ITEM
1. BUSINESS.
General
We
are a blank check company formed under the laws of the State of Delaware on August 21, 2020. We were formed for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this report as our initial business combination. Our efforts to identify a prospective target business are
not limited to any particular industry or geographic region, although we intend to focus our search on a target business that will benefit
from economic globalization, particularly as it affects emerging markets.
Initial
Public Offering
On
December 15, 2020, we consummated our Initial Public Offering of 11,500,000 units, which included the exercise in full of the underwriters’
option to purchase an additional 1,500,000 Units to cover over-allotments. Each unit consists of one share of our common stock, $0.0001
par value per share, and one redeemable warrant, with each such warrant entitling the holder thereof to purchase one share of common
stock at an exercise price of $11.50 per share, subject to adjustment. The units were sold at an offering price of $10.00 per unit, generating
gross proceeds of $115,000,000 (before underwriting discounts and commissions and offering expenses).
Simultaneously
with the closing of the Initial Public Offering, we consummated the private sale of 4,188,889 warrants (the “private warrants”)
at a price of $0.75 per warrant to Globis SPAC LLC and Up and Up Capital, LLC, generating gross proceeds of $3,141,667. In addition,
Up and Up Capital, LLC purchased an aggregate of 100,833 units (the “placement units”) at a purchase price of $10.00 per
unit, or $1,008,333 in the aggregate (collectively with the private sale of warrants, the “Private Placements”). The placement
units consist of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $11.50
per share, subject to adjustment (the “placement warrants”).
The
net proceeds from the Initial Public Offering, together with certain of the proceeds from the Private Placements, $116,150,000 in the
aggregate, were placed in a trust account established for the benefit of our public stockholders with Wilmington Trust Company acting
as trustee.
Note
Draw Down - Business Combination Extension
On
January 11, 2021, we issued an unsecured promissory note (as amended through January 27, 2022, the “Note”) to Globis SPAC
LLC, or its assigns or successors in interest, that permits us to borrow from time to time up to $7,000,000. On December 10, 2021, we
drew down $1,150,000 under the Note the proceeds from the draw down have been deposited into the Company’s trust account in order
to extend the period of time the Company has to complete its initial business combination (the “Completion Window”). As a
result, the Completion Window was extended by three months from December 15, 2021 until March 15, 2022. The Company’s stockholders
are not entitled to vote on or redeem their shares in connection with such extension of the Completion Window. The Note does not bear
interest and matures upon closing of a business combination by the Company. As of December 31, 2021, the total amount outstanding under
the Note was $2,600,000.
Initial
Business Combination
On
December 19, 2021 (the “Effective Date”), we entered into a securities purchase agreement (the “Business Combination
Agreement”) with Forafric Agro Holdings Limited, a Gibraltar private company limited by shares (“FAHL”) and Lighthouse
Capital Limited, a Gibraltar private company limited by shares (the “Seller”).
The
Business Combination Agreement provides for the consummation of the following transactions (collectively, the “Business Combination”):
(a) we will form under the laws of the State of Nevada a wholly-owned subsidiary (the “New Subsidiary”), change its jurisdiction
of incorporation to Nevada by merging with and into the New Subsidiary such that the New Subsidiary will survive the merger (the “Surviving
Company”) (the “Pre-Closing Merger”), and change its jurisdiction of incorporation again by transferring by way
of a redomiciliation and domesticating the New Subsidiary as a Gibraltar public company limited by shares (the “Redomiciliation”);
and (b) immediately following the effectiveness of the Redomiciliation, the Surviving Company will acquire 100% of the equity interests
in FAHL from the Seller. Upon consummation of the transactions contemplated by the Business Combination, FAHL will become a wholly owned
subsidiary of the Surviving Company, which will be renamed “Forafric Global PLC”.
Immediately
prior to the consummation of the Business Combination (the “Closing”), we will effect the Pre-Closing Merger and the Redomiciliation
pursuant to which (i) our issued and outstanding shares of common stock will, following the Pre-Closing Merger and pursuant to the Redomiciliation,
convert automatically by operation of law, on a one-for-one basis, into ordinary shares, nominal value $0.001 per share, of Forafric
Global PLC (“Ordinary Shares”); (ii) our issued and outstanding redeemable warrants will automatically become redeemable
warrants to acquire Ordinary Shares and (iii) each of our issued and outstanding Units that has not been previously separated into the
underlying common stock and underlying warrant upon the request of the holder thereof, will be cancelled and will entitle the holder
thereof to one Ordinary Share and one redeemable warrant to acquire one Ordinary Share. No other changes will be made to the terms of
any issued and outstanding warrants as a result of the Pre-Closing Merger and Redomiciliation.
The
total consideration to be paid to the Seller in the Business Combination will be (i) 15,100,000 Ordinary Shares, subject to reduction
to the extent that the Closing Payment (as defined below) is less than $0, provided that the Seller may be issued up to 1,904,762 additional
Ordinary Shares determined based on the amount of Remaining Cash (as defined in the Business Combination Agreement) at the Closing; plus
(ii) an amount (the “Closing Payment”) equal to $20,000,000 minus the outstanding amount of all Funded Debt (as defined
in the Business Combination Agreement) as of the Closing (other than Permitted Debt); provided that Seller may receive up to an additional
$20,000,000 determined based on the amount of Remaining Cash (as defined in the Business Combination Agreement) at the Closing. The Closing
Payment shall be funded by remaining funds in the trust account after giving effect to any Buyer Share Redemptions (as defined in the
Business Combination Agreement) and the proceeds of any potential private placement financing.
In
addition to the foregoing consideration, the Seller shall be entitled to receive, as additional consideration, and without any action
on behalf of the Company or the Company’s stockholders, additional Ordinary Shares (the “Earnout Shares”), to be issued
as follows during the period from and after the Closing until the end of calendar year 2024 (A) 500,000 Earnout Shares, if, during calendar
year 2022, Adjusted EBITDA (as defined in the Business Combination Agreement) of Forafric Global PLC is equal to or greater than $27,000,000,
(B) 500,000 Earnout Shares, if, during calendar year 2023, Adjusted EBITDA o Forafric Global PLC is equal to or greater than $33,000,000,
and (C) 1,000,000 Earnout Shares, if, during calendar year 2024, the Buyer Trading Price (as defined in the Business Combination Agreement)
during the standard market trading hours of a trading day is greater than or equal to $16.50 for any 20 trading days within any period
of 30 consecutive trading days. The Seller will also be entitled to receive, as additional consideration, and without any action on behalf
of Forafric Global PLC or its stockholders, 20% of any cash proceeds received by Forafric Global PLC from the exercise of the outstanding
warrants.
Representations
and Warranties; Covenants; Indemnities
Under
the Business Combination Agreement, the parties to the agreement made customary representations and warranties for transactions of this
type. The representations and warranties made under the Business Combination Agreement generally will survive the Closing for a period
of 12 months while certain representations and warranties made under the Business Combination Agreement will survive for a period of
48 months. In addition, the parties to the Business Combination Agreement agreed to be bound by certain covenants as specified in the
Business Combination Agreement. The covenants made under the Business Combination generally will survive the Closing for a period of
12 months, subject to certain exceptions, including certain covenants and agreements that by their terms are to be performed in whole
or in part after the Closing and will survive until the end of the period of applicable performance or otherwise fully performed (or
waived). Under the Business Combination Agreement, from and after the Closing, the Seller will hold harmless and indemnify Forafric Global
PLC from and against any damages directly or indirectly suffered by Forafric Global PLC relating to (i) breaches of representations and
warranties of FAHL and the Seller, (ii) breaches of covenants, obligations and agreements of FAHL and the Seller, and (iii) any unpaid
indebtedness (other than Permitted Debt, as defined in the Business Combination Agreement) or transaction expenses of FAHL and the Seller.
Other than certain limited exceptions, such indemnification obligations are subject to a general cap of $20,000,000, a threshold value
of such aggregate claims of $500,000, and a minimum claim threshold of $50,000. At the Closing, 755,000 Ordinary Shares otherwise issuable
to the Seller will be placed in escrow in order to secure the Seller’s indemnification obligations under the Business Combination
Agreement. In addition, the Seller may also elect to satisfy such indemnification obligations by offsetting against any Earnout Shares,
forfeiting additional Ordinary Shares issued to the Seller at the Closing, or paying such indemnification obligations in cash.
Conditions
to Each Party’s Obligations
The
consummation of the Business Combination is subject to the satisfaction or waiver of certain customary closing conditions of the respective
parties, including: (a) the approval and adoption by the Company’s stockholders of the Business Combination Agreement and transactions
contemplated thereby; (b) the expiration or termination of any applicable waiting period under any applicable antitrust laws; (c) no
Material Adverse Effect (as defined in the Business Combination Agreement) shall have occurred that is continuing; (d) the Company having
at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Buyer Share Redemption (as
defined in the Business Combination Agreement) and any private placement financing; (e) the Redomiciliation shall have been completed;
(f) the memorandum of association and articles of association of the Company shall have been adopted and filed under the Companies Act
2014 of the Laws of Gibraltar and shall be in effect at the Closing; and (g) the Company’s Registration Statement (as described
below) shall have been declared effective under the Securities Act of 1933, as amended, no stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC that remains in effect, and no legal proceeding seeking such a stop order
shall have been initiated by the SEC that remains pending.
