Item 1. BUSINESS
Overview
We
are a blank check company incorporated on January 18, 2021 as a Cayman Islands exempted company and incorporated for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business combination, involving one or more
businesses or assets, which we refer to as our initial business combination. We have generated no operating revenues to date and we do
not expect that we will generate operating revenues until we consummate our initial business combination.
We
have concentrated our efforts on identifying technology and financial services technology, or fintech, companies that power transformation
and innovation. Our expertise lends itself well to pursuing platforms related to the financial services, real estate, insurance, ecommerce
and related technology infrastructure sectors, but we are not required to complete our initial business combination with a business in
these industries and, as a result, we may pursue a business combination outside of these industries. We expect to pursue global businesses
but may also acquire a domestic company. We do not intend to acquire companies that have speculative business plans or are excessively
leveraged.
At
December 31, 2021, we had not commenced any operations. All activity through December 31, 2021 relates to the Company’s formation
and its initial public offering, and identifying a target company for our initial business combination.
The
registration statement for our initial public offering was declared effective on March 3, 2021. On March 8, 2021, we consummated the
initial public offering of 80,000,000 units generating gross proceeds of $800,000,000. On March 5, 2021, the underwriters
partially exercised their over-allotment option, resulting in the sale on March 9, 2021 of an additional 5,147,760 units for total gross
proceeds of $51,477,600, bringing the aggregate gross proceeds of the initial public offering to $851,477,600.
Simultaneously
with the closing of the initial public offering, we consummated the sale of 1,920,000 placement units at a price of $10.00 per unit in
a private placement to our sponsor and Millennium, generating gross proceeds of $19,200,000.
Following
the closing of the initial public offering on March 8, 2021 and the closing of the partial over-allotment option on March 9, 2021, an
aggregate amount of $851,477,600 ($10.00 per unit) from the net proceeds of the sale of the units in the initial public offering and
the placement units was placed in a trust account and 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 money market funds meeting certain conditions under Rule 2a-7 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 consummation of a business combination,
(ii) the redemption of any public shares in connection with a shareholder vote to amend our amended and restated memorandum and articles
of association (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business
combination by March 8, 2023 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business
combination activity; or (iii) the distribution of the trust account, if we are unable to complete a business combination within the
combination period or upon any earlier liquidation of us.
Business
Combination Structure
We
anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses.
NASDAQ
rules require that our initial business combination must be with one or more target businesses that together have a fair market value
equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned)
at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make
the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While
we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of
our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target
or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
Business
Strategy
We
will seek to capitalize on the significant technology, financial services, financial technology and banking experience and contacts of
Betsy Z. Cohen, our Chairman of the Board, and Daniel G. Cohen, our President and Chief Executive Officer, and our board of directors,
to identify, evaluate and acquire a technology or fintech business, although we may pursue a business combination outside of those industries.
If we elect to pursue an investment outside of those industries, our management’s expertise related to those industries may not
be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding that industry might
not be relevant to an understanding of the business that we elect to acquire.
Members
of our board of directors and management team have served as executive officers, directors and/or advisors of FinTech Acquisition Corp.,
or FinTech I, a former blank check company which raised $100.0 million in its initial public offering in February 2015 and completed
its initial business combination when it acquired FTS Holding Corporation in July 2016, which we refer to as the FinTech I
Acquisition, in connection with which FinTech I changed its name to CardConnect Corp. The common stock of CardConnect Corp. was traded
on NASDAQ under the symbol “CCN” until CardConnect Corp. was acquired by First Data Corporation in July 2017. Members
of our board of directors and management team have also served as executive officers and/or directors of FinTech Acquisition Corp. II,
or FinTech II, a blank check company which raised $175.0 million in its initial public offering in January 2017 and completed
its initial business combination when it acquired Intermex Holdings II in July 2018, which we refer to as the FinTech II Acquisition,
in connection with which FinTech II changed its name to International Money Express, Inc. Members of our board of directors and management
team have also served as executive officers and/or directors of FinTech Acquisition Corp. III, or FinTech III, a blank check company
which raised $345.0 million in its initial public offering in November 2018 and completed its initial business combination with
Paya, Inc. in October 2020, which we refer to as the FinTech III Acquisition. Members of our board of directors and management
team have also served as executive officers and/or directors of FinTech Acquisition Corp. IV, or FinTech IV, a blank check
company which raised $230.0 million in its initial public offering in September 2020 and completed its initial business combination
with PWP Holdings LP, in June 2021, which we refer to as the FinTech IV Acquisition. Members of our board of directors and
management team also served as executive officers, directors and/or advisors of FTAC Olympus Acquisition Corp., or FTAC Olympus, a blank
check company which raised $754.7 million in its initial public offering in August 2020 and completed its initial business
combination with Payoneer Inc. in June 2021, which we refer to as the FTAC Olympus Acquisition. Additionally, members of our
board of directors and management team also currently serve as executive officers, directors and/or advisors of: FinTech Acquisition
Corp. V (NASDAQ: FTCV), or FinTech V, a blank check company which raised $250.0 million in its initial public offering in December 2020;
FinTech Acquisition Corp. VI (NASDAQ: FTVI), or FinTech VI, a blank check company which raised $250.0 million in its initial public
offering in June 2021; FTAC Athena Acquisition Corp. (NASDAQ: FTAA), or FTAC Athena, a blank check company which raised $250.0 million
in its initial public offering in February 2021; FTAC Parnassus Acquisition Corp. (NASDAQ: FTPA), or FTAC Parnassus, a blank check
company which raised $250.0 million in its initial public offering in March 2021; FTAC Zeus Acquisition Corp. (NASDAQ: ZING),
or FTAC Zeus, a blank check company which raised $402.5 million in its initial public offering in November 2021; and FTAC Emerald
Acquisition Corp. (NASDAQ: EMLD), or FTAC Emerald, a blank check company which raised $220 million in its initial public offering
in December 2021. We believe that potential sellers of target businesses will view the fact that members of our board of directors and
management team have successfully closed multiple business combinations with vehicles similar to our company as a positive factor in
considering whether or not to enter into a business combination with us. However, past performance is not a guarantee of success with
respect to any business combination we may consummate.
Ms. Cohen,
our Chairman, and Mr. Cohen, our President and Chief Executive Officer, have extensive experience in the technology and financial
services industries, generally, and the financial technology industry, in particular, as well as extensive experience in operating technology
and financial services companies in a public company environment.
Ms. Cohen,
with over 42 years of experience, was a founder of Bancorp and served as Bancorp’s Chief Executive Officer from September 2000
through December 2014. Ms. Cohen served as Chairman of the board of directors of FinTech IV until the FinTech IV Acquisition,
as Chairman of the Board of Directors of FTAC Olympus until the FTAC Olympus Acquisition, as Chairman of the board of directors of FinTech
III until the FinTech III Acquisition, as Chairman of the board of directors of FinTech II until the FinTech II Acquisition,
and also served as the Chairman of the board of directors of FinTech I until the Fintech I Acquisition and, following the FinTech I
Acquisition, served on the post-business combination board of directors until May 2017. She is currently the Chairman of the
Board of FinTech V, FinTech VI, FTAC Athena and FTAC Emerald. Ms. Cohen is also a founder of RAIT and was its Chairman until December 2010
and its Chief Executive Officer until December 2006. She was also the founder and Chief Executive Officer of JeffBanks and its subsidiary
banks from 1974 until the merger of JeffBanks into Hudson United Bancorp in 1999.
Mr.
Cohen, with over 22 years of experience in financial services and financial technology, is the Chairman of the Board of Directors and
of the Board of Managers of Cohen & Company, LLC, and serves as the President and Chief Executive of the European Business of Cohen
& Company Inc. (NYSE American: COHN), a financial services company with approximately $2.24 billion in assets under management as
of September 30, 2021, and as President, a director and the Chief Investment Officer of Cohen & Company Inc.’s indirect majority
owned subsidiary, Cohen & Company Financial Limited (formerly known as EuroDekania Management Limited), a Financial Conduct Authority
regulated investment advisor and broker dealer focusing on the European capital markets (“CCFL”). Mr. Cohen previously served
as Vice Chairman of the Board of Directors and of the Board of Managers of Cohen & Company, LLC. Mr. Cohen served as the Chief Executive
Officer and Chief Investment Officer of Cohen & Company Inc. from December 16, 2009 to September 16, 2013 and as the Chairman of
the Board of Directors from October 6, 2006 to September 16, 2013. Mr. Cohen served as the executive Chairman of Cohen & Company
Inc. from October 18, 2006 to December 16, 2009. In addition, Mr. Cohen served as the Chairman of the Board of Managers of Cohen &
Company, LLC from 2001 to September 16, 2013, as the Chief Investment Officer of Cohen & Company, LLC from October 2008 to September
16, 2013, and as Chief Executive Officer of Cohen & Company, LLC from December 16, 2009 to September 16, 2013. Mr. Cohen served as
the Chairman and Chief Executive Officer of J.V.B. Financial Group, LLC (formerly C&Co/PrinceRidge Partners LLC), the Company’s
indirect broker dealer subsidiary (“JVB”), from July 19, 2012 to September 16, 2013. Mr. Cohen is also a founder, the former
Chief Executive Officer and the former Chairman of The Bancorp, Inc. (NASDAQ: TBBK), which we refer to as Bancorp, a financial holding
company with over $6.3 billion of total assets as of September 30, 2021, whose principal subsidiary is The Bancorp Bank, that provides
a wide range of commercial and retail banking products and services to both regional and national markets. Mr. Cohen currently serves
as the Chief Executive Officer of FinTech V and FinTech VI and serves as Chairman of INSU Acquisition Corp. III (NASDAQ: IIII), or INSU
III, a blank check company which raised $250 million in its initial public offering in December 2020. Mr. Cohen served as Chairman
of the Board of Insurance Acquisition Corp., or INSU I, a former blank check company which raised $150.7 million in its initial
public offering in March 2019 and completed its initial business combination when it merged with affiliates of Shift Technologies,
Inc. in October 2020, which we refer to as the INSU I Acquisition. Mr. Cohen also served as Chairman of the Board of Insurance Acquisition
Corp. II, or INSU II, a former blank check company which raised $230.0 million in its initial public offering in September 2020
and completed its initial business combination when it merged with MetroMile, Inc. in February 2021, which we refer to as the INSU
II Acquisition. Further, Mr. Cohen served as Chief Executive Officer, President and a director of FinTech I until the FinTech I Acquisition,
as Chief Executive Officer and a director of FinTech II until the FinTech II Acquisition, as Chief Executive Officer of FinTech III until
the FinTech III Acquisition and as Chief Executive Officer of FinTech IV until the FinTech IV Acquisition. Mr. Cohen also recently
joined FTAC Parnassus as its Chairman, FTAC Zeus as its Chairman, and INSU Acquisition Corp. IV, or INSU IV, as its Chairman, each a
blank check company formed for the purpose of effecting its own initial business combination. . He is also a past Chief Executive
Officer of RAIT Financial Trust, which we refer to as RAIT, formerly a publicly traded real estate finance company focused on the commercial
real estate industry, from December 2006 when it merged with Taberna Realty Finance Trust, to February 2009, and served as a trustee
from the date RAIT acquired Taberna in February 2009 until his resignation from that position in February 2010. From 1998 to 2000, Mr.
