EDGAR 10-K Filing

Company CIK: 1800392
Filing Year: 2022
Filename: 1800392_10-K_2022_0001829126-22-006763.json

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ITEM 1. BUSINESS
ITEM
1. BUSINESS
Company
Profile
Venus
Acquisition Corporation (“Company”) was formed on May 14, 2018 formed under the laws of the Cayman Islands, as a blank check
company for the purpose of engaging in a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or other similar business combination, with one or more target businesses or entities. Our efforts to identify a prospective target business
will not be limited to a particular industry or geographic region, although we intend to focus on businesses that have a connection to
the Asian market. We believe that we will add value to these businesses primarily by providing them with access to the U.S. capital markets.
On
February 11, 2021, we consummated our initial public offering (“IPO”) of 4,600,000 units (the “Units”), inclusive
of the over-allotment option of 600,000 Units. Each unit consisted of one ordinary share, par value $0.001, one redeemable warrant, and
one right to receive one-tenth (1/10) of an ordinary share upon consummation of a business combination. The Company’s Registration
Statement on Form S-1 was declared effective by the SEC on February 8, 2021. Ladenburg Thalmann & Co., Inc., acted as lead bookrunner
for the IPO. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $46,000,000.
In
August 2019, our sponsor, Yolanda Management Corporation (“Sponsor”), purchased an aggregate of 1,150,000 founder shares
for an aggregate purchase price of $25,000, or approximately $0.02 per share. Simultaneously with the closing of the IPO, the Company
consummated a private placement (“Private Placement”) with its sponsor, for the purchase of 225,000 units (the “Private
Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,250,000, pursuant to the subscription agreement
with the Company. In addition, the Company sold to Ladenburg Thalmann & Co., Inc., for $75, a total of 75,000 Shares.
As
of February 11, 2021, a total of $46,460,000 of the net proceeds from the IPO and the Private Placement were deposited in a trust account
established for the benefit of the Company’s public shareholders.
As
a result of the IPO, the Private Placement and sale of shares to our underwriter, assuming the units were separated into their
component parts, we had: (i) 4,825,000 units, (ii) 6,050,000 ordinary shares, (iii) 4,825,000 rights to acquire an aggregate of
482,500 ordinary shares: and (iv) 4,825,000 warrants to acquire 2,412,500 ordinary shares issued and outstanding as of February 11,
2021. We have not issued any securities since such date.
Prior
to the IPO, there had been no public market for our units, ordinary shares, rights or warrants. Our units are listed for trading on the
NASDAQ Capital Market, or NASDAQ, under the symbol “VENAU”. The ordinary shares, rights and warrants comprising the units
began separate trading on April 13, 2021 and are traded on NASDAQ under the symbols “VENA,” “VENAR” and “VENAW,”
respectively. As our IPO registration statement and Form 8A were not declared effective by the SEC until February 8, 2021, we were not
a filing company under the Securities and exchange Act of 1934, as amended until February 8, 2021. Since our IPO and until our execution
of the merger agreement with VIYI Algorithm Inc., Venus Merger Sub Corp., and WiMi Hologram Cloud, Inc. in June 2021, our sole business
activity has been identifying and evaluating suitable acquisition transaction candidates and engaging in non-binding discussions with
potential target entities. Thereafter, our business activities have also included the preparation of a registration statement and proxy
statement in connection with seeking stockholder approval of the proposed business combination with VIYI Algorithm, Inc. and WiMi Hologram
Cloud, Inc. (the “Business Combination”). We presently have no revenue and have had losses since inception from incurring
formation and operating costs since completion of our IPO. Other than as specifically discussed, this report does not assume the closing
of the Business Combination.
Recent
Developments
Business
Combination with VIYI and WiMi
On
June 10, 2021, we, VIYI Algorithm Inc., a Cayman Islands exempted company (“VIYI”), Venus Merger Sub Corp., a Cayman Islands
exempted company and wholly-owned subsidiary of us (the “Merger Sub”) and WiMi Hologram Cloud Inc., (“WiMi”),
entered into a Merger Agreement (the “Merger Agreement”). WiMi (NASDAQ: WIMI) holds approximately 73% of the share capital
of VIYI. We may use the term “New Venus” in this report to refer to our Company after giving effect to the consummation of
the Business Combination.