Termination
The
Business Combination Agreement may be terminated at any time prior to the Closing under certain circumstances, including, among others,
(i) by mutual written consent of us and the Seller, or (ii) by either us or the Seller if the Closing has not occurred on or before March
15, 2022 (or until June 15, 2022, if our board of directors has extended the period of time to consummate a business combination in accordance
with its organizational documents, or such later date as we and the Seller may mutually agree), provided that such right to terminate
is not available to us or the Seller if such party’s breach of the Business Combination Agreement has directly caused the failure
of, or has prevented, the consummation of the transactions contemplated by the Business Combination Agreement to occur by such date.
For
additional information regarding the Business Combination, see the Company’s Registration Statement on Form S-4 filed with the
SEC on January 12, 2022 (the “Registration Statement”) which contains a preliminary prospectus and proxy statement concerning
the Business Combination.
In
the event that the Company does not consummate the initial Business Combination with FAHL as described above, it will continue to search
for an appropriate target up until the Completion Window.
PIPE
Investment
In
connection with the Business Combination, on December 31, 2021, the Company entered into a subscription agreement (the “PIPE Subscription
Agreement”) with an accredited investor (the “PIPE Investor”) pursuant to which the PIPE Investor will purchase ordinary
shares of Forafric Global PLC in a private placement following the Redomiciliation and prior to the closing of the Business Combination.
Pursuant to the PIPE Subscription Agreement, the PIPE Investor will purchase, at a purchase price of $10.50 per share, that number of
ordinary shares of Forafric Global PLC (the “PIPE Shares”) equal to the lesser of (i) 4.99% of all issued and outstanding
ordinary shares, after taking into account the completion of the Business Combination and all ordinary shares issued pursuant to the
FAHL Bonds (defined below) and other related subscription agreements, if any, and (ii) 1,904,761 ordinary shares (the “PIPE Investment”).
The maximum aggregate amount to be paid by the PIPE Investor for the PIPE Shares is approximately $20 million. The purpose of the sale
of the PIPE Shares is to raise additional capital for use in connection with the Business Combination.
The
closing of the sale of the PIPE Shares (the “PIPE Closing”) will be contingent upon, and substantially concurrent with, the
closing of the Business Combination.
The
PIPE Subscription Agreement will terminate upon the earliest to occur of (i) such date and time as the Business Combination Agreement
is validly terminated in accordance with its terms without the Business Combination having been consummated, (ii) upon the mutual written
agreement of each of the parties to the PIPE Subscription Agreement and FAHL, (iii) Globis’ notification to the PIPE Investor in
writing that it has, with the prior written consent of FAHL, abandoned its plans to move forward with the Business Combination, (iv)
the End Date (as defined in the Business Combination Agreement), if the PIPE Closing has not occurred by such date, (v) at the election
of the PIPE Investor, on or after the date that is 180 days after the date of the PIPE Subscription Agreement if the PIPE Closing has
not occurred on or prior to such date, or (vi) if any of the conditions to the PIPE Closing are not satisfied or waived, or are not capable
of being satisfied, on or prior to the PIPE Closing, as a result thereof, the transactions contemplated by the PIPE Subscription Agreement
will not be and are not consummated at the PIPE Closing.
Pursuant
to the PIPE Subscription Agreement, we also granted the PIPE Investor certain registration rights and have agreed to file a registration
statement registering the resale of the PIPE Shares (the “PIPE Resale Registration Statement”) within 30 calendar days after
the consummation of the Business Combination and to use our commercially reasonable efforts to have the PIPE Resale Registration Statement
declared effective no later than the 60th calendar day following the PIPE Closing (or, in the case of an SEC review of the PIPE Resale
Registration Statement, the 120th calendar day following the PIPE Closing.
Convertible
Bonds Offering
In
connection with the Business Combination, between December 31, 2021 and January 3, 2022, affiliates (each a “Bond Investor”)
of the Sponsors, subscribed for convertible bonds of FAHL in the aggregate principal amount of $9.5 million (the “FAHL Bonds”)
and on January 19, 2022 an additional bond investment was made in the principal amount of $2.5 million, both in private offerings, and
issued pursuant to a Bond Subscription Deed (the “Bond Subscription Deed”), among FAHL, the Seller and the Bond Investors.
The FAHL Bonds are unsecured obligations of FAHL and are not transferable without the consent of FAHL. FAHL currently intends to use
the proceeds from the sale of the FAHL Bonds for general working capital and/or capital expenditure requirements.
Unless
earlier converted or redeemed in accordance with the terms of the FAHL Bonds, the FAHL Bonds will mature and be redeemed on June 15,
2026. Interest accrues on the FAHL Bonds at a rate of 6% per annum and the Bond Investors are entitled to certain customary information
rights.
Pursuant
to the current terms of the FAHL Bonds, upon consummation of the Business Combination, the FAHL Bonds will automatically convert into
ordinary shares of Forafric Global PLC at a price per share that is a 10% discount to the PIPE Investment, subject to certain adjustments.
The number of ordinary shares will be equal to the quotient that results from dividing the aggregate principal amount of the respective
FAHL Bond by $9.45, subject to certain adjustments.
Acquisition
Strategy
Our
acquisition strategy is to identify an untapped opportunity within our target industry and offer a public-ready business a facility through
which to enter the public markets, accessing capital markets and advancing its priorities. We believe that our management team and directors’
experiences in evaluating assets through investing and company building will enable us to source the highest quality targets. Through
our selection process we leverage the relationships of our management team with industry leaders, venture capitalists, private equity
and hedge fund managers, respected peers, and our network of investment banking executives, attorneys, and accountants. Together with
this network of trusted partners, we intend to capitalize the target business and create purposeful strategic initiatives in order to
achieve attractive growth and performance targets.
Investment
Criteria
We
focus on companies that are well positioned to benefit from economic globalization, particularly as it affects emerging markets. Consistent
with this strategy, we have identified the following criteria for evaluating potential target businesses. Although we may decide to enter
into our initial business combination with a target business that does not meet the criteria described below, it is our intention to
acquire companies that we believe:
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Are
sector leaders in their product category or have the potential to be dominant competitors in their sectors;
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Have
experienced management teams and corporate governance, reporting, and control systems ready to comply with the requirements of a
public listing;
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Have
technological or brand competitive advantage;
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Have
underexploited growth opportunities which our team is positioned to help them achieve; and
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Will
offer attractive return on investment for our shareholders.
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Effecting
Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial business until the closing of our initial business
combination. We intend to utilize cash derived from the proceeds of the Initial Public Offering and the Private Placement of private
warrants, our capital stock, debt or a combination of these in effecting our initial business combination. Although substantially all
of the net proceeds of our Initial Public Offering and the private placement of private warrants are intended to be applied generally
toward effecting a business combination, the proceeds are not otherwise being designated for any more specific purposes. Our initial
business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but
which desires to establish a public trading market for its shares. In the alternative, we may seek to consummate a business combination
with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous
business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to
effect only a single business combination.
Subject
to the limitations that a target business has a fair market value of at least 80% of the balance in the trust account (excluding any
taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business
combination, as described below in more detail, we have virtually unrestricted flexibility in identifying and selecting a prospective
acquisition candidate. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target
businesses. Accordingly, there is no basis for our public stockholders to evaluate the possible merits or risks of the target business
with which we may ultimately complete a business combination. To the extent we effect a business combination with a company or an entity
in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected
by numerous risks inherent in the business and operations of early stage or potential emerging growth companies. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or
assess all significant risk factors.
Sources
of Target Businesses
We
believe based on our management’s business knowledge and past experience that there are numerous business combination candidates.
We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial
community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through
calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read our prospectus and know what types of businesses we are targeting. Our officers and
directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through
their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or
conventions. We may engage professional firms or other individuals that specialize in business acquisitions or mergers in the future,
in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. In no event, however, will our insiders or any of the members of our management team 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). We have no present intention to enter into a
business combination with a target business that is affiliated with any of our officers, directors or insiders. However, we are not restricted
from entering into any such transactions and may do so if (1) such transaction is approved by a majority of our disinterested and independent
directors (if we have any at that time) and (2) we obtain an opinion from an independent investment banking firm that the business combination
is fair to our unaffiliated stockholders from a financial point of view.
Selection
of a Target Business and Structuring of Our Initial Business Combination
Subject
to our management team’s fiduciary duties and the limitation that one or more target businesses have an aggregate fair market value
of at least 80% of the value of the trust account (excluding any taxes payable on the income earned on the trust account) at the time
of the execution of a definitive agreement for our initial business combination, as described below in more detail, our management has
virtually unrestricted flexibility in identifying and selecting a prospective target business. Additionally, there is no limitation on
our ability to raise funds privately or through loans in connection with our initial business combination. We have not established any
specific attributes or criteria (financial or otherwise) for prospective target businesses.
Accordingly,
there is no basis for our public stockholders to evaluate the possible merits or risks of the target business with which we may ultimately
complete a business combination. To the extent we effect our initial business combination with a financially unstable company or an entity
in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected
by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies.
The valuation of a financially unstable company or early stage company can be more complicated than the calculation of a mature, stable
company, and any valuation we make on such a company would be based, in part, on its prospects and how successful we believe the business
will be once the company matures or is stabilized. Although our management will endeavor to evaluate the risks inherent in a particular
target business, we may not properly ascertain or assess all significant risk factors. In evaluating a prospective target business, our
management may consider a variety of factors, including one or more of the following:
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financial
condition and results of operation;
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growth
potential;
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brand
recognition and potential;
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return
on equity or invested capital;
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market
capitalization or enterprise value;
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experience
and skill of management and availability of additional personnel;
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capital
requirements;
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competitive
position;
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barriers
to entry;
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stage
of development of the products, processes or services;
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existing
distribution and potential for expansion;
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degree
of current or potential market acceptance of the products, processes or services;
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proprietary
aspects of products and the extent of intellectual property or other protection for products or formulas;
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impact
of regulation on the business;
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regulatory
environment of the industry;
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costs
associated with effecting the business combination;
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industry
leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and
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macro
competitive dynamics in the industry within which the company competes.