Cohen served as the Chief Operation Officer of Resource America, Inc., formerly a publicly traded asset management company with interests
in energy, real estate and financial services. Mr. Cohen was also a past director of Jefferson Bank of Pennsylvania, a commercial bank
and subsidiary of JeffBanks, Inc., a publicly traded bank holding company, which we refer to as JeffBanks, acquired by Hudson United
Bancorp in 1999.
We
have identified the following criteria that we intend to use in evaluating business transaction opportunities. We expect that no individual
criterion will entirely determine a decision to pursue a particular opportunity. Further, any particular business transaction opportunity
which we ultimately determine to pursue may not meet one or more of these criteria:
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Recurring Revenue. We have sought
to acquire one or more businesses or assets that have a history of, or potential for, strong, sustainable recurring and predictable
revenue streams. |
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Strong management team. We have
sought to acquire one or more businesses or assets that have strong, experienced management teams or those that provide a platform
for us to assemble an effective and experienced management team. We have focused on management teams with a proven track record of
driving revenue growth, enhancing profitability and creating value for their shareholders. |
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Opportunities for add-on acquisitions. We
have sought to acquire one or more businesses or assets that we can grow both organically and through acquisitions. In addition,
we believe that our ability to source proprietary opportunities and execute transactions will help the business we acquire grow through
acquisition, and thus serve as a platform for further add-on acquisitions. |
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Differentiated business niche. We
have sought to acquire one or more businesses or assets that have a leading or niche market position and that demonstrate advantages
when compared to their competitors, which may help to create barriers to entry against new competitors. We anticipate that these
barriers to entry will enhance the ability of these businesses or assets to generate strong profitability and free cash flow. |
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Diversified customer and supplier base. We
have sought to acquire one or more businesses or assets that have a diversified customer and supplier base, which are generally better
able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact
their customers, suppliers and competitors. |
Competitive
Strengths
We
believe we have the following competitive strengths:
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Management Operating and Investing Experience.
Our directors and executive officers have significant experience in the financial services and financial technology industries. Betsy
Z. Cohen has over 42 years’ experience in the financial services industry and is a founder of and, until her retirement in
December 2014, served as chief executive officer of, The Bancorp, Inc., a financial holding company whose banking subsidiary, The
Bancorp Bank, provides banking services principally through the internet. Additionally, Ms. Cohen served as Chairman of the Board
of FinTech I, FinTech II, FinTech III, FinTech IV and FTAC Olympus and currently serves as Chairman of the Board of FinTech V, FinTech
VI, FTAC Athena and FTAC Emerald. Daniel G. Cohen brings over 22 years of experience in financial services and financial technology.
He is Chairman of the Board of Cohen & Company, LLC, and the President and Chief Executive Officer of the European business
of Cohen and Company, Inc., a publicly traded financial services company. He also serves as Chairman of the Board of INSU III, INSU
IV, FTAC Parnassus and FTAC Zeus, and as Chief Executive Officer of FinTech V and FinTech VI. We believe that
this breadth of experience provides us with a competitive advantage in evaluating businesses and acquisition opportunities in our
target industry. |
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Established Deal Sourcing Network. As
a result of their extensive experience in the financial services and venture capital industries, our team has developed a broad array
of contacts in these industries. We believe that these contacts will be important in generating acquisition opportunities for us. |
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Strong Financial Position and Flexibility. With
a trust account initially in the amount of approximately $851 million and a public market for our ordinary shares, we offer a target
business a variety of options to facilitate a future business transaction and fund the growth and expansion of business operations.
Because we are able to consummate an initial business transaction using our equity, debt, cash or a combination of the foregoing,
we have the flexibility to design an acquisition structure to address the needs of the parties. We have not, however, taken any steps
to secure third party financing and would only do so in connection with the consummation of our initial business transaction. Accordingly,
our flexibility in structuring an initial business transaction may be constrained by our ability to arrange third-party financing,
if required. |
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Status as a Public Company. We believe
our structure makes us an attractive business transaction partner to prospective target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business transaction
with us. In this situation, the owners of the target business would exchange their shares of stock or other equity interests in the
target business for our shares. Once public, we believe the target business would have greater access to capital and additional means
of creating management incentives that are better aligned with shareholders’ interests than it would as a private company.
We believe that being a public company can also augment a company’s profile among potential new customers and vendors and aid
it in attracting and retaining talented employees. |
Effecting
Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations until our initial business combination. We intend to effectuate
our initial business combination using cash from the proceeds of the initial public offering and the private placement, our equity, debt
or a combination of these as the consideration to be paid in our initial business combination.
If
we pay for our initial business combination using shares or debt securities, or we do not use all of the funds released from the trust
account for payment of the purchase price in connection with our business combination or for redemptions or purchases of our ordinary
shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating
our initial business combination, to fund the purchase of other companies or for working capital.
While
we have not contacted any of the prospective target businesses that FinTech I, FinTech II, FinTech III, FinTech IV, INSU I or INSU II
had considered and rejected while searching for target businesses to acquire, we may do so in the future if we become aware that the
valuations, operations, profits or prospects of such target business, or the benefits of any potential transaction with such target business,
would be attractive. Accordingly, there is no current basis for shareholders to evaluate the possible merits or risks of the target business
with which we may ultimately complete our initial business combination. Although our management 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 impact a target business.
NASDAQ
rules require that our initial business combination be with one or more target businesses that together have a fair market value equal
to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned)
at the time of our signing a definitive agreement in connection with our initial business combination. Our initial business combination
must also be approved by a majority of our independent directors in accordance with NASDAQ rules. However, if our securities are
not listed on NASDAQ or another securities exchange, we will no longer be subject to that requirement.
We
may seek to raise additional funds through a private offering of debt or equity securities to finance our initial business combination,
and we may effectuate an initial business combination using the proceeds of such offering rather than using the amounts held in the trust
account. Subject to compliance with applicable securities laws, we would consummate such financing only simultaneously with the consummation
of our business combination. In the case of an initial business combination funded with assets other than the trust account assets, our
tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if
required by law or NASDAQ, we would seek shareholder approval of such financing. There are no prohibitions on our ability to raise funds
privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or
understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Sources
of Acquisition Candidates
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers,
attorneys, accountants, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds, brokers and other
members of the financial community and corporate executives. These target candidates may present solicited or unsolicited proposals.
Such sources became aware that we were seeking a business combination candidate by a variety of means, including publicly available information
relating to the initial public offering, public relations and marketing efforts or direct contact by management following the completion
of the initial public offering.
Our
officers and directors, as well as their affiliates, may also bring to our attention target business candidates of which they become
aware through their contacts. While we do not presently anticipate engaging the services of professional firms or other individuals that
specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event
we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on
the terms of the transaction. We will engage a finder only if our management determines that the use of a finder may bring opportunities
to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our
management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction,
in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor, officers
or directors, or any entities with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior
to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type
of transaction that it is), other than (i) repayment of loans made to us prior to the date of the initial public offering by our sponsor
and its affiliates to cover offering-relating and organization expenses, (ii) repayment of incremental loans that our sponsor, members
of our management team, board or any of their respective affiliates or other third parties may make to finance transaction costs
in connection with an intended initial business combination (provided that if we do not consummate an initial business combination, we
may use working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be
used for such repayment), (iii) payments to our sponsor or its affiliate of a total of $40,000 per month for office space, administrative
and shared personnel support services, (iv) payment of certain consulting fees to persons engaged by an entity affiliated
with certain of our directors and officers, (v) at the closing of our initial business combination, a customary advisory fee to
affiliates of our sponsor, in an amount that constitutes a market standard advisory fee for comparable transactions and services provided,
and (vi) reimbursements for any out-of-pocket expenses related to identifying, investigation and completing an initial business combination.
