represent to us and the dealer from whom the purchase confirmation is received that:
|
|
●
|
the purchaser is entitled under applicable provincial securities laws to purchase our securities without the benefit of a prospectus qualified under those securities laws;
|
|
|
●
|
where required by law, that the purchaser is purchasing as principal and not as agent;
|
|
|
●
|
the purchaser has reviewed the text above under Resale Restrictions; and
|
|
|
●
|
the purchaser acknowledges and consents to the provision of specified information concerning its purchase of our securities to the regulatory authority that by law is entitled to collect the information.
|
Rights of Action
— Ontario Purchasers Only
Under Ontario securities legislation, certain
purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of
action for damages, or while still the owner of our securities, for rescission against us in the event that this prospectus contains
a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is
exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to
the cause of action and three years from the date on which payment is made for our securities. The right of action for rescission
is exercisable not later than 180 days from the date on which payment is made for our securities. If a purchaser elects to exercise
the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount
recoverable in any action exceed the price at which our securities were offered to the purchaser and if the purchaser is shown
to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for
damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value
of our securities as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from,
any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an
Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.
Enforcement of
Legal Rights
All of our directors and officers as well
as the experts named herein are located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect
service of process within Canada upon us or those persons. All of our assets and the assets of those persons are located outside
of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a
judgment obtained in Canadian courts against us or those persons outside of Canada.
Collection of
Personal Information
If a Canadian purchaser is resident in
or otherwise subject to the securities laws of the Province of Ontario, the Purchaser authorizes the indirect collection of personal
information pertaining to the Canadian purchaser by the Ontario Securities Commission (the “OSC”) and each Canadian
purchaser will be required to acknowledge and agree that the Canadian purchaser has been notified by us (i) of the delivery to
the OSC of personal information pertaining to the Canadian purchaser, including, without limitation, the full name, residential
address and telephone number of the Canadian purchaser, the number and type of securities purchased and the total purchase price
paid in respect of the securities, (ii) that this information is being collected indirectly by the OSC under the authority granted
to it in securities legislation, (iii) that this information is being collected for the purposes of the administration and enforcement
of the securities legislation of Ontario, and (iv) that the title, business address and business telephone number of the public
official in Ontario who can answer questions about the OSC’s indirect collection of the information is the Administrative
Assistant to the Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto,
Ontario, M5H 3S8, Telephone: (416) 593-8086, Facsimile: (416) 593-8252.
British Virgin Islands
No offer or invitation to subscribe for
shares may be made to the public in the British Virgin Islands.
Switzerland
The Units may not be publicly offered in
Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility
in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art.
652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the
SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus
nor any other offering or marketing material relating to the Units or the offering may be publicly distributed or otherwise made
publicly available in Switzerland.
Neither this prospectus nor any other offering
or marketing material relating to the offering, the company or the securities have been or will be filed with or approved by any
Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of securities will not be supervised
by, the Swiss Financial Market Supervisory Authority FINMA, or FINMA, and the offer of securities has not been and will not be
authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers
of interests in collective investment schemes under the CISA does not extend to acquirers of Units.
Italy
This prospectus has not been submitted
to the Commissione Nazionale per le Società e la Borsa, the Italian Securities Exchange Commission (“CONSOB”),
for clearance and will not be subject to formal review or clearance by CONSOB.
Accordingly, the Units may not be offered,
and copies of this prospectus or any other document relating to the shares may not be distributed in Italy except:
(a) to
“qualified investors” (investitori qualificati), as defined pursuant to Article 34-ter, first paragraph, letter b),
of CONSOB regulation No. 11971 of May 14, 1999, as amended, concerning issuers (“Regulation No. 11971”), but excluding
(i) small and medium enterprises and natural persons indicated in Regulation No. 11971 that have not been included in the register
of qualified investors, (ii) management companies and financial intermediaries authorized to manage individual portfolios on behalf
of third parties and (iii) fiduciary companies managing portfolio investments regulated by Article 60, paragraph 4 of Legislative
Decree No. 415 of July 23, 1996; or
(b) in
other circumstances that are exempt from the rules on public offers pursuant to Article 100 of the Legislative Decree No. 58 of
February 24, 1998, as amended (the “Italian Financial Act”), and its implementing CONSOB regulations, including Regulation
No. 11971.