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These
criteria are not intended to be exhaustive. Our management may not consider any of the above criteria in evaluating a prospective target
business. The retention of our officers and directors following the completion of any business combination will not be a material consideration
in our evaluation of a prospective target business.
Any
evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as
well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective.
In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things,
meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available
to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, although
we have no current intention to engage any such third parties.
Any
costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is
not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair
Market Value of Target Business
Pursuant
to Nasdaq listing rules, our initial business combination must occur with one or more target businesses having an aggregate fair market
value equal to at least 80% of the value of the funds in the trust account (excluding any taxes payable on the income earned on the trust
account), which we refer to as the 80% test, at the time of the execution of a definitive agreement for our initial business combination,
although we may structure a business combination with one or more target businesses whose fair market value significantly exceeds 80%
of the trust account balance. If we are no longer listed on Nasdaq, we will not be required to satisfy the 80% test.
We
currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses.
We may, however, structure a business combination where we merge directly with the target business or where we acquire less than 100%
of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders
or for other reasons, but we will only complete such business combination if the post-transaction company owns 50% or more of the outstanding
voting securities of the target or otherwise owns a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares,
our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities
to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the
financial community (such as actual and potential sales, earnings, cash flow and/or book value). We are not required to obtain an opinion
from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance
of the trust account unless our board of directors cannot make such determination on its own. The board of directors, in light of its
fiduciary obligation to stockholders, would be required to determine whether it is capable of valuing the target company based on the
experience of its members in valuing companies and whether the board was actually able to reach a determination of value with respect
to the particular target company.
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 our initial 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 initial business combination, and
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result
in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited
number of products, processes or services.
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Limited
Ability to Evaluate the Target Business’ Management Team
Although
we intend to scrutinize the management team, including the management team of FAHL, of a prospective target business for, among other
things, their ability to manage a company with securities that are publicly traded, when evaluating the desirability of effecting our
initial business combination, our assessment of the target business’ management team may not prove to be correct. In addition,
the future management team may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the
future role of our officers and directors, if any, in the target business following our initial business combination remains to be determined.
While it is possible that some of our key personnel will remain associated in senior management or advisory positions with us following
our initial business combination, it is unlikely that they will devote their full time efforts to our affairs subsequent to our initial
business combination. Moreover, they would only be able to remain with the company after the consummation of our initial business combination
if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would
take place simultaneously with the negotiation of the business combination and could provide for them to receive compensation in the
form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination.
While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target
business, their ability to remain with the company after the consummation of 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. Additionally, our officers and directors
may not have significant experience or knowledge relating to the operations of the particular target business.
Following
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We may not have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination at
a meeting called for such purpose at which public stockholders may seek to convert their public shares, regardless of whether they vote
for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable) or (2) provide our public stockholders with the opportunity to sell their public shares to us by means
of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding
the foregoing, our initial stockholders and sponsors have agreed, pursuant to written letter agreements with us, not to convert any public
shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. If we determine to
engage in a tender offer, such tender offer will be structured so that each stockholder may tender any or all of his, her or its public
shares rather than some pro rata portion of his, her or its shares. The decision as to whether we will seek stockholder approval
of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us based on
a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek
stockholder approval. If we so choose and we are legally permitted to do so, we have the flexibility to avoid a stockholder vote and
allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender
offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other
information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval,
a majority of the issued and outstanding shares of common stock voted are voted in favor of the business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities
Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital
closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial
business combination, our net tangible asset threshold may limit our ability to consummate such initial business combination (as we may
be required to have a lesser number of shares converted or sold to us) and may force us to seek third party financing which may not be
available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we
may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may therefore have
to wait until March 15, 2022 (or until June 15, 2022 if we extend the period of time to consummate a business combination by the full
amount of time) in order to be able to receive a pro rata share of the trust account.
Our
initial stockholders, sponsors and our officers and directors have agreed (1) to vote any shares of common stock owned by them in favor
of any proposed business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve
a proposed initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial
business combination. In addition, Chardan Capital Markets, LLC has agreed (1) to vote its equity participation shares in favor of any
proposed business combination, (2) not to convert any of its equity participation shares in connection with a stockholder vote to approve
a proposed initial business combination and (3) not sell any of its equity participation shares in any tender in connection with a proposed
initial business combination. As a result, if we sought stockholder approval of a proposed transaction, we would need only a limited
number of public shares to be voted in favor of the transaction in order to have such transaction approved.
If
we hold a meeting to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention
to vote, against such proposed business combination, our officers, directors, initial stockholders or their affiliates could make such
purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers,
directors, initial stockholders and their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
Conversion/Tender
Rights
At
any meeting called to approve an initial business combination, public stockholders may seek to convert their public shares, regardless
of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then
on deposit in the trust account, less any taxes then due but not yet paid. Notwithstanding the foregoing, our initial stockholders and
sponsors have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro
rata share of the aggregate amount then on deposit in the trust account. In addition, Chardan Capital Markets, LLC has agreed (1)
to vote its equity participation shares in favor of any proposed business combination, (2) not to convert any of its equity participation
shares in connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any of its equity participation
shares in any tender in connection with a proposed initial business combination. If we hold a meeting to approve an initial business
combination, a holder will always have the ability to vote against a proposed business combination and not seek conversion of its shares.
Alternatively,
if we engage in a tender offer, each public stockholder will be provided the opportunity to sell its public shares to us in such tender
offer. The tender offer rules require us to hold the tender offer open for at least 20 business days. Accordingly, this is the minimum
amount of time we would need to provide holders to determine whether they want to sell their public shares to us in the tender offer
or remain an investor in our company.
Our
initial stockholders, officers and directors do not have conversion rights with respect to any shares of common stock owned by them,
directly or indirectly.
We
may also require public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender
their certificates (if any) to our transfer agent or to deliver their shares to the transfer agent electronically using Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, at any time at or prior to the vote on the
business combination. The proxy solicitation materials that we will furnish to stockholders in connection with the vote for any proposed
business combination will indicate whether we are requiring stockholders to satisfy such delivery requirements. Accordingly, a stockholder
would have from the time our proxy statement is mailed through the vote on the business combination to deliver his shares if he wishes
to seek to exercise his conversion rights. Under Delaware law and our bylaws, we are required to provide at least 10 days’ advance
notice of any stockholder meeting, which would be the minimum amount of time a stockholder would have to determine whether to exercise
conversion rights. As a result, if we require public stockholders who wish to convert their shares of common stock into the right to
receive a pro rata portion of the funds in the trust account to comply with the foregoing delivery requirements, holders may not
have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, public stockholders may not be able
to exercise their conversion rights and may be forced to retain our securities when they otherwise would not want to.
There
is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC
System. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this
cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise
conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such
delivery must be effectuated. However, in the event we require stockholders seeking to exercise conversion rights to deliver their shares
prior to the consummation of the proposed business combination and the proposed business combination is not consummated, this may result
in an increased cost to stockholders.
Any
request to convert or tender such shares once made, may be withdrawn at any time up to the vote on the proposed business combination
or expiration of the tender offer. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of their conversion or tender and subsequently decides prior to the vote on the business combination or the expiration of the tender
offer not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
conversion or tender rights would not be entitled to convert their shares for the applicable pro rata share of the trust account.
In such case, we will promptly return any shares delivered by public holders.
Ability
to Extend Time to Complete a Business Combination
We
currently have until March 15, 2022 to complete a business combination; provided, however, that if we anticipate we may not be able to
consummate a business combination by March 15, 2022, the Company, by resolution of the board of directors if requested by Globis SPAC
LLC, may extend the period of time to consummate a business combination by an additional three months up until June 15, 2022), subject
to the deposit of additional funds into the trust account by one or both of the sponsors or their affiliates or designees. Our public
stockholders will not be entitled to vote or redeem their shares in connection with any such extension. Pursuant to the terms of our
amended and restated certificate of incorporation, in order for the time available for us to consummate a business combination to be
extended, one or both of the sponsors or their affiliates or designees, upon five days’ advance notice prior to the applicable
deadline, must deposit into the trust account $1,000,000, or $1,150,000 if the underwriters’ over-allotment option is exercised
in full ($0.10 per unit in either case, up to an aggregate of $2,300,000), on or prior to the date of the applicable deadline, for each
three-month extension. Any such payments will be made in the form of a non-interest bearing loan and will be repaid, if at all, from
funds released to the Company upon completion of a business combination. On December 10, 2021, we drew down $1,150,000 under an unsecured
promissory note that was previously issued to Globis SPAC LLC, the Company’s initial public offering sponsor. The proceeds from
the draw down have been deposited into our trust account in order to extend the period of time the Company has to complete its initial
business combination from December 15, 2021 until March 15, 2022. The Company’s stockholders are not entitled to vote on or redeem
their shares in connection with such extension. The note does not bear interest and matures upon closing of a business combination by
the Company.
Automatic
Liquidation of Trust Account if No Business Combination
If
we do not complete a business combination by March 15, 2022 (or June 15, 2022 if we further extend the period of time to consummate a
business combination for by an additional three months, subject to the deposit of additional funds into the trust account as described
above), 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 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the
case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other
applicable law. At such time, the warrants will expire and holders of warrants will receive nothing upon a liquidation with respect to
such warrants, and the warrants will be worthless.