None of the initial holders, our officers, our directors or any entity with which they are affiliated will be allowed to receive any
compensation, finder’s fees or consulting fees from a prospective acquisition target in connection with a contemplated acquisition
of such target by us. Although some of our officers and directors may enter into employment or consulting agreements with the acquired
business following our initial business combination, the presence or absence of any such arrangements will not be used as a criterion
in our selection process of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers, directors
or their affiliates. Additionally, we are not prohibited from partnering, submitting joint bids, or entering into any similar transaction
with such persons in the pursuit of an initial business combination. If we seek to complete an initial business combination with such
a company or we partner with such persons in our pursuit of an initial business combination, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm, and
reasonably acceptable to Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the underwriters of the
initial public offering, that such an initial business combination is fair to our shareholders from a financial point of view. Generally,
such opinion is rendered to a company’s board of directors and investment banking firms may take the view that shareholders may
not rely on the opinion. Such view will not impact our decision on which investment banking firm to hire.
Unless
we consummate our initial business combination with an affiliated entity, we are not required to obtain a financial fairness opinion
from an independent investment banking firm. If we do not obtain such an opinion, our shareholders will be relying on the judgment of
our board of directors, who will determine fair market value and fairness based on standards generally accepted by the financial community.
The application of such standards would involve a comparison, from a valuation standpoint, of our business combination target to comparable
public companies, as applicable, and a comparison of our contemplated transaction with such business combination target to other then-recently
announced comparable private and public company transactions, as applicable. The application of such standards and the basis of our board
of directors’ determination will be discussed and disclosed in our tender offer or proxy solicitation materials, as applicable,
related to our initial business combination.
Selection
of a target business and structuring of our initial business combination
NASDAQ
rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market
value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest
earned) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value
of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial
community, such as discounted cash flow valuation or value of comparable businesses. Our shareholders will be relying on the business
judgment of our board of directors, which will have significant discretion in choosing the standard used to establish the fair market
value of the target or targets, and different methods of valuation may vary greatly in outcome from one another. Such standards used
will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
If
our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type
of company we are seeking to acquire or an independent accounting firm, with respect to the satisfaction of such criteria. We do not
intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this
requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target
businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar
company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be
taken into account for purposes of NASDAQ’s 80% fair market value test. There is no basis for shareholders to evaluate the possible
merits or risks of any target business with which we may ultimately complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review, which may encompass, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational,
legal and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of business diversification
For
an indefinite period of time after consummation of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By consummating a business combination with only a single entity, our lack of diversification
may:
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subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our
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cause us to depend on the marketing and sale of a single
product or limited number of products or services. |
Limited
ability to evaluate the target’s management team
Although
we closely scrutinize the management of a prospective target business when evaluating a target business, our assessment of the target
business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications
or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business
cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some
capacity with us following our business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent
to our business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business. We cannot assure you that any of our key personnel will remain in senior
management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with
the combined company will be made at the time of our initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management team of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
may not have the ability to approve a business combination
We
may conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC, subject to the provisions of our amended
and restated memorandum and articles of association. However, we will seek shareholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek shareholder approval for business or other legal reasons.
Under
NASDAQ’s listing rules, shareholder approval would be required for our initial business combination if, for example:
|
● |
we issue ordinary shares
that will be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding (other than in a public offering); |
|
● |
any of our directors, officers
or substantial shareholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or
greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential
issuance of ordinary shares could result in an increase in outstanding ordinary shares or voting power of 5% or more; or |
|
● |
the issuance or potential
issuance of ordinary shares will result in our undergoing a change of control. |
Permitted
purchases of our securities
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, officers or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the consummation of our initial business combination, although as of
the date of this Annual Report they have no commitments, plans or intentions to engage in such transactions. In the event our sponsor,
directors, officers or their affiliates determine to make any such purchases at the time of a shareholder vote relating to our initial
business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the
funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are
in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record
holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
In
the event that our sponsor, directors, officers or their affiliates purchase shares in privately negotiated transactions from public
shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their
prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject
to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the
Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the
purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of
obtaining shareholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that
requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that
such requirement would otherwise not be met. This may result in the consummation of a business combination that may not otherwise have
been possible.
As
a consequence of any such purchases, the public “float” of our ordinary shares may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our
securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the shareholders with whom they may pursue privately
negotiated purchases by either the shareholders contacting us directly or by our receipt of redemption requests submitted by shareholders
following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers,
directors or their affiliates enter into a private purchase, they would identify and contact only potential selling shareholders who
have expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business combination.
Such persons would select the shareholders from whom to acquire shares based on the number of shares available, the negotiated price
per share and such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction
may be different than the amount per share a public shareholder would receive if it elected to redeem its shares in connection with our
initial business combination. Our sponsor, officers, directors or their affiliates will only purchase shares if such purchases comply
with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor
from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors
and/or their affiliates will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of
the Exchange Act.
Redemption
rights for public shareholders upon consummation of our initial business combination
We
will provide our shareholders with the opportunity to redeem all or a portion of their ordinary shares upon the consummation of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of
two business days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes
payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust
account is approximately $10.00 per public share (based on the trust account balance as of December 31, 2021). There will be no redemption
rights upon the consummation of our initial business combination with respect to our warrants. The per-share amount we will distribute
to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.
Our initial holders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed
to waive their redemption rights with respect to any founder shares, any placement shares and any public shares they may hold in connection
with the completion of our initial business combination. However, our sponsor, officers and directors will be entitled to redemption
rights with respect to any public shares held by them if we fail to consummate a business combination or liquidate by March 8, 2023.
Manner
of Conducting Redemptions
We
will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion
of our initial business combination either (i) in connection with a general meeting called to approve the business combination or (ii)
by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination or conduct
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would require us to seek shareholder approval under the law or stock exchange listing requirement.
Under NASDAQ rules, asset acquisitions and share purchases would not typically require shareholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our issued and outstanding ordinary shares or
seek to amend our amended and restated memorandum and articles of association would require shareholder approval. We intend to conduct
redemptions without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or
stock exchange listing requirements or we choose to seek shareholder approval for business or other legal reasons. So long as we obtain
and maintain a listing for our securities on NASDAQ, we will be required to comply with such rules.
If
a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant
to our amended and restated memorandum and articles of association:
|
● |
conduct the redemptions pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
|
● |
file tender offer documents with the SEC prior to consummating
our initial business combination that contain substantially the same financial and other information about the initial business combination
and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Upon
the public announcement of our initial business combination, we and our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase our Class A ordinary shares in the open market if we elect to redeem our public shares through a tender offer,
to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to consummate our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering
more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either prior
to or upon consummation of our initial business combination, after payment of the deferred underwriting commission (so that we are not
subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. If public shareholders tender more shares than we have offered to purchase,
we will withdraw the tender offer and not complete our initial business combination.
If,
however, shareholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain shareholder
approval for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles of association:
|
● |
conduct the redemptions in conjunction with a proxy
solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules, and |
|
● |
file proxy materials with the SEC. |
We
expect that a final proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder vote. However, we
expect that a draft proxy statement would be made available to such shareholders well in advance of such time, providing additional notice
of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently
intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any shareholder vote even
if we are not able to maintain our NASDAQ listing or Exchange Act registration.
In
the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business combination.
If
we seek shareholder approval, we will complete our initial business combination only if we receive an ordinary resolution under Cayman
Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company.
In such case, pursuant to the terms of a letter agreement entered into with us, our sponsor, officers and directors have agreed (and
their permitted transferees will agree) to vote any founder shares and placement shares held by them and any public shares purchased
during or after the initial public offering in favor of our initial business combination. We expect that at the time of any shareholder
vote relating to our initial business combination, our sponsor and its permitted transferees will own at least 20.9% of our issued and
outstanding ordinary shares entitled to vote thereon. Each public shareholder may elect to redeem its public shares irrespective of whether
they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, placement shares and
public shares in connection with the completion of a business combination.
Our
amended and restated memorandum and articles of association provide that we will only redeem our public shares so long as (after such
redemption) our net tangible assets will be at least $5,000,001 either prior to or upon consummation of our initial business combination,
after payment of the deferred underwriting commission (so that we are not subject to the SEC’s “penny stock” rules).
Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement
relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be
paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or
(iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event
the aggregate cash consideration we would be required to pay for all 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, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted
for redemption will be returned to the holders thereof.
Limitation
on redemption upon consummation of our initial business combination if we seek shareholder approval
Notwithstanding
the foregoing, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with
our business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association 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 Exchange Act), will be restricted from seeking redemption rights
with respect to an more than aggregate of 15.0% of the shares sold in the initial public offering without our prior consent. We believe
the restriction described above will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such
holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our
sponsor or its affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable
terms. Absent this provision, a public shareholder holding more than an aggregate of 15.0% of the shares sold in the initial public offering
could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our sponsor or its affiliates
at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no
more than 15.0% of the shares sold in the initial public offering, we believe we will limit the ability of a small group of shareholders
to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business
combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However,
we would not restrict our shareholders’ ability to vote all of their shares (including all shares held by those shareholders that
hold more than 15.0% of the shares sold in the initial public offering) for or against our business combination.
