UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2023
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
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Commission File Number 001-41041
(Exact name of Registrant as specified in its Charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
+1 (617 ) 874-5152
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Title of Each Class:
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Trading Symbol(s)
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Name of Each Exchange on Which Registered:
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth 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.
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Large accelerated filer
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Accelerated filer
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☐
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☒
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Smaller reporting company
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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 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of June 30, 2023 (the last business day of the Registrant’s most recently completed second fiscal quarter), the aggregate market value of the
Registrant’s Class A ordinary shares outstanding, other than shares held by persons who may be deemed affiliates of the Registrant, was approximately $42,826,691
(based on the closing price of the registrant’s Class A ordinary shares on that date as reported on Nasdaq).
As of March 25, 2024, there were 7,249,997 of the Registrant’s Class A ordinary shares, par value $0.0001 per share, and 3 of the Registrant’s Class B ordinary shares, par value $0.0001 per share, issued and outstanding.
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Page
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Item 1.
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Item 1A.
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11
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Item 1B.
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Item 1C.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9C.
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Item 10.
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CERTAIN TERMS
References to the “Company,” “our,” “us” or “we” refer to DP Cap Acquisition Corp I, a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company. References to our “Sponsor” refer to DP Investment Management Sponsor I LLC. References to our “Public Offering” refer to the initial public offering of DP Cap Acquisition Corp I which closed on November 12, 2021 (the “Close Date”).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K for this fiscal year ended December 31, 2023 contains forward-looking statements. All statements contained in this Annual Report on Form 10-K
other than statements of historical fact, including statements regarding our future operating results and financial position, our ability to identify and select a business combination target, our ability to successfully enter into and
complete a business combination and our business strategy and plan, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “seek,” “should,” “strive,” “would” and similar expressions are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our
strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management. Actual results and
shareholders’ value will be affected by a variety of risks and factors, including, without limitation, international, national and local economic conditions, merger, acquisition and Business Combination risks, financing risks, geo-political
risks, acts of terror or war, and those risk factors described under “Summary of Risk Factors” and “Risk Factors” each under Item 1A. of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7
of Part II, and elsewhere in this Annual Report on Form 10-K. Many of the risks and factors that will determine these results and shareholders’ value are beyond our ability to control or predict.
All such forward-looking statements speak only as of the date of this Annual Report on Form 10-K. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required by law. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Special Note Regarding Forward-Looking Statements.
All such forward-looking statements speak only as of the date of this Annual Report on Form 10-K. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required by law. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Special Note Regarding Forward-Looking Statements.
Introduction
We are a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the target businesses that we have reviewed or with any other target business. We have neither engaged in any operations nor generated any operating revenue to date. Based on our business activities, we are a “shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
On May 13, 2021, Data Point Capital III, LP, Data Point Capital III-Q, LP (together with Data Point Capital III, LP, the “Funds”) and our Sponsor purchased an aggregate of 5,750,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.004 per share. At December 31, 2023, our Sponsor and the Funds (collectively, the “Initial Shareholders”) held, collectively, 5,750,000 Founder Shares.
On the Close Date, we consummated an initial public offering of 23,000,000 units (the “Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments, at a price of $10.00 per Unit generating gross proceeds of $230.0 million before underwriting discounts and expenses (the “Public Offering”). Each “Unit” consists of one Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”) and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment. Only whole Public Warrants may be exercised and no fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants may be traded.
Simultaneously with the closing of the Public Offering, we completed the private sale of an aggregate of 4,733,333 warrants (the “Private Placement Warrants” and together with the Public Warrants, the “Warrants”), each exercisable to purchase one Class A ordinary share for $11.50 per share, subject to adjustment, to our Sponsor, at a price of $1.50 per Private Placement Warrant. The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that we have an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) covering the Class A ordinary shares issuable upon the exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or holders are permitted to exercise their Public Warrants on a cashless basis under certain circumstances as a result of our failure to have an effective registration statement by the 60th business day after the closing of the Business Combination), and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Alternatively, if we do not complete a Business Combination by November 12, 2024 or during any Extension Period (as defined below), the Warrants will expire at the end of such period.
Simultaneously with the closing of the Public Offering, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4.6 million to us at no interest. The proceeds of the Sponsor Loan were deposited into the Trust Account (as defined below) and will be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a conversion price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of the Business Combination. The Sponsor Loan Warrants are identical to the Private Placement Warrants.
We are a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the target businesses that we have reviewed or with any other target business. We have neither engaged in any operations nor generated any operating revenue to date. Based on our business activities, we are a “shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
On May 13, 2021, Data Point Capital III, LP, Data Point Capital III-Q, LP (together with Data Point Capital III, LP, the “Funds”) and our Sponsor purchased an aggregate of 5,750,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.004 per share. At December 31, 2023, our Sponsor and the Funds (collectively, the “Initial Shareholders”) held, collectively, 5,750,000 Founder Shares.
On the Close Date, we consummated an initial public offering of 23,000,000 units (the “Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments, at a price of $10.00 per Unit generating gross proceeds of $230.0 million before underwriting discounts and expenses (the “Public Offering”). Each “Unit” consists of one Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”) and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment. Only whole Public Warrants may be exercised and no fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants may be traded.
Simultaneously with the closing of the Public Offering, we completed the private sale of an aggregate of 4,733,333 warrants (the “Private Placement Warrants” and together with the Public Warrants, the “Warrants”), each exercisable to purchase one Class A ordinary share for $11.50 per share, subject to adjustment, to our Sponsor, at a price of $1.50 per Private Placement Warrant. The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that we have an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) covering the Class A ordinary shares issuable upon the exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or holders are permitted to exercise their Public Warrants on a cashless basis under certain circumstances as a result of our failure to have an effective registration statement by the 60th business day after the closing of the Business Combination), and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Alternatively, if we do not complete a Business Combination by November 12, 2024 or during any Extension Period (as defined below), the Warrants will expire at the end of such period.
Simultaneously with the closing of the Public Offering, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4.6 million to us at no interest. The proceeds of the Sponsor Loan were deposited into the Trust Account (as defined below) and will be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a conversion price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of the Business Combination. The Sponsor Loan Warrants are identical to the Private Placement Warrants.
We received gross proceeds from the Public Offering, the sale of the Private Placement Warrants, and the Sponsor Loan of $230.0 million, $7.1 million and $4.6 million,
respectively, for an aggregate of $241.7 million. Upon the closing of the Public Offering, a total of $234.6 million, comprised of $225.4 million of the proceeds from the Public Offering (which amount includes $8.05 million of the
underwriter’s deferred discounts and commissions), $4.6 million of the proceeds of the sale of the Private Placement Warrants and $4.6 million of the proceeds from the Sponsor Loan, were deposited in a Trust Account with Continental Stock
Transfer and Trust Company (the “Trust Account”) and $2.5 million of the proceeds from the sale of the Private Placement Warrants was deposited in our operating account for future working capital expenditures. At the Close Date, we paid $4.6
million in underwriting discounts and commissions and $498,152 for other offering costs related to the Public Offering. In addition, the underwriter agreed to defer $8.05 million in underwriting discounts and commissions. In the future, a
portion of interest income on the funds held in the Trust Account may be released to us to pay tax obligations.
On December 23, 2021, we announced that the holders of our Units may elect to separately trade the Class A ordinary shares and Public Warrants included in the Units commencing on December 30, 2021 on The Nasdaq Global Market under the symbols “DPCS” and “DPCSW,” respectively. Those Units not separated will continue to trade on Nasdaq under the symbol “DPCSU.” See “—Recent Developments” below regarding a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market.
On December 23, 2021, we announced that the holders of our Units may elect to separately trade the Class A ordinary shares and Public Warrants included in the Units commencing on December 30, 2021 on The Nasdaq Global Market under the symbols “DPCS” and “DPCSW,” respectively. Those Units not separated will continue to trade on Nasdaq under the symbol “DPCSU.” See “—Recent Developments” below regarding a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market.
On May 5, 2023, certain of our unaffiliated investors (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with
the Sponsor, pursuant to which the Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A ordinary shares (the “Investor Shares”) in connection with the First Extension (as defined below) and (ii) vote the
Investor Shares in favor of the First Extension. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B ordinary shares in connection with an
extension until November 12, 2023 and (ii) to the extent our board of directors agrees to further extend the date up to three times by an additional month each time until February 12, 2024 to consummate its Business Combination, an aggregate of
up to 1,500,000 Class B ordinary shares, which includes the Class B ordinary shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.
On May 10, 2023, we held an extraordinary general meeting of shareholders at which our shareholders approved, by special resolution, a proposal to amend and restate the
Company’s amended and restated memorandum and articles of association to extend the date (the “Extension Date”) by which we must (1) consummate our Business Combination, (2) cease our operations except for the purpose of winding up if we fail
to complete such Business Combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Public Offering, from May 12, 2023 to November 12, 2023, with up to three optional additional extensions by an
additional month each time, at the option of our board of directors, until February 12, 2024 (the “First Extension”). In connection with the First Extension, shareholders holding 18,940,598 Class A ordinary shares exercised their right to
redeem such shares at a per share redemption price of $10.51. As a result, approximately $199.0 million was removed from our Trust Account to pay such holders.
On November 8, 2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until December 12, 2023. On December 8, 2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until December 12, 2023. On January 8, 2024, our board of directors approved the extension of the date by which we are required to complete our Business Combination until February 12, 2024.
On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we entered into an amendment to the investment management trust agreement by and between the Company and Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account (“Continental”), to allow for Continental to hold all funds in the Trust Account uninvested or in cash in an interest-bearing bank demand deposit account. On the same day, we instructed Continental to liquidate the U.S. government treasury obligations and money market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of consummation of our Business Combination or liquidation. Interest on such demand deposit account is variable and therefore such rate of interest may decrease or increase significantly. As a result, following such liquidation, we may receive less interest on the funds held in the Trust Account, which would reduce the dollar amount public shareholders would receive upon any redemption or liquidation of the Company.
As of the date of this Annual Report on Form 10-K, we have not identified a Business Combination target.
Recent Developments
Second Extraordinary General Meeting
On November 8, 2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until December 12, 2023. On December 8, 2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until December 12, 2023. On January 8, 2024, our board of directors approved the extension of the date by which we are required to complete our Business Combination until February 12, 2024.
On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we entered into an amendment to the investment management trust agreement by and between the Company and Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account (“Continental”), to allow for Continental to hold all funds in the Trust Account uninvested or in cash in an interest-bearing bank demand deposit account. On the same day, we instructed Continental to liquidate the U.S. government treasury obligations and money market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of consummation of our Business Combination or liquidation. Interest on such demand deposit account is variable and therefore such rate of interest may decrease or increase significantly. As a result, following such liquidation, we may receive less interest on the funds held in the Trust Account, which would reduce the dollar amount public shareholders would receive upon any redemption or liquidation of the Company.
As of the date of this Annual Report on Form 10-K, we have not identified a Business Combination target.
Recent Developments
Second Extraordinary General Meeting
On February 8, 2024, we held a second extraordinary general meeting of shareholders at which our shareholders approved, by special resolution, a proposal to amend and restate
the Company’s second amended and restated memorandum and articles of association to extend the Extension Date from February 12, 2024 to November 12, 2024 (the “Second Extension”). In connection with the Second Extension, holders of additional
2,559,402 Class A ordinary shares properly exercised their right to redeem their Class A ordinary shares for cash at a redemption price of approximately $10.96 per share. As a result, an aggregate of approximately $28 million was removed from
our Trust Account to pay such holders. Following this redemption, we had 1,500,000 Class A ordinary shares with redemption rights outstanding, and approximately $16.4 million remained in the Trust Account.
In connection with the approval of the Second Extension, the Sponsor has agreed to deposit on a monthly basis, or pro rata portion thereof if less than a month, $49,500 into our
Trust Account for the benefit of our public shareholders (the “Extension Deposit”), until the earlier of (i) the date of the extraordinary general meeting held in connection with the shareholder vote to approve a Business Combination and (ii)
November 12, 2024 (or any earlier date of termination, dissolution or winding up of the Company as determined in the sole discretion of our board of directors). The Sponsor made the first Extension Deposit on February 12, 2024 and the
second Extension Deposit on March 12, 2024.
Pursuant to the terms of the third amended and restated memorandum and articles of association, on February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into Class A ordinary shares (such shares, the “Converted Shares”). The Initial Shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if we fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer included in the letter agreement entered into by and between the Initial Shareholders and us in connection with our Public Offering. Following such conversion, and as a result of the redemptions described above, as of March 25, 2024, we have an aggregate of 7,249,997 Class A ordinary shares issued and outstanding, of which 1,500,000 Class A ordinary shares issued and outstanding are with redemption rights, and three Founder Shares issued and outstanding.
Application for Transfer to The Nasdaq Capital Market
On August 21, 2023, we received a letter from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that that we were not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our listed securities maintain a minimum Market Value of Listed Securities (“MVLS”) of $50 million (the “MVLS Rule”). Subsequently on March 11, 2024, the Nasdaq Staff notified us that we have regained compliance with the MVLS Rule. On October 12, 2023, we received a second letter from the Nasdaq Staff notifying us that we were not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires that the Company maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). To resolve the deficiencies and regain compliance with the Nasdaq continued listing requirements, we submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024 (the "Transfer Application"). On March 26, 2024, the Nasdaq Staff notified us that our Transfer Application has been approved, and that our Units, Class A ordinary shares and Public Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on April 4, 2024.
Pursuant to the terms of the third amended and restated memorandum and articles of association, on February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into Class A ordinary shares (such shares, the “Converted Shares”). The Initial Shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if we fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer included in the letter agreement entered into by and between the Initial Shareholders and us in connection with our Public Offering. Following such conversion, and as a result of the redemptions described above, as of March 25, 2024, we have an aggregate of 7,249,997 Class A ordinary shares issued and outstanding, of which 1,500,000 Class A ordinary shares issued and outstanding are with redemption rights, and three Founder Shares issued and outstanding.
Application for Transfer to The Nasdaq Capital Market
On August 21, 2023, we received a letter from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that that we were not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our listed securities maintain a minimum Market Value of Listed Securities (“MVLS”) of $50 million (the “MVLS Rule”). Subsequently on March 11, 2024, the Nasdaq Staff notified us that we have regained compliance with the MVLS Rule. On October 12, 2023, we received a second letter from the Nasdaq Staff notifying us that we were not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires that the Company maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). To resolve the deficiencies and regain compliance with the Nasdaq continued listing requirements, we submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024 (the "Transfer Application"). On March 26, 2024, the Nasdaq Staff notified us that our Transfer Application has been approved, and that our Units, Class A ordinary shares and Public Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on April 4, 2024.
Our Business Strategy
We believe that our management team and our seasoned team of executives’ (the “Industry Advisors”), including Scott Savitz, Lars Albright, Diane Hessan, Leonard Schlesinger, Jason Krantz, Jason Robins, Peggy Koenig, and Mark McWeeny, track record of identifying and sourcing transactions positions us well to appropriately evaluate potential business combinations and select a business combination target that will be well received by the public markets. Additionally, we believe that Data Point Capital’s (“Data Point”) extensive experience in building businesses, sourcing deals, investing in and serving on the boards of companies, and numerous successful exits further increases the chances of successfully identifying a quality business where we can employ our best practices to improve performance and value creation. Our sourcing process leverages our extensive relationships as well as the extensive networks of our Industry Advisors, which we believe should provide us with a number of business combination opportunities.
Our business strategy is focused on the identification and completion of a Business Combination with a company that can benefit from the strategic and transactional experience of our Sponsor, management team, and Industry Advisors to catalyze and enhance the company, thereby creating shareholder value. We have chosen Industry Advisors with specific connectivity and experience in our core tech-enabled consumer and technology sectors. Further, we believe that examining target opportunities with the support of our Industry Advisors will increase the likelihood of finding an acquisition target that will lead to greater shareholder value creation.
We believe that our management team and our seasoned team of executives’ (the “Industry Advisors”), including Scott Savitz, Lars Albright, Diane Hessan, Leonard Schlesinger, Jason Krantz, Jason Robins, Peggy Koenig, and Mark McWeeny, track record of identifying and sourcing transactions positions us well to appropriately evaluate potential business combinations and select a business combination target that will be well received by the public markets. Additionally, we believe that Data Point Capital’s (“Data Point”) extensive experience in building businesses, sourcing deals, investing in and serving on the boards of companies, and numerous successful exits further increases the chances of successfully identifying a quality business where we can employ our best practices to improve performance and value creation. Our sourcing process leverages our extensive relationships as well as the extensive networks of our Industry Advisors, which we believe should provide us with a number of business combination opportunities.
Our business strategy is focused on the identification and completion of a Business Combination with a company that can benefit from the strategic and transactional experience of our Sponsor, management team, and Industry Advisors to catalyze and enhance the company, thereby creating shareholder value. We have chosen Industry Advisors with specific connectivity and experience in our core tech-enabled consumer and technology sectors. Further, we believe that examining target opportunities with the support of our Industry Advisors will increase the likelihood of finding an acquisition target that will lead to greater shareholder value creation.
Our Industry Advisors have been chief executive officers, senior executives, and board members of public and private tech-enabled consumer and technology companies. We believe
the Industry Advisors will enhance our value proposition to potential business combination partners given their collective expertise, operational and strategic capabilities, and track record in their respective sectors. Our Industry Advisors
have experience in:
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Founding companies that have scaled into large, successful businesses;
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Operating companies, setting and changing strategies and capital allocation, and identifying, monitoring and recruiting world-class talent;
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Acquiring and integrating companies;
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Developing and growing companies, both organically and through acquisitions and strategic transactions and expanding the product range and geographic footprint of
businesses;
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Sourcing, structuring, and selling businesses;
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Accessing the capital markets, including financing businesses and helping companies transition to public ownership; and
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Engaging with public market analysts and investors to help companies better communicate their business model, opportunity and strategy to maximize value for their
shareholders.
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Our Competitive Strengths
We believe we have the following competitive strengths which position us favorably to identify an attractive business combination candidate:
Proven Ability to Acquire, Build and Successfully Exit Tech-enabled Consumer and Technology Businesses
Our management team and Industry Advisors have extensive operating experience and have demonstrated the ability to scale businesses in the tech-enabled consumer and technology sectors. Members of our management team and Industry Advisors have served as founders, executives, advisors, investors and board members to companies across all stages of business lifecycles and have managed companies and investment strategies across numerous markets and economic cycles. For example, Scott Savitz, our Chairman, founded Shoebuy.com in 1999 and served as CEO through its sale to InterActive Corporation. Under his guidance, Shoebuy grew into one of the largest online retailers in the country, with over 1 million products and $3.5 billion in inventory available for sale, serving over 8 million visitors a month. Our management team, Board members, and Industry Advisors have a long and successful track record of building companies to successful exits and/or strategic investments, including: Brightcove (NASDAQ: BCOV), CLYPD sale to AT&T, Communispace sale to Omnicom, Definitive Healthcare (NASDAQ: DH), DraftKings IPO via a SPAC (NASDAQ: DKNG), Eastern Bank (NASDAQ: EBC), m-Qube sale to VeriSign, Paintzen sale to PPG Industries, Panera Bread, Quattro Wireless sale to Apple, Restoration Hardware (NYSE: RH), SessionM sale to MasterCard and Shoebuy.com sale to InterActive Corporation.
Deep Domain Expertise in Target Markets and Ability to Identify Compelling Business Models
While we may pursue a transaction in any sector, we believe that the tech-enabled consumer and technology sectors are poised for continued significant growth driven by innovation and disruption. We have the right experience for consummating a business combination in these sectors. Our management team, Industry Advisors, and independent directors have held senior executive roles, including as CEOs, sat on the board of directors, or invested in the following companies in our target sectors:
We believe we have the following competitive strengths which position us favorably to identify an attractive business combination candidate:
Proven Ability to Acquire, Build and Successfully Exit Tech-enabled Consumer and Technology Businesses
Our management team and Industry Advisors have extensive operating experience and have demonstrated the ability to scale businesses in the tech-enabled consumer and technology sectors. Members of our management team and Industry Advisors have served as founders, executives, advisors, investors and board members to companies across all stages of business lifecycles and have managed companies and investment strategies across numerous markets and economic cycles. For example, Scott Savitz, our Chairman, founded Shoebuy.com in 1999 and served as CEO through its sale to InterActive Corporation. Under his guidance, Shoebuy grew into one of the largest online retailers in the country, with over 1 million products and $3.5 billion in inventory available for sale, serving over 8 million visitors a month. Our management team, Board members, and Industry Advisors have a long and successful track record of building companies to successful exits and/or strategic investments, including: Brightcove (NASDAQ: BCOV), CLYPD sale to AT&T, Communispace sale to Omnicom, Definitive Healthcare (NASDAQ: DH), DraftKings IPO via a SPAC (NASDAQ: DKNG), Eastern Bank (NASDAQ: EBC), m-Qube sale to VeriSign, Paintzen sale to PPG Industries, Panera Bread, Quattro Wireless sale to Apple, Restoration Hardware (NYSE: RH), SessionM sale to MasterCard and Shoebuy.com sale to InterActive Corporation.
Deep Domain Expertise in Target Markets and Ability to Identify Compelling Business Models
While we may pursue a transaction in any sector, we believe that the tech-enabled consumer and technology sectors are poised for continued significant growth driven by innovation and disruption. We have the right experience for consummating a business combination in these sectors. Our management team, Industry Advisors, and independent directors have held senior executive roles, including as CEOs, sat on the board of directors, or invested in the following companies in our target sectors:
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Tech-enabled Consumer: Shoebuy.com; DraftKings; Rue Gilt Groupe; Restoration Hardware; Eastern Bank; Resident; Rent the Runway; CABA Design; Monument; FlexCar;
CoachUp; Blitsy; and Paintzen.
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Technology: SessionM; Communispace; Definitive Healthcare; Infinata; CLYPD; Returnalyze; Reblaze; Vee24; UpShift; Brightcove; Yieldify; Jebbit; Aperio; Black Kite;
JobGet; connectRN; Quattro Wireless; and Raptor Maps.
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This depth of experience provides us with significant deal flow, market insights, pattern recognition, and a well-established reputation within the target sectors.
Diverse Network of Entrepreneurs and Industry Advisors Bring Operating Expertise and Will Generate Attractive Investment Opportunities
We believe that our management team and Industry Advisors’ track record of identifying and sourcing investment candidates’ positions us well to efficiently evaluate numerous potential business combinations and select a business combination target that will be well received by the public markets. Our sourcing process leverages our management teams’ and Industry Advisors’ extensive relationships in the entrepreneurial ecosystem including management teams of private and public companies, venture capital sponsors, private equity sponsors, other public investors, investment bankers, lenders, restructuring advisers, attorneys, accountants, and other consultants and intermediaries. In addition, we deploy a proactive sourcing strategy to identify companies where we believe the combination of our collective operating experience, relationships, capital, and capital markets expertise can be catalysts to transform a target company and create value for our shareholders. The combination of these deal sources is likely to lead to potential business combination opportunities and the evaluation capabilities of our affiliate, Data Point, will enable us to quickly select attractive investment candidates amidst the number of opportunities that are identified. Further, our affiliate, Data Point, evaluates numerous businesses each year, giving us the ability to identify attractive investment candidates amidst the wide funnel of opportunities reviewed.
Differentiated Investment Philosophy and Collaborate Approach Designed to Identify and Rapidly Grow Market Leaders
We are focusing on identifying and collaborating with successful founders and management teams with disruptive businesses in attractive technology markets. Data Point has demonstrated its ability to identify category trends and companies that are emerging as consumer and enterprise tech winners early in their development. Data Point has a history of closely collaborating with portfolio executive teams to support the successful development of high performing, market leaders. We believe the Public Offering allowed us to establish a creative and flexible platform to partner with talented entrepreneurs to build an exceptional business. While we continue to believe that traditional initial public offerings and direct listings may be an appropriate transaction path for many companies, we also believe that going public via a special purpose acquisition company, or SPAC, will be the optimal choice for a wide range of high-growth technology companies. Our deep network, proven track record, focus on disruptive businesses, and experience supporting companies across the whole life cycle of developing high performing consumer and enterprise technology businesses makes us attractively positioned to identify and execute a successful business combination. Our management team, directors and Data Point have extensive operational, commercial and transactional experience with companies in our target sectors, and we intend to use these skills and expertise to identify market leaders for a Business Combination.
Acquisition Criteria
We believe we have the opportunity to pursue a differentiated set of potential business combination targets due to our management team’s, our Sponsor’s, and the Industry Advisors’ strong networks and experience in driving growth in businesses in order to create value for shareholders. Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses and set us apart from other sources of capital pursuing target businesses in our areas of focus. We have used, and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our Business Combination with a target business that does not meet these criteria and guidelines. We seek to acquire companies that we believe:
Diverse Network of Entrepreneurs and Industry Advisors Bring Operating Expertise and Will Generate Attractive Investment Opportunities
We believe that our management team and Industry Advisors’ track record of identifying and sourcing investment candidates’ positions us well to efficiently evaluate numerous potential business combinations and select a business combination target that will be well received by the public markets. Our sourcing process leverages our management teams’ and Industry Advisors’ extensive relationships in the entrepreneurial ecosystem including management teams of private and public companies, venture capital sponsors, private equity sponsors, other public investors, investment bankers, lenders, restructuring advisers, attorneys, accountants, and other consultants and intermediaries. In addition, we deploy a proactive sourcing strategy to identify companies where we believe the combination of our collective operating experience, relationships, capital, and capital markets expertise can be catalysts to transform a target company and create value for our shareholders. The combination of these deal sources is likely to lead to potential business combination opportunities and the evaluation capabilities of our affiliate, Data Point, will enable us to quickly select attractive investment candidates amidst the number of opportunities that are identified. Further, our affiliate, Data Point, evaluates numerous businesses each year, giving us the ability to identify attractive investment candidates amidst the wide funnel of opportunities reviewed.
Differentiated Investment Philosophy and Collaborate Approach Designed to Identify and Rapidly Grow Market Leaders
We are focusing on identifying and collaborating with successful founders and management teams with disruptive businesses in attractive technology markets. Data Point has demonstrated its ability to identify category trends and companies that are emerging as consumer and enterprise tech winners early in their development. Data Point has a history of closely collaborating with portfolio executive teams to support the successful development of high performing, market leaders. We believe the Public Offering allowed us to establish a creative and flexible platform to partner with talented entrepreneurs to build an exceptional business. While we continue to believe that traditional initial public offerings and direct listings may be an appropriate transaction path for many companies, we also believe that going public via a special purpose acquisition company, or SPAC, will be the optimal choice for a wide range of high-growth technology companies. Our deep network, proven track record, focus on disruptive businesses, and experience supporting companies across the whole life cycle of developing high performing consumer and enterprise technology businesses makes us attractively positioned to identify and execute a successful business combination. Our management team, directors and Data Point have extensive operational, commercial and transactional experience with companies in our target sectors, and we intend to use these skills and expertise to identify market leaders for a Business Combination.
Acquisition Criteria
We believe we have the opportunity to pursue a differentiated set of potential business combination targets due to our management team’s, our Sponsor’s, and the Industry Advisors’ strong networks and experience in driving growth in businesses in order to create value for shareholders. Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses and set us apart from other sources of capital pursuing target businesses in our areas of focus. We have used, and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our Business Combination with a target business that does not meet these criteria and guidelines. We seek to acquire companies that we believe:
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Can achieve rapid revenue growth in a large and growing market.
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Have achieved scale and are on a predictable growth trajectory. Additionally, we seek businesses that are profitable, or have a clear path to profitability, and the
ability to grow that profitability over time.