Under
the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent
of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders
upon the redemption of 100% of our outstanding public shares in the event we do not complete our initial business combination within
the required time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures
set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims
against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional 150-day waiting period before any redemptions are made
to stockholders, any liability of stockholders with respect to a redemption is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares
in the event we do not complete our initial business combination within the required time period is not considered a liquidation distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation
Law, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of
three years, as in the case of a liquidation distribution. It is our intention to redeem our public shares as soon as reasonably possible
following the 18th month from the closing of the Initial Public Offering and, therefore, we do not intend to comply with the
above procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation
Law requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending
claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company,
rather than an operating company, and our operations will be limited to seeking to complete an initial business combination, the only
likely claims to arise would be from vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
We
agreed to have any prospective target businesses and use our best efforts to have all third parties enter into valid and enforceable
agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account.
As
a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any
liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have
a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, there is no
guarantee that third parties, service providers and prospective target businesses will execute such agreements. In the event that a potential
contracted party was to refuse to execute such a waiver, we will execute an agreement with that entity only if our management first determines
that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another entity willing
to execute such a waiver. Examples of instances where we may engage a third party that refused to execute a waiver would be the engagement
of a third party consultant who cannot sign such an agreement due to regulatory restrictions, such as our auditors who are unable to
sign due to independence requirements, or whose particular expertise or skills are believed by management to be superior to those of
other consultants that would agree to execute a waiver or a situation in which management does not believe it would be able to find a
provider of required services willing to provide the waiver. There is also no guarantee that, even if they execute such agreements with
us, they will not seek recourse against the trust account. Our sponsors have agreed that they will be liable to us if and to the extent
any claims by third parties for services rendered or products sold to us, or a prospective target business with which we have discussed
entering into a transaction agreement, or any reductions in the value of the trust assets, reduce the amount of funds in the trust account
to below $10.20 per public share, except as to any claims by a third party who executed a valid and enforceable agreement with us waiving
any right, title, interest or claim of any kind they may have in or to any monies held in the trust account 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. However, our sponsors may not be able to satisfy their indemnification obligations, as we have not required our sponsors to retain
any assets to provide for their indemnification obligations, nor have we taken any further steps to ensure that our sponsors will be
able to satisfy any indemnification obligations that arise. Moreover, our sponsors will not be liable to our public stockholders and
instead will only have liability to us. As a result, if we liquidate, the per-share distribution from the trust account could be less
than approximately $10.20 due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion
to their respective equity interests, an aggregate sum equal to the amount then held in the trust account, inclusive of any interest
not previously released to us, subject to our obligations under Delaware law to provide for claims of creditors as described below.
If
we are unable to consummate an initial business combination and are forced to redeem 100% of our outstanding public shares for a portion
of the funds held in the trust account, we anticipate notifying the trustee of the trust account to begin liquidating such assets promptly
after such date and anticipate it will take no more than 10 business days to effectuate the redemption of our public shares. Our insiders
have waived their rights to participate in any redemption with respect to their founder shares. We will pay the costs of any subsequent
liquidation from our remaining assets outside of the trust account and from the interest income on the balance of the trust account (net
income and other tax obligations) that may be released to us to fund our working capital requirements. If such 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 release to us an additional amount of up to $100,000 of such
accrued interest to pay those costs and expenses. Each holder of public shares will receive a full pro rata portion of the amount then
in the trust account, plus any pro rata interest earned on the funds held in the trust account and not previously released to us or necessary
to pay our taxes. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference
to the claims of public stockholders.
Our
public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete our initial
business combination in the required time period or if the stockholders seek to have us convert their respective shares of common stock
upon a business combination which is actually completed by us. In no other circumstances shall a stockholder have any right or interest
of any kind to or in the trust account.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims
of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the
per share redemption or conversion amount received by public stockholders may be less than $10.20.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. 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 stockholders from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these
reasons.
Certificate
of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions that apply to us until the consummation
of our initial business combination. If we hold a stockholder vote to amend any provisions of our amended and restated certificate of
incorporation relating to stockholder’s rights or pre-business combination activity (including the substance or timing within which
we have to complete a business combination), we will provide our public stockholders with the opportunity to redeem their shares of common
stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise
and income taxes, divided by the number of then outstanding public shares, in connection with any such vote. Our insiders have agreed
to waive any conversion rights with respect to any founder shares, placement shares and any public shares they may hold in connection
with any vote to amend our certificate of incorporation. Specifically, our certificate of incorporation provides, among other things,
that:
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prior
to the consummation of our initial business combination, we shall either (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which public stockholders may seek to convert their shares of common stock, regardless of
whether they vote for or against the proposed business combination, into a portion of the aggregate amount then on deposit in the
trust account, or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the
trust account, in each case subject to the limitations described herein;
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we
will consummate our initial business combination only if public stockholders do not exercise conversion rights in an amount that
would cause our net tangible assets to be less than $5,000,001 and a majority of the outstanding shares of common stock voted are
voted in favor of the business combination;
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if
our initial business combination is not consummated within 12 months of the closing of the Initial Public Offering (or up to 18 months
from the closing of the Initial Public Offering if we extend the extend the period of time to consummate a business combination),
then our existence will terminate and we will distribute all amounts in the trust account to all of our public holders of shares
of common stock;
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upon
the consummation of the Initial Public Offering, $116,150,000 was placed into the trust account;
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we
may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar transaction prior to our initial business combination; and
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prior
to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to
(i) receive funds from the trust account or (ii) vote on any initial business combination.
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Potential
Revisions to Agreements with Insiders
Each
of our insiders has entered into letter agreements with us pursuant to which each of them has agreed to do certain things relating to
us and our activities prior to a business combination. We could seek to amend these letter agreements without the approval of stockholders,
although we have no intention to do so. In particular:
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Restrictions
relating to liquidating the trust account if we failed to consummate a business combination in the time-frames specified above could
be amended, but only if we allowed all stockholders to redeem their shares in connection with such amendment;
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Restrictions
relating to our insiders being required to vote in favor of a business combination or against any amendments to our organizational
documents could be amended to allow our insiders to vote on a transaction as they wished;
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The
requirement of members of the management team to remain our officer or director until the closing of a business combination could
be amended to allow persons to resign from their positions with us if, for example, the current management team was having difficulty
locating a target business and another management team had a potential target business;
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The
restrictions on transfer of our securities could be amended to allow transfer to third parties who were not members of our original
management team;
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The
obligation of our management team to not propose amendments to our organizational documents could be amended to allow them to propose
such changes to our stockholders;
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The
obligation of insiders to not receive any compensation in connection with a business combination could be modified in order to allow
them to receive such compensation; and
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The
requirement to obtain a valuation for any target business affiliated with our insiders, in the event it was too expensive to do so.
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Except
as specified above, stockholders would not be required to be given the opportunity to redeem their shares in connection with such changes.
Such changes could result in:
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Our
insiders being able to vote against a business combination or in favor of changes to our organizational documents;
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Our
operations being controlled by a new management team that our stockholders did not elect to invest with;
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Our
insiders receiving compensation in connection with a business combination; and
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Our
insiders closing a transaction with one of their affiliates without receiving an independent valuation of such business.
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We
will not agree to any such changes unless we believed that such changes were in the best interests of our stockholders (for example,
if we believed such a modification were necessary to complete a business combination). Each of our officers and directors have fiduciary
obligations to us requiring that they act in our best interests and the best interests of our stockholders.
Competition
If
we succeed in effecting the Business Combination with FAHL, there will likely be significant competition from FAHL’s competitors.
We cannot assure you that, subsequent to the Business Combination, Forafric Global PLC (“New Forafric”) will have the resources
or ability to compete effectively. In the event that the Business Combination is not consummated, in identifying, evaluating and selecting
a target business for our initial business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, venture capital firms, private equity groups and leveraged buyout funds, and
operating businesses seeking strategic acquisitions. Many of these entities are well established and have significant experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources,
which could be reduced further because of our obligation to convert shares held by our public stockholders as well as any tender offer
we conduct. Our management team is not experienced in pursuing business combinations on behalf of blank check companies. Other blank
check companies may be sponsored and managed by individuals with prior experience in completing business combinations between blank check
companies and target businesses. Our managements’ lack of experience may not be viewed favorably by target businesses. These inherent
limitations give others an advantage in pursuing the acquisition of a target business. Furthermore, the requirement that we acquire a
target business or businesses having a fair market value equal to at least 80% of the value of the trust account (excluding any taxes
payable) at the time of the agreement to enter into the business combination, our obligation to pay cash in connection with our public
stockholders who exercise their redemption rights and the number of our outstanding warrants and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive disadvantage
in successfully negotiating our initial business combination.
Employees
We
have one executive officer, Paul Packer, who serves as our chief executive officer and chief financial officer. Mr. Packer is not obligated
to devote any specific number of hours to our matters and intends to devote only as much time as he deems necessary to our affairs. We
do not intend to have any full-time employees prior to the consummation of a business combination.
Periodic
Reporting and Audited Financial Statements
We
have registered our units, common stock 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
report will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of any proxy solicitation materials
or tender offer documents sent to stockholders to assist them in assessing the target business. These financial statements will need
to be prepared in accordance with or reconciled to United States GAAP or IFRS as issued by the IASB. A particular target business identified
by us as a potential business combination candidate may not have the necessary financial statements. To the extent that this requirement
cannot be met, we may not be able to consummate our initial business combination with the proposed target business.