Tendering
share certificates in connection with a tender offer or redemption rights
We
may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates (if any) to our transfer agent prior to the date set forth in the tender
offer documents, or up to two business days prior to the vote on the proposal to approve our initial business combination in the event
we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination. The tender offer or
proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will indicate whether we are requiring public shareholders to satisfy such delivery requirements. Accordingly, a public shareholder would
have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the
vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise
its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the
case of a shareholder vote, a final proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder
vote. However, we expect that a draft proxy statement would be made available to such shareholders well in advance of such time, providing
additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the broker whether or not
to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking
to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would distribute proxy materials for the shareholders’ vote on an initial
business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating
such holder was seeking to exercise his redemption rights. After the business combination was approved, the company would contact such
shareholder to arrange for him to deliver his certificate to verify ownership. As a result, the shareholder then had an “option
window” after the consummation of the business combination during which he could monitor the price of the company’s stock
in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his
shares to the company for cancellation. As a result, the redemption rights, to which shareholders were aware they needed to commit before
the general meeting, would become “option” rights surviving past the consummation of the business combination until the redeeming
holder delivered its certificate. The requirement for physical or electronic delivery prior to the general meeting ensures that a redeeming
holder’s election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the
date of the general meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivers its
certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to
exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It
is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly
after the completion of our business combination.
If
the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial business combination is not consummated, we may continue to try to consummate a business combination with a different target
until March 8, 2023.
Redemption
of public shares and liquidation if no initial business combination
Our
amended and restated memorandum and articles of association provides that we will have only until March 8, 2023 to complete our initial
business combination. If we are unable to consummate our initial business combination by March 8, 2023, 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 (less up to $100,000 of interest to pay dissolution expenses) (which interest shall be net of taxes payable), divided by the
number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we
fail to complete our initial business combination within such completion window.
Our
initial holders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their
rights to liquidating distributions from the trust account with respect to any founder shares and placement shares held by them if we
fail to complete our initial business combination by March 8, 2023. However, if our initial holders, sponsor, officers or directors acquire
public shares in or after the initial public offering, they will be entitled to liquidating distributions from the trust account with
respect to such public shares if we fail to complete our initial business combination by March 8, 2023.
Our
initial holders, sponsor, executive officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose
any amendment to our amended and restated memorandum and articles of association that (i) would modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination by March 8, 2023 or (ii) with respect
to the other provisions relating to shareholders’ rights or pre-initial business combination activity, 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 (which interest shall be net
of taxes payable) divided by the number of then outstanding public shares. However, we will only redeem our public shares so long as
(after such redemption) our net tangible assets will be at least $5,000,001 either prior to or upon consummation of our initial business
combination, after payment of the deferred underwriting commission (so that we are not subject to the SEC’s “penny stock”
rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy
the net tangible asset requirement (described above) we would not proceed with the amendment or the related redemption of our public
shares.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts remaining out of the approximately $1,650,000 of proceeds held outside the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses
associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required
to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those
costs and expenses.
If
we were to expend all of the net proceeds of the initial public offering and the sale of the placement units, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by shareholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders. We
cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.00.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although
we will seek to have all third parties (other than our independent auditors), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third
party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will 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 are unable to complete our initial business combination within the prescribed time frame, or upon the exercise
of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the 10 years following redemption. FTAC Hera Sponsor, LLC has agreed that
it will be liable to us if and to the extent any claims by a third-party (other than our independent auditors) for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all
rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of the initial public
offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed
to be unenforceable against a third party, then FTAC Hera Sponsor, LLC will not be responsible to the extent of any liability for such
third-party claims. We have not independently verified whether FTAC Hera Sponsor, LLC has sufficient funds to satisfy its indemnity
obligations and believe that FTAC Hera Sponsor, LLC’s only assets are securities of our company. None of our other officers will
indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and FTAC Hera Sponsor, LLC asserts that it is unable
to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against FTAC Hera Sponsor, LLC to enforce its indemnification obligations. While
we currently expect that our independent directors would take legal action on our behalf against FTAC Hera Sponsor, LLC to enforce its
indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not
to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be substantially less than $10.00 per share.
We
will seek to reduce the possibility that FTAC Hera Sponsor, LLC will have to indemnify the trust account due to claims of creditors by
endeavoring to have all third parties (other than our independent auditors), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
FTAC Hera Sponsor, LLC will also not be liable as to any claims under our indemnity of the underwriters of the initial public offering
against certain liabilities, including liabilities under the Securities Act. We will have access to up to $1,650,000 from the proceeds
of the initial public offering and the sale of the placement units, with which to pay any such potential claims (including costs and
expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that
we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received
funds from our trust account could be liable for claims made by creditors.
If
we file a bankruptcy or winding-up petition or an involuntary bankruptcy winding-up petition is filed against us that is not dismissed,
the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete
the trust account, we cannot assure you we will be able to return $10.00 per share to our public shareholders. Additionally, if we file
a bankruptcy winding-up petition or an involuntary bankruptcy 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 laws as either a “preferential transfer”
or a “fraudulent conveyance.” As a result, a bankruptcy insolvency court could seek to recover all amounts received by our
shareholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad
faith, and thereby exposing itself and our company to claims of punitive damages, by paying public shareholders from the trust account
prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier of (i) the completion of our
initial business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend
our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination by March 8, 2023 or (B) with respect to any other provision
relating to shareholders’ rights or pre-business combination activity and (iii) the redemption of all of our public shares
if we are unable to complete our initial business combination by March 8, 2023, subject to applicable law. In no other circumstances
will a shareholder have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection
with our initial business combination, a shareholder’s voting in connection with the business combination alone will not result
in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must have
also exercised its redemption rights described above.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we 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
and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay
cash to our public shareholders who exercise their redemption rights will reduce the resources available to us for an initial business
combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain
target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Facilities
We
currently maintain our executive offices at 2929 Arch Street, Suite 1703, Philadelphia, PA 19104-2870. The cost for our use of this space
is included in the $40,000 per month fee we pay to our sponsor or its affiliate for office space, administrative and shared personnel
support services. We consider our current office space adequate for our current operations.
Employees
We
currently have two officers. Members of our management team are not obligated to devote any specific number of hours to our matters but
they devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The
amount of time that our officers or any other members of our management team devote in any time period varies based on whether a target
business has been selected for our initial business combination and the current stage of the initial business combination process. We
do not intend to have any full time employees prior to the consummation of our initial business combination.
Periodic
Reporting and Financial Information
We
have registered our units, Class A ordinary shares and warrants under the Exchange Act and have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act,
our annual reports contain financial statements audited and reported on by our independent registered public accountants. The SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers like us that file electronically
with the SEC at http://www.sec.gov.
We
will provide shareholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to shareholders to assist them in assessing the target business. These financial statements may
be required to be prepared in accordance with, or be reconciled to, U.S. GAAP, or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with 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 statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal
control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. If some shareholders find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of the initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that is held by non-affiliates
equals or exceeds $700 million as of the prior June 30th, 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.
Item 1A. RISK FACTORS
You
should consider carefully all of the risks described below, which we believe are the principal risks that we face and of which we are
currently aware, and all of the other information contained in this report. If any of the events or developments described below occur,
our business, financial condition or results of operations could be negatively affected.
Risks
Relating to our Search for, Consummation of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may consummate our
initial business combination even though a majority of our public shareholders do not support such a combination.
We
may not hold a shareholder vote to approve our initial business combination unless the business combination would require shareholder
approval under applicable Cayman Islands law or the rules of NASDAQ or if we decide to hold a shareholder vote for business or other
legal reasons. Examples of transactions that would not ordinarily require shareholder approval include asset acquisitions and share purchases,
while transactions such as direct mergers with our company or transactions where we issue more than 20% of our outstanding shares would
require shareholder approval. For instance, the NASDAQ rules currently allow us to engage in a tender offer in lieu of a general meeting
but would still require us to obtain shareholder approval if we were seeking to issue more than 20% of our outstanding shares to
a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required
us to issue more than 20% of our outstanding shares, we would seek shareholder approval of such business combination. Except as
required by law or NASDAQ rules, the decision as to whether we will seek shareholder approval of a proposed business combination or will
allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a
variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek
shareholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the public shares
do not approve of the business combination we consummate.
If
we seek shareholder approval of our initial business combination, our sponsor, directors and officers have agreed to vote in favor of
such initial business combination, regardless of how our public shareholders vote.
Unlike
other blank check companies in which the initial shareholders agree to vote their founder shares in accordance with the majority of the
votes cast by the public shareholders in connection with an initial business combination, our sponsor, officers and directors have agreed
(and their permitted transferees will agree), pursuant to a letter agreement entered into with us, to vote any founder shares and any
placement shares, as well as any public shares purchased during or after the initial public offering, in favor of our initial business
combination. In addition, as a result of the founder shares and private placement warrants that Millennium holds, it may have different
interests with respect to a vote on an initial business combination than other public shareholders. Our initial shareholders own shares
representing 20.9% of our issued and outstanding ordinary shares, including placement shares. Accordingly, if we seek shareholder approval
of our initial business combination, it is more likely that the necessary shareholder approval will be received than would be the case
if our sponsor, officers and directors agreed to vote their founder shares, placement shares and public shares in accordance with the
majority of the votes cast by our public shareholders.
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 the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more
target businesses. Since our board of directors may consummate a business combination without seeking shareholder approval, public shareholders
may not have the right or opportunity to vote on the business combination, unless we seek such shareholder approval. Accordingly, if
we do not seek shareholder approval, your only opportunity to affect the investment decision regarding a potential business combination
will be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in
our tender offer documents mailed to our public shareholders in which we describe our initial business combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, we
will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either prior
to or upon consummation of our initial business combination, after payment of the deferred underwriting commission (so that we are not
subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than $5,000,001 either prior to or upon consummation of our initial business combination
or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the
related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these
risks and, thus, may be reluctant to enter into a business combination transaction with us.