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Have a defensible market position with demonstrated advantages compared to competitors that create barriers to entry against new potential market entrants. We intend
to identify businesses with defensible technology, intellectual property rights, branding or market positioning. Further, we strongly value an organization’s ability to evolve with a changing market in order to continue to be the
disruptor rather than the disrupted as the business gains scale.
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Have significant embedded and/or underexploited expansion opportunities. This can be accomplished through a combination of accelerating organic growth and finding
attractive bolt-on acquisition targets. Our management team and Industry Advisors have significant experience in identifying such targets and helping target management assess the strategic and financial fit of potential bolt-on
acquisitions. Similarly, we believe our management team and Industry Advisors have the expertise to assess the likely synergies between target companies and help a target effectively integrate acquisitions.
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Exhibit unrecognized value or other characteristics that we believe represent upside in the public markets 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.
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Have strong, experienced management teams, or provide a platform to assemble an effective management team with a track record of driving growth, profitability, and
value creation.
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Are prepared to be public companies and will benefit from having access to the public markets in order to enhance their ability to grow, pursue accretive acquisitions,
high-return capital projects, and/or strengthen their balance sheet.
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Any evaluation relating to the merits of a particular Business Combination may be based, to the extent relevant, on these general criteria and guidelines as well as other
considerations, factors, criteria, and guidelines that our management team may deem relevant. In the event that we decide to enter into our Business Combination with a target business that does not meet the above criteria and guidelines, we
will disclose that the target business does not meet the above criteria and guidelines in our shareholder communications related to our Business Combination, which, as discussed in this Annual Report on Form 10-K, would be in the form of
proxy materials or tender offer documents, as applicable, that we would file with the SEC.
In addition to any potential business combination targets we may identify on our own, we anticipate that other target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds, and venture capital funds.
Our Acquisition Process
We have not selected our business combination target. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which may encompass, as applicable and among other things, commercial and industry due diligence, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, and a review of financial and other information about the target and its industry and other reviews as we deem appropriate. To help facilitate this evaluation we may rely on input from our management team, Industry Advisors and third-party due diligence providers. We also intend to leverage the operational and capital allocation planning experience of Data Point, our management team, and our Industry Advisors. Although our management team will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect a target business.
In addition to any potential business combination targets we may identify on our own, we anticipate that other target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds, and venture capital funds.
Our Acquisition Process
We have not selected our business combination target. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which may encompass, as applicable and among other things, commercial and industry due diligence, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, and a review of financial and other information about the target and its industry and other reviews as we deem appropriate. To help facilitate this evaluation we may rely on input from our management team, Industry Advisors and third-party due diligence providers. We also intend to leverage the operational and capital allocation planning experience of Data Point, our management team, and our Industry Advisors. Although our management team will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect a target business.
We are not prohibited from pursuing our Business Combination with a target that is affiliated with our Sponsor, Data Point, our directors, or our officers or from making the
acquisition through a joint venture or other form of shared ownership with our Sponsor, our directors, officers or their affiliates. In the event we seek to complete our Business Combination with a target that is affiliated with our Sponsor,
our directors or officers, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or an independent
accounting firm (other than our registered public accounting firm) that such a Business Combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Each of our directors and officers may, directly or indirectly, own Founder Shares and/or Private Placement Warrants and, accordingly, may have a conflict of interest in
determining whether a particular target business is an appropriate business with which to effectuate our Business Combination. Further, such directors and officers may have a conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such directors and officers was included by a target business as a condition to any agreement with respect to our Business Combination.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. However, we do not expect these duties to present a significant conflict of interest with our search for a Business Combination.
Our directors and officers are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Certain of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Initial Business Combination
Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount held in trust) at the time of our signing a definitive agreement in connection with our Business Combination. We refer to this as the “80% of net assets test.” If our board of directors is not able to independently determine the fair market value of our Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent accounting firm (other than our registered public accounting firm) that regularly renders fairness opinions with respect to the satisfaction of such criteria.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. However, we do not expect these duties to present a significant conflict of interest with our search for a Business Combination.
Our directors and officers are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Certain of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Initial Business Combination
Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount held in trust) at the time of our signing a definitive agreement in connection with our Business Combination. We refer to this as the “80% of net assets test.” If our board of directors is not able to independently determine the fair market value of our Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent accounting firm (other than our registered public accounting firm) that regularly renders fairness opinions with respect to the satisfaction of such criteria.
We anticipate structuring our Business Combination so that the post-transaction company in which our public shareholders own shares will own or acquire 100% of the equity
interests or assets of the target business or businesses. We may, however, structure our Business Combination such that the post-transaction company owns or acquires 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 (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. For example, we could pursue a transaction in which we issue a substantial number of new ordinary shares or preference shares in exchange for all of the outstanding
capital stock of a target in order to consummate such transaction or issue a substantial number of new shares to third parties in connection with financing our Business Combination. In this case, we would acquire a 100% controlling interest
in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our Business Combination could own less than a majority of our outstanding shares subsequent to our Business
Combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired by us is what will
be taken into account for purposes of Nasdaq’s 80% of net assets test. If the Business Combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions.
Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% of net assets test.
Corporate Information
We are 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”). 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 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the Close Date, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are held by non-affiliates equals or exceeds $700.0 million as of the end of that fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Class A ordinary shares held by non-affiliates equals or exceeds $250.0 million as of the end of that fiscal year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded $100.0 million during such completed fiscal year or the market value of our ordinary shares held by non-affiliates equals or exceeds $700.0 million as of the end of that fiscal year’s second fiscal quarter.
Competition
In identifying, evaluating and selecting a target business for our Business Combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies, operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. While we believe there are target businesses we could potentially acquire with the funds held in the Trust Account, our ability to acquire larger target businesses may be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available to us for our Business Combination and our outstanding Public Warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating our Business Combination.
Corporate Information
We are 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”). 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 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the Close Date, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are held by non-affiliates equals or exceeds $700.0 million as of the end of that fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Class A ordinary shares held by non-affiliates equals or exceeds $250.0 million as of the end of that fiscal year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded $100.0 million during such completed fiscal year or the market value of our ordinary shares held by non-affiliates equals or exceeds $700.0 million as of the end of that fiscal year’s second fiscal quarter.
Competition
In identifying, evaluating and selecting a target business for our Business Combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies, operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. While we believe there are target businesses we could potentially acquire with the funds held in the Trust Account, our ability to acquire larger target businesses may be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available to us for our Business Combination and our outstanding Public Warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating our Business Combination.
Facilities
We currently maintain our executive offices at 341 Newbury Street, 6th Floor, Boston, MA 02115. Our Sponsor currently provides us with office space at no cost. We consider our
current office space adequate for our current operations.
Employees
We currently have two executive officers and do not intend to have any full-time employees prior to the completion of our Business Combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they are devoting as much of their time as they deem necessary to our affairs until we have completed our Business Combination. The amount of time that any such person devotes in any time period to our company will vary based on whether a target business has been selected for our Business Combination and the current stage of the business combination process.
Employees
We currently have two executive officers and do not intend to have any full-time employees prior to the completion of our Business Combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they are devoting as much of their time as they deem necessary to our affairs until we have completed our Business Combination. The amount of time that any such person devotes in any time period to our company will vary based on whether a target business has been selected for our Business Combination and the current stage of the business combination process.
Summary of Risk Factors
Below is a summary of the principal risk factors that make an investment in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this summary of risk factors, and other risks that we face, can be found below in “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K, including, but not limited to the following:
Below is a summary of the principal risk factors that make an investment in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this summary of risk factors, and other risks that we face, can be found below in “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K, including, but not limited to the following:
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We have no operating history and, accordingly, you have no basis on which to evaluate our ability to achieve our business objective.
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We may not be able to consummate a Business Combination before November 12, 2024 or during any Extension Period, in which case we would
cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. |
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If we have not completed our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may be forced to wait beyond such date before redemption proceeds from our Trust Account become available. |
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Our shareholders may not be afforded an opportunity to vote on our proposed Business Combination, which means we may complete our Business
Combination even though a majority of our public shareholders do not support such a combination. |
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Our Initial Shareholders will be able to approve the Business Combination, regardless of how our public shareholders vote. |
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Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of such business combination. |
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The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a Business Combination with a target. |
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The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. |
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The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares. |
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The net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024, and we will depend on loans from our Sponsor, its affiliates or members of our management team to fund our search and to complete our Business Combination. |
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The requirement that we consummate a Business Combination by November 12, 2024 may give potential target businesses leverage over us in negotiating a Business Combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our Business Combination on terms that would produce value for our shareholders. |
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Our search for a Business Combination, and any target business with which we ultimately consummate a Business Combination, may be materially adversely affected by the ongoing military conflicts and other geopolitical uncertainties. |
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Increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate a Business Combination. |
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Our Sponsor, directors, executive officers, advisors or any of their affiliates may elect to purchase public shares or Warrants, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A ordinary shares or Public Warrants. |
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If we seek shareholder approval of our Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares. |
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Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our Business Combination. If we have not consummated our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless. |
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You do not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to
liquidate your investment, you may be forced to sell your public shares or Public Warrants, potentially at a loss. |
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The 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. |
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Our Initial Shareholders have a controlling interest in us and thus may exert control over actions requiring a shareholder vote, potentially in a manner that you do not support. |
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We have identified material weaknesses in our internal controls over financial reporting. The material weaknesses could continue to adversely affect our ability to report our results of operations
and financial condition accurately and in a timely manner.
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The funds in the Trust Account are currently held in cash in an interest-bearing account, and interest rate can vary significantly, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders may be less than $10.20 per share. |
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Since our Sponsor, executive officers and directors will lose their entire investment in us if our Business Combination is not completed (other than with respect to public shares they may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our Business Combination. |
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You will not be entitled to protections normally afforded to investors of many other blank check companies. |
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Our registered independent public accountants have included an explanatory paragraph on our ability to continue as a going concern in their report of registered independent public accounting firm. |
Risk Factors
You should consider carefully all of the risks described below, together with the other information contained in this Annual Report on Form 10-K. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Relating to our Search for, and Consummation of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks
We have no operating history and, accordingly, you have no basis on which to evaluate our ability to achieve our business
objective.
We are a blank check company established under the laws of the Cayman Islands with no operating results. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our Business Combination with one or more target businesses or assets. We have not yet selected our business combination target and may be unable to complete our Business
Combination. If we fail to complete our Business Combination, we will never generate any operating revenues.
We may not be able to consummate a Business Combination before November 12, 2024 or during any Extension Period, in which
case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable target business and consummate a Business Combination before November 12, 2024. Our ability to complete our Business Combination is dependent on a variety of factors, many of which are beyond our control, such as the due diligence and negotiation process with a Business Combination target, review process of the U.S. Securities and Exchange Commission of any Business Combination, the stock exchange listing process, general market conditions, volatility in the capital and debt markets, conflict and the other risks described herein. The decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, global macroeconomic conditions including heightened inflation and other geopolitical events (such as current or anticipated military conflict, including between Russia and Ukraine and the armed conflicts in the Middle East, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) may negatively impact businesses we may seek to acquire. Although we are required to offer shareholders redemption rights in connection with any shareholder vote to approve a Business Combination, or if we seek to extend the date by which we are required to complete our Business Combination at an extraordinary general meeting of shareholders to vote upon an amendment to our third amended and restated memorandum and articles of association for such extension (an “Extension”), and such extension period, the “Extension Period,” there may be no extraordinary general meeting of shareholders to vote upon our Business Combination or an Extension before November 12, 2024, the date by which we are required to complete our Business Combination or be forced to liquidate. Even if our Business Combination or an Extension is approved by our shareholders, it is possible that redemptions will leave us with insufficient cash to consummate our Business Combination on commercially acceptable terms, or at all. Other than in connection with a redemption offer or liquidation, our shareholders may be unable to recover their investment, except through sales of our securities on the open market. The price of our securities may be volatile, and there can be no assurance that shareholders will be able to dispose of our securities at favorable prices, or at all.
If we have not completed our Business Combination by November 12, 2024, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Due to certain provisions of the Companies Law, investors may be forced to wait beyond the prescribed time frame before the redemption proceeds of our Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from our Trust Account. In such case, our public shareholders may receive only $10.20 per public share, or less than $10.20 per public share, on the redemption of their shares, and our Warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
If we have not completed our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may be forced to wait beyond such date before redemption proceeds from our Trust Account become available.
We may not be able to find a suitable target business and consummate a Business Combination before November 12, 2024. Our ability to complete our Business Combination is dependent on a variety of factors, many of which are beyond our control, such as the due diligence and negotiation process with a Business Combination target, review process of the U.S. Securities and Exchange Commission of any Business Combination, the stock exchange listing process, general market conditions, volatility in the capital and debt markets, conflict and the other risks described herein. The decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, global macroeconomic conditions including heightened inflation and other geopolitical events (such as current or anticipated military conflict, including between Russia and Ukraine and the armed conflicts in the Middle East, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) may negatively impact businesses we may seek to acquire. Although we are required to offer shareholders redemption rights in connection with any shareholder vote to approve a Business Combination, or if we seek to extend the date by which we are required to complete our Business Combination at an extraordinary general meeting of shareholders to vote upon an amendment to our third amended and restated memorandum and articles of association for such extension (an “Extension”), and such extension period, the “Extension Period,” there may be no extraordinary general meeting of shareholders to vote upon our Business Combination or an Extension before November 12, 2024, the date by which we are required to complete our Business Combination or be forced to liquidate. Even if our Business Combination or an Extension is approved by our shareholders, it is possible that redemptions will leave us with insufficient cash to consummate our Business Combination on commercially acceptable terms, or at all. Other than in connection with a redemption offer or liquidation, our shareholders may be unable to recover their investment, except through sales of our securities on the open market. The price of our securities may be volatile, and there can be no assurance that shareholders will be able to dispose of our securities at favorable prices, or at all.
If we have not completed our Business Combination by November 12, 2024, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Due to certain provisions of the Companies Law, investors may be forced to wait beyond the prescribed time frame before the redemption proceeds of our Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from our Trust Account. In such case, our public shareholders may receive only $10.20 per public share, or less than $10.20 per public share, on the redemption of their shares, and our Warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
If we have not completed our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may be forced to wait beyond such date before redemption proceeds from our Trust Account become available.
If we have not completed our Business Combination by November 12, 2024, unless otherwise extended, the proceeds then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further
described herein. Any redemption of public share from the Trust Account will be effected automatically by function of our third amended and restated memorandum and articles of association prior to any voluntary winding up. If we are required
to wind up, liquidate the Trust Account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of
the Companies Act. In that case, investors may be forced to wait beyond November 12, 2024 (or at end of any Extension Period) before the redemption proceeds of our Trust Account become available to them, and they receive the return of their
pro rata portion of the proceeds from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our Business Combination or amend certain
provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation will public shareholders be
entitled to distributions if we do not complete our Business Combination and do not amend certain provisions of our third amended and restated memorandum and articles of association. Our third amended and restated memorandum and articles of
association provide that, if we wind up for any other reason prior to the consummation of our Business Combination, we will follow the foregoing procedures with respect to the liquidation of the Trust Account as promptly as reasonably
possible but not more than ten business days thereafter, subject to applicable Cayman Islands law.
Our Initial Shareholders will be able to approve the Business Combination regardless of how our public shareholders vote.
Our third amended and restated memorandum and articles of association provide that, if we seek shareholder approval, we will complete our Business Combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting. Our Initial Shareholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their Founder Shares and any public shares held by them in favor of our Business Combination. As a result, given that our Initial Shareholders own approximately 79% of our outstanding ordinary shares, we don’t need any additional public shares voted in favor of a Business Combination in order to have our Business Combination approved.
Your only opportunity to affect the investment decision regarding a potential Business Combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of such Business Combination.
The Initial Shareholders will be able to approve the Business Combination without favorable votes from any public shareholders. Accordingly, your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to exercising your redemption rights within the period of time set forth in the documents mailed to our public shareholders in which we describe our Business Combination in connection with the shareholder meeting held for the purpose of voting on whether to approve the Business Combination.
The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a Business Combination with a target.
Our third amended and restated memorandum and articles of association provide that, if we seek shareholder approval, we will complete our Business Combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting. Our Initial Shareholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their Founder Shares and any public shares held by them in favor of our Business Combination. As a result, given that our Initial Shareholders own approximately 79% of our outstanding ordinary shares, we don’t need any additional public shares voted in favor of a Business Combination in order to have our Business Combination approved.
Your only opportunity to affect the investment decision regarding a potential Business Combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of such Business Combination.
The Initial Shareholders will be able to approve the Business Combination without favorable votes from any public shareholders. Accordingly, your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to exercising your redemption rights within the period of time set forth in the documents mailed to our public shareholders in which we describe our Business Combination in connection with the shareholder meeting held for the purpose of voting on whether to approve the Business Combination.
The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a Business Combination with a target.
We may seek to enter into a Business Combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a
certain amount of cash. As of March 19, 2024, we had approximately $16.6 million in our Trust Account. If too many public shareholders exercise their redemption rights, we may not be able to meet such closing condition and, as a result, may
not be able to consummate the Business Combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination with us. If we are able to consummate a Business Combination, the per-share
value of shares held by non-redeeming shareholders will reflect our obligation to pay, among other fees, the deferred underwriting commissions owed by us in connection with our Public Offering.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not
allow us to complete the most desirable Business Combination or optimize our capital structure.
In connection with the First Extension and the Second Extension, shareholders holding an aggregate of 21,500,000 Class A ordinary shares exercised their redemption rights, and an aggregate of approximately $227 million has been removed from our Trust Account. In connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. At the time we enter into an agreement for our Business Combination, we will not know how many shareholders may exercise their redemption rights in connection with the shareholder meeting to vote to approve a Business Combination, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for additional third-party financing. Raising additional third-party financing may involve dilutive equity issuances and/or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriter will not be adjusted for any shares that are redeemed in connection with a Business Combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in the Trust Account will reflect our obligation to pay, among other fees, the entire deferred underwriting commissions.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our Business Combination would be unsuccessful increases. If our Business Combination is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market.
The net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024, and we will depend on loans from our Sponsor, its affiliates or members of our management team to fund our search and to complete our Business Combination.
Of the net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan, only approximately $409,643 as of December 31, 2023 was available to us outside the Trust Account to fund our working capital requirements, and we have a working capital deficit of $692,819. As a result, we will need to borrow funds from our Sponsor, its affiliates, members of our management team or other third parties to operate or be forced to liquidate. Neither our Sponsor, members of our management team nor their affiliates is under any obligation to us in such circumstances. Any such advances may be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our Business Combination. we do not expect to seek loans from parties other than our Sponsor, its affiliates or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
Of the funds currently available to us, we expect to use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we will need to seek additional funds to continue searching for, or conduct due diligence with respect to, a target business.
In connection with the First Extension and the Second Extension, shareholders holding an aggregate of 21,500,000 Class A ordinary shares exercised their redemption rights, and an aggregate of approximately $227 million has been removed from our Trust Account. In connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. At the time we enter into an agreement for our Business Combination, we will not know how many shareholders may exercise their redemption rights in connection with the shareholder meeting to vote to approve a Business Combination, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for additional third-party financing. Raising additional third-party financing may involve dilutive equity issuances and/or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriter will not be adjusted for any shares that are redeemed in connection with a Business Combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in the Trust Account will reflect our obligation to pay, among other fees, the entire deferred underwriting commissions.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our Business Combination would be unsuccessful increases. If our Business Combination is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market.
The net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024, and we will depend on loans from our Sponsor, its affiliates or members of our management team to fund our search and to complete our Business Combination.
Of the net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan, only approximately $409,643 as of December 31, 2023 was available to us outside the Trust Account to fund our working capital requirements, and we have a working capital deficit of $692,819. As a result, we will need to borrow funds from our Sponsor, its affiliates, members of our management team or other third parties to operate or be forced to liquidate. Neither our Sponsor, members of our management team nor their affiliates is under any obligation to us in such circumstances. Any such advances may be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our Business Combination. we do not expect to seek loans from parties other than our Sponsor, its affiliates or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
Of the funds currently available to us, we expect to use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we will need to seek additional funds to continue searching for, or conduct due diligence with respect to, a target business.
If we have not consummated our Business Combination before November 12, 2024 or the end of any Extension Period because we do not have sufficient funds available to us, we will
be forced to cease operations and liquidate the Trust Account. Consequently, our public shareholders may only receive an estimated $10.20 per public share, or possibly less, on our redemption of our public shares, and our Warrants will expire
worthless. See also “—Our registered independent public accountants have included an explanatory paragraph on our ability to continue as a going concern in their report of registered independent public accounting firm” and “—If third parties
bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
The requirement that we consummate a Business Combination before November 12, 2024 may give potential target businesses
leverage over us in negotiating a Business Combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine
our ability to complete our Business Combination on terms that would produce value for our shareholders.
Any potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must consummate a Business Combination by November 12, 2024, unless otherwise extended. Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our Business Combination with that particular target business, we may be unable to complete our Business Combination with any target business. This risk will increase as we get closer to the end of the time frame described above. In addition, we may have limited time to conduct due diligence and may enter into our Business Combination on terms that we would have rejected upon a more comprehensive investigation.
Increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate a Business Combination.
Increases in inflation and interest rates in the United States and elsewhere may lead to (i) increased price volatility for publicly traded securities, including ours, (ii) other national, regional and international economic disruptions, and (iii) uncertainty regarding the valuation of target businesses, any of which could make it more difficult for us to consummate a Business Combination.
Our Sponsor, directors, executive officers, advisors or any of their affiliates may elect to purchase public shares or Warrants, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A ordinary shares or Public Warrants.
Our Sponsor, directors, executive officers, advisors or any of their affiliates may purchase public shares or Public Warrants in privately negotiated transactions or in the open market either prior to or following the completion of our Business Combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase public shares or Public Warrants in such transactions.
In the event that our Sponsor, directors, executive officers, advisors or any of their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such transaction could be to (1) reduce the number of public shares tendered for redemption in order to maximize the amount of cash held in the Trust Account, (2) reduce the number of Public Warrants outstanding or vote such Public Warrants on any matters submitted to the public warrant holders for approval in connection with our Business Combination or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our Business Combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our Business Combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares or Public Warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
Any potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must consummate a Business Combination by November 12, 2024, unless otherwise extended. Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not complete our Business Combination with that particular target business, we may be unable to complete our Business Combination with any target business. This risk will increase as we get closer to the end of the time frame described above. In addition, we may have limited time to conduct due diligence and may enter into our Business Combination on terms that we would have rejected upon a more comprehensive investigation.
Increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate a Business Combination.
Increases in inflation and interest rates in the United States and elsewhere may lead to (i) increased price volatility for publicly traded securities, including ours, (ii) other national, regional and international economic disruptions, and (iii) uncertainty regarding the valuation of target businesses, any of which could make it more difficult for us to consummate a Business Combination.
Our Sponsor, directors, executive officers, advisors or any of their affiliates may elect to purchase public shares or Warrants, which may influence a vote on a proposed Business Combination and reduce the public “float” of our Class A ordinary shares or Public Warrants.
Our Sponsor, directors, executive officers, advisors or any of their affiliates may purchase public shares or Public Warrants in privately negotiated transactions or in the open market either prior to or following the completion of our Business Combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase public shares or Public Warrants in such transactions.
In the event that our Sponsor, directors, executive officers, advisors or any of their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such transaction could be to (1) reduce the number of public shares tendered for redemption in order to maximize the amount of cash held in the Trust Account, (2) reduce the number of Public Warrants outstanding or vote such Public Warrants on any matters submitted to the public warrant holders for approval in connection with our Business Combination or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our Business Combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our Business Combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares or Public Warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our Business
Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our Business Combination. Despite our compliance with
these rules, if a shareholder fails to receive our proxy solicitation or tender offer materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer
materials, as applicable, that we will furnish to holders of our public shares in connection with our Business Combination will describe the various procedures that must be complied with in order to validly redeem or tender public shares. For
example, we may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the proxy materials documents mailed to such holders, or up to two business days prior to the scheduled vote on the proposal to approve the Business Combination in the event we distribute proxy materials, or to deliver their
shares to the transfer agent electronically. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.
If we seek shareholder approval of our Business Combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If we seek shareholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant to the tender offer rules, our third amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Public Offering, which we refer to as the “Excess Shares,” without our prior consent. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our Business Combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our Business Combination. If we have not consummated our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
We have encountered, and expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. They may have longer periods to complete a business combination, bigger shareholder base and more funds in their trust accounts and more working capital available for the completion of a business combination. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. Additionally, many of these blank check companies are sponsored by entities or persons that have significant experience with completing business combinations. Given the limited funds we have in our Trust Account and as working capital, and given the limited time we have to complete a Business Combination by November 12, 2024, unless otherwise extended, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our Business Combination in conjunction with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our Business Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we have not consummated our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
If we seek shareholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant to the tender offer rules, our third amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Public Offering, which we refer to as the “Excess Shares,” without our prior consent. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our Business Combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our Business Combination. If we have not consummated our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
We have encountered, and expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. They may have longer periods to complete a business combination, bigger shareholder base and more funds in their trust accounts and more working capital available for the completion of a business combination. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. Additionally, many of these blank check companies are sponsored by entities or persons that have significant experience with completing business combinations. Given the limited funds we have in our Trust Account and as working capital, and given the limited time we have to complete a Business Combination by November 12, 2024, unless otherwise extended, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our Business Combination in conjunction with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our Business Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination. If we have not consummated our Business Combination by November 12, 2024, unless otherwise extended, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
Subsequent to our completion of our Business Combination, we may be required to take write-downs or write-offs,
restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our Business Combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our Business Combination, and results of operations.
On January 24, 2024, the SEC issued final rules (the “2024 SPAC Rules”), effective as of July 1, 2024, that formally adopted some of the SEC’s proposed rules for SPACs that were released on March 30, 2022. The 2024 SPAC Rules, among other items, impose additional disclosure requirements in business combination transactions involving SPACs and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, including requiring disclosure of all material bases of the projections and all material assumptions underlying the projections; and increase the potential liability of certain participants in proposed business combination transactions. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act of 1940, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules and related guidance may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our Business Combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our Business Combination, and results of operations.
On January 24, 2024, the SEC issued final rules (the “2024 SPAC Rules”), effective as of July 1, 2024, that formally adopted some of the SEC’s proposed rules for SPACs that were released on March 30, 2022. The 2024 SPAC Rules, among other items, impose additional disclosure requirements in business combination transactions involving SPACs and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, including requiring disclosure of all material bases of the projections and all material assumptions underlying the projections; and increase the potential liability of certain participants in proposed business combination transactions. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act of 1940, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules and related guidance may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities,
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each of which may make it difficult for us to complete our Business Combination.
In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
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In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a
business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S.
government securities and cash items) on an unconsolidated basis. Our business is to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy
businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our principal activities subject us to the Investment Company Act. In order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we have been holding the funds in our Trust Account in cash in an interest bearing demand account since November 7, 2023. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The Public Offering was not intended for persons who are seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our Business Combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our third amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent our completing a Business Combination by November 12, 2024, our return of the funds held in the Trust Account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a Business Combination. If we have not consummated our Business Combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our Business Combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may pursue business combination opportunities in any sector, except that we will not, under our third amended and restated memorandum and articles of association, be permitted to effectuate our Business Combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our Units, Class A ordinary shares or Public Warrants will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
We do not believe that our principal activities subject us to the Investment Company Act. In order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we have been holding the funds in our Trust Account in cash in an interest bearing demand account since November 7, 2023. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The Public Offering was not intended for persons who are seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our Business Combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our third amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent our completing a Business Combination by November 12, 2024, our return of the funds held in the Trust Account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a Business Combination. If we have not consummated our Business Combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our Business Combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may pursue business combination opportunities in any sector, except that we will not, under our third amended and restated memorandum and articles of association, be permitted to effectuate our Business Combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our Business Combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our Units, Class A ordinary shares or Public Warrants will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target
businesses, we may enter into our Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our Business Combination may not have attributes entirely
consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our Business Combination will not have all of these positive attributes. If we complete our Business Combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval of our Business Combination if the target business does not meet our general criteria and guidelines. If we have not consummated our Business Combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our Business Combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete all appropriate due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate.