We
may be required by the Sarbanes-Oxley Act to have our internal control over financial reporting audited for the fiscal year ending December
31, 2021. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of their internal
control over financial reporting. The development of the internal control over financial reporting of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such initial business combination.
We
are an emerging growth company as defined in the JOBS Act. However, if our non-convertible debt issued within a three-year period exceeds
$1.0 billion or our total revenues exceed $1.07 billion or the market value of our shares of common stock that are held by non-affiliates
exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company
as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage
of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter.
ITEM
1A. RISK FACTORS.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report on Form 10-K. If any of the following events occur, our business, financial
condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline,
and you could lose all or part of your investment.
For
additional risks relating to the Business Combination and FAHL, see the “Risk Factors” section contained in the Company’s
Registration Statement on Form S-4 filed with the SEC on January 12, 2022.
RISKS
RELATING TO OUR SEARCH FOR, CONSUMMATION OF, OR INABILITY TO CONSUMMATE, A BUSINESS COMBINATION AND POST-BUSINESS COMBINATION RISKS
We
are an early stage company with no operating history and, accordingly, you have no basis on which to evaluate our ability to achieve
our business objective.
We
are an early stage company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective, which is to complete our initial business combination with one or more target businesses.
If we fail to complete our business combination, we will never generate any operating revenues.
If
we are unable to consummate our initial business combination, our public stockholders may be forced to wait until March 15, 2022 (or
until June 15, 2022 if we extend the period of time to consummate a business combination by the full amount of time) before receiving
distributions from the trust account.
We
have until March 15, 2022 to consummate our initial business combination (or until June 15, 2022 if we extend the period of time to consummate
a business combination by the full amount of time). We may not be able to find a suitable target business and consummate our initial
business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by
general market conditions, volatility in the capital and debt markets and the other risks described herein. Additionally, the outbreak
of the COVID-19 coronavirus pandemic may negatively impact businesses we may seek to acquire. Similarly, the outbreak of this pandemic,
the measures being taken to counter it, and volatility in valuations in the financial markets that are resulting from the imposition
of such measures and the pending health crisis, may make it harder for us to find a suitable target business and consummate our initial
business combination. We have no obligation to return funds to investors prior to such date unless we consummate our initial business
combination prior thereto or we seek to amend out amended and restated certificate of incorporation prior to the consummation of our
initial business combination and only then in cases where investors have sought to convert their shares. Only after the expiration of
this full time period will holders of our common stock be entitled to distributions from the trust account if we are unable to complete
our initial business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate
an investment, public security holders may be forced to sell their public shares or warrants, potentially at a loss.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the ongoing COVID-19 coronavirus pandemic and the status of debt and equity markets.
The
COVID-19 pandemic could materially and adversely affect the business of any potential target business with which we consummate a business
combination. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel,
limit the ability to have meetings with potential investors, if the target company’s personnel, vendors and service providers are
unavailable to negotiate and consummate a transaction in a timely manner, or if COVID-19 causes a prolonged economic downturn. 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 business combination may be dependent on the ability to raise equity and debt financing which may
be impacted by COVID-19 and other events.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination.
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders
may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our public stockholders with
the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount
equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject
to certain limitations described in our this report. Accordingly, it is possible that we will consummate our initial business combination
even if holders of a majority of our public shares do not approve of the business combination. The decision as to whether we will seek
stockholder approval of a proposed business combination or will allow stockholders 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 stockholder approval. For instance, Nasdaq rules currently allow us to
engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder 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 stockholder
approval of such business combination instead of conducting a tender offer.
Our
sponsors have the right to extend the term we have to consummate our initial business combination, without providing our stockholders
with redemption rights.
We
currently have until March 15, 2022 to consummate our initial business combination. However, if we anticipate that we may not be able
to consummate our initial business combination by March 15, 2022, we may, by resolution of our board of directors if requested by Globis
SPAC LLC, extend the period of time to consummate a business combination by an additional three months (until June 15, 2022), subject
to the deposit of additional funds into the trust account by our sponsors or their affiliates or designees. Our stockholders will not
be entitled to vote or redeem their shares in connection with any such extension. In order for the time available for us to consummate
our initial business combination to be extended, our sponsors or their affiliates or designees must deposit into the trust account $1,150,000
($0.10 per unit), or $0.10 per unit, on or prior to the date of the applicable deadline.
Any
such payments would be made in the form of a non-interest bearing loan and would be repaid, if at all, from funds released to us upon
completion of our initial business combination. The obligation to repay any such loans may reduce the amount available to us to pay as
purchase price in our initial business combination, and/or may reduce the amount of funds available to the combined company following
the initial business combination. This feature is different than the traditional special purpose acquisition company structure, in which
any extension of the company’s period to complete a business combination requires a vote of the company’s stockholders and
stockholders have the right to redeem their public shares in connection with such vote, and which do not provide the sponsor with the
right to loan funds to the company to fund extension payments.
Our
sponsors may decide not to extend the term we have to consummate our initial business combination, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, and the rights and warrants will be worthless.
We
currently have until March 15, 2022 to consummate our initial business combination. However, as described above, if we anticipate that
we may not be able to consummate our initial business combination by March 15, 2022, we may, by resolution of our board of directors
if requested by Globis SPAC LLC, extend the period of time to consummate a business combination by an additional three months (until
June 15, 2022), subject to the deposit of additional funds into the trust account by our sponsors or their affiliates or designees as
set out above. Our sponsors are not obligated to fund the trust account to extend the time for us to complete our initial business combination.
If we are unable to consummate our initial business combination within the applicable time period, we will, as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the funds held in the trust
account and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. In such event, the rights and warrants will be worthless.
Our
investors are not entitled to protections normally afforded to investors of blank check companies.
We
are a “blank check” company under the United States securities laws. However, since we had net tangible assets in excess
of $5,000,001 upon consummation of the Initial Public Offering and have 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 of blank check companies such as
Rule 419. Accordingly, investors are not afforded the benefits or protections of those rules which would, for example, completely restrict
the transferability of our securities, require us to complete our initial business combination within 18 months of the closing of the
Initial Public Offering and restrict the use of interest earned on the funds held in the trust account. Because we are not subject to
Rule 419, our units are immediately tradable, we will be entitled to withdraw amounts from the funds held in the trust account prior
to the completion of our initial business combination and we may have a longer period of time to complete such a business combination
than we would if we were subject to such rule.
If
we determine to amend certain agreements made by our management team, many of the disclosures contained in this report regarding those
agreements would no longer apply.
We
could seek to amend certain agreements with our management team disclosed in this report without the approval of our stockholders, although
we have no current intention to do so. For example, restrictions on our executives relating to the voting of securities owned by them,
the obligation of our management team to not propose certain changes to our organizational documents or the obligation of the management
team and its affiliates to not receive any compensation in connection with a business combination could be modified without obtaining
stockholder approval. Although stockholders would not be given the opportunity to redeem their shares in connection with such changes,
in no event would we be able to modify the redemption or liquidation rights of our stockholders without permitting our stockholders the
right to redeem their shares in connection with any such change. We will not agree to any such changes unless we believed that such changes
were in the best interests of our stockholders (for example, if such a modification were necessary to complete a business combination).
If
the funds held outside of the trust account are insufficient to allow us to operate for the 12 months (or up to 18 months) following
our Initial Public Offering, it could limit the amount available to fund our search for target businesses, to pay our tax obligations
and to complete our initial business combination.
The
funds available to us outside of the trust account to fund our working capital requirements may not be sufficient to allow us to operate
for at least the next 18 months, assuming that our initial business combination is not completed during that time. We believe that the
funds available to us outside of the trust account, together with funds available from loans from our sponsors will be sufficient to
allow us to operate for at least the 12 months (or up to 18 months) following our Initial Public Offering; however, we cannot assure
you that our estimates are accurate. If our expenses exceed our estimates, we will not have sufficient funds outside the trust account
to cover our estimated expenses. In such event we would need to borrow additional funds from our sponsors or from third parties to continue
to operate. Our initial stockholders, officers and directors or their affiliates or our sponsors may, but other than pursuant to the
January 2021 Loan (as defined below) are not obligated to, loan us funds as may be required. Such loans, including the January 2021 Loan,
would be evidenced by promissory notes that would either be paid upon consummation of our initial business combination, or, at such lender’s
discretion, the notes may be converted upon consummation of our business combination into private warrants at a price of $0.75 per warrant.
However, other than pursuant to the January 2021 Loan, our initial stockholders, officers and directors or their affiliates or our sponsors
are under no obligation to loan us any funds. If we are unable to obtain the necessary funds, we may be forced to cease searching for
a target business and liquidate without completing our initial business combination.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption price received
by stockholders may be less than approximately $10.20.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we agreed to have any prospective
target businesses we negotiate with execute agreements with us and use our best efforts to have all third parties and service providers
we engage and 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 stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they
may seek recourse against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly,
the proceeds held in trust could be subject to claims which could take priority over those of our public stockholders. If we liquidate
the trust account before the completion of a business combination, our sponsors have agreed that they will be liable to ensure that the
proceeds in the trust account are not reduced by the claims of target businesses or claims of third parties or other entities that are
owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However,
our sponsors may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation
may be less than $10.20, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise
enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least $10.20
per share.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
If
we have not completed our initial business combination by March 15, 2022 (or June 15, 2022 if we extend the period of time to consummate
a business combination), 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 100% of the outstanding public shares for a pro rata portion of the funds held
in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses) which redemption will completely
extinguish public stockholders’ rights as stockholders (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
holders of common stock and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims
that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution.
Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board
of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors
and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. 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 stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
The
requirement that a target business has a fair market value of at least 80% of the balance in the trust account (excluding any taxes payable
on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination
may limit the type and number of companies that we may complete such a business combination with.
Pursuant
to the Nasdaq listing rules, our initial business combination must occur with one or more target businesses having an aggregate fair
market value equal to at least 80% of the value of the trust account (excluding any taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and
number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that
satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of
the funds in the trust account. If we are no longer listed on Nasdaq, we will not be required to satisfy the 80% test.
We
may only be able to complete one business combination with the proceeds of our Initial Public Offering, which will cause us to be solely
dependent on a single business which may have a limited number of products or services.
It
is likely we will consummate our initial business combination with a single target business, although we have the ability to simultaneously
consummate our initial business combination with several target businesses. By consummating a business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not
be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly,
the prospects for our success may be:
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solely
dependent upon the performance of a single business, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
Alternatively,
if we determine to simultaneously consummate our initial business combination with several businesses and such businesses are owned by
different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous
closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business
combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect
to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated
with the subsequent assimilation of the operations and services or products of the target 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.
Purchases
of shares of common stock in the open market or in privately negotiated transactions by our sponsors, founder, directors, officers, advisors
or their affiliates may make it difficult for us to maintain the listing of our shares on a national securities exchange following the
consummation of an initial business combination.
If
our sponsors, founder, directors, officers, advisors or their affiliates purchase shares of common stock in the open market or in privately
negotiated transactions, the public “float” of our shares of common stock and the number of beneficial holders of our securities
would both be reduced, possibly making it difficult to maintain the listing or trading of our securities on a national securities exchange
following consummation of the business combination.
The
ability of our public stockholders 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 our initial business combination with a target.
We
may enter into a 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 stockholders exercise their redemption rights, we may not be able to meet such closing
condition, and as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly submitted
redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing
condition as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our initial
business combination transaction with us.
We
may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing,
in which case public stockholders may have to remain stockholders of our company and wait until our redemption of the public shares to
receive a pro rata share of the trust account or attempt to sell their shares in the open market.
A
potential target may make it a closing condition to our initial business combination that we have a certain amount of cash in excess
of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing.
If the number of our public stockholders electing to exercise their conversion rights has the effect of reducing the amount of money
available to us to consummate an initial business combination below such minimum amount required by the target business and we are not
able to locate an alternative source of funding, we will not be able to consummate such initial business combination and we may not be
able to locate another suitable target within the applicable time period, if at all. In that case, public stockholders may have to remain
stockholders of our company and wait until March 15, 2022 (or until June 15, 2022 if we extend the period of time to consummate a business
combination) in order to be able to receive a portion of the trust account, or attempt to sell their shares in the open market prior
to such time, in which case they may receive less than they would have in a liquidation of the trust account.
Because
of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We
encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture
capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors
possess greater technical, human and other resources than we do, and our financial resources are relatively limited when contrasted with
those of many of these competitors. Therefore, our ability to compete in consummating our initial business combination with certain sizable
target businesses is limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing a business combination with certain target businesses. Furthermore, seeking stockholder approval of our initial business combination
may delay the consummation of a transaction. Additionally, our outstanding warrants and the future dilution they represent (entitling
the holders to receive shares of our common stock on close of the business combination), may not be viewed favorably by certain target
businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial business combination.
Our
ability to consummate an attractive business combination may be impacted by the market for initial public offerings.
Our
efforts to identify a prospective target business will not be limited to any particular industry or geographic region. If the market
for initial public offerings is limited, we believe there will be a greater number of attractive target businesses open to consummating
an initial business combination with us as a means to achieve publicly held status. Alternatively, if the market for initial public offerings
is robust, we believe that there will be fewer attractive target businesses amenable to consummating an initial business combination
with us to become a public reporting company. Accordingly, during periods with strong public offering markets, it may be more difficult
for us to complete an initial business combination.
We
may be unable to obtain additional financing, if required, to complete our initial business combination or to fund the operations and
growth of the target business, which could compel us to restructure or abandon a particular business combination.
If
the net proceeds of the Initial Public Offering prove to be insufficient, either because of the size of the business combination, the
depletion of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number of
shares of common stock, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if
at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection
with or after our initial business combination.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first
fiscal year end following our listing on Nasdaq. Under Section 211(b) of the Delaware General Corporation Law, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is
made by written consent in lieu of such a meeting. It is unlikely that there will be an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the Delaware
General Corporation Law, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to
the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware
Court of Chancery in accordance with Section 211(c) of the Delaware General Corporation Law.
We
have entered and may in the future enter into agreements with consultants or financial advisers that provide for the payment of fees
upon the consummation of our initial business combination, and, therefore, such consultants or financial advisers may have conflicts
of interest.
We
have entered and may in the future enter into agreements with consultants or financial advisers that provide for the payment of fees
upon the consummation of our initial business combination. If we pay consultants or financial advisers fees that are tied to the consummation
of our initial business combination, they may have conflicts of interest when providing services to us, and their interests in such fees
may influence their advice with respect to a potential business combination. For example, if a consultant’s or financial advisor’s
fee is based on the size of the transaction, then they may be influenced to present us larger transactions that may have lower growth
opportunities or long-term value versus smaller transactions that may have greater growth opportunities or provide greater value to our
stockholders. Similarly, consultants whose fees are based on consummation of a business combination may be influenced to present potential
business combinations to us regardless of whether they provide longer-term value for our stockholders. While we will endeavor to structure
agreements with consultants and financial advisors to minimize the possibility and extent of these conflicts of interest, we cannot assure
you that we will be able to do so and that we will not be impacted by the adverse influences they create.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may
be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities,
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each
of which may make it difficult for us to complete our business combination.
In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete
a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses
or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive
investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held
in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these
instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. Our shares are not intended for persons who are seeking a return on investments in
government securities or investment securities. The trust account is intended as a holding place for funds pending the earlier to occur
of either: (i) the completion of our primary business objective, which is a business combination; or (ii) absent a business combination,
our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do
not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have
not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our public warrants
will expire worthless.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating our initial business combination.
We
have until March 15, 2022 (or until June 15, 2022 if we extend the period of time to consummate a business combination by the full amount
of time) to complete our initial business combination. Any potential target business with which we enter into negotiations concerning
a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable
to complete a business combination with any other target business. This risk will increase as we get closer to the time limit referenced
above.
We
may not obtain a fairness opinion with respect to the target business that we seek to consummate our initial business combination with
and therefore you may be relying solely on the judgment of our board of directors in approving a proposed business combination.
We
will only be required to obtain a fairness opinion with respect to the target business that we seek to consummate our initial business
combination with if it is an entity that is affiliated with any of our insiders, officers or directors. In all other instances, we will
have no obligation to obtain an opinion. If no opinion is obtained, our stockholders will be relying on the judgment of our board of
directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used
will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.20 per share on the liquidation of our trust account and our public warrants will expire worthless.
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 complete
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 stockholders may receive only approximately $10.20
per share on the liquidation of our trust account and our public warrants will expire worthless.
Compliance
with the Sarbanes-Oxley Act of 2002 requires substantial financial and management resources and may increase the time and costs of completing
an initial business combination.
Section
404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal control
and may require that we have such system of internal control audited. If we fail to maintain the adequacy of our internal control, we
could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable
financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public
accounting firm report on management’s evaluation of our system of internal control, although as an “emerging growth company”
as defined in the JOBS Act, we may take advantage of an exemption to this requirement. A target company may not be in compliance with
the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal control. 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 initial
business combination.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop
and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
We
have identified a material weakness in our internal control over financial reporting related to the Company’s accounting and reporting
of complex financial instruments, including application of ASC 480-10-S99-3A to its accounting classification of public shares. As a
result of this material weakness, our management has concluded that our disclosure controls and procedures were not effective as of December
31, 2020. We have taken a number of measures to remediate such material weaknesses, however, if we are unable to remediate our material
weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information
in a timely and reliable manner and we may incorrectly report financial information. 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 securities are listed, the SEC
or other regulatory authorities. The existence of material weaknesses in internal control over financial reporting could adversely affect
our reputation or investor perceptions of us, which could have a negative effect on the trading price of our 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. 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
are an “emerging growth company” and a smaller reporting company and we cannot be certain if the reduced disclosure requirements
applicable to emerging growth companies or smaller reporting companies will make our securities less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for
up to five years following our Initial Public Offering. However, if our non-convertible debt issued within a three-year period exceeds
$1.0 billion or revenues exceeds $1.07 billion, or the market value of our shares of common stock that are held by non-affiliates exceeds
$700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as
of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements
of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay
the adoption of new or revised accounting standards that have different effective dates for public and private companies until those
standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with public company
effective dates. We cannot predict if investors will find our shares less attractive because we may rely on these provisions. If some
investors find our shares less attractive as a result, there may be a less active trading market for our shares and our share price may
be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are
required to adopt the new or revised standard. This may make comparison of our financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accountant standards used.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of that fiscal year’s second fiscal quarter, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as
of the end of that fiscal year’s second fiscal quarter. 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.
Provisions
in our certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might
be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions
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.
Because
we must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting
principles or international financial reporting standards, 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. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or
GAAP, or international financial reporting standards, or IFRS as issued by the International Accounting Standards Board, or the IASB,
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. We will include the same financial statement disclosure in
connection with any tender offer documents we use, whether or not they are required under the tender offer rules. These financial statement
requirements may limit the pool of potential target businesses we may consummate our initial business combination with 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.