Any such offer, sale or delivery of the
Units offered hereby or distribution of copies of this Prospectus, or any other document relating to the offering in the Republic
of Italy must be in compliance with the selling restrictions under
|
|
(i)
|
made by
soggetti abilitati
(including investment firms (
imprese di investimento
), banks or financial intermediaries, as defined by Article 1, first paragraph, letter r), of the Italian Financial Act), to the extent duly authorized to engage in the offering and/or underwriting and/or purchase of financial instruments in the Republic of Italy in accordance with the relevant provisions of the Italian Financial Act, CONSOB Regulation 16190 of October 29, 2007, as amended, Legislative Decree No. 385 of September 1, 1993, as amended (the “
Italian Banking Act
”) and any other applicable laws and regulations; and
|
|
|
(ii)
|
in compliance with any other applicable requirements or limitations which may be imposed by CONSOB, the Bank of Italy or any other Italian regulatory authority.
|
Any investor purchasing
the Units offered hereby is solely responsible for ensuring that any offer or resale of the shares it purchased occurs in compliance
with applicable laws and regulations.
In accordance
with Article 100-bis of the Italian Financial Act, the subsequent resale on the secondary market in the Republic of Italy of the
Units offered hereby (which were part of an offer made pursuant to an exemption from the obligation to publish a prospectus) constitutes
a distinct and autonomous offer that must be made in compliance with the public offer and prospectus requirement rules provided
under the Italian Financial Act and the Regulation No. 11971 unless an exemption applies. Failure to comply with such rules
may result in the subsequent resale of such shares being declared null and void and the intermediary transferring the shares may
be liable for any damage suffered by the investors.
LEGAL MATTERS
Loeb & Loeb LLP, is acting as United
States counsel in connection with the registration of our securities under the Securities Act and will pass on the validity of
the warrants and rights offered in the prospectus. Legal matters as to British Virgin Islands’ law, as well as the validity
of the issuance of the ordinary shares offered in this prospectus, will be passed upon for us by Forbes Hare. Scarinci & Hollenbeck,
LLC. is acting as counsel for the underwriters in this offering.
EXPERTS
The financial statements of Wealthbridge
Acquisition Limited as of July 31, 2018 and for the period from May 2, 2018 (inception) through July 31, 2018 appearing in this
prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon
(which contains an explanatory paragraph relating to substantial doubt about the ability of Wealthbridge Acquisition Limited to
continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and are
included in reliance on such report given on the authority of such firm as an experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration
statement on Form S-1, which includes exhibits, schedules and amendments, under the Securities Act, with respect to this offering
of our securities. Although this prospectus, which forms a part of the registration statement, contains all material information
included in the registration statement, parts of the registration statement have been omitted as permitted by rules and regulations
of the SEC. We refer you to the registration statement and its exhibits for further information about us, our securities and this
offering. The registration statement and its exhibits, as well as our other reports filed with the SEC, can be inspected and copied
at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information about
the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at http://www.sec.gov
which contains the Form S-1 and other reports, proxy and information statements and information regarding issuers that file electronically
with the SEC.
WEALTHBRIDGE ACQUISITION LIMITED
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Wealthbridge Acquisition Limited
Opinion on the Financial Statements
We have audited the accompanying
balance sheet of Wealthbridge Acquisition Limited (the “Company”) as of July 31, 2018, the related statements of
operations, changes in shareholders’ (deficit) equity and cash flows for the period from May 2, 2018 (inception)
through July 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July
31, 2018, and the results of its operations and its cash flows for the period from May 2, 2018 (inception) through July 31,
2018, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph — Going Concern
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements,
its business plan is dependent on the completion of a financing and the Company’s cash and working capital as of July 31,
2018 are not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date the financial statements are issued. Management’s plans
in regard to these matters are also described in Note 1 and 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2018.
New York, NY
September 24, 2018, except for Note 8, as to which the date is November 9, 2018
WEALTHBRIDGE ACQUISITION LIMITED
BALANCE SHEETS
|
|
|
September 30,
2018
|
|
|
July 31,
2018
|
|
|
|
|
Unaudited
|
|
|
Audited
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current asset – cash
|
|
$
|
42,068
|
|
|
$
|
59,390
|
|
|
Deferred offering costs
|
|
|
120,621
|
|
|
|
108,720
|
|
|
Total Assets
|
|
$
|
162,689
|
|
|
$
|
168,110
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
(DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
Current liability –
Promissory note – related party
|
|
$
|
178,205
|
|
|
$
|
165,285
|
|
|
Total
Current Liabilities
|
|
|
178,205
|
|
|
|
165,285
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ (Deficit) Equity
|
|
|
|
|
|
|
|
|
|
Ordinary shares, no
par value; unlimited shares authorized; 1,437,500 shares issued and outstanding
(1)
|
|
|
25,100
|
|
|
|
25,100
|
|
|
Accumulated deficit
|
|
|
(40,616
|
)
|
|
|
(22,275
|
)
|
|
Total
Shareholders’ (Deficit) Equity
|
|
|
(15,516
|
)
|
|
|
2,825
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS’ (DEFICIT) EQUITY
|
|
$
|
162,689
|
|
|
$
|
168,110
|
|
(1) Includes an
aggregate of up to 187,500 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the
underwriters.