To the extent we complete our Business Combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our Business Combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful as a combination with a smaller, less complex organization.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our Business Combination will not have all of these positive attributes. If we complete our Business Combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval of our Business Combination if the target business does not meet our general criteria and guidelines. If we have not consummated our Business Combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our Warrants will expire worthless.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our Business Combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete all appropriate due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate.
To the extent we complete our Business Combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our Business Combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful as a combination with a smaller, less complex organization.
We are not required to obtain an valuation opinion from an independent accounting or investment banking firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our shareholders from a financial point of view.
Unless we complete our Business Combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent entity that commonly renders valuation opinions that the price we are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our Business Combination.
Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific Business Combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our Business Combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our Business Combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our Business Combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete our Business Combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although we have no commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our Business Combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect the per-share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
Unless we complete our Business Combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent entity that commonly renders valuation opinions that the price we are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our Business Combination.
Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific Business Combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our Business Combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our Business Combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our Business Combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete our Business Combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although we have no commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our Business Combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect the per-share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the
maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our Class A ordinary shares;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A 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 only be able to complete one business combination with the proceeds of the Public Offering and the sale of the
Private Placement Warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.
We may effectuate our Business Combination with a single-target business or multiple-target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our Business Combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our Business Combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory 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:
We may effectuate our Business Combination with a single-target business or multiple-target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our Business Combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our Business Combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory 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, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our Business Combination.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our Business Combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our Business Combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our Business Combination with a private company about which little information is available,
which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to effectuate our Business Combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential Business Combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete a Business Combination.
The market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete a Business Combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense and/or accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, after completion of any Business Combination, our directors and officers could be subject to potential liability from claims arising from conduct alleged to have occurred prior to such Business Combination. As a result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity and could interfere with or frustrate our ability to consummate a Business Combination on terms favorable to our investors.
After our Business Combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our Business Combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.
Our Business Combination or reincorporation may result in taxes imposed on shareholders or warrant holders.
We may, in connection with our Business Combination and subject to requisite shareholder approval under the Companies Act, effect a business combination with a target company in another jurisdiction, reincorporate in the jurisdiction in which the target company or business is located, or reincorporate in another jurisdiction. Such transactions may require a shareholder or warrant holder to recognize taxable income in the jurisdiction in which the shareholder or warrant holder is a tax resident or in which its members are resident. We do not intend to make any cash distributions to shareholders or warrant holders to pay such taxes. Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership of us after any reincorporation in any jurisdiction, including any Domestication.
In pursuing our acquisition strategy, we may seek to effectuate our Business Combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential Business Combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete a Business Combination.
The market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete a Business Combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense and/or accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, after completion of any Business Combination, our directors and officers could be subject to potential liability from claims arising from conduct alleged to have occurred prior to such Business Combination. As a result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity and could interfere with or frustrate our ability to consummate a Business Combination on terms favorable to our investors.
After our Business Combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our Business Combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.
Our Business Combination or reincorporation may result in taxes imposed on shareholders or warrant holders.
We may, in connection with our Business Combination and subject to requisite shareholder approval under the Companies Act, effect a business combination with a target company in another jurisdiction, reincorporate in the jurisdiction in which the target company or business is located, or reincorporate in another jurisdiction. Such transactions may require a shareholder or warrant holder to recognize taxable income in the jurisdiction in which the shareholder or warrant holder is a tax resident or in which its members are resident. We do not intend to make any cash distributions to shareholders or warrant holders to pay such taxes. Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership of us after any reincorporation in any jurisdiction, including any Domestication.
Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an
otherwise advantageous Business Combination with some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to 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. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our Business Combination within the prescribed time frame.
Risks Relating to our Securities
You do not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or Public Warrants, potentially at a loss.
Our public shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of a Business Combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to certain limitations, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our third amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, and (iii) the redemption of our public shares if we have not completed our Business Combination by November 12, 2024, subject to applicable law and as further described herein. Public shareholders who elect to have their Class A ordinary shares redeemed in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the Trust Account upon the subsequent completion of a Business Combination or liquidation if we have not completed our Business Combination by November 12 ,2024, with respect to such Class A ordinary shares so redeemed. In no other circumstances does a public shareholder have any right or interest of any kind in the Trust Account. Holders of Warrants do not have any right to the proceeds held in the Trust Account with respect to the Warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or Public Warrants, potentially at a loss.
The Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Units, Class A ordinary shares and Public Warrants are currently listed on The Nasdaq Global Market, and we submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024. Although we believe we currently meet the minimum continued listing standards of The Nasdaq Capital Market set forth in the Nasdaq listing standards, our securities may not be listed on the Nasdaq in the future or prior to our Business Combination. In order to continue listing our securities on the Nasdaq prior to our Business Combination, we must maintain certain financial, distribution and share price levels, such as a minimum market value of listed securities (generally $50,000,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, our Units will not be traded after completion of our Business Combination and, in connection with our Business Combination, we will be required to demonstrate compliance with the Nasdaq initial listing requirements, which are more rigorous than the Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on the Nasdaq. We may not be able to meet the Nasdaq initial listing requirements at that time, especially if there are a significant number of redemptions in connection with our Business Combination.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to 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. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our Business Combination within the prescribed time frame.
Risks Relating to our Securities
You do not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or Public Warrants, potentially at a loss.
Our public shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of a Business Combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to certain limitations, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our third amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, and (iii) the redemption of our public shares if we have not completed our Business Combination by November 12, 2024, subject to applicable law and as further described herein. Public shareholders who elect to have their Class A ordinary shares redeemed in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the Trust Account upon the subsequent completion of a Business Combination or liquidation if we have not completed our Business Combination by November 12 ,2024, with respect to such Class A ordinary shares so redeemed. In no other circumstances does a public shareholder have any right or interest of any kind in the Trust Account. Holders of Warrants do not have any right to the proceeds held in the Trust Account with respect to the Warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or Public Warrants, potentially at a loss.
The Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Units, Class A ordinary shares and Public Warrants are currently listed on The Nasdaq Global Market, and we submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024. Although we believe we currently meet the minimum continued listing standards of The Nasdaq Capital Market set forth in the Nasdaq listing standards, our securities may not be listed on the Nasdaq in the future or prior to our Business Combination. In order to continue listing our securities on the Nasdaq prior to our Business Combination, we must maintain certain financial, distribution and share price levels, such as a minimum market value of listed securities (generally $50,000,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, our Units will not be traded after completion of our Business Combination and, in connection with our Business Combination, we will be required to demonstrate compliance with the Nasdaq initial listing requirements, which are more rigorous than the Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on the Nasdaq. We may not be able to meet the Nasdaq initial listing requirements at that time, especially if there are a significant number of redemptions in connection with our Business Combination.
On August 21, 2023, we received the MVLS Letter from the Nasdaq Staff notifying us that we are not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our
listed securities maintain a minimum MVLS of $50 million (the “MVLS Rule”). Subsequently on March 11, 2024, the Nasdaq Staff notified us that we have regained compliance with the MVLS Rule. On October 12, 2023, we received the Total Holders
Letter from the Nasdaq Staff notifying us that we are not in compliance with the Minimum Total Holders Rule, which requires that we maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market. To resolve the
deficiencies and regain compliance with the Nasdaq continued listing requirements, we submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global Market to
The Nasdaq Capital Market on January 24, 2024 (the "Transfer Application"). On March 26, 2024, the Nasdaq Staff notified us that our Transfer Application has been approved, and that our Units,
Class A ordinary shares and Public Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on April 4, 2024.
If the Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent
rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are
referred to as “covered securities.” Because our Units, Class A ordinary shares and Public Warrants are listed on the Nasdaq, our Units, Class A ordinary shares and Public Warrants qualify as covered securities under the statute. Although the
states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can
regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho,
certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer
listed on the Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
Our Initial Shareholders have a controlling interest in us and thus may exert control over actions requiring a shareholder vote, potentially in a manner that you do not support.
Our Initial Shareholders own approximately 79% of our issued and outstanding ordinary shares. Accordingly, they may exert control over actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our third amended and restated memorandum and articles of association. Our third amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of our Class A ordinary shares (including the requirement to deposit proceeds of the Public Offering and of the sale of the Private Placement Warrants into the Trust Account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our Business Combination may only be amended by a special resolution passed by not less than two-thirds of our ordinary shares who attend and vote at our general meeting which shall include the affirmative vote of a simple majority of our Founder Shares. Our Sponsor and its permitted transferees, if any, who, together with the Funds, collectively beneficially own approximately 79% of our issued and outstanding ordinary shares, will participate in any vote to amend our third amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our third amended and restated memorandum and articles of association which govern our pre-business combination behavior without the support from any public shareholders, even if you do not agree with such amendment. Our shareholders may pursue remedies against us for any breach of our third amended and restated memorandum and articles of association.
Our Initial Shareholders have a controlling interest in us and thus may exert control over actions requiring a shareholder vote, potentially in a manner that you do not support.
Our Initial Shareholders own approximately 79% of our issued and outstanding ordinary shares. Accordingly, they may exert control over actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our third amended and restated memorandum and articles of association. Our third amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of our Class A ordinary shares (including the requirement to deposit proceeds of the Public Offering and of the sale of the Private Placement Warrants into the Trust Account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our Business Combination may only be amended by a special resolution passed by not less than two-thirds of our ordinary shares who attend and vote at our general meeting which shall include the affirmative vote of a simple majority of our Founder Shares. Our Sponsor and its permitted transferees, if any, who, together with the Funds, collectively beneficially own approximately 79% of our issued and outstanding ordinary shares, will participate in any vote to amend our third amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our third amended and restated memorandum and articles of association which govern our pre-business combination behavior without the support from any public shareholders, even if you do not agree with such amendment. Our shareholders may pursue remedies against us for any breach of our third amended and restated memorandum and articles of association.
Our Sponsor, executive officers and directors have agreed, pursuant to agreements with us, that they will not propose any amendment to our amended and restated memorandum and
articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of
our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, unless we provide our public shareholders with
the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries of, these agreements and,
as a result, will not have the ability to pursue remedies against our Sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder
derivative action, subject to applicable law.
In addition, our board of directors, whose members were appointed by our Sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. We may not hold an annual general meeting to appoint new directors prior to the completion of our Business Combination, in which case all of the current directors will continue in office until at least the completion of the Business Combination. 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 appointment and our Initial Shareholders, because of their ownership position, will control the outcome, as only holders of our Founder Shares will have the right to vote on the appointment of directors and to remove directors prior to our Business Combination. In addition, the Founder Shares, all of which are held by our Initial Shareholders, will, in a vote to continue the Company in a jurisdiction outside the Cayman Islands (which requires the approval of at least two thirds of the votes of all ordinary shares), entitle the holders to ten votes for every Founder Share. This provision of our third amended and restated memorandum and articles of association may only be amended by a special resolution passed by a majority of at least two-thirds of our ordinary shares voting in a general meeting. As a result, you will not have any influence over our continuation in a jurisdiction outside the Cayman Islands prior to our Business Combination. Accordingly, our Sponsor will continue to exert control at least until the completion of our Business Combination. In addition, we have agreed not to enter into a definitive agreement regarding a Business Combination without the prior consent of our Sponsor.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of the Public Offering and the sale of the Private Placement Warrants are intended to be used to complete a Business Combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws. However, because, at the time of our Public Offering, we had net tangible assets in excess of $5,000,000 and filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means we will have a longer period of time to complete our Business Combination than do companies subject to Rule 419. Moreover, if our Public Offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with our completion of a Business Combination.
In addition, our board of directors, whose members were appointed by our Sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. We may not hold an annual general meeting to appoint new directors prior to the completion of our Business Combination, in which case all of the current directors will continue in office until at least the completion of the Business Combination. 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 appointment and our Initial Shareholders, because of their ownership position, will control the outcome, as only holders of our Founder Shares will have the right to vote on the appointment of directors and to remove directors prior to our Business Combination. In addition, the Founder Shares, all of which are held by our Initial Shareholders, will, in a vote to continue the Company in a jurisdiction outside the Cayman Islands (which requires the approval of at least two thirds of the votes of all ordinary shares), entitle the holders to ten votes for every Founder Share. This provision of our third amended and restated memorandum and articles of association may only be amended by a special resolution passed by a majority of at least two-thirds of our ordinary shares voting in a general meeting. As a result, you will not have any influence over our continuation in a jurisdiction outside the Cayman Islands prior to our Business Combination. Accordingly, our Sponsor will continue to exert control at least until the completion of our Business Combination. In addition, we have agreed not to enter into a definitive agreement regarding a Business Combination without the prior consent of our Sponsor.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of the Public Offering and the sale of the Private Placement Warrants are intended to be used to complete a Business Combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws. However, because, at the time of our Public Offering, we had net tangible assets in excess of $5,000,000 and filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means we will have a longer period of time to complete our Business Combination than do companies subject to Rule 419. Moreover, if our Public Offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to us in connection with our completion of a Business Combination.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share
redemption amount received by shareholders may be less than $10.20 per public share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business (except for the Company’s independent registered public accounting firm) execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we have not completed our Business Combination by November 12, 2024, or upon the exercise of a redemption right in connection with our Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.20 per public share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.20 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, provided that such liability will not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under our indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third-party, our Sponsor will not be responsible to the extent of any liability for such third-party claims.
However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our Business Combination and redemptions could be reduced to less than $10.20 per public share. In such event, we may not be able to complete our Business Combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The funds in the Trust Account are currently held in cash in an interest-bearing account, and interest rate can vary significantly, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders may be less than $10.20 per share.
On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations and money market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of consummation of our Business Combination or liquidation. Interest on such demand deposit account is variable and therefore such rate of interest may decrease or increase significantly. As a result, following such liquidation, we may receive less interest on the funds held in the Trust Account, which would reduce the dollar amount public shareholders would receive upon any redemption or liquidation of the Company, which may be reduced below $10.20 per share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business (except for the Company’s independent registered public accounting firm) execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we have not completed our Business Combination by November 12, 2024, or upon the exercise of a redemption right in connection with our Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.20 per public share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.20 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, provided that such liability will not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under our indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third-party, our Sponsor will not be responsible to the extent of any liability for such third-party claims.
However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our Business Combination and redemptions could be reduced to less than $10.20 per public share. In such event, we may not be able to complete our Business Combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The funds in the Trust Account are currently held in cash in an interest-bearing account, and interest rate can vary significantly, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders may be less than $10.20 per share.
On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, we instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations and money market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of consummation of our Business Combination or liquidation. Interest on such demand deposit account is variable and therefore such rate of interest may decrease or increase significantly. As a result, following such liquidation, we may receive less interest on the funds held in the Trust Account, which would reduce the dollar amount public shareholders would receive upon any redemption or liquidation of the Company, which may be reduced below $10.20 per share.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the
amount of funds in the Trust Account available for distribution to our public shareholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the trust account if less than $10.20 per public share due to reductions in the value of the funds in the Trust Account, in each case net of the interest that may be withdrawn to pay our tax obligations, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.20 per public share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever (except to the extent they are entitled to funds from the Trust Account due to their ownership of public shares). Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate a Business Combination. Since we had a working capital deficit of $692,819 as of December 31, 2023, we won’t have sufficient funds to indemnify our officers and directors unless we are able to secure additional funding from our Sponsor, its affiliates or other third parties. Our obligation to indemnify our officers and directors may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our 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 our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the trust account if less than $10.20 per public share due to reductions in the value of the funds in the Trust Account, in each case net of the interest that may be withdrawn to pay our tax obligations, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.20 per public share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever (except to the extent they are entitled to funds from the Trust Account due to their ownership of public shares). Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate a Business Combination. Since we had a working capital deficit of $692,819 as of December 31, 2023, we won’t have sufficient funds to indemnify our officers and directors unless we are able to secure additional funding from our Sponsor, its affiliates or other third parties. Our obligation to indemnify our officers and directors may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our 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 our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up
petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would
otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up
petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy or insolvency estate and subject to the claims of
third parties with priority over the claims of our shareholders. To the extent any bankruptcy or insolvency claims deplete the Trust Account, the per-share amount that would otherwise be received by our shareholders in connection with our
liquidation may be reduced.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offense and may be liable for a fine of $18,292.68 and imprisonment for five years in the Cayman Islands.
We may not hold an annual general meeting until after the consummation of our Business Combination.
In accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on the Nasdaq. There is no requirement under the Companies Act for us to hold annual or extraordinary general meetings to appoint directors. Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to appoint directors and to discuss company affairs with management. Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
Holders of Class A ordinary shares will not be entitled to vote on any appointment of directors we hold prior to our Business Combination.
Prior to our Business Combination, only holders of our Founder Shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to our Business Combination, holders of a majority of our Founder Shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our company prior to the consummation of a Business Combination.
If the issuance of the Class A ordinary shares upon exercise of the Warrants is not registered, qualified or exempt from registration or qualification under the Securities Act and applicable state securities laws, holders of the Warrants will not be entitled to exercise such Warrants and such Warrants may have no value and expire worthless.
We registered the Class A ordinary shares issuable upon exercise of the Public Warrants because the Public Warrants will become exercisable 30 days after the completion of our Business Combination, which could have been within twelve months of the Public Offering. However, because the Public Warrants will become exercisable until their expiration date of up to five years after the completion of our Business Combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our Business Combination, under the terms of the warrant agreements, we have agreed that, as soon as practicable, but in no event later than 20 business days after the closing of our Business Combination, we will use commercially reasonable efforts to file with the SEC a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants. Thereafter, we will use commercially reasonable efforts to cause the same to become effective within 60 business days following our Business Combination and to maintain the effectiveness of such registration statement and a current prospectus relating to the Class A ordinary shares issuable upon exercise of the Public Warrants until the expiration or redemption of the Public Warrants in accordance with the provisions of the public warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct, or the SEC issues a stop order.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offense and may be liable for a fine of $18,292.68 and imprisonment for five years in the Cayman Islands.
We may not hold an annual general meeting until after the consummation of our Business Combination.
In accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on the Nasdaq. There is no requirement under the Companies Act for us to hold annual or extraordinary general meetings to appoint directors. Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to appoint directors and to discuss company affairs with management. Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
Holders of Class A ordinary shares will not be entitled to vote on any appointment of directors we hold prior to our Business Combination.
Prior to our Business Combination, only holders of our Founder Shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to our Business Combination, holders of a majority of our Founder Shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our company prior to the consummation of a Business Combination.
If the issuance of the Class A ordinary shares upon exercise of the Warrants is not registered, qualified or exempt from registration or qualification under the Securities Act and applicable state securities laws, holders of the Warrants will not be entitled to exercise such Warrants and such Warrants may have no value and expire worthless.
We registered the Class A ordinary shares issuable upon exercise of the Public Warrants because the Public Warrants will become exercisable 30 days after the completion of our Business Combination, which could have been within twelve months of the Public Offering. However, because the Public Warrants will become exercisable until their expiration date of up to five years after the completion of our Business Combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our Business Combination, under the terms of the warrant agreements, we have agreed that, as soon as practicable, but in no event later than 20 business days after the closing of our Business Combination, we will use commercially reasonable efforts to file with the SEC a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants. Thereafter, we will use commercially reasonable efforts to cause the same to become effective within 60 business days following our Business Combination and to maintain the effectiveness of such registration statement and a current prospectus relating to the Class A ordinary shares issuable upon exercise of the Public Warrants until the expiration or redemption of the Public Warrants in accordance with the provisions of the public warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct, or the SEC issues a stop order.
If the Class A ordinary shares issuable upon exercise of the Warrants are not registered under the Securities Act in accordance with the above requirements, under the terms of
the public warrant agreement, we will be required to permit holders to exercise their Public Warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will Warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
Notwithstanding the above, if our Class A ordinary shares are at the time of any exercise of a Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of Public Warrants who seek to exercise their Public Warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the Warrants under applicable state securities laws, and in the event we do not so elect, we will use commercially reasonable efforts to register or qualify the shares underlying the Warrants under applicable state securities laws to the extent an exemption is not available. Exercising the Warrants on a cashless basis could have the effect of reducing the potential “upside” of the holder’s investment in our company because the warrant holder will hold a smaller number of Class A ordinary shares upon a cashless exercise of the Warrants they hold than they would have upon a cash exercise.
In no event will we be required to net cash settle any Warrant, or issue securities or other compensation in exchange for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under the Securities Act or applicable state securities laws and no exemption is available. If the issuance of the shares upon exercise of the Warrants is not so registered or qualified or exempt from registration or qualification, the holder of such Warrant shall not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In such event, holders who acquired their Warrants as part of a purchase of Units will have paid the full unit purchase price solely for the Class A ordinary shares included in the Units. There may be a circumstance where an exemption from registration exists for holders of our Private Placement Warrants to exercise their Private Placement Warrants while a corresponding exemption does not exist for holders of the Public Warrants included as part of Units sold in The Public Offering. In such an instance, our Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their Warrants and sell the Class A ordinary shares underlying their Warrants while holders of our Public Warrants would not be able to exercise their Warrants and sell the underlying Class A ordinary shares. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying Class A ordinary shares for sale under all applicable state securities laws. As a result, we may redeem the Warrants as set forth above even if the holders are otherwise unable to exercise their Warrants.
The Warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security at this time.
In certain situations, including if we are not the surviving entity in our Business Combination, the Warrants may become exercisable for a security other than the Class A ordinary shares. As a result, if the surviving company redeems your Warrants for securities pursuant to the warrant agreement, you may receive a security in a company of which you do not have information at this time.
In no event will Warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
Notwithstanding the above, if our Class A ordinary shares are at the time of any exercise of a Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of Public Warrants who seek to exercise their Public Warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the Warrants under applicable state securities laws, and in the event we do not so elect, we will use commercially reasonable efforts to register or qualify the shares underlying the Warrants under applicable state securities laws to the extent an exemption is not available. Exercising the Warrants on a cashless basis could have the effect of reducing the potential “upside” of the holder’s investment in our company because the warrant holder will hold a smaller number of Class A ordinary shares upon a cashless exercise of the Warrants they hold than they would have upon a cash exercise.
In no event will we be required to net cash settle any Warrant, or issue securities or other compensation in exchange for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under the Securities Act or applicable state securities laws and no exemption is available. If the issuance of the shares upon exercise of the Warrants is not so registered or qualified or exempt from registration or qualification, the holder of such Warrant shall not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In such event, holders who acquired their Warrants as part of a purchase of Units will have paid the full unit purchase price solely for the Class A ordinary shares included in the Units. There may be a circumstance where an exemption from registration exists for holders of our Private Placement Warrants to exercise their Private Placement Warrants while a corresponding exemption does not exist for holders of the Public Warrants included as part of Units sold in The Public Offering. In such an instance, our Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their Warrants and sell the Class A ordinary shares underlying their Warrants while holders of our Public Warrants would not be able to exercise their Warrants and sell the underlying Class A ordinary shares. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying Class A ordinary shares for sale under all applicable state securities laws. As a result, we may redeem the Warrants as set forth above even if the holders are otherwise unable to exercise their Warrants.
The Warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security at this time.
In certain situations, including if we are not the surviving entity in our Business Combination, the Warrants may become exercisable for a security other than the Class A ordinary shares. As a result, if the surviving company redeems your Warrants for securities pursuant to the warrant agreement, you may receive a security in a company of which you do not have information at this time.
The grant of registration rights to our Sponsor and to our shareholders who executed non-redemption agreements in connection
with our First Extension Meeting may make it more difficult to complete our Business Combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Our Sponsor and its permitted transferees can demand that we register the resale of the Class A ordinary shares into which Founder Shares are convertible, the Private Placement
Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants, and the Sponsor Loan Warrants that may be issued upon conversion of working capital loans and the Class A ordinary shares issuable upon
conversion of such warrants.
In addition, in connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. In connection with the transfer of such Founder Shares, we agreed to register for resale such shares transferred to those certain shareholders following the consummation of the Business Combination.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our Business Combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our securities that is expected when the securities owned by our Sponsor or its permitted transferees are registered for resale.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our Business Combination with which a substantial majority of our shareholders do not agree.
Our third amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold. As a result, we may be able to complete our Business Combination even though a substantial majority or all of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our Business Combination and do not conduct redemptions in connection with our Business Combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, and any such condition is not waived, we will not complete the Business Combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
In order to effectuate a Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our third amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our Business Combination that our shareholders may not support.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate a business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our third amended and restated memorandum and articles of association requires at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and amending our warrant agreement will require a vote of holders of at least 50% of the Public Warrants, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. In addition, our third amended and restated memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered in the Public Offering, we would register, or seek an exemption from registration for, the affected securities.
In addition, in connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. In connection with the transfer of such Founder Shares, we agreed to register for resale such shares transferred to those certain shareholders following the consummation of the Business Combination.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our Business Combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our securities that is expected when the securities owned by our Sponsor or its permitted transferees are registered for resale.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our Business Combination with which a substantial majority of our shareholders do not agree.
Our third amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold. As a result, we may be able to complete our Business Combination even though a substantial majority or all of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our Business Combination and do not conduct redemptions in connection with our Business Combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, and any such condition is not waived, we will not complete the Business Combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
In order to effectuate a Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our third amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our Business Combination that our shareholders may not support.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate a business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our third amended and restated memorandum and articles of association requires at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and amending our warrant agreement will require a vote of holders of at least 50% of the Public Warrants, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. In addition, our third amended and restated memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered in the Public Offering, we would register, or seek an exemption from registration for, the affected securities.
We may amend the terms of the Public Warrants in a manner that may be adverse to holders of Public Warrants with the
approval by the holders of at least 50% of the then-outstanding Public Warrants. As a result, the exercise price of your Public Warrants could be increased, the exercise period could be shortened and the number of our Class A ordinary
shares purchasable upon exercise of a Public Warrant could be decreased, all without your approval.
Our Public Warrants were issued in registered form under a public warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The public warrant agreement provides that the terms of the public warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct any mistake or defective provision, (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the public warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the public warrant agreement as the parties to the public warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the Public Warrants; provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Public Warrants, convert the Public Warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a Public Warrant.
Our warrant agreements designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our Warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreements provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreements will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our Warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreements, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. In addition, this choice-of-forum provision may result in our warrant holders incurring increased costs to bring an action, proceeding or claim due to, but not limited to, the warrant holder’s physical location or knowledge of the applicable laws, when the courts of the State of New York or the United States District Court for the Southern District of New York is the exclusive forum. Alternatively, if a court were to find this provision of our warrant agreements inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
Our Public Warrants were issued in registered form under a public warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The public warrant agreement provides that the terms of the public warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct any mistake or defective provision, (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the public warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the public warrant agreement as the parties to the public warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the Public Warrants; provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Public Warrants, convert the Public Warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a Public Warrant.