Pursuant
to the Merger Agreement, upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Cayman Islands
Companies Act (as revised), the parties intend to effect a business combination transaction whereby the Merger Sub will merge with and
into VIYI, with VIYI being the surviving entity and becoming a wholly owned subsidiary of us on the terms and subject to the conditions
set forth in the Merger Agreement and simultaneously with the closing we will change our name to “MicroAlgo Inc.”
The
Board of Directors of both us and VIYI and the stockholders of VIYI have approved the Merger Agreement and the transactions contemplated
by it.
Pursuant
to the Merger Agreement, the merger is structured as a stock for stock transaction and is intended to be qualified as a tax-free
reorganization. The terms of the merger provide for a valuation of VIYI and its subsidiaries and businesses of $400,000,000. Based
upon a per share value of $10.10 per share, the VIYI stockholders will receive approximately 39,600,000 ordinary shares of us which
will represent approximately 85% of the combined outstanding shares following the closing, assuming no redemptions by our
stockholders and assuming conversion of our outstanding rights into 485,000 ordinary shares. Currently, there are
6,050,000 ordinary shares of the us issued and outstanding (including 4,600,000 ordinary shares subject to possible
redemption) (assuming all the units were separated into their component parts on such date).
At
the effective time of the Merger Agreement, all outstanding options and other convertible securities of VIYI will be cancelled or converted
into ordinary shares of VIYI and exchanged for our ordinary shares as part of the consideration described above.
As
contemplated by and as a condition of the Merger Agreement, we entered into a backstop agreement with Ever Abundant Investments
Limited, dated as of June 10, 2021. On January 24, 2022, we agreed with Ever Abundant Investments Limited to terminate the backstop
agreement.
In
addition, on January 24, 2022, we entered into an amendment to the Merger Agreement with VIYI and WiMi. The purposes of the amendment
were to:
1.
extend the outside termination date of the proposed merger to June 30, 2022;
2.
provide for the termination of the original backstop agreement and the execution of the new backstop agreement with the majority shareholder
of VIYI; and
3.
acknowledge the existence of new potential governmental approvals required under recent changes in China law.
Pursuant
to the amendment to the Merger Agreement, on January 24, 2022, we entered into a backstop agreement with WiMi. Under the new agreement,
WiMi agreed to purchase (i) ordinary shares in open market transactions in connection with any tendered or proposed redemptions, and
(ii) from us ordinary shares in a private placement transaction exempt from registration under the Securities Act of 1933, as amended.
Any purchases, either from our shareholders seeking to redeem ordinary shares, or from us are limited to up to $15 million in gross amount.
WiMi has agreed that any ordinary shares acquired by it will not be subject to redemption under our corporate organizational documents
and also waived any claims against our Trust Account.
Consummation
of the transactions contemplated by the Merger Agreement are subject to customary conditions of the respective parties, including the
approval of the Merger Agreement by our shareholders, and minimum net tangible assets immediately after the closing. Other than as specifically
discussed, this report does not assume the closing of the business combination with VIYI.
Extension
On
February 11, 2022, we elected to extend the date by which we are required to complete a business combination to March 11, 2022 and
deposited $153,333 into our trust account. On February 11, 2022, we issued an unsecured promissory note, each in an amount of $153,333 to the Sponsor, pursuant to which such amount had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination until March 11, 2022. The note is non-interest bearing and payable upon the closing of a business combination. In addition, the note may be converted, at the lender's discretion, into additional Private Units at a price of $10.00 per unit.
On March 11, 2022, we elected to further extend the date by which we are required to
complete a business combination to April 11, 2022 and deposited $153,333 into our trust account. We plan to further deposit
extension fee monthly to effect the automatic monthly extension as necessary in order to complete the business combination
transaction.
Management
Business Combination Experience
We
will seek to capitalize on the strength of our management team. Our team consists of experienced professionals and senior operating executives.
Collectively, our officers and directors have decades of experience in mergers and acquisitions, and operating companies, in Asia. We
believe we will benefit from their accomplishments, and specifically their current and recent activities with companies that have a connection
to the Asian market, in identifying attractive acquisition opportunities. However, there is no assurance that we will complete a business
combination. Previously, Yanming Liu served as chairman and chief executive officer, and River Chi served as chief financial officer,
Yu Chen and Shan Cui served as independent directors of Greenland Acquisition Corporation, or Greenland, a “blank check”
company that acquired Zhongchai Holding (Hong Kong) Limited, or Zhongchai, in October 2019.