The
ability of our public shareholders to exercise redemption rights with respect to a large amount of our shares may not allow us to consummate
the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our
initial business combination, we will not know how many shareholders may exercise their redemption rights, and therefore we will need
to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have
a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or
arrange for third party financing. In addition, if a larger number of shares 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 third party financing.
Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable
levels. Furthermore, this dilution would increase to the extent that the anti-dilution provisions of the Class B ordinary shares
result in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares
at the time of the initial business combination. The above considerations may limit our ability to complete the most desirable business
combination available to us or optimize our capital structure.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial 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 initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate
the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such
time our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a
material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are
able to sell your shares in the open market.
The
requirement that we consummate a business combination by March 8, 2023 may give potential target businesses leverage over us in negotiating
a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach
our dissolution deadline, which could undermine our ability to consummate a 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
our initial business combination by March 8, 2023. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable
to complete our initial business combination with any target business. This risk will increase as we get closer to March 8, 2023. In
addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would
have rejected upon a more comprehensive investigation.
If
the net proceeds from the initial public offering and the sale of the placement units not being held in the trust account are insufficient,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination
and we will depend on loans from our sponsor or management team to fund our search for a business combination, to pay our taxes and to
complete our initial business combination.
Of
the net proceeds of the initial public offering and the sale of the placement units, only $965,671 was available to us as of December
31, 2021 outside the trust account to fund our working capital requirements. If we are required to seek additional capital, we would
need to borrow funds from our sponsor, management team or other third parties to operate, or we may be forced to liquidate. Neither of
our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our
initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public shareholders may receive only
approximately $10.00 per share (or less in certain circumstances) on our redemption of our public shares, and our warrants will expire
worthless. In certain circumstances, our public shareholders may receive less than $10.00 per share on the redemption of their shares.
Please see “If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by shareholders may be less than $10.00 per share” and other risk factors in this section.
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 recent coronavirus (COVID-19) outbreak and the status of debt and equity markets.
The
COVID-19 outbreak has and a significant outbreak of other infectious diseases could result in a widespread health crisis that could
adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate
a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if
continued concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors
or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in
a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments,
which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and
the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of
global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target
business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability to
consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and
other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable
on terms acceptable to us or at all.
We
may not be able to consummate our initial business combination by March 8, 2023, in which case we would cease all operations except for
the purpose of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may only receive
$10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
amended and restated memorandum and articles of association provide that we must complete our initial business combination by March 8,
2023. We may not be able to find a suitable target business and complete our initial business combination by that date. If we have not
completed our initial business combination by March 8, 2023, we will: (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net
of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares,
which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining shareholders and our board of directors, 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. In such case, our
public shareholders may only receive $10.00 per share, and our warrants will expire worthless. In certain circumstances, our public shareholders
may receive less than $10.00 per share on the redemption of their shares.
If
we are unable to consummate our initial business combination by March 8, 2023, our public shareholders may be forced to wait beyond such
date before redemption from our trust account.
If
we are unable to consummate our initial business combination by March 8, 2023, we will distribute the aggregate amount then on deposit
in the trust account (less up to $100,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders
by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. Any
redemption of public shareholders from the trust account shall be effected automatically by function of our amended and restated memorandum
and articles of association prior to any voluntary winding up. If we are required to windup, liquidate the trust account and distribute
such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution
must comply with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond March 8, 2023 before
the redemption proceeds of our trust account become available to them and they receive the return of their pro rata portion of the proceeds
from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless
we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their ordinary
shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable to complete
our initial business combination.
If
we seek shareholder approval of our initial business combination, our sponsor, directors, officers and their affiliates may elect to
purchase shares from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float”
f our Class A ordinary shares.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, officers or their affiliates may purchase shares in the open market or in
privately negotiated transactions either prior to or following the consummation of our initial business combination, although they are
under no obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record
holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event
that our sponsor, directors, officers or their affiliates purchase shares in privately negotiated transactions from public shareholders
who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections
to redeem their shares. The price per share paid in any such transaction may be different than the amount per share a public shareholder
would receive if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could
be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of
the business combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth
or a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be
met. This may result in the completion of our business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our Class A ordinary shares and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities
on a national securities exchange.
If
a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business
combination. Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable,
such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or redeem public shares. In the event that a shareholder
fails to comply with these procedures, its shares may not be redeemed. Please see “Business — Tendering share certificates
in connection with attender offer or redemption rights.”
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of
our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to
amend our amended and restated memorandum and articles of association to (a) modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by March 8, 2023 or (b) with respect to any other provision
relating to shareholders’ rights or pre-business combination activity and (iii) the redemption of all of our public shares if we
are unable to complete our initial business combination by March 8, 2023, subject to applicable law and as further described herein.
In no other circumstances will a public shareholder have any right or interest of any kind in the trust account. Accordingly, to liquidate
your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of the initial public offering and the sale of the placement units are intended to be used to complete an initial business
combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the
United States securities laws. However, because we had net tangible assets in excess of $5.0 million upon the completion of the initial
public offering and the sale of the placement units and we 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 under the
Securities Act. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means
our units were immediately tradable and we have a longer period of time to complete a business combination than would companies subject
to Rule 419. Moreover, if the initial public offering was 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 consummation
of an initial business combination.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public shareholders may receive
only approximately $10.00 per share, or less in certain circumstances, on our redemption, and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources, or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target
businesses we could potentially acquire, 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,
if we are obligated to pay cash for the Class A ordinary shares redeemed and, in the event we seek shareholder approval of our initial
business combination, we make purchases of our Class A ordinary shares, potentially reducing the resources available to us for our initial
business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.00
per share (or less in certain circumstances) (based on the trust account balance as of December 31, 2021) on the liquidation of our trust
account and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $10.00 per share
on the redemption of their shares.
If
the net proceeds of the initial public offering not being held in the trust account are insufficient to allow us to operate until at
least March 8, 2023, we may be unable to complete our initial business combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until at least March 8, 2023, assuming
that our initial business combination is not completed by that date. We believe that the funds available to us outside of the trust account
will be sufficient to allow us to operate until at least March 8, 2023; however, we cannot assure you that our estimate is accurate.
Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search
for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms
more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current
intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and
were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds
to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business
combination, our public shareholders may receive only $10.00 per share on the liquidation of our trust account and our warrants will
expire worthless. In certain circumstances, our public shareholders may receive less than $10.00 per share upon our liquidation.
Subsequent
to the consummation of our initial 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 our share price,
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 surface
all material issues that may be present inside 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 shareholders who choose to remain shareholders
following the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy
for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by shareholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third party claims against us. Although we seek to have all third
parties (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our
public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented
from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with
respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement
waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will 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 are unable to complete our business combination within the required time frame, or upon the exercise of a
redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount
received by public shareholders could be less than the $10.00 per share initially held in the trust account due to claims of such creditors.
FTAC
Hera Sponsor, LLC has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent
auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a
transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser
amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value
of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as any claims by a third party who
executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of the initial 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, FTAC Hera Sponsor, LLC will not be responsible to the extent
of any liability for such third party claims. We have not independently verified whether FTAC Hera Sponsor, LLC has sufficient funds
to satisfy its indemnity obligations and believe that FTAC Hera Sponsor, LLC’s only assets are securities of our company. FTAC
Hera Sponsor, LLC may not have sufficient funds available to satisfy those obligations. We have not asked FTAC Hera Sponsor, LLC to reserve
for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims
were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced
to less than $10.00 per public share. In such event, we may not be able to complete our initial 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 third parties and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of FTAC Hera Sponsor, LLC, 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) $10.00 per public share or (ii) such lesser
amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value
of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and FTAC Hera Sponsor, LLC 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 FTAC Hera Sponsor, LLC to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against FTAC Hera Sponsor, LLC to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any
particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public shareholders may be reduced below $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy 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 laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy or insolvency court could seek to recover 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 law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over
the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our shareholders in connection with our liquidation 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 all amounts received by our shareholders. Furthermore,
our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and
thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims
of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who
knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to
pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $18,292.68
and to imprisonment for five years in the Cayman Islands.
We
may not hold an annual general meeting until after the consummation of our initial business combination. Our public shareholders will
not have the right to appoint directors prior to the consummation of our initial business combination.
In
accordance with NASDAQ corporate governance requirements, we are not required to hold an annual general meeting until no later than one
year after our first fiscal year end following our listing on NASDAQ. There is no requirement under the Companies Law for us to hold
annual or general meetings or appoint directors. Until we hold an annual general meeting, public shareholders may not be afforded the
opportunity to discuss company affairs with management. In addition, as holders of our Class A ordinary shares, our public shareholders
will not have the right to vote on the appointment of directors prior to consummation of our initial business combination.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial 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 initial 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 initial business combination will not have all of these positive attributes. If we consummate a business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net
worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law or NASDAQ rules, or we
decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us to obtain shareholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our initial business combination, our public shareholders may receive only approximately $10.00 per share (based on the trust account
balance as of December 31, 2021), on the liquidation of the trust account and our warrants will expire worthless.
We
may seek acquisition opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We
will consider a business combination outside of our management’s areas of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue
an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this Annual Report regarding the areas of our management’s expertise
would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors. Accordingly, any shareholders who choose to remain shareholders following our
business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such
reduction in value.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we consummate our initial business combination with an affiliated entity, or our board of directors cannot independently determine the
fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking
firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an
independent accounting firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion
is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on
standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer or proxy solicitation
materials, as applicable, related to our initial business combination. However, if our board of directors is unable to determine the
fair value of an entity with which we seek to complete an initial business combination based on such standards, we will be required to
obtain an opinion as described above.