Our warrant agreements designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our Warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreements provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreements will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our Warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreements, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. In addition, this choice-of-forum provision may result in our warrant holders incurring increased costs to bring an action, proceeding or claim due to, but not limited to, the warrant holder’s physical location or knowledge of the applicable laws, when the courts of the State of New York or the United States District Court for the Southern District of New York is the exclusive forum. Alternatively, if a court were to find this provision of our warrant agreements inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby
making your Public Warrants worthless.
We have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, if among other things the closing price of our Class A ordinary shares has been at least $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant) for any 20 trading days within the 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the Public Warrants as set forth above even if the holders are otherwise unable to exercise the Public Warrants. Redemption of the outstanding Public Warrants could force you to (i) exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, we expect would be substantially less than the market value of your Public Warrants. None of the Private Placement Warrants will be redeemable by us.
Our management’s ability to require holders of our Public Warrants to exercise such Public Warrants on a cashless basis will cause holders to receive fewer Class A ordinary shares upon their exercise of the Public Warrants than they would have received had they been able to exercise their Public Warrants for cash.
If we call our Public Warrants for redemption after the redemption criteria described elsewhere in this Annual Report on Form 10-K have been satisfied, our management will have the option to require any holder that wishes to exercise its Public Warrants (including any Public Warrants held by our Sponsor, officers, directors or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their Public Warrants on a cashless basis, the number of Class A ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised their Public Warrants for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in us.
Our Warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our Business Combination.
We issued Public Warrants to purchase 11,500,000 of our Class A ordinary shares as part of the Units offered in our Public Offering and, simultaneously with the closing of the Public Offering, we issued in a private placement an aggregate of 4,733,333 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per whole share, subject to adjustment. Additionally, simultaneously with the closing of the Public Offering, the Sponsor loaned $4.6 million to us at no interest. The proceeds of the Sponsor Loan may be converted into Sponsor Loan Warrants at a conversion price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of our Business Combination. In addition, if the Sponsor, its affiliates or a member of our management team makes any working capital loans, it may convert up to $1,500,000 of such loans into up to an additional 1,000,000 Private Placement Warrants, at the price of $1.50 per Private Placement Warrant.
To the extent we issue ordinary shares for any reason, including to effectuate a Business Combination, the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these Warrants could make us a less attractive acquisition vehicle to a target business. Such Warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete the Business Combination. Therefore, our Warrants may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target business.
We have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, if among other things the closing price of our Class A ordinary shares has been at least $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant) for any 20 trading days within the 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the Public Warrants as set forth above even if the holders are otherwise unable to exercise the Public Warrants. Redemption of the outstanding Public Warrants could force you to (i) exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, we expect would be substantially less than the market value of your Public Warrants. None of the Private Placement Warrants will be redeemable by us.
Our management’s ability to require holders of our Public Warrants to exercise such Public Warrants on a cashless basis will cause holders to receive fewer Class A ordinary shares upon their exercise of the Public Warrants than they would have received had they been able to exercise their Public Warrants for cash.
If we call our Public Warrants for redemption after the redemption criteria described elsewhere in this Annual Report on Form 10-K have been satisfied, our management will have the option to require any holder that wishes to exercise its Public Warrants (including any Public Warrants held by our Sponsor, officers, directors or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their Public Warrants on a cashless basis, the number of Class A ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised their Public Warrants for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in us.
Our Warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our Business Combination.
We issued Public Warrants to purchase 11,500,000 of our Class A ordinary shares as part of the Units offered in our Public Offering and, simultaneously with the closing of the Public Offering, we issued in a private placement an aggregate of 4,733,333 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per whole share, subject to adjustment. Additionally, simultaneously with the closing of the Public Offering, the Sponsor loaned $4.6 million to us at no interest. The proceeds of the Sponsor Loan may be converted into Sponsor Loan Warrants at a conversion price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of our Business Combination. In addition, if the Sponsor, its affiliates or a member of our management team makes any working capital loans, it may convert up to $1,500,000 of such loans into up to an additional 1,000,000 Private Placement Warrants, at the price of $1.50 per Private Placement Warrant.
To the extent we issue ordinary shares for any reason, including to effectuate a Business Combination, the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these Warrants could make us a less attractive acquisition vehicle to a target business. Such Warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete the Business Combination. Therefore, our Warrants may make it more difficult to effectuate a Business Combination or increase the cost of acquiring the target business.
Because each Unit contains one-half of one redeemable Public Warrant and only a whole Warrant may be exercised, the Units
may be worth less than Units of other blank check companies.
Each Unit contains one-half of one redeemable Public Warrant. Pursuant to the public warrant agreement, no fractional warrants will be issued upon separation of the Units, and only whole Units will trade. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the Public Warrant holder. This is different from other offerings similar to ours whose units include one ordinary share and one whole public warrant to purchase one whole share. We have established the components of the Units in this way in order to reduce the dilutive effect of the Public Warrants upon completion of a Business Combination since the Public Warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our Units to be worth less than if a unit included a warrant to purchase one whole share.
A provision of our warrant agreements may make it more difficult for us to consummate a Business Combination.
If (i) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our Business Combination at a Newly Issued Price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our Sponsor or its affiliates, without taking into account any Founder Shares held by our Sponsor or such affiliates, as applicable, prior to such issuance), (ii) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our Business Combination on the date of the consummation of our Business Combination (net of redemptions), and (iii) the Market Value is below $9.20 per share, then the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and in the case of the Public Warrants only the $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate a Business Combination with a target business.
Risks Relating to our Sponsor and Management Team
Since our Sponsor, executive officers and directors will lose their entire investment in us if our Business Combination is not completed (other than with respect to any public shares they may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our Business Combination.
On May 13, 2021, our Sponsor and the Funds paid $25,000, or approximately $0.004 per share, to cover certain of our offering and formation costs in consideration of 5,750,000 Founder Shares. Prior to the initial investment in the company of $25,000 by the Sponsor and the Funds, we had no assets, tangible or intangible. The per share price of the Founder Shares was determined by dividing the amount contributed to us by the number of Founder Shares issued. The Founder Shares will be worthless if we do not complete a Business Combination. In addition, our Sponsor purchased an aggregate of 4,733,333 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per whole share, subject to adjustment, at a price of $1.50 per Private Placement Warrant, or $7,100,000 in the aggregate, in a private placement that closed simultaneously with the closing of the Public Offering. Additionally, simultaneously with the closing of the Public Offering, the Sponsor loaned us $4.6 million at no interest. The Sponsor Loan may be converted into Sponsor Loan Warrants at the discretion of the Sponsor. The Sponsor Loan Warrants, if issued, would be identical to the Private Placement Warrants. If we do not consummate a Business Combination by November 12, 2024, unless otherwise extended, the Private Placement Warrants and the Sponsor Loan Warrants, if any, will expire worthless. In connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. On February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into Class A ordinary shares. The Initial Shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if we fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer included in the letter agreement entered into by and between the Initial Shareholders and us in connection with our Public Offering. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing a Business Combination and influencing the operation of the business following the Business Combination.
Each Unit contains one-half of one redeemable Public Warrant. Pursuant to the public warrant agreement, no fractional warrants will be issued upon separation of the Units, and only whole Units will trade. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the Public Warrant holder. This is different from other offerings similar to ours whose units include one ordinary share and one whole public warrant to purchase one whole share. We have established the components of the Units in this way in order to reduce the dilutive effect of the Public Warrants upon completion of a Business Combination since the Public Warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our Units to be worth less than if a unit included a warrant to purchase one whole share.
A provision of our warrant agreements may make it more difficult for us to consummate a Business Combination.
If (i) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our Business Combination at a Newly Issued Price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our Sponsor or its affiliates, without taking into account any Founder Shares held by our Sponsor or such affiliates, as applicable, prior to such issuance), (ii) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our Business Combination on the date of the consummation of our Business Combination (net of redemptions), and (iii) the Market Value is below $9.20 per share, then the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and in the case of the Public Warrants only the $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate a Business Combination with a target business.
Risks Relating to our Sponsor and Management Team
Since our Sponsor, executive officers and directors will lose their entire investment in us if our Business Combination is not completed (other than with respect to any public shares they may acquire), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our Business Combination.
On May 13, 2021, our Sponsor and the Funds paid $25,000, or approximately $0.004 per share, to cover certain of our offering and formation costs in consideration of 5,750,000 Founder Shares. Prior to the initial investment in the company of $25,000 by the Sponsor and the Funds, we had no assets, tangible or intangible. The per share price of the Founder Shares was determined by dividing the amount contributed to us by the number of Founder Shares issued. The Founder Shares will be worthless if we do not complete a Business Combination. In addition, our Sponsor purchased an aggregate of 4,733,333 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per whole share, subject to adjustment, at a price of $1.50 per Private Placement Warrant, or $7,100,000 in the aggregate, in a private placement that closed simultaneously with the closing of the Public Offering. Additionally, simultaneously with the closing of the Public Offering, the Sponsor loaned us $4.6 million at no interest. The Sponsor Loan may be converted into Sponsor Loan Warrants at the discretion of the Sponsor. The Sponsor Loan Warrants, if issued, would be identical to the Private Placement Warrants. If we do not consummate a Business Combination by November 12, 2024, unless otherwise extended, the Private Placement Warrants and the Sponsor Loan Warrants, if any, will expire worthless. In connection with the First Extension Meeting, our Sponsor entered into a number of non-redemption agreements with certain of our existing shareholders. Pursuant to such agreements, our Sponsor has agreed to transfer a number of its existing Founder Shares at the time of consummation of the Business Combination in connection with such holders agreeing (i) not to redeem their public shares in connection with the First Extension Meeting and (ii) voting in favor of the proposals presented at the First Extension Meeting. On February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into Class A ordinary shares. The Initial Shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if we fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer included in the letter agreement entered into by and between the Initial Shareholders and us in connection with our Public Offering. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing a Business Combination and influencing the operation of the business following the Business Combination.
Past performance by our management team or their respective affiliates may not be indicative of future performance of an
investment in us.
Information regarding performance is presented for informational purposes only. Any past experience or performance of our management team and their respective affiliates is not
a guarantee of either (i) our ability to successfully identify and execute a transaction or (ii) success with respect to any Business Combination that we may consummate. You should not rely on the historical record of our management team or
their respective affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.
We may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We will consider a business combination outside of our management’s area of expertise if a business combination target is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will endeavor to evaluate the risks inherent in any particular business combination target, we cannot assure you that we will adequately 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 the Public Offering than a direct investment, if an opportunity were available, in a business combination target. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report on Form 10-K regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our Business Combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, may have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect our Business Combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our Business Combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our Business Combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our Business Combination. None of our officers are required to commit any specified amount of time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. If our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to their other business activities, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our Business Combination. In addition, 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 after our Business Combination, however, remains to be determined. Although some of our key personnel serve in senior management or advisory positions following our Business Combination, it is likely that most, if not all, of the management of the target business will remain in place. 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.
We may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We will consider a business combination outside of our management’s area of expertise if a business combination target is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will endeavor to evaluate the risks inherent in any particular business combination target, we cannot assure you that we will adequately 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 the Public Offering than a direct investment, if an opportunity were available, in a business combination target. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report on Form 10-K regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any holders who choose to retain their securities following the Business Combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our Business Combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, may have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect our Business Combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our Business Combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our Business Combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our Business Combination. None of our officers are required to commit any specified amount of time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. If our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to their other business activities, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our Business Combination. In addition, 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 after our Business Combination, however, remains to be determined. Although some of our key personnel serve in senior management or advisory positions following our Business Combination, it is likely that most, if not all, of the management of the target business will remain in place. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular
Business Combination, and a particular Business Combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation following our Business Combination and as a
result, may cause them to have conflicts of interest in determining whether a particular Business Combination is the most advantageous.
Our key personnel may be able to remain with our company after the completion of our Business Combination only if they are able to negotiate employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
The officers and directors of an acquisition candidate may resign upon completion of our Business Combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our Business Combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our Business Combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Members of our management team and affiliated companies have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business.
Members of our management team have been involved in a wide variety of businesses. Such involvement has, and may lead to, media coverage and public awareness. As a result, members of our management team and affiliated companies have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business. Any such claims or investigations may be detrimental to our reputation and could negatively affect our ability to identify and complete a Business Combination and may have an adverse effect on the price of our securities.
Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our Business Combination.
Our executive officers and directors are not required to, and may not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our Business Combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our Business Combination. For a complete discussion of our executive officers’ and directors’ other business affairs, please see “Item 10. Directors, Executive Officers and Corporate Governance.”
Our key personnel may be able to remain with our company after the completion of our Business Combination only if they are able to negotiate employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
The officers and directors of an acquisition candidate may resign upon completion of our Business Combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our Business Combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our Business Combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Members of our management team and affiliated companies have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business.
Members of our management team have been involved in a wide variety of businesses. Such involvement has, and may lead to, media coverage and public awareness. As a result, members of our management team and affiliated companies have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business. Any such claims or investigations may be detrimental to our reputation and could negatively affect our ability to identify and complete a Business Combination and may have an adverse effect on the price of our securities.
Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our Business Combination.
Our executive officers and directors are not required to, and may not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our Business Combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our Business Combination. For a complete discussion of our executive officers’ and directors’ other business affairs, please see “Item 10. Directors, Executive Officers and Corporate Governance.”
Our officers and directors presently have, and any of them in the future may have, additional, fiduciary or contractual
obligations to other entities, including other special purpose acquisition companies, and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Following the completion of the Public Offering and until we consummate our Business Combination, we intend to engage in the business of identifying and combining with one or
more businesses or entities. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities, including the special purpose acquisition company noted
below and any other special purpose acquisition companies they may become involved with, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her
fiduciary duties under Cayman Islands law. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to another entity prior to its presentation to us, subject to their fiduciary duties under Cayman Islands law.
Additionally, our Sponsor, officers and directors are not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in connection with their initial business combinations, prior to us completing our Business Combination. Therefore, our Sponsor, officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking a Business Combination. These companies may seek to complete a business combination in any location and may not focus on any particular industry for a business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing a Business Combination with a potential acquisition target. These conflicts may not be resolved in our favor and a potential target business may be presented to such other blank check companies prior to its presentation to us, subject to our officers’ and directors’ fiduciary duties under Cayman Islands law. Furthermore, the personal and financial interests of our directors and officers may influence their motivation in timely identifying and pursuing an initial business combination or completing our Business Combination. The different timelines of competing business combinations could cause our directors and officers to prioritize a different business combination over finding a suitable acquisition target for our 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, which could negatively impact the timing for a Business Combination.
Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest” and “Certain Relationships and Related Party Transactions, and Director Independence.”
Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated with our Sponsor, our directors or executive officers. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
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 may be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals for infringing on our shareholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
Additionally, our Sponsor, officers and directors are not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in connection with their initial business combinations, prior to us completing our Business Combination. Therefore, our Sponsor, officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking a Business Combination. These companies may seek to complete a business combination in any location and may not focus on any particular industry for a business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing a Business Combination with a potential acquisition target. These conflicts may not be resolved in our favor and a potential target business may be presented to such other blank check companies prior to its presentation to us, subject to our officers’ and directors’ fiduciary duties under Cayman Islands law. Furthermore, the personal and financial interests of our directors and officers may influence their motivation in timely identifying and pursuing an initial business combination or completing our Business Combination. The different timelines of competing business combinations could cause our directors and officers to prioritize a different business combination over finding a suitable acquisition target for our 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, which could negatively impact the timing for a Business Combination.
Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest” and “Certain Relationships and Related Party Transactions, and Director Independence.”
Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a Business Combination with a target business that is affiliated with our Sponsor, our directors or executive officers. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
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 may be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals for infringing on our shareholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
We may engage in a Business Combination with one or more target businesses that have relationships with entities that may be
affiliated with our Sponsor, executive officers, directors or Initial Shareholders which may raise potential conflicts of interest.
In light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, executive officers, directors or Initial Shareholders. Our directors also serve as officers and board members for other entities, including, without limitation, those described under “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest.” Our Sponsor, officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking a Business Combination. Such entities may compete with us for business combination opportunities. Our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our Business Combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a Business Combination with any such entity or entities. Although we are not specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent entity that commonly renders valuation opinions regarding the fairness to our company from a financial point of view of a Business Combination with one or more domestic or international businesses affiliated with our Sponsor, executive officers, directors or Initial Shareholders, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest.
Our management may not be able to maintain control of a target business after our Business Combination. Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our Business Combination so that the post-business combination company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such Business Combination if the post-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 business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-business combination company owns 50% or more of the voting securities of the target, our shareholders prior to our Business Combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target and us in the Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
Members of our management team, board of directors and Industry Advisors have significant experience as founders, board members, officers, executives and employees of other companies. Certain of those persons have been, may be, or may become, involved in litigation, investigations or other proceedings, including related to those companies or otherwise. This may have an adverse effect on us, which may impede our ability to consummate a Business Combination.
During the course of their careers, members of our management team, board of directors and Industry Advisors have had significant experience as founders, board members, officers, executives and employees of other companies. As a result of their involvement and positions in these companies, certain of those persons have been, may be or may in the future become involved in litigation, investigations or other proceedings, including relating to the business affairs of such companies, transactions entered into by such companies, or otherwise. Any such litigation, investigations or other proceedings may divert the attention and resources of our management team, board of directors and Industry Advisors away from identifying and selecting a target business or businesses for our Business Combination and may negatively affect our reputation, which may impede our ability to complete a Business Combination.
In light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, executive officers, directors or Initial Shareholders. Our directors also serve as officers and board members for other entities, including, without limitation, those described under “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest.” Our Sponsor, officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking a Business Combination. Such entities may compete with us for business combination opportunities. Our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our Business Combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a Business Combination with any such entity or entities. Although we are not specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent entity that commonly renders valuation opinions regarding the fairness to our company from a financial point of view of a Business Combination with one or more domestic or international businesses affiliated with our Sponsor, executive officers, directors or Initial Shareholders, potential conflicts of interest still may exist and, as a result, the terms of the Business Combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest.
Our management may not be able to maintain control of a target business after our Business Combination. Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our Business Combination so that the post-business combination company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such Business Combination if the post-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 business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-business combination company owns 50% or more of the voting securities of the target, our shareholders prior to our Business Combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target and us in the Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
Members of our management team, board of directors and Industry Advisors have significant experience as founders, board members, officers, executives and employees of other companies. Certain of those persons have been, may be, or may become, involved in litigation, investigations or other proceedings, including related to those companies or otherwise. This may have an adverse effect on us, which may impede our ability to consummate a Business Combination.
During the course of their careers, members of our management team, board of directors and Industry Advisors have had significant experience as founders, board members, officers, executives and employees of other companies. As a result of their involvement and positions in these companies, certain of those persons have been, may be or may in the future become involved in litigation, investigations or other proceedings, including relating to the business affairs of such companies, transactions entered into by such companies, or otherwise. Any such litigation, investigations or other proceedings may divert the attention and resources of our management team, board of directors and Industry Advisors away from identifying and selecting a target business or businesses for our Business Combination and may negatively affect our reputation, which may impede our ability to complete a Business Combination.
Risks Associated with Acquiring and Operating a Business in Foreign Countries
If we pursue a target company with operations or opportunities outside of the United States for our Business Combination, we may face additional burdens in connection with investigating, agreeing to and completing such Business Combination, and if we effect such Business Combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target company with operations or opportunities outside of the United States for our Business Combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our Business Combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our Business Combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
If we pursue a target company with operations or opportunities outside of the United States for our Business Combination, we may face additional burdens in connection with investigating, agreeing to and completing such Business Combination, and if we effect such Business Combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target company with operations or opportunities outside of the United States for our Business Combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our Business Combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our Business Combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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laws granting government authorities the power to block, modify or unwind business combinations;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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longer payment cycles;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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corruption;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks, natural disasters and wars; or
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deterioration of political relations with the United States.
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We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such Business Combination, or, if we complete such
Business Combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
If our management following our 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 Business Combination, our management may resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States federal and state securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our Business Combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in any such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which we operate.
The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our Business Combination and if we effect our Business Combination, the ability of that target business to become profitable.
Exchange rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our Business Combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our Business Combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We may reincorporate in another jurisdiction in connection with our Business Combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights.
In connection with our Business Combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.
If our management following our 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 Business Combination, our management may resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States federal and state securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our Business Combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in any such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which we operate.
The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our Business Combination and if we effect our Business Combination, the ability of that target business to become profitable.
Exchange rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our Business Combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our Business Combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We may reincorporate in another jurisdiction in connection with our Business Combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights.
In connection with our Business Combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.
General Risk Factors
We may issue additional Class A ordinary shares or preference shares to complete our Business Combination or under an employee incentive plan after completion of our Business Combination. We may also issue Class A ordinary shares upon the conversion of the Founder Shares at a ratio greater than one-to-one at the time of our Business Combination as a result of the anti-dilution provisions contained in our third amended and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our third amended and restated memorandum and articles of association authorize the issuance of up to 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share. As of March 15, 2024, there are 177,000,000 and 14,250,000 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding Warrants or shares issuable upon conversion of the Class B ordinary shares, if any. The Class B ordinary shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if we fail to consummate a Business Combination) at the time of our Business Combination or earlier at the option of the holders thereof as described herein and in our third amended and restated memorandum and articles of association. There are no preference shares issued and outstanding.
We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our Business Combination or under an employee incentive plan after completion of our Business Combination. We may also issue Class A ordinary shares in connection with our redeeming the Warrants or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our Business Combination as a result of the anti-dilution provisions as set forth herein. However, our third amended and restated memorandum and articles of association provide, among other things, that prior to or in connection with our 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 Business Combination or on any other proposal presented to shareholders prior to or in connection with the completion of a Business Combination. These provisions of our third amended and restated memorandum and articles of association, like all provisions of our third amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares:
We may issue additional Class A ordinary shares or preference shares to complete our Business Combination or under an employee incentive plan after completion of our Business Combination. We may also issue Class A ordinary shares upon the conversion of the Founder Shares at a ratio greater than one-to-one at the time of our Business Combination as a result of the anti-dilution provisions contained in our third amended and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our third amended and restated memorandum and articles of association authorize the issuance of up to 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share. As of March 15, 2024, there are 177,000,000 and 14,250,000 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding Warrants or shares issuable upon conversion of the Class B ordinary shares, if any. The Class B ordinary shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if we fail to consummate a Business Combination) at the time of our Business Combination or earlier at the option of the holders thereof as described herein and in our third amended and restated memorandum and articles of association. There are no preference shares issued and outstanding.
We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our Business Combination or under an employee incentive plan after completion of our Business Combination. We may also issue Class A ordinary shares in connection with our redeeming the Warrants or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our Business Combination as a result of the anti-dilution provisions as set forth herein. However, our third amended and restated memorandum and articles of association provide, among other things, that prior to or in connection with our 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 Business Combination or on any other proposal presented to shareholders prior to or in connection with the completion of a Business Combination. These provisions of our third amended and restated memorandum and articles of association, like all provisions of our third amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares:
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may significantly dilute the equity interest of investors in the Public Offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary
shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
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may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
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could cause a change in control if a substantial number of Class A 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;
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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;
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may adversely affect prevailing market prices for our Units, Class A ordinary shares and/or Public Warrants; and
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may not result in adjustment to the exercise price of our Warrants.
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We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that
have increased both our costs and the risk of non-compliance.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from seeking a business combination target.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
We may be a passive foreign investment company (“PFIC”) which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. We expect that we were a PFIC for our taxable year ending December 31, 2023 and, although our PFIC status will not be determinable until the end of the taxable year, we are likely to be a PFIC for our current taxable year. If we determine we are a PFIC for any taxable year prior to the time we effect a Business Combination, we currently intend to endeavor to provide to a U.S. Holder, upon written request, such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required information, and final Treasury Regulations provide that such election would be unavailable with respect to our warrants. We urge U.S. investors to consult their tax advisors regarding the possible application of the PFIC rules.
Our registered independent public accountants have included an explanatory paragraph on our ability to continue as a going concern in their report of registered independent public accounting firm.
We have until November 12, 2024 to consummate a Business Combination. It is currently uncertain that we will be able to consummate a Business Combination by this time. If our Business Combination cannot be completed prior to November 12, 2024, we will cease operations except for the purpose of winding-up, redeem our outstanding public shares, and liquidate and dissolve unless, prior to such date, we receive an extension approval from our shareholders and elect to extend the date on which a Business Combination must be consummated.
As of December 31, 2023, we had $409,643 in cash held outside of the Trust Account for our working capital needs and a working capital deficit of $692,819. We expect to incur significant costs in pursuit of our acquisition plans, and the net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024. The Company will likely depend on loans from our Sponsor, its affiliates or members of the management team and/or third parties to fund our search and to complete a Business Combination. Further, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating the Business Combination are less than the actual amount necessary to do so, we will need even more funds available to operate our business prior to our Business Combination. If we have not completed our Business Combination by November 12, 2024 or the end of any Extension Period because we do not have sufficient funds available to us or otherwise, we will be forced to cease operations and liquidate the Trust Account. These factors, among others, raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this Annual Report on Form 10-K.
As more fully described in the report of registered independent public accounting firm preceding the financial statements included elsewhere in this Annual Report on Form 10-K, our independent auditors have included an explanatory paragraph regarding our ability to continue as a going concern and noting that the financial statements included elsewhere in this Annual Report have been prepared assuming that we will continue as a going concern and the financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from seeking a business combination target.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
We may be a passive foreign investment company (“PFIC”) which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. We expect that we were a PFIC for our taxable year ending December 31, 2023 and, although our PFIC status will not be determinable until the end of the taxable year, we are likely to be a PFIC for our current taxable year. If we determine we are a PFIC for any taxable year prior to the time we effect a Business Combination, we currently intend to endeavor to provide to a U.S. Holder, upon written request, such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required information, and final Treasury Regulations provide that such election would be unavailable with respect to our warrants. We urge U.S. investors to consult their tax advisors regarding the possible application of the PFIC rules.
Our registered independent public accountants have included an explanatory paragraph on our ability to continue as a going concern in their report of registered independent public accounting firm.
We have until November 12, 2024 to consummate a Business Combination. It is currently uncertain that we will be able to consummate a Business Combination by this time. If our Business Combination cannot be completed prior to November 12, 2024, we will cease operations except for the purpose of winding-up, redeem our outstanding public shares, and liquidate and dissolve unless, prior to such date, we receive an extension approval from our shareholders and elect to extend the date on which a Business Combination must be consummated.
As of December 31, 2023, we had $409,643 in cash held outside of the Trust Account for our working capital needs and a working capital deficit of $692,819. We expect to incur significant costs in pursuit of our acquisition plans, and the net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024. The Company will likely depend on loans from our Sponsor, its affiliates or members of the management team and/or third parties to fund our search and to complete a Business Combination. Further, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating the Business Combination are less than the actual amount necessary to do so, we will need even more funds available to operate our business prior to our Business Combination. If we have not completed our Business Combination by November 12, 2024 or the end of any Extension Period because we do not have sufficient funds available to us or otherwise, we will be forced to cease operations and liquidate the Trust Account. These factors, among others, raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this Annual Report on Form 10-K.