Business
Strategy
Our
efforts in identifying prospective target businesses will not be limited to a particular geographic region, although we intend to focus
on businesses that have a connection to the Asian market. We believe that we will add value to these businesses primarily by providing
them with access to the U.S. capital markets.
Acquisition
Criteria
Our
management team intends to focus on creating shareholder value by leveraging its experience in the management, operation and financing
of businesses to improve the efficiency of operations while implementing strategies to scale revenue organically and/or through acquisitions.
We have identified the following general criteria and guidelines, which we believe are important in evaluating prospective target businesses.
While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines
should we see justification to do so.
● Middle-Market Growth
Business. We will primarily seek to acquire one or more growth businesses with a total enterprise
value of between $150,000,000 and $250,000,000. We believe that there are a substantial number of potential target businesses within
this valuation range that can benefit from new capital for scalable operations to yield significant revenue and earnings growth.
We currently do not intend to acquire either a start-up company (a company that has not yet established commercial operations)
or a company with negative cash flow.
● Companies
in Business Segments that are Strategically Significant to the Asian Markets. We will seek to acquire
those businesses that are currently strategically significant in the Asian markets. Such sectors include: Internet and high technology,
financial technology (including technology applied in financial services or used to help companies manage the financial aspects of
their business), clean energy, health care, consumer and retail, energy and resources, food processing, manufacturing and education.
● Business
with Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that have
the potential for significant revenue and earnings growth through a combination of both existing and new product development, increased
production capacity, expense reduction and synergistic follow-on acquisitions resulting in increased operating leverage.
● Companies
with Potential for Strong Free Cash Flow Generation. We will seek to acquire one or more businesses
that have the potential to generate strong, stable and increasing free cash flow. We intend to focus on one or more businesses that
have predictable revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently
leverage this cash flow in order to enhance shareholder value.
● Benefit
from Being a Public Company. We intend to only acquire a business or businesses that will benefit from being publicly traded
and which can effectively utilize access to broader sources of capital and a public profile that are associated with being a
publicly traded company.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination may be based,
to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our sponsor and management
team may deem relevant. In the event that we decide to enter into an business combination with a target business that does not meet the
above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications
related to our business combination, which, would be in the form of proxy solicitation or tender offer materials, as applicable, that
we would file with the United States Securities and Exchange Commission, or the SEC. In evaluating a prospective target business, we
expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent ownership, management and employees,
document reviews, interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information
which will be made available to us.
Past
performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination or (ii)
of success with respect to any business combination we may consummate. Stockholders should not rely on the historical record of our management’s
performance as indicative of our future performance.
Our
Acquisition Process
Our
management team has developed a broad network of contacts and corporate relationships. We believe that the network of contacts and relationships
of our management team and our sponsor will provide us with an important source of business combination opportunities. In addition, we
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment banking
firms, private equity firms, consultants, accounting firms and business enterprises. We are not prohibited from pursuing an business
combination with a company that is affiliated with our sponsor, officers or directors, or completing the business combination through
a joint venture or other form of shared ownership with our sponsor, officers or directors.
Unless
we complete our business combination with an affiliated entity, or our Board of Directors cannot independently determine the fair market
value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another
independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting
firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our
shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the
standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome
from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our business combination.
Members
of our management team may directly or indirectly own our ordinary shares and/or Private Units following our IPO, and, accordingly,
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such officers and directors was included by a target business as a condition
to any agreement with respect to our business combination.
Each
of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities
to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes
aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations,
he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity,
and only present it to us if such entity rejects the opportunity. Our amended and restated memorandum and articles of association will
provide that, subject to his or her fiduciary duties under Cayman Islands law, we renounce our interest in any corporate opportunity
offered to any officer or director unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be
reasonable for us to pursue. We do not believe, however, that any fiduciary duties or contractual obligations of our directors or officers
would materially undermine our ability to complete our business combination.
Effecting
A Business Combination
Under
our amended and restated memorandum and articles of association, we have 12 months from the closing of our IPO (which occurred
February 11, 2021) to consummate our business combination; provided, however, if we anticipate that we may not be able to consummate
our business combination within 12 months, we may, by resolution of our board if requested by our sponsor, extend the period of
time to consummate a business combination up to nine times, each by an additional one month (for a total of up to 21 months to
complete a business combination), subject to the sponsor depositing additional funds into the trust account as set out below. On
February 11, 2022, we elected to extend the date by which we are required to complete a business combination to March 11, 2022 and
deposited $153,333 into our trust account. On March 11, 2022, we elected to further extend the date by which we are required to
complete a business combination to April 11, 2022 and deposited $153,333 into our trust account.