Because
we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards Board,
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the
standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to
disclose such statements in accordance with federal proxy rules and consummate our initial business combination by March 8, 2023.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to consummate our initial business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer
or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not 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 company 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.
Our
warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
The
SEC Statement regarding the accounting and reporting considerations for warrants issued by SPACs focused on certain settlement terms
and provisions related to certain tender offers following a business combination. The terms described in the SEC Statement are common
in SPACs and are similar to the terms contained in the warrant agreement governing our warrants. In response to the SEC Statement, we
reevaluated the accounting treatment of our public warrants and private placement warrants, and determined to classify the warrants as
derivative liabilities measured at fair value, with changes in fair value each period reported in earnings. As a result, included on
our balance sheet as of December 31, 2021 contained elsewhere in this Annual Report are derivative liabilities related to embedded features
contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the
remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the
change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement,
our financial statements and results of operations may fluctuate quarterly based on factors which are outside of our control. Due to
the recurring fair value measurement, we expect that we will recognize non- cash gains or losses on our warrants each reporting period
and that the amount of such gains or losses could be material.
We
have identified a material weakness in our internal control over financial reporting. This material weakness 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 control 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 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 in those internal controls. A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Annual Report, we
identified a material weakness in our internal control over financial reporting related to the accounting for complex financial instruments.
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as
of December 31, 2021.
To
respond to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation
and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable
accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex
accounting standards that apply to our financial statements. 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. For a discussion of management’s
consideration of the material weakness identified related to our accounting for a significant and unusual transaction, see Note 2 to
the accompanying financial statements, as well as Part II, Item 9A: Controls and Procedures included in this Annual Report.
Any
failure to maintain such internal control 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 are 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 weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control 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.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to consummate
a business combination with which a substantial majority of our shareholders do not agree.
Our
amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold, except that we will
only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either prior to
or upon consummation of our initial business combination after payment of the deferred underwriting commission (such that we are not
subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. As a result, we may be able to complete our business combination even
though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek
shareholder approval of our initial 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
or 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, 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 complete an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments. We cannot assure you that we will not seek to amend our amended and restated memorandum
and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination
that our shareholders may not support.
In
order to effectuate a business combination, blank check companies have, in the past, amended various provisions of their charters and
modified governing instruments. For example, blank check companies have amended the definition of business combination, increased redemption
thresholds and extended the period of time in which it had to consummate a business combination. We cannot assure you that we will not
seek to amend our amended and restated memorandum and articles of association or governing instruments or extend the time in which we
have to consummate a business combination through amending our amended and restated memorandum and articles of association require a
special resolution of our shareholders as a matter of Cayman Islands law.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may complete our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any shareholders who
choose to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such shareholders
are unlikely to have a remedy for such reduction in value.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a
business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidates’ key personnel upon the completion of our initial 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 initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
The
provisions of our amended and restated memorandum and articles of association that relate to our pre-initial business combination activity
(and corresponding provisions of the agreement governing the release of funds from our trust account), including an amendment to permit
us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation
is substantially reduced or eliminated, may be amended with the approval of a special resolution under Cayman Islands law, which requires
the approval of holders of at least two-thirds of our ordinary shares who attend and vote in a general meeting, which is a lower amendment
threshold than that of some other blank check companies (and corresponding provisions of the trust agreement governing the release of
funds from our trust account may be amended if approved by holders of 65% of our ordinary shares). It may be easier for us, therefore,
to amend our amended and restated memorandum and articles of association and the trust agreement to facilitate the completion of an initial
business combination that some of our shareholders may not support.
Our
amended and restated memorandum and articles of association provide that any of its provisions, including those related to pre-initial business
combination activity (including the requirement to deposit proceeds of the initial public offering and the private placement into the
trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders
as described herein and in our amended and restated memorandum and articles of association or an amendment to permit us to withdraw funds
from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated), but excluding the provision of the articles relating to the appointment of directors, may be amended if approved by a
special resolution under Cayman Islands law, which requires the approval of holders of at least two-thirds of our ordinary shares
who attend and vote in a general meeting, and corresponding provisions of the trust agreement governing the release of funds from our
trust account may be amended if approved by holders of 65% of our ordinary shares. Our initial holders and holders of placement shares
will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement and will
have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated
memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check
companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may pursue
remedies against us for any breach of our amended and restated memorandum and articles of association.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of the initial public offering and the sale of the placement units will be sufficient to allow us to
complete our initial business combination, because we have not yet selected any prospective target business we cannot ascertain the capital
requirements for any particular transaction. If the net proceeds of the initial public offering and the sale of the placement units prove
to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search
of a target business, the obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection
with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business
combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that
such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when
needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. In addition, even if we do not need additional financing to complete
our business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure
additional financing could have a material adverse effect on the continued development or growth of the target business. None of our
officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination.
If we are unable to complete our initial business combination, our public shareholders may only receive approximately $10.00 per share
on the liquidation of our trust account, and our warrants will expire worthless. In certain circumstances, our public shareholders may
receive less than $10.00 per share on the redemption of their shares.
Our
sponsor will control the appointment of our board of directors until consummation of our initial business combination and will hold a
substantial interest in us. As a result, it will appoint all of our directors and may exert a substantial influence on actions requiring
a shareholder vote, potentially in a manner that you do not support.
Our
sponsor owns approximately 20.9% of our issued and outstanding ordinary shares, including placement shares. In addition, holders of the
founder shares are entitled to appoint all of our directors prior to our initial business combination. Holders of our public shares have
no right to vote on the appointment of directors during such time. These provisions of our amended and restated memorandum and articles
of association may only be amended by a special resolution passed by at least 90% of our ordinary shares voting in a general meeting.
As a result, you will not have any influence over the appointment of directors prior to our initial business combination.
Neither
our sponsor nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors
that would be considered in making such additional purchases would include consideration of the current trading price of our Class A
ordinary shares. In addition, as a result of its substantial ownership in our company, our sponsor may exert a substantial influence
on other actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and
restated memorandum and articles of association and approval of major corporate transactions. If our sponsor purchases any additional
ordinary shares in the aftermarket or in privately negotiated transactions, this would increase its influence over these actions. Accordingly,
our sponsor will exert significant influence over actions requiring a shareholder vote at least until the completion of our initial business
combination.
Resources
could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders
may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants
will expire worthless.
We
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 initial 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 consummate our initial business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and
acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive
only approximately $10.00 per share (based on the trust account balance as of December 31, 2021) on the liquidation of our trust account
and our warrants will expire worthless.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular initial business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a result,
may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the consummation of our initial business combination only if they are able
to negotiate employment or consulting agreements 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 consummation of our initial business combination. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject to his
or her fiduciary duties under Cayman Islands law. However, we believe the ability of such individuals to remain with us after the consummation
of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any
potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the consummation
of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory
positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial
business combination.
We
may attempt to simultaneously consummate business combinations with multiple prospective targets, which may hinder our ability to consummate
our initial 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 initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to consummate our initial 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 consummate our initial 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
initial 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.
After
our initial 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 initial business combination, a majority of our directors and officers will reside outside of the United States
and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible,
for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers
or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers
under United States laws.
If
we consummate our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to a variety of additional risks that may negatively impact our operations.
If
we consummate our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to any special considerations or risks associated with companies operating in an international setting, including any of the
following:
|
● |
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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tariffs and trade barriers; |
|
● |
regulations related to customs and import/export matters; |
|
● |
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; |
|
● |
challenges in collecting accounts receivable; |
|
|
|
|
● |
cultural and language differences; |
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employment regulations; |
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crime, strikes, riots, civil disturbances, terrorist
attacks and wars; and |
|
● |
deterioration of political relations with the United
States. |
We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely
impact our results of operations and financial condition.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure our initial business combination so that the post-transaction company in which our public shareholders own shares will
own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the
post-transaction company 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 us not to be required to register as an investment company under the Investment Company Act. We
will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new 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 ordinary shares, our shareholders immediately prior to such transaction could own less
than a majority of our issued and outstanding ordinary shares subsequent to such transaction. In addition, other minority shareholders
may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s 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.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
We
may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
|
● |
default and foreclosure on our assets if our operating
revenues after an initial business combination are insufficient to repay our debt obligations; |
|
● |
acceleration of our obligations to repay the indebtedness,
even if we make all principal and interest payments when due, if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant; |
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● |
our immediate payment of all principal and accrued
interest, if any, if the debt security is payable on demand; |
|
● |
our inability to obtain necessary additional financing
if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
|
● |
our inability to pay dividends on our ordinary shares; |
|
● |
using a substantial portion of our cash flow to pay
principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses,
capital expenditures, acquisitions, and other general corporate purposes; |
|
● |
limitations on our flexibility in planning for and
reacting to changes in our business and in the industry in which we operate; |
|
● |
increased vulnerability to adverse changes in general
economic, industry and competitive conditions and adverse changes in government regulation; and |
|
● |
limitations on our ability to borrow additional amounts
for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other
disadvantages compared to our competitors who have less debt. |
Because
we are not limited to a particular industry or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’ operations.
We
may seek to consummate a business combination with an operating company in any industry or sector. However, we will not, under our amended
and restated memorandum and articles of association, be permitted to consummate our business combination with another blank check company
or similar company with nominal operations. Because we have not yet identified 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 consummate our initial 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 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 securities 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 shareholders who choose to remain shareholders following the business
combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction
in value.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of sales or earnings.