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 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.
RISKS
RELATING TO OUR CO-SPONSORS AND MANAGEMENT TEAM
Our
insiders, officers and directors control a substantial interest in us and thus may influence certain actions requiring a stockholder
vote.
Our
insiders, officers and directors collectively beneficially own approximately 19% of our issued and outstanding shares of common stock,
and Chardan Capital Markets, LLC beneficially owns approximately 3% of our issued and outstanding shares of our common stock. In addition,
our insiders, officers, directors or their affiliates could determine in the future to make such purchases in the open market or in private
transactions, to the extent permitted by law, in order to influence the vote. In connection with any vote for a proposed business combination,
our insiders, officers and directors have agreed to vote the shares of common stock owned by them immediately before the Initial Public
Offering as well as any shares of common stock acquired in the Initial Public Offering or in the aftermarket in favor of such proposed
business combination, and therefore will have a significant influence on the vote.
If
we seek stockholder approval of our business combination, our sponsors, founder, directors, officers, advisors and their affiliates may
elect to purchase shares from stockholders, in which case they may influence a vote in favor of a proposed business combination that
you do not support.
If
we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsors, founder, directors, officers, advisors or their affiliates may purchase shares in privately
negotiated transactions either prior to or following the consummation of our initial business combination. Such purchases will not be
made if our sponsors, founder, directors, officers, advisors or their affiliates are in possession of any material non-public information
that has not been disclosed to the selling stockholder. Such a purchase would include a contractual acknowledgement that such stockholder,
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 sponsors, founder, directors, officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be
required to revoke their prior elections to redeem their shares. It is intended that, if Rule 10b-18 would apply to purchases by our
sponsors, founder, directors, officers, advisors or their affiliates, then such purchases will comply with Rule 10b-18 under the Exchange
Act, to the extent it applies, which provides a safe harbor for purchases made under certain conditions, including with respect to timing,
pricing and volume of purchases.
The
purpose of such purchases would be to (1) increase the likelihood of obtaining stockholder approval of the business combination or (2)
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 an initial business combination that may not otherwise have been possible.
Our
board of directors is divided into three classes and, therefore, our insiders will continue to exert control over us until the closing
of a business combination.
Our
board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior
to the consummation of our initial business combination, in which case all of the current directors will continue in office until at
least the consummation of the business combination. If there is an annual meeting, as a consequence of our “staggered” board
of directors, fewer than half of the board of directors will be considered for election and our insiders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our insiders will continue to exert control at least until
the consummation of our initial business combination.
Reimbursement
of out-of-pocket expenses incurred by our insiders, officers, directors or any of their affiliates in connection with certain activities
on our behalf, such as identifying and investigating possible business targets and business combinations, could reduce the funds available
to us to consummate a business combination. In addition, an indemnification claim by one or more of our officers and directors in the
event that any of them are sued in their capacity as an officer or director could also reduce the funds available to us outside of the
trust account.
We
may reimburse our insiders, officers, directors or any of their affiliates for out-of-pocket expenses incurred in connection with certain
activities on our behalf, such as identifying and investigating possible business targets and business combinations. There is no limit
on the amount of out-of-pocket expenses reimbursable by us; provided, that, to the extent such expenses exceed the available proceeds
not deposited in the trust, such expenses would not be reimbursed by us unless we consummate an initial business combination. In addition,
pursuant to our certificate of incorporation and Delaware law, we may be required to indemnify our officers and directors in the event
that any of them are sued in their capacity as an officer or director. We have entered into agreements with our officers and directors
to provide contractual indemnification in addition to the indemnification provided for in our certificate of incorporation and under
Delaware law. In the event that we reimburse our insiders, officers, directors or any of their affiliates for out-of-pocket expenses
prior to the consummation of a business combination or are required to indemnify any of our officers or directors pursuant to our certificate
of incorporation, Delaware law, or the indemnity agreements that we have entered into with them, we would use funds available to us outside
of the trust account. Any reduction in the funds available to us could have a material adverse effect on our ability to locate and investigate
prospective target businesses and to structure, negotiate, conduct due diligence in connection with or consummate our initial business
combination.
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 such that the post-transaction company owns less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we
will only complete such business combination if the post-transaction company owns 50% or more of the outstanding voting securities of
the target or otherwise owns a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders
prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger
share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not
be able to maintain our control of the target business.
Our
ability to successfully effect 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. While we intend to closely scrutinize any
individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. We believe that our
success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. None
of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest
in allocating management time among various business activities, including identifying potential business combinations and monitoring
the related due diligence. If our officers’ and directors’ other business affairs require them to devote more substantial
amounts of time to their other business activities, it could limit their ability to devote time to our affairs and could have a negative
impact on our ability to consummate our initial business combination. In addition, we do not have employment agreements with, or key-man
insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect
on us.
The
role of our key personnel after our initial business combination, however, remains to be determined. Although some of our key personnel
may serve in senior management or advisory positions following our initial business combination, it is likely that most, if not all,
of the management of the target business will remain in place. These individuals may be unfamiliar with the requirements of operating
a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This
could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effectuate 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’ 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.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to consummate our initial business combination with.
We
may consummate a business combination with a target business in any geographic location or industry we choose. Our officers and directors
may not have enough experience or sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed
decision regarding our initial business combination.
Our
management team is not experienced in pursuing business combinations on behalf of blank check companies.
Other
blank check companies may be sponsored and managed by individuals with prior experience in completing business combinations between blank
check companies and target businesses. Our managements’ lack of experience may not be viewed favorably by target businesses.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following our 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 completion of our business combination only if they are able to negotiate
employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with
the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business.
Our
insiders, officers, directors and their affiliates may be owed reimbursement for out-of-pocket expenses which may cause them to have
conflicts of interest in determining whether a particular business combination is most advantageous.
Our
insiders, officers, directors and their affiliates may incur out-of-pocket expenses in connection with certain activities on our behalf,
such as identifying and investigating possible business targets and combinations. We have no policy that would prohibit these individuals
and their affiliates from negotiating the reimbursement of such expenses by a target business. As a result, the personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business.
Members
of our management team may have affiliations with entities engaged in business activities similar to those intended to be conducted by
us and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Members
of our management team may have affiliations with companies, including companies that are engaged in business activities similar to those
intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition
with our consummation of our initial business combination. As a result, a potential target business may be presented by our management
team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such
target business.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our executive officers, directors or insiders, which may raise potential conflicts of interest.
In
light of the involvement of our insiders, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our insiders, officers and directors. Our directors also serve as officers and board members for other entities. Our
insiders, officers, 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, such transaction
was approved by a majority of our disinterested and independent directors (if we have any at that time), and we obtain an opinion from
an independent investment banking firm that the business combination is fair to our unaffiliated stockholders from a financial point
of view. Despite our agreement to obtain an opinion from an independent investment banking 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 insiders, 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 stockholders as they would be absent any conflicts of interest.
The
shares beneficially owned by our insiders, officers and directors will not participate in a redemption and, therefore, our insiders,
officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial
business combination.
Our
insiders have waived their right to convert their founder shares and placement shares in connection with a business combination and their
redemption rights with respect to their founder shares and placement shares if we are unable to consummate our initial business combination.
Accordingly, these securities will be worthless if we do not consummate our initial business combination. The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing
a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target
business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination
are appropriate and in our stockholders’ best interest.
If
we are unable to consummate a business combination, any loans made by our insiders, officers, directors or their affiliates would not
be repaid, resulting in a potential conflict of interest in determining whether a potential transaction is in our stockholders’
best interest.
In
order to meet our working capital needs following the consummation of the Initial Public Offering, our initial stockholders, officers
and directors or their affiliates or our sponsors may, but other than the January 2021 Loan are not obligated to, loan us funds, from
time to time or at any time, in whatever amount they deem reasonable in their sole discretion. The loans would be non-interest bearing
and would be payable at the consummation of a business combination. If we fail to consummate a business combination within the required
time period, the loans would not be repaid. Consequently, our directors and officers may have a conflict of interest in determining whether
the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest.
RISKS
RELATING TO OUR SECURITIES
We
may issue shares of our capital stock to complete our initial business combination, which would reduce the equity interest of our stockholders
and likely cause a change in control of our ownership.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001
per share, and up to 1,000,000 shares of preferred stock, par value $0.0001 per share. We may issue a substantial number of additional
shares of common stock or shares of preferred stock, or a combination of common stock and preferred stock, to complete our initial business
combination. The issuance of additional shares of common stock or preferred stock:
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significantly reduce the equity interest of our investors;
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subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded
to our shares of common stock;
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may
cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; and
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adversely affect prevailing market prices for our shares of common stock.
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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 stockholders’ investment in us.
We
issued an unsecured promissory note (the “Note”) to Globis SPAC LLC, or its assigns or successors in interest, providing
for borrowings from time to time of up to an aggregate of $7,000,000 (such facility, the “January 2021 Loan”). The Note bears
no interest and is due and payable upon the date on which we consummate our initial business combination. As of December 31, 2021, the
Company has drawn an aggregate of $2,600,000 under the Note. We may choose to incur substantial additional debt to complete our business
combination. However, the incurrence of debt could have a variety of negative effects, including:
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and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt
obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding; and
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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Holders
of warrants will not have redemption rights.