Pursuant
to the terms of our memorandum and articles of association and the trust agreement entered into between us, Wilmington Trust Company
and Vstock Transfer LLC, in order for the time available for us to consummate our business combination to be extended, our sponsor or
its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account $133,333,
or $153,333 if the underwriters’ over-allotment option is exercised in full (approximately $0.033 per public share in either
case), up to an aggregate of $1,200,000 (or $1,380,000 if the underwriters’ over-allotment option is exercised in full), or
$0.30 per public share (for an aggregate of 9 months), on or prior to the date of the applicable deadline, for each extension. In
the event that we receive notice from our sponsor five days prior to the applicable deadline of its wish for us to effect an extension,
we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend
to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Holders
of our securities will not have to right to approve or disapprove any such monthly extension. Further, holders of our securities will
not have the right to seek or obtain redemption in connection with any extension of the time frame to complete a business combination.
Any such payments from our
sponsor to extend the time frame would be made in the form of a loan from our sponsor to the company. For the extensions that we have
made, the loans are interest free and will not be repaid unless and until we complete a business combination. For the extensions that
may be made in the future, the final and definitive terms of the loan in connection with any such loans have not yet been negotiated,
but any such loan would be interest free and not repaid unless and until we complete a business combination. If we complete our business
combination, we would expect to repay such loaned amounts out of the proceeds of the trust account released to us or from funds which
may be raised in any subsequent capital financing transaction which may be undertaken in connection with the completion of a business
combination.
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which 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 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 the limitations
described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or 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.
In the case of a tender offer, 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. In either case, we will consummate
our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder
approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
The
NASDAQ rules require that our business combination must be with one or more target businesses that together have an aggregate fair market
value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest
earned) at the time of our signing a definitive agreement in connection with our business combination. If our Board of Directors is not
able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent
investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to
acquire or an independent accounting firm. We do not intend to purchase multiple businesses in unrelated industries in conjunction with
our business combination. If we are delisted from NASDAQ prior to completion of the business combination, the NASDAQ 80% requirement
would no longer be applicable.
We
anticipate structuring our business combination so that the post-transaction company in which our public shareholders own shares will
own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business. The determination
of whether or not to acquire less than 100% of the equity interests or assets will be dependent upon numerous factors, including satisfaction
certain objectives of the target management team or target’s shareholders, the costs of any such proposed acquisition or for other
reasons, many of which we cannot determine at this time and will be contingent upon negotiations with prospective targets. We will only
complete a business combination for equity interests if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. In considering an asset
transaction, we would acquire such assets only if we could constitute from such assets a stand-alone operating business. Even if the
post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business
combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target
and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of
new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest
in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our
business combination could own less than a majority of our outstanding shares subsequent to our business combination. If less than 100%
of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion
of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of Nasdaq net assets test. If
our business combination involves more than one target business or assets from different businesses, the 80% of net assets test will
be based on the aggregate value of all of the target businesses.
Status
as a Public Company and Financial Considerations
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we
offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In
this situation, the owners of the target business would exchange their shares of stock in the target business for our shares of common
stock or for a combination of our shares of common stock and cash, allowing us to tailor the consideration to the specific needs of the
sellers. We believe target businesses might find this method a more certain and cost-effective method to becoming a public company than
the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, roadshow
and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us. Furthermore,
once the business combination is consummated, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent
the offering from occurring. We believe the target business would then have greater access to capital and an additional means of providing
management incentives consistent with stockholders’ interests than it would have as a privately-held company. It can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While
we believe that our status as a public company will make us an attractive business partner, some potential target businesses may view
the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination with a
more established entity or with a private company. These inherent limitations include limitations on our available financial resources,
which may be inferior to those of other entities pursuing the acquisition of similar target businesses; the requirement that we seek
stockholder approval of a business combination, which may delay the consummation of a transaction; and the existence of our outstanding
rights, which may represent a source of future dilution.