As more fully described in the report of registered independent public accounting firm preceding the financial statements included elsewhere in this Annual Report on Form 10-K, our independent auditors have included an explanatory paragraph regarding our ability to continue as a going concern and noting that the financial statements included elsewhere in this Annual Report have been prepared assuming that we will continue as a going concern and the financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take
advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare
our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including, but not limited to, if out total annual gross revenues are more than $1.235 billion or if the market value of our Class A ordinary shares held by non-affiliates equals or exceeds $700.0 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250.0 million as of the prior June 30, and (2) our annual revenues exceeded $100.0 million during such completed fiscal year or the market value of our ordinary shares held by non-affiliates exceeds $700.0 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a Business Combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls in our Annual Report on Form 10-K. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including, but not limited to, if out total annual gross revenues are more than $1.235 billion or if the market value of our Class A ordinary shares held by non-affiliates equals or exceeds $700.0 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250.0 million as of the prior June 30, and (2) our annual revenues exceeded $100.0 million during such completed fiscal year or the market value of our ordinary shares held by non-affiliates exceeds $700.0 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a Business Combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls in our Annual Report on Form 10-K. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We have identified material weaknesses in our internal controls over financial reporting. The material weaknesses could
continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As previously disclosed in our Quarterly Report for the fiscal quarter ended September 30, 2023, we identified material weaknesses in our internal control over financial reporting related to the accounting for complex financial instruments and the review and approval of adjusting journal entries. As a result of the identified material weaknesses, our management concluded that our internal controls over financial reporting was not effective as of December 31, 2023.
To respond to the material weaknesses, we plan to devote significant effort and resources to the remediation and improvement of our internal controls over financial reporting before November 12, 2024. Our plans at this time include incorporating additional controls and procedures over the review of complex financial instrument valuations, increasing communication among our personnel and third-party professionals with whom we consult regarding accounting applications and incorporating additional procedures over the review of the general ledger and the review and approval of adjustment to journal entries. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Any failure to maintain such internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective 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 ordinary shares.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs will be governed by our third amended and restated memorandum and articles of association, the Companies Act (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. We will also be subject to the federal securities laws of the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As previously disclosed in our Quarterly Report for the fiscal quarter ended September 30, 2023, we identified material weaknesses in our internal control over financial reporting related to the accounting for complex financial instruments and the review and approval of adjusting journal entries. As a result of the identified material weaknesses, our management concluded that our internal controls over financial reporting was not effective as of December 31, 2023.
To respond to the material weaknesses, we plan to devote significant effort and resources to the remediation and improvement of our internal controls over financial reporting before November 12, 2024. Our plans at this time include incorporating additional controls and procedures over the review of complex financial instrument valuations, increasing communication among our personnel and third-party professionals with whom we consult regarding accounting applications and incorporating additional procedures over the review of the general ledger and the review and approval of adjustment to journal entries. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Any failure to maintain such internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective 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 ordinary shares.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs will be governed by our third amended and restated memorandum and articles of association, the Companies Act (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. We will also be subject to the federal securities laws of the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We have been advised by Carey Olsen, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely: (i) to recognize or enforce against us judgments of
courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us
predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory
enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits
based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in
the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the
grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public
policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
Provisions in our third amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our third amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of our Business Combination only holders of our Class B ordinary shares, which have been issued to our Sponsor and the Funds, are entitled to vote on the appointment of directors, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss. See also “Item 1.C. Cybersecurity” for additional information on our cybersecurity risk management, strategy and governance.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
Provisions in our third amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our third amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of our Business Combination only holders of our Class B ordinary shares, which have been issued to our Sponsor and the Funds, are entitled to vote on the appointment of directors, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss. See also “Item 1.C. Cybersecurity” for additional information on our cybersecurity risk management, strategy and governance.
Our search for a business combination, and any target business with which we ultimately consummate a Business Combination,
may be materially adversely affected by the ongoing military conflicts and other geopolitical uncertainties.
On February 24, 2022, Russian military forces launched a military action in Ukraine, and sustained conflict and disruption in the region is likely. Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage. Russia’s recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic. The escalation in October 2023 of the conflict between Israel and Hamas also could cause disruptions to global economic conditions and effect the stability of the Middle East region. It is unknown how long the disruptions will continue and whether such disruption will become more severe. The impact of the conflict on the world economy is not determinable as of the date of the filing of this Annual Report on Form 10-K.
The situation is rapidly evolving as a result of the conflicts in Ukraine and in the Middle East, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia and other countries, regions, officials, individuals or industries. Such sanctions and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our ability to search for a business combination or finance such business combination, and the business, financial condition and results of operations of any target business with which we ultimately consummate a Business Combination may be materially adversely affected.
We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, we qualify for exemptions from certain corporate governance requirements.
On February 24, 2022, Russian military forces launched a military action in Ukraine, and sustained conflict and disruption in the region is likely. Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage. Russia’s recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic. The escalation in October 2023 of the conflict between Israel and Hamas also could cause disruptions to global economic conditions and effect the stability of the Middle East region. It is unknown how long the disruptions will continue and whether such disruption will become more severe. The impact of the conflict on the world economy is not determinable as of the date of the filing of this Annual Report on Form 10-K.
The situation is rapidly evolving as a result of the conflicts in Ukraine and in the Middle East, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia and other countries, regions, officials, individuals or industries. Such sanctions and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our ability to search for a business combination or finance such business combination, and the business, financial condition and results of operations of any target business with which we ultimately consummate a Business Combination may be materially adversely affected.
We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, we qualify for exemptions from certain corporate governance requirements.
As of March 15, 2024, our Initial Shareholders own approximately 79% of our outstanding ordinary shares. As a
result, we are considered a “controlled company” within the meaning of the Nasdaq corporate governance standards. Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power is held by an
individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
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•
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we have a board that includes a majority of “independent directors,” as defined under the rules of the Nasdaq;
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•
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we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and
responsibilities; and
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•
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we have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written charter addressing the
committee’s purpose and responsibilities.
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We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of the Nasdaq, subject to applicable phase-in rules. However, if we
determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
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Item 1B.
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Unresolved Staff Comments.
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None.
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Item 1C.
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Cybersecurity.
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We are a special purpose acquisition company with no business operations. Since our IPO, our sole activity has been identifying and evaluating suitable acquisition transaction candidates.
As noted in Item 1A. Risk Factors of this Form 10-K, cybersecurity attacks or other information security incidents relating to the information systems and infrastructure that we utilize, including those of third parties, could lead to
corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. While we have not adopted formal processes for assessing cybersecurity risk and we have no company personnel or processes of our own for
this purpose, we rely upon the technology of third parties, and we depend upon the personnel and the processes of third parties to identify and protect against cybersecurity threats. Our board of directors is responsible for the oversight of
risks from cybersecurity threats, and in fiscal year 2023, we did not identify any cybersecurity threats that have materially affected our business strategy, results of operations, or financial condition.
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Item 2.
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Properties.
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We currently maintain our executive offices at 341 Newbury Street, 6th Floor, Boston, MA 02115. Our Sponsor currently provides us with office space at no cost. We consider our current office space adequate for our current operations.
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Item 3.
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Legal Proceedings.
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We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors
in their corporate capacity.
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Item 4.
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Mine Safety Disclosures.
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Not applicable.
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Item 5.
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Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.
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(a)
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Market Information
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Our Units began trading on the Nasdaq under the symbol “DPCSU” on November 9, 2021. On December 30, 2021, our Class A ordinary shares and Public Warrants began trading on the
Nasdaq under the symbols “DPCS” and “DPCSW,” respectively. Each Unit includes one Class A ordinary share and one half of one Public Warrant, and each whole Public Warrant entitles the holder to purchase one Class A ordinary share at a price
of $11.50 per share, subject to adjustment as described elsewhere in this Annual Report on Form 10-K. Only whole Public Warrants will be issued on separation of Units, and only whole Public Warrants may be traded and be exercised for Class A
ordinary shares. The Public Warrants will become exercisable on the later of 30 days after the completion of our Business Combination or 12 months after the Close Date. Our Public Warrants will expire five years after the completion of our
Business Combination or earlier upon redemption or liquidation as described in “Item 1. Business.”
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(b)
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Holders
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At March 15, 2024 there was 1 holder of record of our Units, 4 holder of record of our separately traded Class A ordinary shares, 3 holders of record of our Class B ordinary
shares and 2 holders of record of our separately traded Public Warrants.
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(c)
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Dividends
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We have not paid any cash dividends on our Class A ordinary shares to date and do not intend to pay cash dividends prior to the completion of our 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 our Business Combination. The payment of any cash dividends
subsequent to our Business Combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share dividends in the
foreseeable future. Further, if we incur any indebtedness in connection with our Business Combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
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(d)
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Securities Authorized for Issuance Under Equity Compensation Plans
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(e)
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Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings
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Unregistered Sales
Not Applicable.
Use of Proceeds
On November 8, 2021, our registration statement on Form S-1 (File No. 333-260456) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 23,000,000 Units, inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at an offering price to the public of $10.00 per Unit for an aggregate offering price of $230,000,000, with each Unit consisting of one Class A ordinary share of the Company at $0.0001 par value and one-half of one warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share.
Not Applicable.
Use of Proceeds
On November 8, 2021, our registration statement on Form S-1 (File No. 333-260456) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 23,000,000 Units, inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at an offering price to the public of $10.00 per Unit for an aggregate offering price of $230,000,000, with each Unit consisting of one Class A ordinary share of the Company at $0.0001 par value and one-half of one warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share.
Net proceeds of $230,000,000 from the Public Offering and the sale of the Private Placement Warrants, including deferred underwriting discounts of $8,050,000, were deposited into the Trust Account on the Close
Date and $2,500,000 of the proceeds from the sale of the Private Placement Warrants was deposited in our operating account for future working capital expenditures. We paid $4,600,000 in underwriting discounts and incurred offering costs of
$498,152 related to the Public Offering. In addition, the Underwriters agreed to defer $8,050,000 in underwriting discounts, which amount will be payable when and if a business combination is consummated. No payments were made by us to
directors, officers or persons owning ten percent or more of our Class A ordinary shares or to their associates, or to our affiliates.
In connection with the First Extension adopted at the First Extraordinary General Meeting held on May 10, 2023, we paid approximately $199.0 million in redemption proceeds to shareholders
holding 18,940,598 Class A ordinary shares who exercised their right to redeem such shares at a per share redemption price of $10.51.
In connection with the Second Extension adopted at the Second Extraordinary General Meeting held on February 8, 2024, we paid approximately $28 million in redemption proceeds to
shareholders holding 2,559,402 Class A ordinary shares who exercised their right to redeem such shares at a per share redemption price of $10.96.
Other than as described above, there has been no material change in the planned use of proceeds from the Public Offering as described in our final Prospectus, dated November 8, 2021,
which was filed with the SEC on November 10, 2021.
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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References in this Item 7 to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K (the “Financial Statements”). Capitalized terms used but
not otherwise defined herein have the meaning set forth in the Financial Statements. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and
elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging
growth companies. We completed our Public Offering on November 12, 2021. As of December 31, 2023 and as of the date of this Annual Report, we had not identified any Business Combination target.
We presently have no revenue and have had no operations other than the active solicitation of a target business with which to complete a Business Combination.
We expect to continue to incur significant costs in the pursuit of our Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.
Our registration statement for our Public Offering was declared effective on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 units (the
“Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consists of one Class A ordinary share, par value $0.0001
per share (the “Class A ordinary shares”), and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per
share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $230.0 million.
Simultaneously with the closing of the Public Offering, we consummated the private sale (the “Private Placement”) of 4,733,333 warrants (the “Private Placement Warrants”) to DP
Investment Management Sponsor I LLC (the “Sponsor”), each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating total gross proceeds of $7.1 million.
Simultaneously with the closing of the Public Offering, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4,600,000 to the Company (the “Sponsor
Loan”). The Sponsor Loan is interest free. The Sponsor Loan shall be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a purchase price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until
the consummation of our initial Business Combination. Any Sponsor Loan Warrants issued will be identical to the Private Placement Warrants.
Upon the closing of our Public Offering, a total of $234.6 million ($10.20 per unit), comprised of $225.4 million of the proceeds from the Public Offering (which amount includes $8.05
million of the underwriter’s deferred discount), $4.6 million of the proceeds of the sale of the Private Placement Warrants and $4.6 million of the proceeds from the Sponsor Loan, were placed in a U.S.- based trust account (“Trust
Account”) maintained by Continental Stock Transfer & Trust Company acting as trustee. The funds held in the Trust Account may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of
Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of the net proceeds of our Public Offering and the sale of the Private Placement Warrants, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we will be able to complete a Business Combination successfully.
We must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to
management for working capital purposes, if permitted, and excluding the amount of deferred underwriting discounts held in trust) at the time of our signing a definitive agreement in connection with our Business Combination. However, we
only intend to complete a 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.
If we are unable to complete a Business Combination by November 12, 2024, and our shareholders have not amended our third amended and restated memorandum and articles of association
(the "Third A&R M&A") to extend the combination period, we 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 subject to
lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and
not previously released to us to pay our taxes (if any) (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, 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 our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
On May 5, 2023, certain of our unaffiliated investors (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with the Sponsor, pursuant to which the
Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A ordinary shares (the “Investor Shares”) in connection with the First Extension (as defined below) and (ii) vote the Investor Shares in favor of the
First Extension. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B ordinary shares in connection with an extension until November 12, 2023
and (ii) to the extent our board of directors agrees to further extend the date up to three times by an additional month each time until February 12, 2024 to consummate its Business Combination, an aggregate of up to 1,500,000 Class B
ordinary shares, which includes the Class B ordinary shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.
On May 10, 2023, we held an extraordinary general meeting of shareholders (the “First Extraordinary General Meeting”) at which our shareholders voted to approve to amend and restate our
amended and restated memorandum and articles of association to extend the date (the “Extension Date”) by which we must (1) consummate our Business Combination, (2) cease our operations except for the purpose of winding up if we fail to
complete such Business Combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Public Offering, from May 12, 2023 to November 12, 2023, with optional additional extensions of up to three
times by an additional month each time, at the option of our board of directors, until February 12, 2024 (the “First Extension”).
In connection with the First Extension, shareholders holding 18,940,598 Class A ordinary shares issued in our Public Offering exercised their right to redeem such shares at a per share
redemption price of $10.51. As a result, approximately $199.0 million was removed from our Trust Account to pay such holders. Following these redemptions, we had 4,059,402 Class A ordinary shares with redemption rights outstanding.
On November 8, 2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until December 12, 2023. On December 8,
2023, our board of directors approved the extension of the date by which we are required to complete our Business Combination until January 12, 2024. On January 8, 2024, our board of directors approved the extension of the date by which
we are required to complete our Business Combination until February 12, 2024.
Recent Developments
Second Extraordinary General Meeting
On February 8, 2024, we held a second extraordinary general meeting of shareholders (“Second Extraordinary General Meeting”) at which our shareholders approved, by special resolution, a
proposal to amend and restate the Company’s second amended and restated memorandum and articles of association to extend the Extension Date from February 12, 2024 to November 12, 2024 (the “Second Extension”). In connection with the Second
Extension, the holders of additional 2,559,402 Class A ordinary shares properly exercised their right to redeem their Class A ordinary shares for cash at a redemption price of approximately $10.96 per share. As a result, an aggregate of
approximately $28 million was removed from our Trust Account to pay such holders. Following these redemptions, we had 1,500,000 Class A ordinary shares with redemption rights outstanding and approximately $16.4 million in our Trust Account.
In connection with the approval of the Second Extension, the Sponsor has agreed to deposit on a monthly basis, or pro rata portion thereof if less than a month, $49,500 into our Trust
Account for the benefit of our public shareholders (the “Extension Deposit”), until the earlier of (i) the date of the extraordinary general meeting held in connection with the shareholder vote to approve a Business Combination and (ii)
November 12, 2024 (or any earlier date of termination, dissolution or winding up of the Company as determined in the sole discretion of our board of directors). The Sponsor made the first Extension Deposit on February 12, 2024 and the
second Extension Deposit on March 12, 2024.
Pursuant to the terms of the Third A&R M&A, on February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into
Class A ordinary shares (such shares, the “Converted Shares”). The Initial Shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if we
fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer included in the letter agreement entered into by and between the Initial Shareholders and us in connection with our Public
Offering. Following such conversion, and as a result of the redemptions described above, as of March 15, 2024, we have an aggregate of 7,249,997 Class A ordinary shares issued and outstanding, of which 1,500,000 Class A ordinary shares
issued and outstanding are with redemption rights, and three Founder Shares issued and outstanding.
Application for Transfer to The Nasdaq Capital Market
On August 21, 2023, we received a letter from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we were not in compliance
with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our listed securities maintain a minimum Market Value of Listed Securities (“MVLS”) of $50 million (the “MVLS Rule”). Subsequently on March 11, 2024, the Nasdaq Staff notified us
that we have regained compliance with the MVLS Rule. On October 12, 2023, we received a second letter from the Nasdaq Staff notifying us that we were not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires that we maintain a
minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). To resolve the deficiencies and regain compliance with the Nasdaq continued listing requirements, we submitted an
application to Nasdaq for a transfer from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024 (the "Transfer Application"). On March 26, 2024, the Nasdaq Staff notified us that the Transfer Application has been
approved, and that the Units, Class A Ordinary Shares and Public Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on April 4, 2024.
Results of Operations
For the year ended December 31, 2023, we had net income of $3,786,635, which consisted of earnings on cash (investments) held in trust of $5,299,109, partially offset by general and
administrative expenses of $1,512,474. General and administrative expenses increased by $564,317 for the year ended December 31, 2023 mainly due to increases in legal expenses and additional fees paid to third party service providers.
For the year ended December 31, 2022, we had net income of $2,434,705, which consisted of earnings on cash (investments) held in trust of $3,382,862, partially offset by general and
administrative expenses of $948,157.
Liquidity and Capital Resources
The registration statement for our Public Offering was declared effective by the SEC on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 Units,
inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Public Offering, we
consummated the sale of 4,733,333 Private Placement Warrants to our Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7,100,000. On the Close Date, our Sponsor loaned us $4,600,000 under the Sponsor Loan.
Following the Public Offering, the sale of the Private Placement Warrants and the issuance of the proceeds under the Sponsor Loan, a total of $234,600,000 was placed in the Trust Account,
which consisted of $225,400,000 from the proceeds from the Public Offering, $4,600,000 from the proceeds of the sale of the Private Placement Warrants and $4,600,000 from the proceeds from the Sponsor Loan. We incurred $13,148,152 in
transaction costs, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $498,152 of other costs.
Our liquidity needs up to December 31, 2023 had been satisfied through (i) a payment from the Sponsor along with certain funds controlled by Data Point Capital of $25,000 to cover certain
offering and formation costs in exchange for the issuance of the Founder Shares to the Sponsor and (ii) the receipt of loans to us of up to $300,000 by the Sponsor under an unsecured promissory note. The unsecured promissory note was
non-interest bearing and was due at the earlier of December 31, 2021 and the closing of the Public Offering. As of December 31, 2023, no amounts were outstanding under the unsecured promissory note. In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us working capital loans. As of December 31, 2023, and
through the date of this filling, there were no amounts outstanding under any working capital loans.
For the year ended December 31, 2023, cash used in operating activities was $536,656, consisting of net income of $3,786,635, earnings on cash (investments) held in trust of $5,299,109 of
and changes in operating assets and liabilities of $975,818, primarily due to an increase in accrued expenses.
For the year ended December 31, 2022, cash used in operating activities was $494,000, consisting of net income of 2,434,705, earnings on investments held in trust of $3,382,862 and
changes in operating assets and liabilities of $454,157.
As of December 31, 2023 and 2022, we had cash and/or investments held in the Trust Account of $44,290,118 and $237,982,862, respectively. At the Second Extraordinary General Meeting held
on February 8, 2024, in connection with the Second Extension, holders of additional 2,559,402 Class A ordinary shares properly exercised their right to redeem their Class A ordinary shares for cash at a redemption price of approximately
$10.96 per share. As a result, an aggregate of approximately $28 million was removed from our Trust Account to pay such holders. As of March 19, 2024, we had cash held in the Trust Account of $16,631,085. We may withdraw interest earned to
pay our income taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding
deferred underwriting commissions) to complete our Business Combination. To the extent that our share capital is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2023 and 2022, we had cash of $409,643 and $946,299 held outside of the Trust Account, respectively. We intend to use the funds held outside the Trust Account primarily
to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers
and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the
cash held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.
We believe we will need to raise additional funds in order to meet the expenditures required for operating our business. Additionally, if our estimate of the costs of identifying a target
business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.
Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our then outstanding public shares upon completion of our Business
Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
At December 31, 2023 and 2022, other than the $4,600,000 Sponsor Loan, we did not have other long-term debt, capital lease obligations, operating lease obligations or long-term
liabilities.
Going Concern Considerations:
We have until November 12, 2024 to consummate a Business Combination. It is currently uncertain that we will be able to consummate a Business Combination by this time. If our Business
Combination cannot be completed prior to November 12, 2024, we will cease operations except for the purpose of winding-up, redeem our outstanding public shares, and liquidate and dissolve unless, prior to such date, we receive an extension
approval from our shareholders and elect to extend the date on which a Business Combination must be consummated.
As of December 31, 2023, we had $409,623 in cash outside of the Trust Account for our working capital needs and a working capital deficit of $692,819. We expect to incur significant
costs in pursuit of our acquisition plans and the net proceeds of the Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until
November 12, 2024. The Company will likely depend on loans from our Sponsor, its affiliates or members of the management team and/or third parties to fund our search and to complete a Business Combination. Further, if our estimates of the
costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to a Business Combination. The
Sponsor is not under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional funds, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
We continue our search for a target and will continue pursuing all options to complete a Business Combination by November 12, 2024. It is uncertain whether we will be able to consummate a
Business Combination by November 12, 2024 or whether the current funds that we have will be sufficient to consummate a Business Combination. If a Business Combination is not consummated by November 12, 2024, we will cease operations except
for the purpose of winding up, redeem the then outstanding Public Shares, and liquidate and dissolve unless, prior to such date, we receive an extension approval from our shareholders and elect to extend the date on which a Business
Combination must be consummated. These factors, among others, raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this Annual Report.
As more fully described in the report of registered independent public accounting firm preceding the financial statements included elsewhere in this Annual Report, our independent
auditors have included an explanatory paragraph regarding our ability to continue as a going concern and noting that the accompanying financial statements have been prepared assuming that we will continue as a going concern and the
financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon the
exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the working capital loans) are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are
entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our
completion of our Business Combination. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup
period, which occurs (i) in the case of the Founder Shares, until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our Business Combination, (x) if the closing price of our Class A
ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
120 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their
ordinary shares for cash, securities or other property, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of our Business Combination. We
will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a 45-day option from the date of the Public Offering to purchase on a pro rata basis up to 3,000,000 additional Units to cover over-allotments, if any, at the
Public Offering price, less the underwriting discounts and commissions. The over-allotment option was exercised in full on November 12, 2021.
The underwriter was entitled to an underwriting discount of $0.20 per Unit, or $4.6 million in the aggregate, paid upon the closing of the Public Offering. An additional fee of $0.35 per
Unit, or $8.05 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we
complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Estimates
The preparation of our Financial Statements in accordance with the generally accepted accounting principles in the United States requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our Financial Statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair
value of financial instruments. We base our estimates on known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As of December 31, 2023, in connection with the 1,333,324 Class B ordinary shares the Sponsor agreed to transfer to the Investors on or promptly after the consummation of the Business
Combination pursuant to the Non-Redemption Agreements, we estimated the aggregate fair value of the 1,333,324 Class B Ordinary Shares attributable to the Investors to be $2,791,710 or a weighted average of $2.09 per share, which is
estimated by taking into considerations the estimated probability of the consummation of a Business Combination, estimated concessions and estimated cost of carrying charges to eliminate the investor’s exposure to changes in the price of
their Class B Ordinary Shares. The excess of the fair value of the Class B Ordinary Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. In substance, we recognized the offering cost as a
capital contribution by the Sponsor to induce the Investors not to redeem their Class A ordinary shares, under the guidance in Staff Accounting Bulletin Topic 5T, with a corresponding charge to additional paid-in capital to recognize the
fair value of the shares transferred as an offering cost.
Critical Accounting Policies
We have identified the following as our critical accounting policies:
Cash (Investments) Held in the Trust Account
Upon consummation of the Public Offering, our portfolio of investments is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. When our investments held in the Trust Account are comprised of U.S.
government securities, the investments are classified as trading securities. When our investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and
investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in “Earnings on cash
(investments) held in Trust Account” in the accompanying statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Warrant Classification
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in
FASB ASC, “Distinguishing Liabilities from Equity (“ASC 480”)” and “Derivatives and Hedging (“ASC 815”).” The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares, among other conditions for equity
classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time
of issuance.
Sponsor Loan Classification
When the Company issues convertible debt it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be
classified as a liability under ASC 480 and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock
would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a stand-alone instrument, meets the definition of an “embedded derivative” as defined in ASC 815. Generally,
characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is
readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the balance sheet at fair value, with
any changes in its fair value recognized currently in the statement of operations. The Sponsor Loan has a conversion feature that allows for converting the loan into warrants.
The Company performed an evaluation as outlined and determined that it qualifies for exemption as an equity instrument and is not bifurcated.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480. Class A ordinary shares subject to mandatory redemption are
classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares
feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
Net Income Per Ordinary Share
We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per share is computed by dividing net income by the weighted-average
number of Class A ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. We have not considered the effect of the warrants sold in the Public Offering and private placement to purchase an aggregate
of 16,233,333 Class A ordinary shares in the calculation of diluted loss per share since they are contingent on a future event. Warrants granted upon conversion of the convertible note would also be anti-dilutive and are thus excluded from
the calculation.
Our statements of operations include a presentation of income per share for ordinary shares subject to possible redemption in a manner similar to the two-class method of income per share.
Net income per ordinary share, basic and diluted, for ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income on earnings, by the weighted average number of ordinary shares subject to
possible redemption outstanding over the period. Net income is allocated evenly on a pro rata basis between Class A ordinary shares and Class B ordinary shares based on weighted average number of ordinary shares outstanding over the period.
Remeasurement adjustments are not considered in the calculation as remeasurement adjustments do not result in carrying value in the excess of fair value.
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This update requires
companies to disclose specific categories in the income tax rate reconciliation and requires additional information for certain reconciling items. For public business entities, ASU 2023-09 is effective for fiscal years beginning after
December 15, 2024, with early adoption permitted. We will adopt the standards required under ASU 2023-09 as of January 1, 2025. We are currently evaluating the impact of ASU 2023-09 on our financial statements.
We do not believe that any other recently issued, but not yet effective, accounting pronouncement, if currently adopted, would have a material effect on the Financial Statements.
Inflation
We do not believe that inflation had a material impact on our business or operating results during the period presented.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the
JOBS Act are 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 a result, the Financial Statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of 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 auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section
404 of the Sarbanes-Oxley Act, (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 Public Company Accounting Oversight Board 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 chief executive officer’s compensation to median
employee compensation. These exemptions will apply for a period of five years from the completion of our Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
To date, our efforts have been limited to organizational activities and activities relating to the Public Offering and the identification and evaluation of prospective acquisition targets
for a Business Combination. We have neither engaged in any operations nor generated any revenues. As the net proceeds from our Public Offering, certain of the net proceeds of the sale of the Private Placement Warrants and the proceeds of
the Sponsor Loan held in the Trust Account have not been invested, we do not believe there will be any material exposure to interest rate risk.
We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
DP CAP ACQUISITION CORP I
INDEX TO FINANCIAL STATEMENTS
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Page
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Report of Independent Registered Public Accounting Firm (
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59
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60
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| 61 | |
| 62 | |
| 63 | |
| 64 |
To the Shareholders and Board of Directors of
DP Cap Acquisition Corp I
Opinion on the Financial Statements
We have audited the accompanying balance sheets of DP Cap Acquisition Corp I (the “Company”) as of December 31, 2023
and 2022, the related statements of operations, changes in shareholders’ deficit and cash flows for each of the two years in the period ended December 31, 2023, 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 December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 2023, 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, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2023 are not sufficient to complete its planned activities for a
reasonable period of time, which is considered to be one year from the issuance date of the financial statements. The Company is subject to a mandatory liquidation and subsequent dissolution requirement if it does not complete a business
combination by November 12, 2024 and the Company’s shareholders have not taken the actions necessary to extend this date. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. 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 audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits 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 audits 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 audits 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 audits 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 audits
provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021.