The accompanying notes are an integral part
of the financial statements.
WEALTHBRIDGE ACQUISITION
LIMITED
STATEMENTS OF
OPERATIONS
|
|
|
For the Period
from May 2,
2018
(inception)
through
September 30,
2018
|
|
|
For
the Period
from May 2,
2018
(inception)
through
July
31,
2018
|
|
|
|
|
Unaudited
|
|
|
Audited
|
|
|
|
|
|
|
|
|
|
|
Formation and operating
costs
|
|
$
|
40,616
|
|
|
$
|
22,275
|
|
|
Net Loss
|
|
$
|
(40,616
|
)
|
|
$
|
(22,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic and diluted
(1)
|
|
|
1,250,000
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted net loss per ordinary share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
|
(1)
|
Excludes an aggregate of up to 187,500 shares subject to forfeiture
if the over-allotment option is not exercised in full or in part by the underwriters.
|
The accompanying notes are an integral part
of the financial statements.
WEALTHBRIDGE ACQUISITION
LIMITED
STATEMENT OF
CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
|
|
|
Ordinary Shares
|
|
|
Accumulated
Deficit
|
|
|
Total
Shareholders’
(Deficit)
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
Balance – May 2, 2018 (Inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of ordinary shares to initial shareholders
(1)
|
|
|
1,437,500
|
|
|
|
25,100
|
|
|
|
—
|
|
|
|
25,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (audited)
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,275
|
)
|
|
|
(22,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – July 31, 2018
|
|
|
1,437,500
|
|
|
$
|
25,100
|
|
|
$
|
(22,275
|
)
|
|
$
|
2,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (unaudited)
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,341
|
)
|
|
|
(18,341
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 30, 2018
|
|
|
1,437,500
|
|
|
$
|
25,100
|
|
|
$
|
(40,616
|
)
|
|
$
|
(15,516
|
)
|
|
|
(1)
|
Includes up to an aggregate of 187,500 shares subject to forfeiture
if the over-allotment option is not exercised in full or in part by the underwriters.
|
The accompanying notes are an integral part
of the financial statements.
WEALTHBRIDGE ACQUISITION
LIMITED
STATEMENTS OF CASH FLOWS
|
|
|
For the Period
from May 2,
2018
(inception)
through
September 30,
2018
|
|
|
For
the
Period from
May 2, 2018
(inception)
through
July
31,
2018
|
|
|
|
|
Unaudited
|
|
|
Audited
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(40,616
|
)
|
|
$
|
(22,275
|
)
|
|
Net cash used in operating activities
|
|
|
(40,616
|
)
|
|
|
(22,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of ordinary shares to initial shareholders
|
|
|
25,100
|
|
|
|
25,100
|
|
|
Proceeds from promissory note – related party
|
|
|
178,205
|
|
|
|
165,285
|
|
|
Payment of offering costs
|
|
|
(120,621
|
)
|
|
|
(108,720
|
)
|
|
Net cash provided by financing
activities
|
|
|
82,684
|
|
|
|
81,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
42,068
|
|
|
|
59,390
|
|
|
Cash – Beginning
|
|
|
—
|
|
|
|
—
|
|
|
Cash – Ending
|
|
$
|
42,068
|
|
|
$
|
59,390
|
|
The accompanying notes are an integral part
of the financial statements.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION
AND BUSINESS OPERATIONS
Wealthbridge Acquisition
Limited (the “Company”) is a blank check company incorporated in the British Virgin Islands on May 2, 2018. The
Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization,
reorganization or similar business combination with one or more businesses or entities (“Business Combination”). Although
the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the
Company intends to focus on businesses in and around the air transportation and aviation industry in China..
At September 30,
2018, the Company had not yet commenced any operations. All activity through September 30, 2018 relates to the Company’s
formation and the Proposed Offering (as defined below). The Company has selected December 31 as its fiscal year end.