To
the extent we complete our initial business combination with 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 volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target
business.
We
may only be able to complete one business combination with the proceeds of the initial public offering and the sale of the placement
units, 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.
Of the net proceeds from the initial public offering
and the sale of the placement units, $851,477,600 is available to complete our business combination and pay related fees and expenses
(which includes $30,831,268 for the payment of deferred underwriting commissions).
We
may complete our initial 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 complete a 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 consummating an initial business combination with only a single entity, our lack of diversification may subject
us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from
the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business,
property or asset, or |
|
● |
dependent upon the development or market acceptance
of a single or limited number of products, processes or services. |
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 partner, submit a joint bid or enter into a similar transaction with holders of founder shares or an affiliate in connection with
our pursuit of, or in connection with, a business combination.
We
are not prohibited from partnering, submitting a joint bid or entering into any similar transaction with holders of founder shares or
their affiliates in our pursuit of a business combination. Although we currently have no plans to do so, we could pursue such a transaction
if we determined that such affiliated entity met our criteria for a business combination and the transaction was approved by a majority
of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm or an independent
accounting firm regarding the fairness to our shareholders from a financial point of view of a business combination with any holder of
founder shares or its affiliates, the terms of the business combination may not be as advantageous to our public shareholders as they
would be absent any conflicts of interest. Additionally, were we successful in consummating such a transaction, conflicts could invariably
arise from the interest of the holder of founder shares or its affiliate in maximizing its returns, which may be at odds with the strategy
of the post-business combination company or not in the best interests of the public shareholders of the post-business combination
company. Any or all of such conflicts could materially reduce the value of your investment, whether before or after our initial business
combination.
Risks
Relating to our Sponsor and Management Team
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals. We believe that our success depends on the continued service of
our officers and directors, at least until we have completed our initial business combination. In addition, our officers and directors
are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating
management 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 officers. The
unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.
Our
ability to successfully complete our initial business combination and to be successful thereafter will be totally dependent upon the
efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
ability to successfully complete our business combination is dependent upon the efforts of our key personnel. The role of our key personnel
in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our business combination, it is likely that some or all of the management of the
target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become
familiar with such requirements.
Our
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 initial
business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other businesses. We do not intend
to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in
several other business endeavors for which he or she may be entitled to substantial compensation and our 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 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 initial business combination. For a complete discussion of our officers’ and directors’
other business affairs, please see “Directors, Executive Officers and Corporate Governance.”
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us (and they may also participate in the formation of, or become an officer or director
of, another special purpose acquisition company) and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Until
we consummate our initial business combination, we will engage in the business of identifying and combining with one or more businesses.
Our sponsor and our officers and directors are and may in the future become, affiliated with entities that are engaged in a similar business.
For example, our President and Chief Executive Officer serves as Chairman or Chief Executive Officer of INSU III, FinTech V,
FinTech VI, FTAC Parnassus and FTAC Zeus, and our Chairman serves as Chairman of FinTech V, FinTech VI, FTAC Athena and FTAC Emerald,
each a blank check company formed for the purpose of effecting its own initial business combination. In addition, our sponsor, officers
and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion
of our initial business combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining
whether to present business combination opportunities to us or to any other blank check company with which they may become involved.
Although we have no formal policy in place for vetting potential conflicts of interest, our board of directors will review any potential
conflicts of interest on a case-by-case basis.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to other entities prior to its presentation to us, subject to his or her fiduciary duties under Cayman
Islands law.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors
or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for
their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, officers, directors or existing shareholders, which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers and directors. Our officers and directors also serve as officers and board members for other entities.
Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our business combination with any entities with which they are affiliated, and there
have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically
focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such
affiliated entity met our criteria for a business combination as set forth in “Proposed Business — Effecting Our Initial
Business Combination — Selection of a Target Business and Structuring of our Initial Business Combination” and such transaction
was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment
banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or
an independent accounting firm, regarding the fairness to our company from a financial point of view of a business combination with one
or more domestic or international businesses affiliated with our officers, directors or existing 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.
Since
holders of our founder shares and placement units will lose their entire investment in us if our business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business
combination.
Our
initial holders currently own 21,766,940 founder shares, which will be worthless if we do not consummate our initial business combination.
Our sponsor and Millennium have also purchased an aggregate of 1,920,000 placement units for an aggregate purchase price of $19.2 million.
There will be no redemption rights or liquidating distributions from the trust account with respect to the founder shares, placement
shares or placement warrants, which will expire worthless if we do not consummate a business combination by March 8, 2023. If we do not
consummate a business combination, our sponsor and Millennium will realize a loss on the placement units they purchased. As a result,
the personal and financial interests of certain of our officers and directors, directly or as members of our sponsor, in consummating
an initial business combination, along with their flexibility in identifying and selecting a prospective acquisition candidate, may influence
their motivation in identifying and selecting a target business combination and completing an initial business combination that is not
in the best interests of our shareholders. Consequently, the discretion of our officers and directors, in identifying and selecting a
suitable target business combination may result in a conflict of interest when determining whether the terms, conditions and timing of
a particular initial business combination are appropriate and in the best interest of our public shareholders.
The
personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business
combination, completing an initial business combination and influencing the operation of the business following the initial business
combination.
Since
our sponsor, officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our initial business combination
is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for
our initial business combination.
At
the closing of our initial business combination, our sponsor, officers and directors, or any entities with which they are affiliated,
will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of
out-of-pocket expenses incurred in connection with activities on our behalf. These financial interests of our sponsor, officers
and directors may influence their motivation in identifying and selecting a target business combination and completing an initial business
combination.
Risks
Relating to our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
The
proceeds held in the trust account are invested only in U.S. government treasury obligations with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in
direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate
of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates
below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the
future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination
or make certain amendments to our amended and restated memorandum and articles of association, our public shareholders are entitled to
receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less,
in the case we are unable to complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the
value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00
per share.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and |
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restrictions on the issuance of securities; |
each
of which may make it difficult for us to complete our initial business combination.
In
addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company; |
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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. |
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust
account may be invested by the trustee only in United States government treasury bills with a maturity of 185 days or less or in money
market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company
Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the
exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds
and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public
shareholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
If
we seek shareholder approval of our initial 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 15.0% 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 initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public
shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as
a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect
to more than an aggregate of 15.0% of the shares sold in the initial public offering, which we refer to as the “Excess Shares”.
However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against
our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to consummate a
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 consummate our business combination.
As a result, you would continue to hold that number of shares exceeding 15.0% and, in order to dispose of such shares, would be required
to sell those shares in open market transactions, potentially at a loss.
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 warrants are currently listed on NASDAQ. We cannot assure you that our securities will continue to
be listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ
prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must
maintain an average global market capitalization and a minimum number of holders of our securities (generally 300 public holders).Additionally,
in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing
requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order to continue to maintain the listing
of our securities on NASDAQ. For instance, our share price would generally be required to be at least $4.00 per share and we would be
required to have a minimum of 400 round lot holders (with at least 50% of such round lot holders holding securities with a market value
of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
NASDAQ delists our securities from trading on its exchange 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 is 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. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our units, Class A ordinary shares and
warrants are listed on NASDAQ, our units, Class A ordinary shares and warrants are covered securities. Although the states are preempted
from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion
of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a
particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by
blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and
might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further,
if we were no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state
in which we offer our securities.
We
may issue additional Class A ordinary or preference shares to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue Class A ordinary shares upon the conversion of the Class
B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained in our amended and restated memorandum and articles of association. Any such issuances would dilute the interest
of our shareholders and likely present other risks.
Our
amended and restated memorandum and articles of association authorize the issuance of up to 500,000,000 Class A ordinary shares, par
value $0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share and 5,000,000 undesignated preference shares,
par value $0.0001 per share. There are currently 391,165,300 and 28,233,060 authorized but unissued Class A and Class B ordinary shares
available, respectively, for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants
but not upon conversion of the Class B ordinary shares. Class B ordinary shares are convertible into Class A ordinary shares, initially
at a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated memorandum and articles of
association. There are no preference shares issued and outstanding.
We
may issue a substantial number of additional ordinary shares, and may issue preference shares, in order to complete our initial business
combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary
shares upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination
as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association. However,
our amended and restated memorandum and articles of association provide, among other things, that prior to our initial business combination,
we may not issue additional ordinary shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii)
vote on any initial business combination.
The
issuance of additional ordinary shares or preference shares:
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may significantly dilute the equity interest of investors
in the initial public offering; |
|
● |
may subordinate the rights of holders of ordinary shares
if preference shares are issued with rights senior to those afforded our ordinary shares; |
|
● |
could cause a change in control if a substantial number
of ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if
any, and could result in the resignation or removal of our present officers and directors; and |
|
● |
may adversely affect prevailing market prices for our
units, Class A ordinary shares and/or warrants. |
We
are not registering the shares of Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state
securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding
such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We
are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later
than 20 business days after the closing of our initial business combination, we will use our best efforts to file, and within 60 business
days following our initial business combination to have declared effective, a registration statement covering such shares and maintain
a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants, until the expiration of the warrants
in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts
or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial
statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any
shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder, or an exemption is available. Notwithstanding the foregoing, if a registration
statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective within a specified period following
the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement
and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis
pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. We will use our best
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will
we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that
we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no exemption is available.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In
such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for
the Class A ordinary shares included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption
right if the issuance of shares upon exercise of the warrants is not exempt from registration or qualification under applicable state
blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such
shares under the blue sky laws of the state of residence in those states in which the warrants were offered by us.