If
we are unable to complete an initial business combination within the required time period and we redeem the funds held in the trust account,
our warrants will expire and holders will not receive any of the amounts held in the trust account in exchange for such warrants.
We
have no obligation to net cash settle the warrants.
In
no event will we have any obligation to net cash settle the warrants. Accordingly, the warrants may expire worthless.
If
we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the redeemable
warrants, public holders will only be able to exercise such redeemable warrants on a “cashless basis” which would result
in a fewer number of shares being issued to the holder had such holder exercised the redeemable warrants for cash.
Except
as set forth below, if we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise
of the warrants at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless
basis,” provided that an exemption from registration is available. As a result, the number of the shares of common stock that a
holder will receive upon exercise of its warrants will be fewer than it would have been had such holder exercised its warrant for cash.
Further, if an exemption from registration is not available, holders would not be able to exercise their warrants on a cashless basis
and would only be able to exercise their warrants for cash if a current and effective prospectus relating to the shares of common stock
issuable upon exercise of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts
to meet these conditions and to maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise
of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to
do so, the potential “upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless.
Notwithstanding the foregoing, the private warrants and placement warrants may be exercisable for unregistered shares of common stock
for cash even if the prospectus relating to the shares of common stock issuable upon exercise of the warrants is not current and effective.
An
investor will only be able to exercise warrants if the issuance of the shares of common stock upon such exercise has been registered
or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No
warrants will be exercisable for cash and we will not be obligated to issue the shares of common stock unless the shares of common stock
issuable upon such exercise have been registered or qualified or deemed to be exempt under the securities laws of the state of residence
of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national securities
exchange, which would provide an exemption from registration in every state. However, we cannot assure you of this fact. If the shares
of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the
holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire
worthless if they cannot be sold.
Our
management’s ability to require holders of our redeemable warrants to exercise such redeemable warrants on a cashless basis will
cause holders to receive fewer shares of common stock upon their exercise of the redeemable warrants than they would have received had
they been able to exercise their redeemable warrants for cash.
If
we call our warrants for redemption after the redemption criteria for such warrants have been satisfied, our management will have the
option to require any holder that wishes to exercise his warrants (including any warrants held by our initial stockholders 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 the shares of common stock received by a holder upon exercise will be fewer than it would have been had
such holder exercised his warrants for cash. This will have the effect of reducing the potential “upside” of the holder’s
investment in our company.
We
may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then
outstanding warrants.
Our
warrants were issued in registered form under a warrant agreement between VStock Transfer, LLC, as warrant agent, and us. The warrant
agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including
the private warrants and placement warrants) in order to make any change that adversely affects the interests of the registered holders;
provided, however that an exchange offer made to both the publicly traded warrants and the warrants held by our sponsors on the same
terms will not constitute an amendment requiring consent of any warrant holder.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New
York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which
could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us or the warrant agent arising
out of or relating in any way to the warrant agreement shall be brought and enforced in the courts of the State of New York or the United
States District Court for the Southern District of New York, and (ii) that we and the warrant agent irrevocably submit to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We and the warrant agent will waive any objection
to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, this exclusive forum provision shall not apply to suits brought to enforce a duty or liability created by the Exchange
Act, any other claim for which the federal courts have exclusive jurisdiction or any complaint asserting a cause of action arising under
the Securities Act against us or any of our directors, officers, other employees or agents. Section 27 of the Exchange Act creates exclusive
federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations
thereunder. In addition, stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement
inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs
associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition
and results of operations and result in a diversion of the time and resources of our management and board of directors.
Nasdaq
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
securities are currently listed on Nasdaq, a national securities exchange. 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 stock price levels. Generally, we must
maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 round lot 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 stock price would generally be required to be at least
$4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would be required to have
a minimum of 300 round lot holders (with at least 50% of such round lot holding securities with a market value of at last $2,500) of
our securities, and we would be required to have $15.0 million market value of publicly held shares. We cannot assure you that we will
be able to meet those initial listing requirements at that time.
If
Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity with respect to our securities;
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a
determination that our shares are a “penny stock,” which will require brokers trading in our shares to adhere to more
stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares;
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a
limited amount of news and analyst coverage for our company; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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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, common stock and warrants are
currently listed on Nasdaq, our units, common stock 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 require public stockholders who wish to convert their shares of common stock in connection with a vote of stockholders on a proposed
business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion
rights prior to the deadline for exercising their rights.
In
connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have
the right, regardless of whether he or she is voting for or against such proposed business combination, to demand that we convert his
or her shares of common stock into a share of the trust account. We may require public stockholders seeking to convert their shares in
connection with a stockholder vote on a proposed business combination, whether they are a record holder or hold their shares in “street
name,” to either tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically
using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, at least two business
days on the initial business combination (a tender of shares is always required in connection with a tender offer). In order to obtain
a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate
this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from
the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly
longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares
through the DWAC System, this may not be the case. Under Delaware law and our bylaws, we are required to provide at least 10 days’
advance notice of any stockholder meeting, which would be the minimum amount of time a public stockholder would have to determine whether
to exercise conversion rights. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders
who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their
shares.
If
we require public stockholders who wish to convert their shares of common stock to comply with the delivery requirements discussed above
for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event that the proposed
business combination is not approved.
If
we require public stockholders who wish to convert their shares of common stock to comply with the delivery requirements discussed above
for conversion and such proposed business combination is not consummated, we will promptly return such certificates to the tendering
public stockholders. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their
securities after the failed business combination until we have returned their securities to them. The market price for our shares of
common stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders
that did not seek conversion may be able to sell their securities.
Our
certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types
of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with our company or our company’s directors, officers or other employees.
Our
certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery
in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative
action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any
director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting
a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation
Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its
directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim
as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery
(and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery
does not have subject matter jurisdiction. Notwithstanding the foregoing, this exclusive forum provision shall not apply to suits brought
to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder.
Additionally,
unless we consent in writing to the selection of an alternative forum, the federal district courts shall be the exclusive forum for the
resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our directors, officers,
other employees or agents. Section 22 of the Securities Act, however, created concurrent jurisdiction for federal and state courts over
all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly,
there is uncertainty as to whether a court would enforce these exclusive forum provisions, and the enforceability of similar choice of
forum provisions in other companies’ charter documents has been challenged in legal proceedings. While the Delaware courts have
determined that such exclusive forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other
than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court
in those other jurisdictions. Furthermore, stockholders cannot waive compliance with the federal securities laws and the rules and regulations
thereunder.
This
choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with our company or its directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to
find this provision of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more
of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of
the time and resources of our management and board of directors.
Our
outstanding warrants may have an adverse effect on the market price of our shares of common stock and make it more difficult to effect
a business combination.
We
have issued warrants that may result in the issuance of up to 11,500,000 shares of common stock as part of the units issued in our Initial
Public Offering and private warrants and placement warrants that may result in the issuance of an additional 4,289,722 shares of common
stock. The potential for the issuance of a substantial number of additional shares upon exercise of the warrants could make us a less
attractive acquisition vehicle in the eyes of a target business. Such warrants, when exercised, will increase the number of issued and
outstanding shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants
may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally,
the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for
our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution
to your holdings.
If
our insiders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock and
the existence of these rights may make it more difficult to effect our initial business combination.
Our
insiders and Chardan Capital Markets, LLC are entitled to make a demand that we register the resale of the founder shares, the placement
shares and the equity participation shares (a total of 3,550,833 shares) at any time commencing three months prior to the date on which
any of their shares may be released from escrow. Additionally, our sponsors are entitled to demand that we register the resale of the
4,289,722 shares of common stock underlying the private warrants and placement warrants they own and any securities our sponsors may
be issued in payment of working capital loans made to us at any time after we consummate a business combination. The presence of these
additional shares of common stock trading in the public market may have an adverse effect on the market price of our securities. In addition,
the existence of these rights may make it more difficult to effectuate our initial business combination or increase the cost of consummating
our initial business combination with the target business, as the stockholders of the target business may be discouraged from entering
into a business combination with us or will request a higher price for their securities because of the potential effect the exercise
of such rights may have on the trading market for our shares of common stock.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions.
Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable
to sell your securities unless a market can be established and sustained.
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 stockholders may be less than $10.20 per share.
The
proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 180 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 stockholders are entitled to receive their pro-rata share of the
proceeds held in the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could
impact the per-share redemption amount that may be received by public stockholders.
RISKS
RELATING TO ACQUIRING AND OPERATING A BUSINESS OUTSIDE OF THE UNITED STATES
If
we effect our initial business combination with a company located outside of the United States, such as FAHL, we would be subject to
a variety of additional risks that may negatively impact our operations.
We
may effect our initial business combination with a company located outside of the United States, such as FAHL. If we did, we would be
subject to any special considerations or risks associated with companies operating in the target business’ home jurisdiction, including
any of the following:
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rules
and regulations or currency conversion or corporate withholding taxes on individuals;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we are unable to do so, our operations may suffer.
If
we effect our initial business combination with a target business located outside of the United States, such as FAHL, the laws applicable
to such target business will likely govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect our initial business combination with a target business, such as FAHL, located outside of the United States, the laws of the
country in which such target business is domiciled will govern almost all of the material agreements relating to its operations. The
target business may not be able to enforce any of its material agreements in such jurisdiction and appropriate remedies to enforce its
rights under such material agreements may not be available in this new jurisdiction. The system of laws and the enforcement of existing
laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce
or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.
Additionally, if we consummate our initial business combination with a company located outside of the United States, it is likely that
substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside
of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect
service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under Federal securities laws.