The
Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a proposed
initial public offering of 5,000,000 units at $10.00 per unit (or 5,750,000 units if the underwriters’
over-allotment option is exercised in full) (the “Units” and, with respect to the ordinary shares included in the
Units being offered, the “Public Shares”) which is discussed in Note 3 (the “Proposed Offering”) and
the sale of 247,500 Units (or 270,000 Units if the underwriters’ over-allotment option is exercised on full) (the
“Private Units”) at a price of $10.00 per Unit in a private placement to the Company’s sponsor,
Oriental Holdings Limited, jointly owned by the Company’s director, Jining Li, through Keen Nice Communications Limited
and Yongsheng Liu (the “sponsor”) that will close simultaneously with the Proposed Offering. The Company intends
to list the Units on the Nasdaq Capital Market (“NASDAQ”). The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Proposed Offering and sale of the Private Units, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ
rules provide that the Business Combination must be with one or more target businesses that together have a fair market value
equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred underwriting commissions and
interest released to pay taxes payable) at the time of the signing a definitive agreement in connection with a Business
Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as
amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully
effect a Business Combination. Upon the closing of the Proposed Offering, management has agreed that $10.00 per Unit sold in
the Proposed Offering, including the proceeds from the sale of Private Units, will be held in a trust account (“Trust
Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 180 days or less, or in any open-ended investment company that holds itself
out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the
Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in
the Trust Account to the Company’s shareholders, as described below.
The
Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination
or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any
pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The per-share amount to be distributed to shareholders who redeem their shares will not be reduced by the deferred underwriting
commissions the Company will pay to the underwriter (as discussed in Note 7). There will be no redemption rights upon the completion
of a Business Combination with respect to the Company’s warrants. The ordinary shares subject to redemption will be recorded
at a redemption value and classified as temporary equity upon the completion of the Proposed Offering, in accordance with Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
The Company will proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business
Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the
Business Combination. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business
or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, offer such
redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer
documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing
a Business Combination.
The Company’s
initial shareholders (the “initial shareholders”) have agreed (a) to vote their founder shares, the ordinary shares
included in the Private Units (the “Private Shares”) and any Public Shares purchased during or after the Proposed Offering
in favor of a Business Combination, (b) not to propose, or vote in favor of, an amendment to the Company’s Amended and
Restated Memorandum and Articles of Association that would stop the public shareholders from converting or selling their shares
to the Company in connection with a Business Combination or affect the substance or timing of the Company’s obligation to
redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period unless the
Company provides dissenting public shareholders with the opportunity to convert their Public Shares into the right to receive cash
from the Trust Account in connection with any such vote; (c) not to convert any founder shares and Private Units (including
underlying securities) (as well as any Public Shares purchased during or after the Proposed Offering) into the right to receive
cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or sell any shares in a tender
offer in connection with a Business Combination) or a vote to amend the provisions of the Amended and Restated Memorandum and Articles
of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the founder shares
and Private Units (including underlying securities) shall not participate in any liquidating distributions upon winding up if a
Business Combination is not consummated. However, the initial shareholders will be entitled to liquidating distributions from the
Trust Account with respect to any Public Shares purchased during or after the Proposed Offering if the Company fails to complete
its Business Combination.
The
Company will have until 12 months from the closing of the Proposed Offering. However, if the Company anticipates that it may
not be able to consummate a Business Combination within 12 months, the Company may, but is not obligated to, extend the
period of time to consummate a Business Combination three times by an additional three months each time (for a total of up
to 21 months to complete a Business Combination) (the “Combination Period”). In order to extend the time
available for the Company to consummate a Business Combination, the initial shareholders or their affiliates or designees
must deposit into the Trust Account $500,000 or, $575,000 if the underwriters’ over-allotment option is exercised in
full ($0.10 per share in either case), on or prior to the applicable deadline.
If
the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem
100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the Trust Account, including interest earned (net of taxes payable), which redemption will completely extinguish public shareholders’
rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders
and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the
Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The
underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the
Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included
with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such
distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $10.00.
The
sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or
products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction
agreement, reduce the amounts in the Trust Account to below $10.00 per share (whether or not the underwriters’ over-allotment
option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Proposed Offering
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
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. The Company will seek to reduce the possibility that the sponsor will
have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right,
title, interest or claim of any kind in or to monies held in the Trust Account.
WEALTHBRIDGE
ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
Going Concern Consideration
At September 30,
2018, the Company had $42,068 in cash and a working capital of $42,068. The Company has incurred and expects to continue to incur
significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that the financial statements are issued. Management plans
to address this uncertainty through a Proposed Offering as discussed in Note 3. There is no assurance that the Company’s
plans to raise capital or to consummate a Business Combination will be successful or successful within the Combination Period.
Keen Nice Communications Limited, which is wholly owned by the Company’s director Jining Li, has agreed to loan the Company
up to an aggregate amount of $400,000 to be used, in part, for transaction costs incurred in connection with the Proposed Offering
(the “Promissory Note”). As of September 30, 2018, $178,205 was outstanding under the Promissory Note (see Note 5).
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The accompanying financial
statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) and pursuant to the rules and regulations of the SEC.
The accompanying
unaudited financial statements for the period from May 2, 2018 (inception) through September 30, 2018 have been prepared in accordance
with GAAP for interim financial information and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting
of normal accruals) considered for a fair presentation have been included. Operating results for the period from May 2, 2018 (inception)
through September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31,
2018.