March 29, 2024
DP CAP ACQUISITION CORP I
| ASSETS |
December 31, 2023 | December 31, 2022 | ||||||
|
Cash
|
$
|
|
$ | |||||
|
Prepaid expenses
|
|
|||||||
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Total current assets
|
|
|||||||
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Cash (Investments) held in Trust Account
|
||||||||
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Total Assets
|
$
|
|
$ | |||||
|
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION, AND SHAREHOLDERS’ DEFICIT
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
|
$ | |||||
|
Accrued expenses
|
|
|||||||
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Total current liabilities
|
|
|||||||
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Deferred underwriting fees payable
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|
|||||||
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|
|||||||
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Total liabilities
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|||||||
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Commitments and Contingencies
|
|
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||||||
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Class A ordinary shares subject to possible redemption,
|
|
|||||||
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Shareholders’ deficit
|
||||||||
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Preference shares, $
|
|
|||||||
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Class A ordinary shares, $
|
|
|||||||
|
Class B ordinary shares, $
|
|
|||||||
|
Additional paid-in capital
|
|
|||||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
|
Total shareholders’ deficit
|
(
|
)
|
(
|
)
|
||||
|
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption, and Shareholders’ Deficit
|
$
|
|
$ |
|||||
The accompanying notes are an integral part of these financial statements.
DP CAP ACQUISITION CORP I
|
For The Year Ended
December 31, 2023
|
For The Year Ended
December 31, 2022
|
|||||||
|
General and administrative expenses
|
||||||||
|
Loss from operations
|
( |
) |
(
|
)
|
||||
|
Earnings on cash (investments) held in Trust Account
|
||||||||
|
Net income
|
$ |
$
|
|
|||||
|
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted
|
|
|||||||
|
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption
|
$ |
$
|
|
|||||
|
Weighted average shares outstanding of Class B non-redeemable ordinary shares, basic and diluted
|
|
|||||||
|
Basic and diluted net income per share, Class B non-redeemable ordinary shares
|
$ |
$
|
|
|||||
The accompanying notes are an integral part of these financial statements.
DP CAP ACQUISITION CORP I
FOR THE YEAR ENDED DECEMBER 31, 2023
| Ordinary Shares | ||||||||||||||||||||||||||||
|
Class A
|
Class B
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total Shareholders’
Deficit
|
||||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||||
|
Capital contribution made by Sponsor for non-redemption agreement
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
|
Cost of raising capital related to shareholder non-redemption agreements
|
- | - | ( |
) | ( |
) | ||||||||||||||||||||||
|
Remeasurement of Class A ordinary shares to redemption value
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
|
Balance as of December 31, 2023
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
AND
FOR THE YEAR ENDED DECEMBER 31, 2022
| Ordinary Shares | ||||||||||||||||||||||||||||
|
Class A
|
Class B
|
|
||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total Shareholders’
Deficit
|
||||||||||||||||||||||
|
Balance as of January 1, 2022
|
|
$
|
|
|
$
|
|
$ |
|
$ |
(
|
)
|
$
|
(
|
)
|
||||||||||||||
|
Remeasurement of Class A
ordinary shares to redemption value
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
| Balance as of December 31, 2022 | $ |
$ | $ | $ |
( |
) | $ |
( |
) | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
DP CAP ACQUISITION CORP I
|
For The Year Ended
December 31, 2023
|
For The Year Ended
December 31, 2022
|
|||||||
|
Cash Flows from Operating Activities
|
||||||||
|
Net income
|
$ |
$
|
|
|||||
|
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
|
Earnings on cash (investments) held in Trust Account
|
( |
) | ( |
) | ||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Prepaid expenses
|
|
|||||||
|
Other assets
|
||||||||
|
Accounts payable
|
(
|
)
|
||||||
|
Accrued expenses
|
|
|||||||
|
Net cash used in operating activities
|
( |
) |
(
|
)
|
||||
|
Cash Flows from Investing Activities
|
||||||||
|
Trust Account Withdrawal-redemption
|
|
|||||||
|
Net cash provided by investing activities
|
|
|||||||
|
Cash Flows from Financing Activities
|
||||||||
|
Redemption of Class A ordinary shares
|
( |
) | ||||||
|
Net cash used in financing activities
|
( |
) |
|
|||||
|
|
||||||||
|
Net change in cash
|
( |
) |
(
|
)
|
||||
|
Cash – beginning of period
|
|
|||||||
|
Cash – end of period
|
$ |
$
|
|
|||||
|
|
||||||||
|
Supplemental disclosure of noncash investing and financing
activities:
|
||||||||
|
Remeasurement of Class A shares to redemption value
|
$ | $ | ||||||
|
Capital contribution from Sponsor
|
$ |
$
|
|
|||||
|
Offering cost associated with non-redemption agreement
|
$ | ( |
) | $ | ||||
The accompanying notes are an integral part of these financial statements.
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Organization and General
DP Cap Acquisition Corp I (the “Company”) is a blank check company incorporated in the Cayman Islands on April 8, 2021. The Company was formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one
or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of December 31, 2023, the Company had not commenced any operations. All activity for the period from April 8, 2021 (inception) through December 31, 2023
relates to the Company’s formation and the Public Offering (as defined below) and subsequent to the Public Offering, the search for a target for the Company’s Business Combination. The Company will not generate any operating revenues until
after the completion of its Business Combination, at the earliest. The Company will generate non-operating income in the form of earnings on cash (investments) held in Trust Account relating to the proceeds derived from the Public Offering on
November 12, 2021 (“Public Offering” or “IPO”). The Company has selected December 31 as its fiscal year end.
On November 12, 2021, the Company consummated its Public Offering of 23,000,000 units (the “Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consists of one
Class A ordinary share, par value $0.0001 per share (the “Class A Ordinary Shares”), and of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A Ordinary Share at an exercise price of $11.50
per share, subject to adjustment. The Units were sold at a price of $10.00 230.0 million, which is described in Note 3.
Simultaneously with the closing of the Public Offering, the Company completed the private sale of 4,733,333 warrants (the “Private Placement Warrants”) at a purchase price of $1.50
per Private Placement Warrant (the “Private Placement”), to DP Investment Management Sponsor I LLC (the “Sponsor”), generating gross proceeds to the Company of $7,100,000 , which is described in Note 4. Each Private Placement Warrant entitles the holder to purchase one
Class A Ordinary Share at an exercise price of $11.50 per share.
Simultaneously with the closing of the IPO, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4,600,000 to the Company (the “Sponsor Loan”) at no
interest. The proceeds of the Sponsor Note were deposited into the Trust Account (described below) and will be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a conversion price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of the Company’s Business Combination. The Sponsor Loan Warrants are
identical to the Private Placement Warrants.
Transaction costs amounted to $13,148,152 ,
including $8,050,000 in deferred underwriting fees, $4,600,000 in paid underwriting fees and $498,152 in other offering costs. Upon completion of the
Public Offering, cash of $2,030,974 was held outside of the Trust Account (as defined below) for the payment of offering costs and
for working capital purposes. Offering costs were allocated between the Class A Ordinary Shares, Public Warrants and Private warrants using the relative fair value method.
A total of $234,600,000 ($10.20 per unit), which consisted of $225,400,000
of the net proceeds from the IPO, $4,600,000 of the proceeds of the sale of the Private Placement Warrants and $4,600,000 of the proceeds from a loan by the Sponsor under the Sponsor Loan, was placed in a U.S.-based Trust Account maintained by Continental
Stock Transfer & Trust Company, acting as trustee. Except with respect to interest earned on the funds in the Trust Account (the “Trust Account”) that may be released to the Company to pay its taxes and winding up and dissolution
expenses, the funds held in the Trust Account will not be released from the Trust Account until (i) the completion of the Company’s Business Combination, or (ii) the redemption of any of the Company’s public shares properly tendered in connection with a shareholder vote to
amend the Company’s third amended and restated memorandum and articles of association (the “Third A&R M&A”) to (A) modify the substance or timing of its obligation to provide holders of its Class A Ordinary Shares the right to have
their shares redeemed in connection with the Company’s initial business combination or to redeem 100% of the Company’s public shares if it does not complete its Business Combination by November 12, 2024 (the “Extended Combination
Period”) or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity, and (iii) the redemption of the Company’s public shares if it is unable to complete its Business Combination within the
Extended Combination Period, subject to applicable law. See discussion below regarding the extensions of the combination period.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination
successfully. The Company must complete one or more Business Combinations having an aggregate fair market value of at least 80 % of
the net assets held in the Trust Account (excluding the amount of deferred underwriting discounts held in the Trust Account and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into a Business
Combination. However, the Company only intends to complete a Business Combination if the post-transaction company owns or acquires 50 %
or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940,
as amended (the “Investment Company Act”). Upon the closing of the Public Offering, management agreed that an amount equal to at least $10.20
per Unit sold in the Public Offering, will be held in a Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in United States ‘‘government securities’’ within the
meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination, (ii) the distribution of the Trust Account as described below. On November 7, 2023, in order to mitigate the potential risks of being
deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, the Company entered into an amendment to the investment management trust agreement by and between the Company and Continental
Stock Transfer & Trust Company, the trustee with respect to the Trust Account (“Continental”), to allow for Continental to hold all funds in the Trust Account uninvested or in cash in an interest-bearing bank demand deposit account. On
the same day, the Company instructed Continental to liquidate the U.S. government treasury obligations and money market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit
account until the earlier of: (i) the completion of a Business Combination, or (ii) the distribution of the Trust Account as described below.
The Company is required to provide the holders (the “Public Shareholders”) of the Company’s issued and outstanding Class A Ordinary Shares, par value $0.0001 per share, sold in the Public Offering (the “Public Shares”) 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 shareholders 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 Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust
Account (initially $10.20 per Public Share). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the
deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6, Commitments and Contingencies). These Public Shares were recorded at a redemption value and
classified as temporary equity upon the completion of the Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
If the Company seeks shareholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company
does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Third A&R M&A, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange
Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for
business or legal reasons, the Company will offer to redeem the Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect
to redeem its Public Shares irrespective of whether such Public Shareholder votes for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the holders of the Founder
Shares (as defined below in Note 5) (“the initial shareholders”) have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public Offering in favor of a Business Combination. In addition, the initial
shareholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Third A&R M&A provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is
acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % of the Public Shares, without the prior consent of the Company. The initial shareholders have agreed not to propose an amendment to the Third
A&R M&A (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100 % of the Public Shares if the Company does not complete a Business Combination within the Extended Combination Period or (B) with respect to any other provision relating to shareholders’ rights or
pre-initial business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination by November 12, 2024 (refer to “Non-Redemption Agreements,
Extension Deposits and Extraordinary General Meetings” below for additional information), and the Company's shareholders have not amended the Third A&R M&A to extend such 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 business days
thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the
Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay
dissolution expenses) divided by the number of the then outstanding Public Shares, 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 board of directors, liquidate and dissolve, subject in each case to the
Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The initial shareholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company
fails to complete a Business Combination within the Extended Combination Period. However, if the initial shareholders acquire Public Shares after the Public Offering (other than by converting Founder Shares into Public Shares), they will be
entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Extended Combination Period. The underwriters have agreed to waive their rights
to the deferred underwriting commission (see Note 6, Commitments and Contingencies) held in the Trust Account in the event the Company does not complete a Business Combination within the Extended
Combination Period and, in such event, such amounts will be included with the other 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 residual assets remaining available for distribution (including Trust Account assets) will be only $10.20 .
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for
services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.20 per Public Share or (ii) the lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the
value of the trust assets, in each case net of interest which may be withdrawn to pay taxes. Such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to seek access to the Trust
Account. Such liability will also not apply to any claims under the Company’s indemnity of the underwriters of the Public 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 (other than the Company’s independent registered public accounting firm), 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.
Non-Redemption Agreements, Extension Deposits and Extraordinary General Meetings
On May 5, 2023, certain of the Company’s
unaffiliated investors (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with the Sponsor, pursuant to which the Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A Ordinary Shares (the “Investor Shares”) in connection with the First Extension (as defined below) and
(ii) vote the Investor Shares in favor of the First Extension. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors, in each case on or promptly after the consummation of the
Business Combination: (i) an aggregate of up to 1,000,000 Class B ordinary shares in connection with an extension until
November 12, 2023 (the “Original Extension”) and (ii) to the extent our board of directors agrees to further extend the date up to three times by an additional month each time until February 12, 2024 to consummate its Business
Combination, an aggregate of up to 1,500,000 Class B ordinary shares (each an “Optional Extension”), which includes the
Class B ordinary shares referred to in clause (i). As of December 31, 2023, in connection with the Original Extension and the first and second Optional Extensions, the Sponsor agreed to transfer to the Investors an aggregate of 1,333,324 Class B ordinary shares promptly after the consummation of the Business Combination. The 1,333,324 Class B ordinary shares were recognized by the Company as a capital contribution by the Sponsor to induce the Investors not to
redeem their Class A Ordinary Shares, under the guidance in Staff Accounting Bulletin Topic 5T, with a corresponding
charge to additional paid-in capital to recognize the fair value of the shares transferred as an offering cost. As of December 31, 2023, the Company estimated the aggregate fair value of the 1,333,324 Class B ordinary shares attributable to the Investors to be $2,791,710 , or a weighted average of $2.09 per share. The excess
of the fair value of the Class B ordinary shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Subsequently, in connection with the third Optional Extension which was approved by the
Company’s board of directors on January 8, 2024 (as discussed below), the Sponsor agreed to transfer additional 166,662
Class B ordinary shares to the Investors, amounting to an aggregate of 1,500,000 Class B ordinary shares to be transferred
to the Investors by the Sponsor on or promptly after the consummation of the Business Combination pursuant to the Non-Redemption Agreements.
On May 10, 2023, the Company held an extraordinary
general meeting of shareholders (the “First Extraordinary General Meeting”) at which the Company’s shareholders voted to approve, by special resolution, the proposal to amend and restate the Company’s amended and restated memorandum
and articles of association (the “Second A&R M&A”), to extend the date (the “Extension Date”) by which the Company must (1) consummate the Business Combination, (2) cease its operations except for the purpose of winding up if
it fails to complete such Business Combination, and (3) redeem all of the Class A Ordinary Shares included as part of the Units sold in the Company’s IPO, from May 12, 2023 to November 12, 2023, with optional additional extensions of
up to three times by an additional month each time, at the option of the Company’s board of directors, until February 12, 2024 (the “First Extension”). In connection with the First
Extension, shareholders holding 18,940,598 Class A Ordinary Shares exercised their right to redeem such shares at a per share redemption price of approximately $10.51 . As a result, approximately $199.0 million was removed from the Company’s Trust Account to pay such holders. Following these redemptions, the Company has 4,059,402 Class A Ordinary Shares with redemption rights outstanding.
On November 8, 2023, the Company’s board of directors approved the extension of the date by which the Company is
required to complete the Business Combination until December 12, 2023. On December 8, 2023, the Company’s board of directors approved the extension of the date by which the
Company is required to complete the Business Combination from December 12, 2023 until January 12, 2024. On January 8, 2024, the Company’s board of directors approved the extension of the date by which the Company is required to
complete an initial business combination from January 12, 2024 until February 12, 2024.
On February 8, 2024, the Company held a second extraordinary general meeting of shareholders (the “Second Extraordinary General Meeting”) at which the Company’s shareholders
approved, by special resolution, a proposal to amend and restate the Company’s Second A&R M&A to extend the Extension Date from February 12, 2024 to November 12, 2024 (the “Second Extension”). In connection with the Second
Extraordinary General Meeting, holders of additional 2,559,402 Class A Ordinary Shares properly exercised their right to
redeem their Class A Ordinary Shares for cash at a redemption price of approximately $10.96 per share. As a result, on
February 13, 2024, an aggregate of approximately $28 million was removed from the Company’s Trust Account to pay such
holders. Following this redemption, the Company has 1,500,000 Class A Ordinary Shares with redemption rights outstanding, and approximately $16.4 million remained in the
Trust Account.
In connection with the approval of the Second Extension, the Sponsor has agreed to deposit on a monthly basis, or pro rata portion thereof if less than a
month, $49,500 into the Company’s Trust Account for the benefit of the public shareholders (the “Extension Deposit”), until
the earlier of (i) the date of the extraordinary general meeting held in connection with the shareholder vote to approve a Business Combination and (ii) November 12, 2024 (or any earlier date of termination, dissolution or winding up of
the Company as determined in the sole discretion of the Company’s board of directors). The Sponsor made the first and second Extension Deposits on February 12, 2024 and March 12, 2024, respectively.
Share Conversion
Pursuant
to the terms of the Third A&R M&A, on February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997
Class B ordinary shares on a one -for-one basis into Class A Ordinary Shares (such shares, the “Converted Shares”). The
initial shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares if the Company fails to consummate a Business Combination, and the
Converted Shares will be subject to the restrictions on transfer pursuant to the letter agreement entered into by and between the initial shareholders and the Company in connection with the IPO. Following such conversion, an aggregate
of 7,249,997 1,500,000 three
Nasdaq Compliance
On August
21, 2023, the Company received a letter from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Company is not in compliance with Nasdaq Listing Rule
5450(b)(2)(A), which requires that the Company’s listed securities maintain a minimum Market Value of Listed Securities (“MVLS”) of $50 million (the “MVLS Rule”). Subsequently on March 11, 2024, the Nasdaq Staff notified the Company
that the Company has regained compliance with the MVLS Rule. On October 12, 2023, the Company received a second letter from the Nasdaq Staff notifying the Company that the Company is not in compliance with Nasdaq Listing Rule
5450(a)(2), which requires that the Company maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). To resolve the deficiencies and regain compliance with the
Nasdaq continued listing requirements, the Company submitted an application to Nasdaq for a transfer from The Nasdaq Global Market to The Nasdaq Capital Market on January 24, 2024. On March 26, 2024 (the “Transfer Application”), the
Nasdaq Staff notified the Company that the Transfer Application has been approved, and that the Units, Class A Ordinary Shares and Public Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the
opening of business on April 4, 2024.
As of the
date of this Annual Report on Form 10-K, the Company has not entered into any non-binding or definitive agreements with a potential Business Combination target.
Liquidity and Going Concern
In connection with the assessment of going concern considerations in accordance with the FASB ASC Subtopic 205-40, “Presentation of Financial Statements- Going Concern,” as a result of the Second Extension, the Company has until
November 12, 2024 to consummate a Business Combination. It is currently uncertain that the Company will be able to consummate a Business Combination by this time. If its Business Combination cannot be completed prior to November 12,
2024, the Company will cease operations except for the purpose of winding-up, redeem the Company’s then outstanding public shares, and liquidate and dissolve unless, prior to such date, the Company receives an extension approval
from its shareholders and elects to extend the date on which a Business Combination must be consummated.
As of
December 31, 2023, the working capital deficit is $692,819 . The current cash position from the net proceeds of the Public
Offering, the sale of the Private Placement Warrants and the Sponsor Loan not being held in the Trust Account are insufficient to allow us to operate until November 12, 2024, and, as such, the Company will likely depend on loans from
our Sponsor, its affiliates or members of the Company’s management team to fund our search and to complete a Business Combination. The Sponsor, its affiliates, or members of the Company’s management team are not under any obligation to
advance additional funds to, or to invest in, the Company. Also, if the Company’s estimate of the costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so,
the Company may need to obtain funding sooner. As such, there is substantial doubt about the Company’s ability to continue as a going concern through one year from the date of these financial statements.
The Company
plans to continue its search for a target and continue to pursue all options to complete a Business Combination by November 12, 2024. The Company is considering obtaining loans from the Sponsor, its affiliates, or members of the
management team to fund the search and to make a business combination. The Sponsor is not under any obligation to advance additional funds to, or to invest in, the Company, and the Company cannot provide any assurance that new financing
will be available to it on commercially acceptable terms, if at all. If the Company is unable to raise additional funds it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses, all of which would have a material adverse effect on the Company and its financial statements.
These
financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
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 of 2002, 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 an emerging growth 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. 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 that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
(“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
Risks and Uncertainties
Various
social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and
potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global
health epidemics) may contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. This market volatility could adversely affect the Company’s ability to complete a Business
Combination. In response to the conflict between nations, the United States and other countries have imposed sanctions or other restrictive actions against certain countries. Any of the above factors, including sanctions, export controls,
tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a Business Combination and the value of the Company’s securities.
Management continues to evaluate the impact of these types of risks on the industry and has concluded that while it is reasonably possible that these types of
risks could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of issuance of these financial statements.
These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management
has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally
toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. See Note 1 (Liquidity and Going Concern).
Use of Estimates
The preparation of the financial statements in conformity with U.S. 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 income and expenses during the reporting period.
Making estimates requires management to exercise significant judgement. 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 estimates, could change in the near term. Accordingly, the actual results could differ significantly from
those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash
equivalents are recorded at cost, which approximates fair value. The Company had no
Cash (Investments) Held in Trust Account
The Company’s investments have consisted of a portfolio of U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act, each with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a
combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities and are recognized at fair value. When the Company’s investments
held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Gains and losses resulting from the change in fair value of these securities are included in earnings on (cash) investments held in
the Trust Account in the statements of operations. On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the Investment Company Act, the
Company entered into an amendment to the investment management trust agreement by and between the Company and Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account (“Continental”), to allow for
Continental to hold all funds in the Trust Account uninvested or in cash in an interest-bearing bank demand deposit account. On the same day, the Company instructed Continental to liquidate the U.S. government treasury obligations and money
market funds held in the Trust Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of the consummation of the Company’s Business Combination or liquidation.
As of December 31, 2023, all the Company’s investments in the Trust Account were cash held in an
interest-bearing demand deposit account.
As of December 31, 2022, the majority of the Company’s investments were investments in money market funds
that invest in U.S. government securities, cash, or a combination thereof.
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820, “Fair Value Measurement” for its financial assets and liabilities that
are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection
with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities,
the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient
frequency and volume to provide pricing information on an ongoing basis.
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in
markets that are not active.
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
In some
circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based
on the lowest level input that is significant to the fair value measurement.
Net Income Per Ordinary Share
The Company
follows the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per share is computed by dividing net income by the weighted-average number of Class A Ordinary Shares or Class B Ordinary Shares
outstanding during the period. The Company has not considered the effect of the warrants sold as part of the Units in the Public Offering or the private placement to purchase an aggregate of 16,233,333 Class A Ordinary Shares in the calculation of diluted loss per share, since the inclusion of such warrants are contingent upon the occurrence of future event.
The Sponsor Loan Warrants to purchase a total of up to 3,066,067 Class A Ordinary Shares to be granted upon conversion of the
Sponsor Loan, if any, would also be contingent upon the occurrence of future event and would therefore also be excluded from the calculation.
The Company’s statements of operations include a presentation of income per share for ordinary shares subject to possible redemption in a manner similar to the
two-class method of income per share. Net income per ordinary share, basic and diluted, for ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income on earnings, by the weighted average
number of ordinary shares subject to possible redemption outstanding over the period. Net income is allocated evenly on a pro rata basis between Class A Ordinary Shares and the Company’s Class B ordinary shares, par value $0.0001 per share (the “Class B Ordinary Shares”) based on weighted average number of ordinary shares outstanding over the period.
Remeasurement adjustments are not considered in the calculation as remeasurement adjustments do not result in carrying value in the excess of fair value.
A reconciliation of net income per ordinary share is as follows:
| Year Ended December 31, 2023 | ||||||||
|
Class A
subject to possible redemption
|
Class B |
|||||||
|
Allocation of net income
|
$ | |||||||
|
Basic and diluted weighted average shares outstanding
|
||||||||
|
Basic and diluted net income per share
|
$ | |||||||
| Year Ended December 31, 2022 | ||||||||
|
Class A
subject to possible redemption
|
Class B |
|||||||
|
Allocation of net income
|
$ | |||||||
|
Basic and diluted weighted average shares outstanding
|
||||||||
|
Basic and diluted net income per share
|
$ | |||||||
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company had no net deferred tax assets as of December 31, 2023.
ASC 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. There were no unrecognized tax benefits as of December 31, 2023. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2023. 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 is
considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands. The Company has reviewed for potential tax filing requirements and liabilities created by
maintaining its principal office in the state of Massachusetts, United States, and has determined it has no resulting tax obligations. As such, the Company’s tax provision was zero for the periods presented.
Warrants
The Company accounts for the 16,233,333 warrants
issued in connection with the IPO (the 11,500,000 Public Warrants and the 4,733,333 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity” (“ASC 815-40”) and ASC 480, “Distinguishing Liabilities from Equity.”
The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares, among other conditions for equity classification. This assessment, which
requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period date while the warrants are outstanding.
Such guidance provides that because the warrants meet the criteria thereunder for equity classification, each warrant is recorded within
Shareholders’ equity (deficit). For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
Non-Redemption Agreements
As of December 31, 2023, in connection with the 1,333,324 Class B ordinary shares the Sponsor agreed to transfer to the Investors on or promptly after the consummation of the Business Combination pursuant to the Non-Redemption Agreements, the Company
estimated the aggregate fair value of the 1,333,324 Class B Ordinary Shares attributable to the Investors to be $2,791,710 or a weighted average of $2.09
per share, which is estimated by taking into considerations the estimated probability of the consummation of a Business Combination, estimated concessions and estimated cost of carrying charges to eliminate the investor’s exposure to changes
in the price of their Class B Ordinary Shares. The excess of the fair value of the Class B Ordinary Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. In substance, the Company recognized the
offering cost as a capital contribution by the Sponsor to induce the Investors not to redeem their Class A ordinary shares, under the guidance in Staff Accounting Bulletin Topic 5T, with a corresponding charge to additional paid-in capital to
recognize the fair value of the shares transferred as an offering cost.
Sponsor Loan
When the Company issues convertible debt it first evaluates the balance sheet classification
of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480 and second whether the conversion feature should be accounted for separately from the host instrument. A
conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a stand-alone
instrument, meets the definition of an “embedded derivative” as defined in ASC 815. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as
defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host
instrument and classified as a derivative liability carried on the balance sheet at fair value, with any changes in its fair value recognized currently in the statement of operations. The Sponsor Loan has a conversion feature that allows
for converting the loan into warrants. The Company performed an evaluation as outlined and determined that it qualifies for exemption as an equity instrument and is not bifurcated.
Recent Accounting Standards
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This update requires companies to disclose
specific categories in the income tax rate reconciliation and requires additional information for certain reconciling items. For public business entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with
early adoption permitted. The Company will adopt the standards required under ASU 2023-09 as of January 1, 2025. The Company is currently evaluating the impact of ASU 2023-09 on its financial statements.
The Company's management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a
material effect on the accompanying financial statements.
NOTE 3 - PUBLIC OFFERING
Pursuant to the Public Offering, the Company offered 23,000,000
Units at a price of $10.00 per Unit, which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consisted of one Class A Ordinary Share and of one Public
Warrant. Each whole Public Warrant entitles the holder to purchase one Class A Ordinary Share at a price of $11.50 per share, subject to adjustment (see Note 9, Warrants). The proceeds from the Public Offering and
the related offering costs were allocated between the Class A Ordinary Shares, Public Warrants and Private Placement Warrants using the relative fair value method. Costs associated with Class A Ordinary Shares were classified as a reduction
of temporary equity, and costs allocated to the warrants were classified as a reduction of permanent equity.