The
grant of registration rights to our initial shareholders and holders of placement units may make it more difficult to complete our initial
business combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in the initial public offering, our initial shareholders
and their permitted transferees can demand that we register their founder shares, after those shares convert to our Class A ordinary
shares at the time of our initial business combination, and placement shares. In addition, holders of our placement units (and underlying
securities) and their permitted transferees can demand that we register the placement shares as well as the placement warrants and the
Class A ordinary shares issuable upon exercise of the placement warrants, and holders of shares and warrants underlying units that may
be issued upon conversion of working capital loans may demand that we register such Class A ordinary shares, warrants or the Class A
ordinary shares issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and
availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price
of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial business combination more
costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the
combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary shares that
is expected when the ordinary shares owned by our initial shareholders, holders of our placement warrants or holders of our working capital
loans or their respective permitted transferees are registered.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least 50% of the then outstanding public warrants.
Our
warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure
any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public
warrants 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 warrants, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of our Class A ordinary shares equal or exceed $18.00 per share (as adjusted
for share sub divisions, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for
any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption
to the warrant holders. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of
shares upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are
unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares under the blue sky
laws of the state of residence in those states in which the warrants were offered by us in the initial public offering. Redemption of
the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants
or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be
substantially less than the market value of your warrants. None of the placement warrants will be redeemable by us so long as they are
held by our sponsor, Millennium or their permitted transferees.
In
addition, we may redeem your warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per
warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants
prior to redemption for a number of Class A ordinary shares determined based on the redemption date and the fair market value of our
Class A ordinary shares. The value received upon exercise of the warrants (1) may be less than the value the holders would have received
if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders
for the value of the warrants, including because the number of ordinary shares received is capped at 0.361 Class A ordinary shares per
warrant (subject to adjustment) irrespective of the remaining life of the warrants. None of the placement warrants will be redeemable
by us so long as they are held by our sponsor, Millennium or their permitted transferees, subject to limited exceptions.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive
fewer Class A ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise their
warrants for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in this Annual Report have been satisfied,
our management will have the option to require any holder that wishes to exercise his warrant (including any warrants held by our sponsor,
officers or directors, other purchasers of our founders’ units, or their permitted transferees) to do so on a “cashless basis.”
If our management chooses to require holders to exercise their warrants on a cashless basis, the number of Class A ordinary shares received
by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect
of reducing the potential “upside” of the holder’s investment in our company.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult
to consummate our business combination.
We
issued warrants to purchase 21,286,940 of our Class A ordinary shares as part of the units sold in the initial public offering and, simultaneously
with the closing of the initial public offering, we issued in a private placement an aggregate of 1,920,000 units. The placement units
include underlying warrants to purchase an aggregate of 480,000 Class A ordinary shares at $11.50 per share, subject to adjustment as
provided herein. In addition, if the sponsor, the management team or their affiliates make any working capital loans, up to $2,000,000
of such loans may be convertible into units at a price of $10.00 per unit at the option of the lender at the time of the business combination.
The units would be identical to the placement units sold in the private placement.
To
the extent we issue ordinary shares to consummate our 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 consummate
our business combination or increase the cost of acquiring the target business.
Because
each unit contains one-fourth of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other
blank check companies.
Each
unit contains one-fourth of one warrant. Because, pursuant to the warrant agreement, the warrants may only be exercised for a whole number
of Class A ordinary shares, only a whole warrant may be exercised at any given time. This is different from other blank check companies
similar to ours whose units include one ordinary share and one warrant to purchase one share. We established the components of the units
in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will
be exercisable in the aggregate for one-fourth of the number of shares compared to units that each contain a warrant to purchase one
share, thus making us, we believe, a more attractive business combination partner for target businesses. Nevertheless, this unit structure
may cause our units to be worth less than if they included a warrant to purchase one whole share.
A
provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
Unlike
most blank check companies, if (x) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per
ordinary share (with such issue price or effective issue price to be determined in good faith by us and in the case of any such issuance
to our sponsors or their affiliates, without taking into account any founder shares held by our initial shareholders or such affiliates,
as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent
more than 50% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the
date of the completion of our initial business combination (net of redemptions), and (z) the volume-weighted average trading price
of our Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which we complete our
initial 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 $10.00
and $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the
Market Value and the Newly Issued Price, respectively. This may make it more difficult for us to consummate an initial business combination
with a target business.
Provisions
in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our
amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that
shareholders may consider to be in their best interests. These provisions include two-year director terms and the ability of the board
of directors to designate the terms of and issue new series of preference shares, which may make more difficult the removal of management
and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
General
Risk Factors
We
are a company with no operating history and no revenues and you have no basis on which to evaluate our ability to achieve our business
objective.
We
are a company established under the laws of the Cayman Islands with no operating results, and we will not commence operations until we
consummate our initial business combination. Because we lack an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective of completing our initial business combination with one or more target businesses. We may be unable
to complete a business combination. If we fail to complete a business combination, we will never generate any operating revenues.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with
certain SEC reporting 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 and results
of operations.
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team and their affiliates is presented for informational purposes
only. Past performance by our management, including their affiliates’ past performance, is not a guarantee either (i) of success
with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial
business combination. You should not rely on the historical record of our management team or their affiliates as indicative of our future
performance. Additionally, in the course of their respective careers, members of our management team have been involved in businesses
and deals that were unsuccessful.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable
to our investors altogether.
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 internal controls attestation requirements of
Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they
may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status
earlier, including if the market value of our Class A ordinary shares held by non-affiliates equals or exceeds $700 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 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 equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled
or exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals
or exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations,
it may also make comparison of our financial statements with other public companies difficult or impossible.
We
may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences
to U.S. investors.
If
we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a 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. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception.
Depending on the particular circumstances the application of the start-up exception may be subject to uncertainty, and there cannot
be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status
as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, however, will not
be determinable until after the end of such taxable year. Moreover, if we determine we are a PFIC for any taxable year, we will endeavor
to provide to a U.S. holder 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 such election would be unavailable with respect
to our warrants in all cases. We urge U.S. holders to consult their own tax advisors regarding the possible application of the PFIC rules
to holders of our Class A ordinary shares and warrants.
We
may reincorporate in another jurisdiction in connection with our initial business combination and such reincorporation may result in
taxes imposed on shareholders.
We
may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Law, reincorporate
in the jurisdiction in which the target company or business is located. The transaction may require a shareholder to recognize taxable
income in the jurisdiction in which the shareholder is a tax resident or in which its members are resident if it is a tax transparent
entity. We do not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding
taxes or other taxes with respect to their ownership of us after the reincorporation.
Certain
agreements related to the initial public offering may be amended without shareholder approval.
Certain
agreements, including the underwriting agreement relating to the initial public offering, the investment management trust agreement between
us and Continental Stock Transfer & Trust Company, the letter agreement among us and our sponsor, officers and directors, the registration
rights agreement among us and our initial shareholders and holders of placement units and the administrative services agreement between
us and our sponsor, may be amended without shareholder approval. These agreements contain various provisions that our public shareholders
might deem to be material. For example, the underwriting agreement contains a covenant that the target company that we acquire must have
a fair market value equal to at least 80% of the balance in the trust account at the time of signing the definitive agreement for the
transaction with such target business (excluding the deferred underwriting commissions and taxes payable on the income earned on the
trust account) so long as we obtain and maintain a listing for our securities on NASDAQ. While we do not expect our board to approve
any amendment to any of these agreements prior to our initial business combination, it may be possible that our board, in exercising
its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection
with the consummation of our initial business combination. Any such amendment may have an adverse effect on the value of an investment
in our securities.
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 shareholders to effect
service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts
against our directors or officers.
Our
corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may
be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against
the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are
to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively
limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive
authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of
our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions
in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and
certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman
Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We
have been advised by Maples and Calder (Cayman) LLP, 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.
If
our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the Company, and the
management of the target business at the time of the business combination will remain in place. Management of the target business may
not be familiar with United States 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 initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue
will be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant
extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. 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 initial business combination and
if we effect our initial 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 initial business combination, our financial condition and results of operations. Additionally, if a
currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a target
business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We
may face risks related to financial technology businesses.
Business
combinations with financial technology businesses may involve special considerations and risks. If we complete our initial business combination
with a financial technology business, we will be subject to the following risks, any of which could be detrimental to us and the business
we acquire:
|
● |
If the company or business we acquire provides products
or services which relate to the facilitation of financial transactions, such as funds or securities settlement system, and such product
or service fails or is compromised, we may be subject to claims from both the firms to whom we provide our products and services
and the clients they serve; |
|
● |
If we are unable to keep pace with evolving technology
and changes in the financial services industry, our revenues and future prospects may decline; |
|
● |
Our ability to provide financial technology products
and services to customers may be reduced or eliminated by regulatory changes; |
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● |
Any business or company we acquire could be vulnerable
to cyberattack or theft of individual identities or personal data; |
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● |
Difficulties with any products or services we provide
could damage our reputation and business; |
|
● |
A failure to comply with privacy regulations could
adversely affect relations with customers and have a negative impact on our business; and |
|
● |
We may not be able to protect our intellectual property
and we may be subject to infringement claims. |
Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to financial technology businesses. Accordingly, if we acquire a target business in
another industry, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry in
which we operate or target business which we acquire, none of which can be presently ascertained.