Emerging growth company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in its 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.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt
out of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with
another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
Use of estimates
The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could
differ significantly from those estimates.
Cash and cash equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company
did not have any cash equivalents as of September 30, 2018 and July 31, 2018.
Deferred offering costs
Deferred offering costs
consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related
to the Proposed Offering and that will be charged to shareholder’s equity upon the completion of the Proposed Offering. Should
the Proposed Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged
to operations.
Income taxes
The Company complies
with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts,
based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken
or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities. The Company’s management determined that the British Virgin Islands is
the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax
benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of September 30, 2018 and July 31, 2018. The Company is currently not aware of any issues under review that could result
in significant payments, accruals or material deviation from its position.
The Company may be subject
to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws.
The Company’s
tax provision is zero and it has no deferred tax assets. The Company is considered to be an exempted British Virgin Islands Company,
and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Net loss per share
Net loss per share
is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary
shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 187,500 ordinary shares that
are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 7). At September 30, 2018
and July 31, 2018, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per share is the same
as basic loss per share for the periods presented.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
Concentration of credit risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which,
at times may exceed the Federal depository insurance coverage of $250,000. At September 30, 2018 and July 31, 2018, the Company
had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair value of financial instruments
The fair value of the
Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their
short-term nature.
Recently issued accounting standards
Management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s consolidated financial statements.
NOTE 3. PROPOSED OFFERING
Pursuant to the
Proposed Offering, the Company will offer for sale up to 5,000,000 Units (or 5,750,000 Units if the underwriters’
overallotment option is exercised in full) at a purchase price of $10.00 per Unit. Each Unit will consist of one ordinary share,
one redeemable warrant (“Public Warrant”) and one right (“Public Right”). Each Public Warrant will entitle
the holder to purchase one-half of one ordinary share at an exercise price of $11.50 per share (see Note 7). However, the
Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in multiples
of two. Each Public Right will entitle the holder to receive one-tenth of one ordinary share at the closing of a Business Combination
(see Note 7).
NOTE 4. PRIVATE PLACEMENT
The Company’s
sponsor has committed to purchase an aggregate of 247,500 private units (or 270,000 Private Units if the underwriters’ over-allotment
is exercised in full) at a price of $10.00 per Private Unit ($2,475,000 in the aggregate, or $2,700,000 in the aggregate if the
underwriters’ over-allotment is exercised in full), in each case, in a private placement that will occur simultaneously
with the closing of the Proposed Offering. Each Private Unit consists of one Private Share, one redeemable warrant (each, a “Private
Warrant”) and one right (each, a “Private Right”). Each Private Warrant is exercisable to purchase one-half
of one ordinary share at a price of $11.50 per share. However, the Private Warrants may only be exercised for a whole number of
shares, meaning that the Private Warrants must be exercised in multiples of two. Each Private Right entitles the holder to receive
one-tenth of one ordinary share at the closing of a Business Combination. The proceeds from the sale of the Private Units will
be added to the net proceeds from the Proposed Offering held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law) and the Private Warrants and Private Rights will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In
July 2018, the Company issued an aggregate of 1,150,000 founder shares to the initial shareholders for an aggregate
purchase price of $25,100 in cash. On October 15, 2018, the Company effected a 5 for 4 stock split of its common
stock, resulting in 1,437,500 founder shares outstanding. All share and per-share amounts have been retroactively restated to
reflect the stock split. The founder shares include an aggregate of up to 187,500 shares subject to forfeiture by the initial
shareholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the
initial shareholders will collectively own 20% of the Company’s issued and outstanding shares after the Proposed
Offering (assuming the initial shareholders do not purchase any Public Shares in the Proposed Offering and excluding the
Private Units and underlying securities).
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
The initial shareholders
have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until (1) with
respect to 50% of the founder shares, the earlier of six months after the completion of a Business Combination and the date on
which the closing price of the ordinary shares equals or exceeds $12.50 per share for any 20 trading days within any 30-trading
day period commencing after a Business Combination and (2) with respect to the remaining 50% of the founder shares, six months
after the completion of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company
completes a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders
having the right to exchange their ordinary shares for cash, securities or other property.
Promissory Note — Related Party
Keen
Nice Communications Limited, which is owned by the Company’s director Jining Li, has agreed to loan the Company up to $400,000
to be used for the payment of costs related to the Proposed Offering (the “Promissory Note”). The Promissory Note
is non-interest bearing, unsecured and due on the closing of the Proposed Offering. As of September 30, 2018 and July 31, 2018,
$178,205 and $165,285, respectively, was outstanding under the Promissory Note.