NOTE 4 - PRIVATE PLACEMENT
The Sponsor purchased an aggregate of 4,733,333
Private Placement Warrants at a price of $1.50 per Private Placement Warrant, or approximately $7,100,000 in the aggregate in a private placement that occurred simultaneously with the closing of the Public Offering. Each Private Placement
Warrant is exercisable for one Class A Ordinary Share at a price of $11.50 per share. $4,600,000 of the proceeds from the sale
of the Private Placement Warrants to the Sponsor were added to the proceeds from the Public Offering to be held in the Trust Account. The remaining cash was deposited into the Company’s operating account for future working capital purposes.
If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
The Sponsor, as purchaser of the Private Placement Warrants, agreed, subject to limited exceptions, not to transfer, assign or sell any of the Private Placement
Warrants (except to permitted transferees) until 30 days after the completion of the initial business combination.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay any outstanding Working Capital
Loans out of the proceeds of the Trust Account released to the Company. Otherwise, any outstanding Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not
close, the Company may use a portion of funds held outside the Trust Account to repay any outstanding Working Capital Loans but no funds held in the Trust Account would be used to repay any outstanding Working Capital Loans. Any outstanding
Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1,500,000
of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per
warrant. Such warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such Working
Capital Loans. As of December 31, 2023 and 2022, and as of the date of the issuance of these financial statements, there were no
NOTE 5 - RELATED PARTY TRANSACTIONS
Founder Shares
On May 13, 2021, the Sponsor, along with certain funds controlled by Data Point Capital, acquired 5,750,000 Class B Ordinary Shares (the “Founder Shares”) for an aggregate purchase price of $25,000 . Prior to the initial investment in the Company of $25,000
by our Sponsor along with certain funds controlled by Data Point Capital, the Company had no assets, tangible or intangible. The per share purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the
Company by the aggregate number of Founder Shares issued.
The
Founder Shares will automatically convert into Class A Ordinary Shares on a one -for-one basis (a) at any time and from time to
time at the option of the holders thereof and (b) automatically on the day of the closing of the Business Combination. Notwithstanding the foregoing, in the case that additional Class A Ordinary Shares or any other equity-linked securities
(as defined in the Third A&R M&A), are issued, or deemed issued, by the Company in excess of the amounts offered in the IPO and related to the closing of a Business Combination, all Founder Shares in issue shall automatically
convert into Class A Ordinary Shares at the time of the closing of the Business Combination, at a ratio such that the number of Class A Ordinary Shares issuable upon conversion of all Founder Shares will equal, in the aggregate on an
as-converted basis, 20 % of the sum of (i) the total number of all Class A Ordinary Shares and Founder Shares issued and
outstanding, plus (ii) the total number of Class A Ordinary Shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined in the Third A&R M&A) or rights issued or deemed issued,
by the Company in connection with or in relation to the consummation of the Business Combination, excluding (x) any Class A Ordinary Shares or equity-linked securities exercisable for or convertible into Class A Ordinary Shares issued,
deemed issued, or to be issued, to any seller in the Business Combination, and (y) the Private Placement Warrants issued to the Sponsor, any Sponsor Loan
Warrants which may be issued to the Sponsor, and any private placement warrants issued to our Sponsor, its
affiliates or any member of our management team upon conversion of Working Capital Loans (as defined in Note 4). In no event will the Founder Shares convert into Class A Ordinary Shares at a rate of less than one -to-one. The holders of a majority of the Founder Shares in issue may agree to waive such anti-dilution adjustment with respect to any such
issuance or deemed issuance. Prior to our Business Combination, only holders of the Founder Shares will be entitled to vote on the appointment of directors. Pursuant to the terms of the Third A&R M&A, on February 9, 2024, the
Initial Shareholders elected to convert an aggregate of 5,749,997 Class B Ordinary Shares on a one -for-one basis into Class A Ordinary Shares (such shares, the “Converted Shares”) (See Note 11, Subsequent
Events).
Sponsor Loan
The Sponsor loaned the Company $4,600,000
as of the closing date of the Public Offering. The Sponsor Loan bears no interest. The proceeds of the Sponsor Note were deposited into the Trust Account and can be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law). The Sponsor Loan shall be repaid or converted into Sponsor Loan Warrants at a conversion price of $1.50 per
Sponsor Loan Warrant, at the discretion of the Sponsor, upon the consummation of a Business Combination. The Sponsor Loan was extended in order to ensure that the amount in the Trust Account is $10.20 per public share. If the Company does not consummate a Business Combination and the Sponsor Loan has not been converted into Sponsor Loan Warrants by such time, the
Company will not repay the Sponsor Loan and its proceeds will be distributed to the Public Shareholders. The Sponsor has waived any claims against the Trust Account in connection with the Sponsor Loan. As of December 31, 2023 and 2022, and as
of the date of issuance of these financial statements, there was $4,600,000
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Registration and Shareholder Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any Class A
Ordinary Shares issuable upon the exercise of the Private Placement Warrants and warrants issued upon conversion of the Sponsor Loan and the Working Capital Loans, if any), are entitled to registration rights pursuant to the registration
rights agreement, dated as of November 8, 2021, by and among the Company, the Sponsor and the undersigned parties listed under holders thereto. These holders are entitled to certain demand and “piggyback” registration rights. However, the
registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will
bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled to an underwriting discount of $0.20
per Unit, or $4,600,000 in the aggregate paid at the closing of the Public Offering. An additional fee of $0.35 per Unit, or $8,050,000 in the
aggregate will be payable to the underwriters for deferred underwriting commissions, which is included in the accompanying balance sheet. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account
solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Non-Redemption Agreements
On May 5,
2023, the Company entered into Non-Redemption Agreements with certain unaffiliated investors that were eligible to redeem the Company’s Class A ordinary shares held by them at the Company’s extraordinary general meeting held on May 10,
2023. Pursuant to the Non-Redemption Agreements, the Investors agreed to (i) not redeem an aggregate of up to 4,000,000
previously held Class A ordinary shares (the “Investor Shares”) in connection with the First Extension (as defined below) and (ii) vote the Investor Shares in favor of the First Extension. In exchange for these commitments from the
Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B ordinary shares in
connection with an extension until November 12, 2023 and (ii) to the extent our board of directors agrees to further extend the date up to three
times by an additional month each time until February 12, 2024 to consummate its Business Combination, an aggregate of up to 1,500,000
Class B ordinary shares, which includes the Class B ordinary shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.
As of December 31, 2023, in connection with the First Extension and pursuant to the Non-Redemption
Agreements, the Sponsor agreed to transfer 1,333,324 Class B ordinary shares to the Investors on or promptly after the
consummation of the Business Combination. The Company evaluated the transfer of Class B ordinary shares in connection with the Non-Redemption Agreements pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”) and
concluded that, the transfer of Class B ordinary shares in connection with the Non-Redemption Agreements should be classified as an equity instrument. The classification of whether such instruments should be recorded as liabilities or as
equity is reassessed at the end of each reporting period. The Company recorded the transfer of Class B ordinary shares in the amount of the fair value of the 1,333,324 Class B ordinary shares, approximately $2.8 million, to be issued to the Investors.
The fair value of these Class B ordinary shares was based on the publicly traded prices of the Company’s Class A ordinary shares on respective extension approval dates, management’s estimate of concessions and management’s estimate of the
probability of completing a Business Combination.
NOTE 7 - CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION
The Company accounts for its Class A Ordinary Shares subject to possible redemption in accordance with the guidance in ASC Topic 480,
“Distinguishing Liabilities from Equity.” Class A Ordinary Shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A Ordinary Shares (including Class A
Ordinary Shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At
all other times, Class A Ordinary Shares are classified as shareholders’ equity. The Company’s Class A Ordinary Shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the
occurrence of uncertain future events. Accordingly, such shares of the Company are classified as temporary equity.
At December 31, 2023 and 2022, the Class A Ordinary Shares reflected in the balance sheets are reconciled as follows:
|
Number of
Shares
|
Amount | |||||||
|
Gross proceeds
|
$
|
|
||||||
|
Less:
|
||||||||
|
Class A Ordinary Shares issuance costs
|
- | ( |
) | |||||
|
Fair value of Public Warrants at issuance
|
- | ( |
) | |||||
|
|
||||||||
|
Plus:
|
||||||||
|
Accretion of carrying value to redemption value
|
- |
|
||||||
|
Class A Ordinary Shares subject to possible redemption at December 31, 2021
|
|
|
||||||
|
Remeasurement of redemption value of Class A Ordinary Shares subject to possible redemption
|
- | |||||||
|
Class A Ordinary Shares subject to possible redemption at December 31, 2022
|
|
|||||||
|
Remeasurement of redemption value of Class A Ordinary Shares subject to possible redemption
|
- | |||||||
|
Redemption of Class A ordinary shares
|
( |
) | ( |
) | ||||
|
Class A Ordinary Shares subject to possible redemption at December 31, 2023
|
|
$
|
||||||
NOTE 8 - SHAREHOLDERS’ DEFICIT
Preference
Shares — The Company is authorized to issue 1,000,000
preference shares with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may
be determined from time to time by the Company’s board of directors. As of December 31, 2023 and 2022, there were no
Class A Ordinary Shares — The Company is authorized to issue 200,000,000 Class A Ordinary Shares with a par
value of $0.0001 per share. As of December 31, 2023 and 2022, there were no 4,059,402 and 23,000,000 shares subject to possible redemption,
respectively. Please refer to Note 11, Subsequent Events for additional redemptions following the Second Extension.
Class B Ordinary Shares — The Company is authorized to issue 20,000,000 Class B Ordinary Shares with a par value of $0.0001 per share. As of December 31, 2023 and 2022, 5,750,000 750,000
of Founder Shares were subject to forfeiture in the event that the underwriter did not purchase additional Units to cover over-allotments. The underwriters’ over-allotment option was exercised in full on November 12, 2021 and forfeiture
restrictions lapsed. Prior to the initial investment in the Company of $25,000 by the Sponsor along with certain funds controlled
by Data Point Capital, the Company had no assets, tangible or intangible. The per share purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by the aggregate number of Founder Shares
issued. Holders of the Class A Ordinary Shares and holders of the Class B Ordinary Shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange
rule; provided that only holders of the Class B Ordinary Shares shall have the right to vote on the election of the Company’s directors prior to the Business Combination. As of December 31, 2023, in connection with the First Extension and
Non-Redemption Agreements, the Sponsor agreed to transfer 1,333,324 Class B ordinary shares to the Investors on or promptly
after the consummation of the Business Combination. The estimated aggregated fair value is $2,791,710 , or a weighted average of $2.09 per share. The excess of the fair value of the Class B Ordinary Shares was determined to be an offering cost in accordance with Staff
Accounting Bulletin Topic 5A. In substance, the Company recognized the offering cost as a capital contribution by the Sponsor to induce the Investors not to redeem their Class A ordinary shares, under the guidance in Staff Accounting Bulletin Topic 5T, with a corresponding charge to additional paid-in capital to recognize the fair value of the shares transferred as an offering cost. Please refer to Note 11, Subsequent Events for the agreement to transfer additional Class B Ordinary Shares under the Non-Redemption Agreements, as well as the conversion of Class B Ordinary Shares into Class A Ordinary Shares
subsequent to December 31, 2023.
NOTE 9 - WARRANTS
Public Warrants may only be exercised for a whole number of Class A Ordinary Shares. No fractional Public Warrants were or will be issued upon separation of the
Units and only whole Public Warrants trade. The Public Warrants will become exercisable on the later of (a) 30 days after the
completion of a Business Combination or (b) 12 months from the closing of the Public Offering; provided in each case that the
Company has an effective registration statement under the Securities Act covering the Class A Ordinary Shares issuable upon exercise of the Public Warrants and a current prospectus relating to the Public Warrants is available and such Class A
Ordinary Shares issuable upon exercise of the Public Warrants are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or holders are permitted to exercise their
Public Warrants on a cashless basis under certain circumstances as a result of the Company’s failure to have an effective registration statement by the 60 th business day after the closing of the Business Combination). The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of its Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and
have an effective registration statement covering the Class A Ordinary Shares issuable upon exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Company’s Business Combination and to maintain a current prospectus relating to those Class A Ordinary
Shares until the Public Warrants expire or are redeemed. If the shares issuable upon exercise of the Public Warrants are not registered under the Securities Act in accordance with the above requirements, the Company will be required to permit
holders to exercise their Public Warrants on a cashless basis. However, no Public Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any Class A Ordinary Shares to holders seeking to
exercise their Public Warrants, unless the issuance of the Class A Ordinary Shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
The Public Warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five year s after the completion of a Business Combination or earlier upon
redemption or liquidation of the Company. In addition, if (x) the Company issues additional Class A Ordinary Shares or equity-linked securities for capital raising purposes in connection with the closing of the Business Combination at an
issue price or effective issue price of less than $9.20 per share of Class A Ordinary Shares (with such issue price or effective
issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60 %
of the total equity proceeds, and interest thereon, available for the funding of the Business Combination on the date of the consummation of the Business Combination (net of redemptions) and (z) the volume weighted average trading price of
Class A Ordinary Shares during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates the Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described in the Public Warrant Agreement, dated November 8, 2021 by and between the Company and
Continental Stock Transfer & Trust Company, under “Redemption of warrants for Class A Ordinary Shares” and “Redemption of warrants for cash” will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price. The Private Placement Warrants are identical to the Public Warrants, except that, (i) they will not be
redeemable by the Company, (ii) they (including the Class A Ordinary Shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the Business Combination, and (iii) are subject to registration rights.
Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00 : Once the warrants become exercisable, the Company may redeem the outstanding
warrants (except as described herein with respect to the Private Placement Warrants):
|
|
•
|
in whole and not in part;
|
|
|
•
|
at a price of $
|
|
|
•
|
upon a minimum of
|
|
|
•
|
if, and only if the last reported sale price of Class A Ordinary Shares for any
|
The Company will not redeem the Public Warrants as described above unless an effective registration statement under the Securities Act covering the Class A
Ordinary Shares issuable upon exercise of the Public Warrants is effective and a current prospectus relating to those Class A Ordinary Shares is available throughout the 30 -day redemption period. Any such exercise would not be on a cashless basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised.
In no event will the Company be required to net cash settle any Public Warrant. If the Company is unable to complete a Business Combination by November 12, 2024
and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with the respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless. Private Placement Warrants have the same terms as the Public Warrants.
NOTE 10 — FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2022 by
level within the fair value hierarchy:
As of December 31, 2022
|
Description
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Other Unobservable Inputs
(Level 3)
|
|||||||||
|
Assets:
|
||||||||||||
|
Investments held in Trust Account
|
$
|
|
$
|
|
$
|
|
||||||
On November 8, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the
Investment Company Act, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations and money market funds held in the Trust
Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of the consummation of the Company’s Business Combination or liquidation. As such, the amount held in the Trust Account
as of December 31, 2023 is not subject to fair value measurement.
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no
NOTE 11 - SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the financial statements were issued.
Based on this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements, other than as described below.
On January 8, 2024, in accordance with the Company’s Second A&R M&A, the Board approved a third extension of the date by which the Company is required
to complete an initial business combination from January 12, 2024 until February 12, 2024. As a result, pursuant to the Non-Redemption Agreements, the Sponsor agreed to transfer an additional 166,662 Class B ordinary shares to the Investors on or promptly after the consummation of the Business Combination.
On February 8, 2024, the Company held a second extraordinary general meeting of shareholders (the “Second Extraordinary General Meeting”) at which the Company’s
shareholders approved, by special resolution, a proposal to amend and restate the Company’s Second A&R M&A to extend the Extension Date from February 12, 2024 to November 12, 2024 (the “Second Extension”). In connection with the
Second Extension, holders of an additional 2,559,402 Class A Ordinary Shares exercised their right to redeem such shares at a per
share redemption price of approximately $10.96 . As a result, approximately $28 million was removed from the Company’s Trust Account to pay such holders. Following these redemptions, the Company has 1,500,000 Class A Ordinary Shares with redemption rights outstanding. As of March 19, 2024, approximately $16.6 million remained in the Trust Account.
In connection with the approval of the Second Extension, the Sponsor has agreed to deposit on a monthly basis, or pro rata portion thereof if less than a month,
$49,500 into the Company’s Trust Account for the benefit of the public shareholders (the “Extension Deposit”), until the earlier of
(i) the date of the extraordinary general meeting held in connection with the shareholder vote to approve a Business Combination and (ii) November 12, 2024 (or any earlier date of termination, dissolution or winding up of the Company as
determined in the sole discretion of the Company’s board of directors). The Sponsor made the first Extension Deposit on February 12, 2024 and the second Extension Deposit on March 12, 2024.
Pursuant to the terms of the Third A&R M&A, on February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Class B Ordinary Shares on a one -for-one
basis into Class A Ordinary Shares (such shares, the “Converted Shares”). The initial shareholders will not have any redemption rights or be entitled to liquidating distributions from the Trust Account in connection with the Converted Shares
if the Company fail to consummate a Business Combination, and the Converted Shares will be subject to the restrictions on transfer pursuant to the letter agreement entered into by and between the initial shareholders and the Company in
connection with the IPO. Following such conversion, an aggregate of 7,249,997 1,500,000 three
On August 21, 2023, the Company received a letter from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying
the Company that the Company is not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that the Company’s listed securities maintain a minimum Market Value of Listed Securities (“MVLS”) of $50 million (the “MVLS Rule”).
Subsequently on March 11, 2024, the Nasdaq Staff notified the Company that the Company has regained compliance with the MVLS Rule. On October 12, 2023, the Company received a second letter from the Nasdaq Staff notifying the Company that the
Company is not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires that the Company maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). To resolve the
deficiencies and regain compliance with the MVLS continued listing requirements, the Company submitted an application to Nasdaq for a transfer of the listing of our Units, Class A ordinary shares and Public Warrants from The Nasdaq Global
Market to The Nasdaq Capital Market on January 24, 2024 (the “Transfer Application”). On March 26, 2024, the Nasdaq Staff notified us that our Transfer Application has been approved, and that our Units, Class A ordinary shares and Public
Warrants will be transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on April 4, 2024.
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|
None.
|
Item 9A.
|
Controls and Procedures.
|
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and
principal financial and accounting officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officer and principal financial and accounting officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023. Based upon their evaluation, our principal executive officer and principal financial and accounting officer concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Controls Over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes
in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
| • |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
|
| • |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors, and
|
| • |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management
assessed the effectiveness of our internal control over financial reporting at December 31, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control—Integrated Framework (2013). Based on our assessments and those criteria, management determined that we did not have effective internal control over financial reporting at December 31, 2023.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. As an
emerging growth company, management’s report is not subject to attestation by our independent registered public accounting firm.
Material Weakness
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosed in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023 as filed
with the SEC on August 14, 2023, management identified a deficiency in internal control over financial reporting relating to the accounting for complex financial instruments, which constituted a material weakness. In addition, as
previously disclosed in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023 as filed with the SEC on November 14, 2023, management identified a deficiency in internal control over financial reporting related
to the review and approval of adjustment to journal entries. As of December 31, 2023, the identified material weaknesses in our internal controls over financial reporting have not yet been remediated.
Remediation Plan
Management plans to remediate the material weaknesses by 1) incorporating additional controls and procedures over the review of complex financial instrument valuations, 2) increasing
communication among our personnel and third-party professionals with whom we consult regarding accounting applications and 3) incorporating additional procedures over the review of the general ledger and the review and approval of
adjustment to journal entries after the consummation of the Business Combination. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the
intended effects.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended December 31, 2023 there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
|
Item 9C.
|
Disclosures Regarding Foreign Jurisdictions that Prevent Inspections.
|
Not Applicable.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Our current directors and executive officers are as follows:
|
Name
|
Age
|
Title
|
||
|
Scott Savitz
|
54
|
Chief Executive Officer and Chairman
|
||
|
Bruce Revzin
|
66
|
Chief Financial Officer
|
||
|
Lars Albright
|
48
|
Director
|
||
|
Diane Hessan
|
68
|
Director
|
||
|
Leonard Schlesinger
|
70
|
Director
|
Scott Savitz has been the Chairman of our board of directors since our inception and our Chief Executive Officer since September 2022. Mr. Savitz
is the Founder of Data Point Capital and a Managing Partner. Mr. Savitz is a strong advocate of entrepreneurship and innovation, especially where it aims to raise the bar on the consumer experience. Scott is also the founder and former CEO
of Shoebuy.com. Mr. Savitz founded Shoebuy in 1999, and served as its CEO through its sale to InterActive Corporation (“IAC”). Further, Mr. Savitz serves on the boards of CoachUp, Jebbit, Print Syndicate, Returnalyze, UpShift, Yieldify and
Vee24. Mr. Savitz has also previously served as an Advisor for Olejo Stores (acquired by Mattress Firm), On The Spot Systems, Inc. (acquired by Press Ganey), Bluestem Brands (acquired by Capmark Financial Group), and Paintzen (acquired by
PPG Industries). Scott also led Data Point Capital investments in CABA Designs, CLYPD (sold to AT&T), connectRN, DraftKings (NASDAQ: DKNG), Rent The Runway and Resident. He also serves on several committees focused on fostering growth
and a more robust economy including the Massachusetts Technology Collaborative, Boch Center, and Co-Chair of 12 X 12 and Mass Scale. He is a frequent industry speaker and has received numerous awards and accolades including Ernst &
Young’s New England Entrepreneur of the Year. We believe Mr. Savitz is qualified to serve on our board of directors because of his significant experience as a founder, executive and director of several public and private companies.
Bruce Revzin has been our Chief Financial Officer since May 2023. Prior to joining the Company in 2023, Mr. Revzin was the Chief Financial Officer
at Cobepa North America, Inc. from September 2019 to May 2023. Prior to that, Mr. Revzin served as a certified public accountant and financial consultant at Bruce D. Revzin, CPA from July 2018 to September 2019. Prior to that, Mr. Revzin
was the Chief Financial Officer of Flybridge Capital Partners from May 2005 to June 2018 and Chief Financial Officer of Halpern, Denny & Co. from June 2000 to May 2005. Prior experience included executive positions at Pioneer
Investments (currently Amundi US), Price Waterhouse, Laventhol & Horwath, and Coopers and Lybrand. Mr. Revzin obtained a JD from Suffolk University Law School, an MBA in accounting and finance from Columbia Business School, and a BS
in Engineering Design from Tufts University. Mr. Revzin is a licensed attorney and a certified public accountant in the state of Massachusetts.
Lars Albright has been a member of our board of directors since November 2021. Mr. Albright is a Partner at venture capital firm, Unusual
Ventures. Prior to Unusual, Mr. Albright was EVP of Merchant Loyalty within the Data & Services team at Mastercard, Inc. Before Mastercard, Mr. Albright was CEO and Co-Founder of SessionM, a market leading software platform for customer
engagement and loyalty for the world’s largest consumer brands. SessionM was acquired by Mastercard in the fall of 2019. Prior to co-founding SessionM, Mr. Albright was an executive at Apple, Inc. as a member of Apple’s iAd mobile
advertising business unit. Before Apple, Mr. Albright was a Co-Founder and Senior Vice President of Business Development at Quattro Wireless, a leading mobile advertising platform that was acquired by Apple in 2010. Prior to Quattro, Mr.
Albright was Vice President of Business Development at m-Qube, North America’s dominant mobile aggregator that was acquired by VeriSign in 2006. We believe Mr. Albright is qualified to serve on our board of directors because of his
experience as a founding entrepreneur across multiple successful businesses, investment experience and operating as an executive of several public companies.
Diane Hessan has been a member of our board of directors since November 2021. Ms. Hessan is a successful marketer, entrepreneur, and author. She
is the founder, Chairman & former CEO of Communispace, a consumer insights technology company which was successfully acquired by Omnicom in 2011. During her leadership, the company expanded to over 700 employees and 400 corporate
brands in 12 countries, and received numerous awards for impact, innovation and culture. Ms. Hessan co-authored the book Customer-Centered Growth: Five Strategies for Building Competitive Advantage,
which was a Business Week best-seller and was published in 11 languages. She has received many honors for her leadership, including Ernst & Young’s Entrepreneur of the Year (National Finalist), the Greater Boston Chamber of Commerce
Entrepreneur of the Year, Boston Business Journal Most Admired CEO, the Boston Chamber Pinnacle Award, a Mass High-Tech All-Star, and a range of Best Boss citations. Ms. Hessan has served on the boards of numerous organizations including
Panera Bread, Brightcove, Eastern Bank, The Tufts University Board of Trustees, Beth Israel Deaconess Medical Center, Mass Challenge, The Boston Philharmonic (where she was chair), the Advertising Research Foundation, and Horizons for
Homeless Children. She also serves as a Special Advisor to Data Point Capital. We believe Ms. Hessan is qualified to serve on our board of directors because of her experience as an entrepreneur, executive and director of several public
and private companies.
Leonard Schlesinger has been a member of our Board since November 2021. Mr. Schlesinger is a Baker Foundation Professor of Business Administration
at Harvard Business School where he chairs the school’s practice faculty He returned to Harvard after concluding a five-year term as President of Babson College. Prior to Babson, Mr. Schlesinger was at Limited Brands (now L Brands), where
he served as Vice Chairman and Chief Operating Officer, and before that was Executive Vice President and Chief Operating Officer at Au Bon Pain. Mr. Schlesinger also serves as a Special Advisor to Data Point Capital and as an advisor to
Omnichannel Acquisition Corp. Mr. Schlesinger serves as a Director of Viewpost, LLC, a Director of Restoration Hardware, an advisory council member of Goldman Sachs’ 10,000 Small Businesses Initiative, and a member of both the Council on
Competitiveness and the Council on Foreign Relations. We believe Mr. Schlesinger is qualified to serve on our board of directors because of his experience as an executive in a public company and as a director in many public and private
companies.
Number, Terms of Office and Election of Officers and Director
Our board of directors consists of four members. Our board of directors is divided into three classes, with only one class of directors being appointed in each year, and with each class
(except for those directors appointed prior to our first annual general meeting) serving a three-year term. In accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until one
year after our first fiscal year end following our listing on the Nasdaq. The term of office of the first class of directors, consisting of Ms. Hessan, will expire at our first annual general meeting. The term of office of the second class
of directors, consisting of Mr. Savitz, will expire at our second annual general meeting. The term of office of the third class of directors, consisting of Messrs. Schlesinger and Savitz, will expire at our third annual general meeting.
Prior to the completion of our Business Combination, any vacancy on the board of directors may be filled by a nominee chosen by holders of a majority of our Founder Shares. In addition,
prior to the completion of a business combination, holders of a majority of our Founder Shares may remove a member of the board of directors for any reason.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized
to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our third amended and restated memorandum and articles of association provide that our officers may
consist of one or more chair or co-chair of the board of directors, chief executive officer, president, chief financial officer, vice presidents, secretary, treasurer and such other offices as may be determined by the board of directors.
Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” 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. We have three “independent directors” as defined in the Nasdaq listing rules and applicable SEC rules. Our board of directors has determined that Lars Albright, Diane Hessan and Leonard Schlesinger are
“independent directors.” Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit committee, a compensation committee and a nominating committee. Subject to phase-in rules and a limited
exception, the rules of the Nasdaq and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and a limited exception, the rules of the
Nasdaq require that the compensation committee and the nominating committee of a listed company be comprised solely of independent directors. Each committee operates under a charter that has been approved by our board of directors and has
the composition and responsibilities described below.
Audit Committee
The members of our audit committee are Messrs. Albright, Hessan and Schlesinger. Mr. Schlesinger serves as the chair of the audit committee.