Administrative Services Agreement
The Company intends
to enter into an agreement, commencing on the effective date of the Proposed Offering through the earlier of the consummation
of a Business Combination or the Company’s liquidation, to pay the sponsor a monthly fee of $10,000 for general and administrative
services, including office space, utilities and administrative services, of which HKD50,000
(or
approximately USD$6,389 based on an exchange rate of HKD$7.83 to USD$1.00 on December 19, 2018) per month will be paid to the
Company’s Chief Executive Officer for services to the Company. However, pursuant to the terms of such agreement, the Company
may delay payment of such monthly fee upon a determination by the audit committee that the Company lacks sufficient funds held
outside the Trust Account to pay actual or anticipated expenses in connection with a Business Combination. Any such unpaid amount
will accrue without interest and be due and payable no later than the date of the consummation of a Business Combination.
Related Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s sponsor or an affiliate of the
sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required
(“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $500,000
of notes may be converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit.
In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account
to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Related Party Extension Loans
As
discussed in Note 1, the Company may extend the period of time to consummate a Business Combination three times by an
additional three months each time (for a total of 21 months to complete a Business Combination). In order to extend the
time available for the Company to consummate a Business Combination, the initial shareholders or their affiliates or
designees must deposit into the Trust Account for each three month extension $500,000, or $575,000 if the underwriters’ over-allotment option is
exercised in full ($0.10 per Unit in either case), on or prior to the date of the applicable deadline. The initial
shareholders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will
not be repaid in the event that the Company is unable to complete a Business Combination unless there are funds available
outside the Trust Account to do so. Such notes would either be paid upon consummation of a Business Combination, or, at the
lender’s discretion, converted upon consummation of a Business Combination into additional Private Units at a price of
$10.00 per unit.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the founder shares, Private Units (and their underlying securities) and any Units that may
be issued upon conversion of the Working Capital Loans (and underlying securities) will be entitled to registration rights pursuant
to a registration rights agreement to be signed prior to or on the effective date of the Proposed Offering. The holders of a majority
of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority
of the founder shares can elect to exercise these registration rights at any time commencing three months prior to the date on
which these ordinary shares are to be released from escrow. The holders of a majority of the Private Units (and underlying securities)
and securities issued in payment of Working Capital Loans (or underlying securities) or loans to extend our life can elect to exercise
these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a
Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
The
Company will grant the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments at the
Proposed Offering price, less the underwriting discounts and commissions.
The
underwriters will be entitled to a cash underwriting discount of 3.00% of the gross proceeds of the Proposed Offering, or $1,500,000
(or up to $1,725,000 if the underwriters’ over-allotment is exercised in full). In addition, the underwriters will be entitled
to a deferred fee of 3.50% of the gross proceeds of the Proposed Offering, or $1,750,000 (or up to $2,012,500 if the underwriters’
over-allotment is exercised in full). The deferred fee will be paid in cash upon the closing of a Business Combination from the
amounts held in the Trust Account, subject to the terms of the underwriting agreement.
Unit Purchase Option
The
Company has agreed to sell Chardan Capital Markets, LLC (and/or its designees) (“Chardan”), for $100, an option to
purchase up to 500,000 Units (or 575,000 Units if the over-allotment option is exercised in full) exercisable at $11.50 per Unit
(or an aggregate exercise price of $5,750,000, or $6,612,500 if the over-allotment option is exercised in full) commencing on
the later of six months from the effective date of the registration statement related to the Proposed Offering and the consummation
of a Business Combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option,
and expires five years from the effective date of the registration statement related to the Proposed Offering. The Units issuable
upon exercise of the option are identical to those offered in the Proposed Offering. The Company intends to account for the unit
purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Proposed Offering resulting in a charge directly
to shareholders’ equity. The Company estimates that the fair value of the unit purchase option is approximately $1,533,000
(or $1,763,000 if the over-allotment option is exercised in full), or $3.07 per Unit, using the Black-Scholes option-pricing model.
The fair value of the unit purchase option to be granted to the underwriters is estimated as of the date of grant using the following
assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 2.94% and (3) expected life of five years. The option
and such units purchased pursuant to the option, as well as the ordinary shares underlying such units, the rights included in
such units, the ordinary shares that are issuable for the rights included in such units, the warrants included in such units,
and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up
pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned,
pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Proposed Offering
except to any underwriter and selected dealer participating in the Proposed Offering and their bona fide officers or partners.
The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from
the effective date of the registration statement with respect to the registration under the Securities Act of the securities directly
and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the
securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number
of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend,
or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for
issuances of ordinary shares at a price below its exercise price.
Right of First Refusal
Subject to certain
conditions, the Company granted Chardan, for a period of
15
months after the date
of the consummation of a Business Combination, a right of first refusal to act as lead underwriters or minimally as a co-manager,
with at least 30% of the economics; or, in the case of a three-handed deal 20% of the economics, for any and all future public
and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have
a duration of more than three years from the effective date of the registration statement related to the Proposed Offering.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
Warrant Solicitation Fee
The Company has
agreed to pay Chardan a warrant solicitation fee of five percent (5%) of the exercise price of each Public Warrant exercised during
the period commencing 12 months from the closing of a Business Combination other than (a) in conjunction with the Force-Call Provision,
or (b) in the case that all solicitations to warrant holders are made exclusively by the Company and/or sponsor without third
party assistance on an engaged or non-engaged basis. The warrant solicitation fee will be payable in cash. There is no limitation
on the maximum warrant solicitation fee payable to Chardan except to the extent it is limited by the number of warrants outstanding.
NOTE 7. STOCKHOLDERS’ EQUITY
Ordinary Shares
— The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s
ordinary shares are entitled to one vote for each share. At September 30, 2018 and July 31, 2018, there were 1,437,500 ordinary
shares issued and outstanding, of which 187,500 ordinary shares are subject to forfeiture to the extent that the underwriters’
over-allotment option is not exercised in full, so that the initial shareholders will own 20% of the issued and outstanding shares
after the Proposed Offering (excluding the sale of the Private Units and assuming the initial shareholders do not purchase any
Units in the Proposed Offering).
Warrants
— The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12 months
from the effective date of the registration statement relating to the Proposed Offering. No Public Warrants will be exercisable
for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise
of the Public Warrants and a current prospectus relating to such ordinary shares. The Public Warrants may only be exercised for
a whole number of shares, meaning that the Public Warrants must be exercised in multiples of two. Notwithstanding the foregoing,
if a registration statement covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within
90 days from the consummation of a Business Combination, the holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise the
Public Warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities
Act provided that such exemption is available. If an exemption from registration is not available, holders will not be able to
exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the effective date of
the registration statement relating to the Proposed Offering.
The Company may call
the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
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●
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at any time while the Public Warrants are exercisable,
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●
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upon not less than 30 days’ prior written notice of redemption to each Public Warrant
holder,
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●
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if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per
share, for any 20 trading days within a 30 trading day period ending on the third trading day prior to the notice of redemption
to Public Warrant holders, and
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●
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if, and only if, there is a current registration statement in effect with respect to the issuance
of the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to
above and continuing each day thereafter until the date of redemption.
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The Private Warrants
will be identical to the Public Warrants underlying the Units being sold in the Proposed Offering, except that the Private Warrants
and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until
after the completion of a Business Combination, subject to certain limited exceptions. The Private Warrants may only be exercised
for a whole number of shares, meaning that the Private Warrants must be exercised in multiples of two. Additionally, the Private
Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers
or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted
transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public
Warrants.
WEALTHBRIDGE ACQUISITION LIMITED
NOTES TO FINANCIAL STATEMENTS
If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary
dividend or recapitalization, reorganization, merger or consolidation. The Public Warrants may only be exercised for a whole number
of shares, meaning that the Public Warrants must be exercised in multiples of two. However, the warrants will not be adjusted
for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to
net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the
Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to
their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with
respect to such warrants. Accordingly, the warrants may expire worthless.
Rights
— Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Public Right
will automatically receive one-tenth (1/10) of an ordinary share upon consummation of a Business Combination, even if the holder
of a Public Right converted all ordinary shares held by him, her or it in connection with a Business Combination or an amendment
to the Company’s Amended and Restated Memorandum and Articles of Association with respect to its pre-business combination
activities. In the event that the Company will not be the surviving company upon completion of a Business Combination, each holder
of a Public Right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of
a share underlying each Public Right upon consummation of the Business Combination. No additional consideration will be required
to be paid by a holder of Public Rights in order to receive his, her or its additional ordinary shares upon consummation of a Business
Combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of
the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the
surviving entity, the definitive agreement will provide for the holders of Public Rights to receive the same per share consideration
the holders of ordinary shares will receive in the transaction on an as-converted into ordinary shares basis.
The Company will not
issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest
whole share or otherwise addressed in accordance with the applicable provisions of the British Virgin Islands law. As a result,
the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights
upon closing of a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of Public Rights will not receive any of such funds with
respect to their Public Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with respect to such Public Rights, and the Public Rights will expire worthless. Further, there are no contractual penalties
for failure to deliver securities to the holders of the Public Rights upon consummation of a Business Combination. Additionally,
in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to December 21, 2018, the date that the financial
statements were issued. Other than as described below, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the financial statements.