Each member of the audit committee meets the financial literacy requirements of the Nasdaq and our board of directors has determined that Mr. Schlesinger qualifies as an “audit committee
financial expert” as defined in applicable SEC rules.
The audit committee is responsible for:
| • |
meeting with our independent registered public accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems;
|
| • |
monitoring the independence of the independent registered public accounting firm;
|
| • |
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;
|
| • |
inquiring and discussing with management our compliance with applicable laws and regulations;
|
| • |
pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed;
|
| • |
appointing or replacing the independent registered public accounting firm;
|
| • |
determining the compensation and oversight of the work of the independent registered public accounting firm (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;
|
| • |
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;
|
| • |
monitoring compliance on a quarterly basis with the terms of the Public Offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or
otherwise causing compliance with the terms of the Public Offering; and
|
| • |
reviewing and approving all payments made to our existing shareholders, executive officers or directors and their respective affiliates. Any payments made to members of our audit committee will be
reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval.
|
The audit committee is governed by a charter that complies with the rules of the Nasdaq.
Compensation Committee
The members of our compensation committee are Messrs. Albright and Schlesinger. Mr. Schlesinger serves as the chair of the compensation committee.
The compensation committee is responsible for:
| • |
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 based on such evaluation;
|
| • |
reviewing and approving the compensation of all of our other Section 16 executive officers;
|
| • |
reviewing our executive compensation policies and plans;
|
| • |
implementing and administering our incentive compensation equity-based remuneration plans;
|
| • |
assisting management in complying with our proxy statement and annual report disclosure requirements;
|
| • |
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
|
| • |
producing a report on executive compensation to be included in our annual proxy statement; and
|
| • |
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
The compensation committee is governed by a charter that complies with the rules of the Nasdaq.
Nominating Committee
The members of our nominating committee are Messrs. Albright and Hessan. Ms. Hessan serves as chair 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 is governed by a charter that complies with the rules of the Nasdaq.
Director Nominations
Our nominating committee will recommend to the board of directors candidates for nomination for election at the annual meeting of the shareholders. Prior to our Business Combination, the
board of directors will also consider director candidates recommended for nomination by holders of our Founder Shares during such times as they are seeking proposed nominees to stand for election at an annual meeting of shareholders (or, if
applicable, a special meeting of shareholders). Prior to our Business Combination, holders of our Public Shares will not have the right to recommend director candidates for nomination to our board of directors.
The guidelines for selecting nominees, which are specified in our nominating committee charter, generally provide that persons to be nominated:
| • |
should have demonstrated notable or significant achievements in business, education or public service;
|
| • |
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
|
| • |
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
|
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 nominating committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity that has one or more executive officers
serving on our board of directors.
Code of Business Conduct and Ethics
We have adopted a Code of Ethics applicable to our directors, officers and employees. A copy of the Code of Ethics will be provided without charge upon request from us. Any amendments to
or waivers of certain provisions of our Code Ethics will be disclosed in a Current Report on Form 8-K. We did not grant any waivers under our Code of Conduct in 2022.
Conflicts of Interest
Under Cayman Islands law, directors and officers owe the following fiduciary duties:
| • |
duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
|
| • |
duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
|
| • |
directors should not improperly fetter the exercise of future discretion;
|
| • |
duty to exercise powers fairly as between different sections of shareholders;
|
| • |
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
|
| • |
duty to exercise independent judgment.
|
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 third amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
Certain of our directors and officers presently have, and any of them in the future may have, additional fiduciary or contractual obligations to other entities. As a result, if any of our
officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, then, subject to their fiduciary duties under Cayman Islands
law, he or she will need to honor such fiduciary or contractual obligations to present such business combination opportunity to such entity, before we can pursue such opportunity. If these other entities decide to pursue any such
opportunity, we may be precluded from pursuing the same. However, we do not expect these duties to materially affect our ability to complete our initial business combination. Our third amended and restated memorandum and articles of
association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging
directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter
which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations:
|
Name of Individual
|
Entity
|
Entity’s Business
|
Affiliation
|
|||
|
Scott Savitz
|
• Data Point Capital
|
• Venture Capital
|
• Managing Partner
|
|||
|
Bruce Revzin
|
• Data Point Capital
|
• Venture Capital
|
• Chief Financial Officer
|
|||
|
Lars Albright
|
• Unusual Ventures
|
• Venture Capital
|
• General Partner
|
|||
|
Diane Hessan
|
• Brightcove
|
• Technology
|
• Director
|
|||
|
• Eastern Bank
|
• Banking
|
• Director
|
||||
|
• Panera Bread
|
• Restaurant
|
• Director
|
||||
|
• Schlesinger Group
|
• Marketing Research
|
• Director
|
||||
|
Leonard Schlesinger
|
• RH
|
• Home Furnishing
|
• Director
|
|||
|
• Viewpost
|
• Technology
|
• Director
|
Potential investors should also be aware of the following other potential conflicts of interest:
| • |
Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our
operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged
in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
|
| • |
Our Sponsor subscribed for Founder Shares prior to the Close Date and purchased Private Placement Warrants on the Close Date.
|
| • |
Our Sponsor and each member of our management team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any Founder Shares and
Public Shares held by them in connection with (i) the completion of our Business Combination, and (ii) a shareholder vote to approve an amendment to our third amended and restated memorandum and articles of association (A) that
would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our public shares if
we do not complete our Business Combination by November 12, 2024 or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. Additionally, our Sponsor has agreed to waive its rights
to liquidating distributions from the Trust Account with respect to its Founder Shares if we fail to complete our initial business combination within the prescribed time frame. If we do not complete our Business Combination within
the prescribed time frame, the Private Placement Warrants will expire worthless. Except as described herein, our Sponsor and our directors and executive officers have agreed not to transfer, assign or sell any of their Founder
Shares until the earliest of (A) one year after the completion of our Business Combination and (B) subsequent to our Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share
(as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after our Business Combination, or
(y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other
property. Except as described herein, the Private Placement Warrants will not be transferable until 30 days following the completion of our Business Combination. Because each of our executive officers and director nominees will own
ordinary shares or warrants directly or indirectly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our Business Combination.
|
| • |
Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors is included
by a target business as a condition to any agreement with respect to our Business Combination.
|
| • |
Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities, including special purpose acquisition
companies they may become involved with, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands
law. In addition, our sponsor, officers and directors are not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in connection with their initial business
combinations, prior to us completing our Business Combination. Therefore, our Sponsor, officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment
ventures during the period in which we are seeking an initial business combination. These companies may seek to complete a business combination in any location and may not focus on any particular industry for a business combination.
Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination with a potential acquisition target.
|
| • |
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and pursuing an initial business combination or completing our Business
Combination. The different timelines of competing business combinations could cause our directors and officers to prioritize a different business combination over finding a suitable acquisition target for our 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, which could negatively impact the timing for a Business Combination.
|
|
•
|
Our Sponsor has loaned us $4,600,000 as of the Close Date at no interest. The proceeds of the Sponsor Loan were deposited into the Trust Account and will be repaid
or converted into Private Placement Warrants, at the discretion of our Sponsor, at a conversion price of $1.50 per Private Placement Warrant upon the consummation of our Business Combination.
|
| • |
Pursuant to the terms of the Third A&R M&A, on February 9, 2024, our Sponsor and its affiliates have elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into
Class A ordinary shares.
|
The conflicts described above may not be resolved in our favor.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our Sponsor, officers or directors. In the event we seek to complete our
Business Combination with a company that is affiliated with our Sponsor or any of our directors or officers, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of
FINRA or another independent entity that commonly renders valuation opinions that such initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
In addition, our Sponsor or any of its affiliates may make additional investments in the company in connection with the our Business Combination, although our Sponsor and its affiliates
have no obligation or current intention to do so. If our Sponsor or any of its affiliates elects to make additional investments, such proposed investments could influence our Sponsor’s motivation to complete an initial business combination.
Furthermore, in no event will our Sponsor or any of our existing officers or directors, or their respective affiliates, be paid by us any finder’s fee, consulting fee or other
compensation prior to, or for any services they render in order to effectuate, the completion of our Business Combination.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
If we seek shareholder approval, we will complete our Business Combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, being the affirmative vote of
a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting. In such case, our Sponsor and each member of our management team have agreed to vote their Founder Shares
and Public Shares in favor of our Business Combination.
Limitation on Liability and Indemnification of Officers and Directors
Cayman 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 Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, fraud or the consequences of committing a crime. Our third amended and restated
memorandum and articles of association 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. We expect to 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.
Our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account, and have agreed to waive any right, title,
interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the Trust Account for any reason whatsoever (except to the extent they are entitled
to funds from the Trust Account due to their ownership of Public Shares). Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the Trust Account or (ii) we complete a
Business Combination.
Our indemnification obligations may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have
the effect of reducing the likelihood of derivative litigation against our 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 our 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.
|
Item 11.
|
Executive Compensation.
|
None of our executive officers or directors have received any cash compensation for services rendered to us. Our Sponsor, executive officers, directors, or their respective affiliates,
are 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. Our audit committee will
review on a quarterly basis all payments that were made by us to our Sponsor, executive officers, or directors, or their affiliates. Any such payments prior to an initial business combination are made using funds held outside the Trust
Account. Other than quarterly audit committee review of such reimbursements, we do not have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses
incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and
consulting fees, will be paid by us to our sponsor, executive officers and directors, or their respective affiliates, prior to completion of our Business Combination.
After the completion of our Business Combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All
of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our shareholders in connection with a proposed Business Combination. We have not
established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such
compensation will be known at the time of the proposed Business Combination, 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, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on
our board of 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 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 our 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 team to remain
with us after the consummation of our 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.
Compensation Recovery and Clawback Policy
Under the Sarbanes-Oxley Act, in the event of misconduct that results in a financial restatement that would have reduced a previously
paid incentive amount, we can recoup those improper payments from our executive officers. The SEC also recently adopted rules which direct national stock exchanges to require listed companies to implement policies intended to recoup
bonuses paid to executives if the company is found to have misstated its financial results.
On November 27, 2023, our board of directors approved the adoption of the Policy for Recovery of Erroneously Awarded Compensation (the
“Clawback Policy”), in order to comply with the final clawback rules adopted by the SEC under Rule 10D-1 under the Exchange Act (the “Rule”), and the listing standards, as set forth in the Nasdaq listing rules (the “Final Clawback
Rules”).
The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from our current and former
executive officers as defined in the Rule (“Covered Officers”) in the event that we are required to prepare an accounting restatement, in accordance with the Final Clawback Rules. The recovery of such compensation applies regardless of
whether a Covered Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. Under the Clawback Policy, our board of directors may recoup from the Covered Officers erroneously awarded
incentive compensation received within a lookback period of the three completed fiscal years preceding the date on which we are required to prepare an accounting restatement.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
|
We have no compensation plans under which equity securities are authorized for issuance.
The following table sets forth information available to us at March 15, 2024 with respect to our ordinary shares held by:
| • |
each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares;
|
| • |
each of our executive officers and directors that beneficially own ordinary shares; and
|
| • |
all our executive officers and directors as a group.
|
In the table below, percentage ownership is based on 7,250,000 ordinary shares, consisting of (i) 7,249,997 Class A ordinary
shares and (ii) 3 Class B ordinary shares, issued and outstanding as of March 15, 2024. Voting power represents the combined voting power of Class A ordinary shares and Class B ordinary shares owned beneficially by such person. The
following table does not reflect record or beneficial ownership of the Private Placement Warrants as they are not exercisable within 60 days of March 15, 2024.
Unless otherwise indicated, we believe that all persons named in the table have shared or sole voting and investment power with respect to all ordinary shares beneficially owned by them.
|
Class A Ordinary Shares
|
Class B Ordinary Shares(2)
|
Approximate
Percentage of
Outstanding
Ordinary
Shares
|
||||||||||||||||||
|
Name and Address of Beneficial Owner (1)
|
Number of
Shares
Beneficially
Owned
|
Approximate
Percentage
of
Class
|
Number of
Shares
Beneficially
Owned
|
Approximate
Percentage
of
Class
|
||||||||||||||||
|
5% Holders of the Company
|
||||||||||||||||||||
|
DP Investment Management Sponsor I LLC (our Sponsor)(3)
|
2,874,999
|
39.66
|
%
|
1
|
(2)(3)
|
33.33
|
%
|
39.66
|
%
|
|||||||||||
|
Funds affiliated with Data Point Capital(4)
|
2,874,998
|
39.66
|
%
|
2
|
(2)
|
66.67
|
%
|
39.66
|
%
|
|||||||||||
|
Polar Asset Management Partners Inc.(5)
|
419,396
|
5.78
|
%
|
—
|
—
|
5.78
|
%
|
|||||||||||||
|
Hudson Bay Capital Management LP(6)
|
400,000
|
5.52
|
%
|
—
|
—
|
5.52
|
%
|
|||||||||||||
|
Radcliffe Capital Management L.P.(7)
|
400,000
|
5.52
|
%
|
—
|
—
|
5.52
|
%
|
|||||||||||||
|
Exos Asset Management LLC(8)
|
397,045
|
5.44
|
%
|
—
|
—
|
5.44
|
%
|
|||||||||||||
|
Fir Tree Capital Management LP(9)
|
367,588
|
5.07
|
%
|
—
|
—
|
5.07
|
%
|
|||||||||||||
|
Executive Officers and Directors
|
||||||||||||||||||||
|
Scott Savitz(3)(4)
|
2,874,998
|
39.66
|
%
|
2
|
66.67
|
%
|
39.66
|
%
|
||||||||||||
|
Bruce Revzin
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Lars Albright
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Diane Hessan
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Leonard Schlesinger
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
All directors and executive officers as a group (5 individuals)
|
2,874,998
|
39.66
|
%
|
2
|
66.67
|
%
|
39.66
|
%
|
||||||||||||
| * |
Less than one percent.
|
| (1) |
Unless otherwise noted, the business address of each of our shareholders, directors and executives in this table is 341 Newbury St, 6th Floor, Boston, MA 02115.
|
| (2) |
Interests shown consist solely of Class B ordinary shares. Such shares will automatically convert into Class A ordinary shares at the time of our initial business combination on a one-for-one basis,
subject to adjustment.
|
| (3) |
The shares reported above are held in the name of our Sponsor. Our Sponsor is governed by three managing members: Scott Savitz, Mike Majors and Geoff Oblak. Each managing member has one vote, and the
approval of a majority of the managing members is required to approve any action of our Sponsor. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more
individuals, and a voting or dispositive decision requires the approval of at least a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based upon the foregoing
analysis, no managing member of our Sponsor exercises voting or dispositive control over any of the securities held by our Sponsor, even those in which he directly holds a pecuniary interest. Accordingly, none of them will be deemed
to have or share beneficial ownership of such shares.
|
| (4) |
Consists of 1,929,124 Class A Ordinary Shares and 1 Class B Ordinary Shares held by Data Point Capital III, LP and 945,874 Class A Ordinary Shares and 1 Class B Ordinary Shares
held by Data Point Capital III-Q, LP. The voting shares of each of Data Point Capital III, LP and Data Point Capital III-Q, LP (the “Data Point Capital Entities”) are held by Data Point Partners III, LLC, the general partner of the
Funds. Scott Savitz is a managing member of Data Point Partners III, LLC and holds 66.67% of the voting shares of such entity, which requires the affirmative vote of 66.67% of the voting shares to vote or dispose of the shares held
by the Funds. Therefore, Scott Savitz may be deemed to have beneficial ownership of the shares held by the Funds.
|
| (5) |
Based solely on the Schedule 13G filed with the SEC on February 2, 2024 interests shown are held by Polar Asset Management Partners Inc., a company incorporated under the laws of Ontario, Canada and
the investment advisor to Polar Multi-Strategy Master Fund, a Cayman Islands exempted company. The address of the principal business office of Polar Asset Management Partners Inc. is 16 York Street Suite 2900, Toronto, A6, M5J 0E6,
Canada.
|
| (6) |
Based solely on the Schedule 13G filed with the SEC on February 2, 2024, interests shown are held by Hudson Bay Capital Management LP (“Hudson Bay”), a Delaware limited partnership. Hudson Bay serves
as the investment manager to HB Strategies LLC, in whose name the Class A Ordinary Shares are held. The business address of Hudson Bay is 28 Havemeyer Place 2nd Floor, Greenwich, CT 06830.
|
| (7) |
Based solely on the Schedule 13G filed with the SEC on May 16, 2023, interests shown are held by Radcliffe Capital Management, L.P., a Delaware limited partnership. Radcliffe
Capital Management, L.P. is the relevant entity for which RGC Management Company, LLC, Steven B. Katznelson and Christopher Hinkel may be considered control persons. The business address of Radcliffe Capital Management, L.P. is 50
Monument Road, Suite 300, Bala Cynwyd, PA 19004.
|
| (8) |
Based solely on the Schedule 13G filed with the SEC on May 23, 2023, interests shown are held by Exos Asset Management LLC, a Delaware limited company (“Exos”) and Morgan Creek –
Exos SPAC+ Fund, LP, a Delaware limited partnership (“SPAC+ Fund”). Exos is the investment manager to the SPAC+ Fund. The business address of Exos and SPAC+ Fund is 1370 Broadway, Suite 1450, New York, NY 10018.
|
| (9) |
Based solely on the Schedule 13G filed with the SEC on February 14, 2024, interests shown are held by Fir Tree Capital Management LP. The business address of Fir Tree Capital
Management LP is 500 Fifth Avenue, 9th Floor, New York, NY 10110.
|
Our Sponsor and the Funds collectively beneficially own 79.32% of our issued and outstanding ordinary shares and have the right to appoint all of our directors prior to our Business
Combination. Holders of our Public Shares will not have the right to appoint any directors to our board of directors prior to our Business Combination. Because of this ownership block, our Sponsor and the Funds may be able to effectively
influence the outcome of all other matters requiring approval by our shareholders, including amendments to our third amended and restated memorandum and articles of association and approval of significant corporate transactions including
our Business Combination.
Our Sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws. See “Item 13. Certain Relationships and
Related Transactions, and Director Independence” below for additional information regarding our relationships with our promoters.
Changes in Control
In the event of the consummation of a Business Combination, there will be a change of control. See “Item 1. Business” above.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Founder Shares
On May 13, 2021, the Initial Shareholders purchased an aggregate of 5,750,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. At December 31,
2023, the Initial Shareholders, collectively, 5,750,000 Founder Shares.
The Founder Shares are identical to the Public Shares included in the Units sold in the Public Offering except that the Founder Shares are subject to certain rights and transfer
restrictions, as described in further detail below, and will automatically convert into Class A ordinary shares at the time of our Business Combination or earlier at the option of the holders of the Founder Shares on a one-for-one basis,
subject to adjustment pursuant to the anti-dilution provisions contained in our third amended and restated memorandum and articles of association.
On February 9, 2024, the Initial Shareholders elected to convert an aggregate of 5,749,997 Founder Shares on a one-for-one basis into Class A ordinary shares. Following such conversion,
three Founder Shares remain issued and outstanding.
The Founder Shares (including the Class A ordinary shares issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder,
and may not be redeemed by us.
Private Placement Warrants
Our Sponsor purchased 4,733,333 Private Placement Warrants at a price of $1.50 per warrant, or $7,100,000 in the aggregate in a private placement that occurred
simultaneously with the closing of the Public Offering. Each Private Placement Warrant entitles the holder to purchase one Class A ordinary share for $11.50 per whole share, subject to adjustment. The Sponsor has agreed, subject to limited
exceptions, not to transfer, assign or sell any Private Placement Warrants until 30 days after the completion of our Business Combination. The Private Placement Warrants have been issued pursuant to, and are governed by the Private
Placement Warrants Purchase Agreement, dated November 8, 2021 between us and the Sponsor.
If the Company does not complete a Business Combination by November 12, 2024, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public
Shares, subject to the requirements of applicable law, and the Private Placement Warrants will expire worthless.
Registration Rights
Holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon
exercise of the Private Placement Warrants and warrants that may be issued upon conversion if working capital loans) hold registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make
up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our
Business Combination. However, the registration rights agreement provides that that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock up period, which
occurs (i) in the case of the Founder Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion
of our Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Except as described herein, our Sponsor and our directors and executive officers have agreed not to transfer, assign or sell their Founder Shares until the earliest of (A) one year after
the completion of our Business Combination and (B) subsequent to our Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share
capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after our Business Combination, or (y) the date on which we complete a liquidation,
merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property. Any permitted transferees will be subject to the
same restrictions and other agreements of our Sponsor with respect to any Founder Shares.
Promissory Note
Prior to the Close Date, the Sponsor agreed to loan us under an unsecured promissory note up to $300,000 to be used for a portion of the expenses of the Public Offering. The unsecured
promissory note was non-interest bearing and was due at the earlier of December 31, 2021 and the Close Date. We borrowed an aggregate of $159,025 under the unsecured promissory note and the loan was subsequently repaid in full in connection
with the consummation of the Public Offering. As of December 31, 2023, there was no amount outstanding under the unsecured promissory note and the unsecured promissory note is no longer available to us.
Sponsor Loan
The Sponsor loaned us $4,600,000 as of the Close Date. The Sponsor Loan bears no interest. The proceeds of the Sponsor Loan were deposited into the Trust Account and can be used to fund
the redemption of the Public Shares (subject to the requirements of applicable law). The Sponsor Loan shall be repaid or converted into Private Placement Warrants at a conversion price of $1.50 per warrant, at the discretion of the Sponsor,
upon the consummation of our Business Combination. The Sponsor Loan was extended in order to ensure that the amount in the Trust Account is $10.20 per Public Share. If we do not consummate a Business Combination and the Sponsor Loan has not
been converted into Sponsor Loan Warrants by such time, we will not repay the Sponsor Loan and its proceeds will be distributed to our public shareholders. The Sponsor has waived any claims against the Trust Account in connection with the
Sponsor Loan. As of December 31, 2023 and as of the date of this Annual Report on Form 10-K, there was $4,600,000 outstanding under the Sponsor Loan.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Fees for professional services provided by our independent registered public accounting firm since inception include:
|
Year Ended
December 31, 2023
|
Year Ended
December 31, 2022
|
|||||||
|
Audit Fees(1)
|
$
|
120,510
|
$
|
134,822
|
||||
|
Audit-Related Fees
|
—
|
—
|
||||||
|
Tax Fees
|
—
|
—
|
||||||
|
All Other Fees
|
—
|
—
|
||||||
|
Total
|
$
|
120,510
|
$
|
134,822
|
||||
| (1) |
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audits of our year-end financial statements, reviews of our unaudited quarterly financial statements and
services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.
|
Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors
The audit committee is responsible for appointing, setting compensation and overseeing the work of the independent auditors. In recognition of this responsibility, the audit committee
shall review and, in its sole discretion, pre-approve all audit and permitted non-audit services to be provided by the independent auditors as provided under the audit committee charter.
Our independent registered public accounting firm is Marcum LLP PCAOB ID #688
|
Item 15.
|
Exhibit and Financial Statement Schedules.
|
| (a) |
The following documents are filed as part of this Annual Report on Form 10-K:
|
Financial Statements: See “Index to Financial Statements” at “Item 8. Financial Statements and Supplementary Data” herein.
| (b) |
Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K.
|
|
Exhibit
Number
|
|
Description
|
|
|
Third Amended and Restated Memorandum and Articles of Association (incorporated herein by reference to Exhibit 3.1 filed with the Company’s Form 8-K filed by the Company on
February 12, 2024 (File No. 001-41041)).
|
|
|
|
Specimen Unit Certificate (incorporated herein by reference to Exhibit 4.1 filed with the Company’s Amendment No. 1 to Form S-1 filed by the Company on October 29, 2021 (File
No. 333-260456)).
|
|
|
|
Specimen Class A Ordinary Share Certificate (incorporated herein by reference to Exhibit 4.2 filed with the Company’s Amendment No. 1 to Form S-1 filed by the Company on October
29, 2021 (File No. 333-260456)).
|
|
|
|
Specimen Warrant Certificate (incorporated herein by reference to Exhibit 4.3 filed with the Company’s Amendment No. 1 to Form S-1 filed by the Company on October 29, 2021 (File
No. 333-260456)).
|
|
|
|
Warrant Agreement between Continental Stock Transfer & Trust Company and the Company (incorporated herein by reference to Exhibit 4.1 filed with the Company’s Form 8-K filed
by the Company on November 16, 2021 (File No. 001-41041)).
|
|
|
|
Description of Registrant’s Securities
|
|
|
|
Letter Agreement among the Company, the Sponsor and the Company’s officers and directors (incorporated herein by reference to Exhibit 10.1 filed with the Company’s Form 8-K
filed by the Company on November 16, 2021 (File No. 001-41041)).
|
|
|
|
Investment Management Trust Account Agreement between Continental Stock Transfer and Trust Company and the Company (incorporated herein by reference to Exhibit 10.2 filed with
the Company’s Form 8-K filed by the Company on November 16, 2021 (File No. 001-41041)).
|
|
|
|
Registration Rights Agreement among the Company, the Sponsor and the other holders party thereto (incorporated herein by reference to Exhibit 10.3 filed with the Company’s Form
8-K filed by the Company on November 16, 2021 (File No. 001-41041)).
|
|
|
|
Private Placement Warrants Purchase Agreement between the Company and the Sponsor (incorporated herein by reference to Exhibit 10.4 filed with the Company’s Form 8-K filed by
the Company on November 16, 2021 (File No. 001-41041)).
|
|
|
|
Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.5 filed with the Company’s Amendment No. 1 to Form S-1 filed by the Company on October 29, 2021 (File
No. 333-260456)).
|
|
|
|
Promissory Note, dated October 20, 2021, issued to DP Investment Management Sponsor I LLC (incorporated herein by reference to Exhibit 10.6 filed with the Company’s Amendment
No. 1 to Form S-1 filed by the Company on October 29, 2021 (File No. 333-260456)).
|
|
|
|
Promissory Note between the Company and the Sponsor (incorporated herein by reference to Exhibit 10.5 filed with the Company’s Form 8-K filed by the Company on November 16, 2021
(File No. 001-41041)).
|
|
|
Amendment No. 1 to Investment Management Trust Agreement between Continental Stock Transfer and Trust Company and the Company, dated November 7, 2023.
|
||
|
|
Power of Attorney (included on the signature pages herein).
|
|
|
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
DP Cap Acquisition Corp I Policy for Recovery of Erroneously Awarded Compensation.
|
||
|
101.INS*
|
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE*
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104*
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
| * |
Filed herewith.
|
| ** |
Furnished herewith.
|
|
Item 16.
|
Form 10-K Summary
|
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Date: March 29, 2024
|
DP CAP ACQUISITION CORP I
|
|
|
By:
|
/s/ Scott Savitz
|
|
|
Name:
|
Scott Savitz
|
|
|
Title:
|
Chief Executive Officer and Chairman
|
|
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bruce Revzin and Scott Savitz and each or any one of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant
in the capacities and on the dates indicated.
|
Name
|
Title
|
Date
|
||
|
/s/ Scott Savitz
|
Chief Executive Officer and Chairman
|
March 29, 2024
|
||
|
Scott Savitz
|
(Principal Executive Officer)
|
|||
|
/s/ Bruce Revzin
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 29, 2024
|
||
|
Bruce Revzin
|
||||
|
/s/ Lars Albright
|
Director
|
March 29, 2024
|
||
|
Lars Albright
|
||||
|
/s/ Diane Hessan
|
Director
|
March 29, 2024
|
||
|
Diane Hessan
|
||||
|
/s/ Leonard Schlesinger
|
Director
|
March 29, 2024
|
||
|
Leonard Schlesinger
|
100