On October 15,
2018, the Company effected a 5 for 4 stock split of its common stock, resulting in 1,437,500 founder shares
outstanding.
Until ____, 2018, all dealers that effect
transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
No dealer, salesperson or any other person
is authorized to give any information or make any representations in connection with this offering other than those contained in
this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by
us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities
offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction
in which the offer or solicitation is not authorized or is unlawful.
$50,000,000
Wealthbridge
Acquisition Limited
5,000,000
Units
PROSPECTUS
Sole Book-Running Manager
Chardan
____________, 2019
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution.
The estimated expenses payable by us in
connection with the offering described in this registration statement (other than the underwriting discount and commissions) will
be as follows:
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Initial Trustees’ fee
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$
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6,500
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(1)
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SEC Registration Fee
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8,547
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FINRA filing fee
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11,079
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Accounting fees and expenses
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40,000
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Nasdaq listing fees
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50,000
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Printing and engraving expenses
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45,000
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Legal fees and expenses
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300,000
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Miscellaneous
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38,874
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(2)
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Total
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$
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500,000
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(1) In
addition to the initial acceptance fee that is charged by Continental Stock Transfer & Trust Company, as trustee, the registrant
will be required to pay to Continental Stock Transfer & Trust Company $_____ for acting as trustee, as transfer agent of the
registrant’s ordinary shares, as warrant agent for the registrant’s warrants, as rights agent for the registrant’s
rights, and as escrow agent.
(2) This
amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those
specifically listed above, including distribution and mailing costs.
Item 14. Indemnification of Directors
and Officers.
British Virgin Islands law does not limit
the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors,
except to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such
as to provide indemnification against civil fraud or the consequences of committing a crime. Our memorandum and articles of association
will provide for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability
incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is theretofore unenforceable.
Item 15. Recent Sales of Unregistered
Securities.
During the past three years, we sold the following ordinary
shares without registration under the Securities Act:
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●
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In May and July, 2018, 1,150,000 shares were sold. On October 15,
2018, the Company affected a 5 for 4 share split resulting in an aggregate of
1,437,500
ordinary
shares outstanding to certain of our initial shareholders, for an aggregate purchase price of $25,100, or approximately
$
0.017
per share, in connection with the Company’s
organization pursuant to the exemption from registration contained in Section 4(a)(2) of the
Securities Act.
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●
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On November 6, Keen Nice Communications Limited
transferred all 1,200,000 shares it owned of the Company to the sponsor. The transfer is conducted pursuant to the exemption
from registration contained in Section 4(a)(2) of the Securities Act.
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●
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In addition, our
sponsor has committed to purchase an aggregate of 247,500
private units
from
the Company on a private placement basis simultaneously with the consummation of this offering. Our sponsor has also agreed
that if the over-allotment option is exercised by the underwriters in full or in part, they will purchase from the Company
at a price of $10.00 per private unit up to an additional
22,500
private units.
These issuances will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
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No underwriting discounts or commissions
were paid with respect to such sales.
Item 16. Exhibits and Financial Statement
Schedules.
(a) The
following exhibits are filed as part of this Registration Statement:
Item 17. Undertakings.
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(a)
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The undersigned registrant hereby undertakes:
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(1)
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To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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i.
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To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
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ii.
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To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
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iii.
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To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
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(2)
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That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3)
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To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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(4)
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That for the purpose of determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
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i.
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Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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ii.
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Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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iii.
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The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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iv.
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Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(5)
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That for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
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(b)
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The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
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(c)
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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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(d)
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The undersigned registrant hereby undertakes that:
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(1)
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For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
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(2)
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For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, on the 21st day of December, 2018.
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WEALTHBRIDGE ACQUISITION LIMITED
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By:
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/s/
Yongsheng
Liu
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Name:
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Yongsheng Liu
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Title:
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Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Yongsheng
Liu and Xiaoyan Tang his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him or her and
in his or her name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments
to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each
acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
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Name
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Position
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Date
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/s/
Yongsheng Liu
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Chief Executive Officer (Principal
executive officer) and Director
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December 21, 2018
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Yongsheng
Liu
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/s/
Xiaoyan Tang
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Chief Financial Officer (Principal
financial and accounting officer)
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December 21, 2018
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Xiaoyan
Tang
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/s/ Ray Chen
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Chief Operating Officer
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December 21, 2018
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Ray Chen
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/s/
Jining
Li
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Director
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December 21, 2018
|
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Jining Li
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/s/
Kinpui Choi
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Independent Director
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December 21, 2018
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Kinpui Choi
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/s/
Weiping Chen
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Independent Director
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December 21, 2018
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Weiping Chen
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/s/
Simin Xie
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Independent Director
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December 21, 2018
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Simin Xie
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