With
funds in the trust account of $46,460,000 available to use for a business combination, we offer a target business a variety of options
such as providing the owners of a target business with shares in a public company and a public means to sell such shares, providing capital
for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are
able to consummate our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we
have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business
to fit its needs and desires. In connection with any potential acquisition, we may be required to obtain acquisition financing. However,
since we have no specific business combination under consideration, we have not taken any steps to secure third party financing and there
can be no assurance that it will be available to us. We may seek to raise additional funds through a private offering of debt or equity
securities in connection with the completion of our business combination, and we may effectuate our business combination using the proceeds
of such offering rather than using the amounts held in the trust account.
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 of 1933, as amended. 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, we may need to have more than $5,000,001 in net tangible assets upon consummation and this 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 up to 21 months from the closing of our IPO (February 11, 2021) in order to
be able to receive a pro rata share of the trust account.
Summary
Information Related to Our Securities, Redemption Rights and Liquidation
We
are a Cayman Islands exempted company and our affairs are governed by our amended and restated memorandum and articles of association,
the Cayman Islands’ Companies Law and common law of the Cayman Islands. Pursuant to our amended and restated memorandum and articles
of association are authorized to issue 50,000,000 ordinary shares, $0.001 par value each. The information provided below is a summary
only and we refer you to our prospectus dated as of March 8, 2021, our amended and restated memorandum and articles of association and
our warrant agreement and rights agreement with Vstock Transfer LLC as warrant and rights agent for additional important and material
information.
Upon completion of our IPO
and as of March 25, 2022, we had and have 6,050,000 ordinary shares issued and outstanding (assuming all the units were separated into their component parts on such
date). Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and
vote together as a single class, except as required by law. Unless specified in the Companies Act, our amended and restated memorandum
and articles of association or applicable stock exchange rules, the affirmative vote of a majority of our ordinary shares that are voted
is required to approve any such matter voted on by our shareholders. Approval of certain actions will require a special resolution under
Cayman Islands law and pursuant to our amended and restated memorandum and articles of association; such actions include amending our
amended and restated memorandum and articles of association and approving a statutory merger or consolidation with another company. Directors
are elected for a term of two years. There is no cumulative voting with respect to the election of directors, with the result that the
holders of more than 50% of the founder shares voted for the election of directors can elect all of the directors. Our shareholders are
entitled to receive ratable dividends when, as and if declared by the Board of Directors out of funds legally available therefor.
We
will provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of
two business days prior to the consummation of our business combination, including interest (which interest shall be net of taxes payable)
divided by the number of then issued and outstanding public shares, subject to the limitations described herein. The amount in the trust
account is initially anticipated to be approximately $10.10 per public share (subject to increase of up to an additional $0.30 per public
share in the event that our sponsor elects to extend the period of time to consummate a business combination. The per-share amount we
will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay
to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed
to waive their redemption rights with respect to their founder shares, private placement shares and public shares in connection with
the completion of our business combination.
If
a shareholder vote is not required by law and we do not decide to hold a shareholder vote for business or other legal reasons, we will,
pursuant to our amended and restated memorandum and articles of association, conduct the redemptions pursuant to the tender offer rules
of the SEC, and file tender offer documents with the SEC prior to completing our business combination. Our amended and restated memorandum
and articles of association will require these tender offer documents to contain substantially the same financial and other information
about the business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a shareholder
approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other legal reasons, we will,
like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If we seek shareholder approval, we will complete our business combination only if a majority of
the issued and outstanding ordinary shares voted are voted in favor of the business combination. However, the participation of our sponsor,
officers, directors or their affiliates in privately-negotiated transactions, if any, could result in the approval of our business combination
even if a majority of our public shareholders vote, or indicate their intention to vote, against such business combination. For purposes
of seeking approval of the majority of our issued and outstanding ordinary shares, non-votes will have no effect on the approval of our
business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days)
prior written notice of any such meeting, if required, at which a vote shall be taken to approve our business combination.
If
we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our amended and restated memorandum and articles of association will provide that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the ordinary shares sold in our IPO, which we refer to as the “Excess Shares.” However, we would not be restricting
our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our business combination.
If
we do not complete a business combination within 12 months (or up to 21 months, as discussed below) from the closing of our IPO (completed
on February 11, 2021), 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 Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law.
In
connection with our IPO and consummation of the private placement with our sponsor we issued an aggregate of 4,825,000 rights to acquire
an aggregate of 482,500 ordinary shares. If we enter into a definitive agreement for a business combination in which we will be the surviving
entity, each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of our business combination, even
if the holder of such right redeemed all ordinary shares held by him, her or it in connection with the business combination or an amendment
to our memorandum and articles of association with respect to our pre-business combination activities. No additional consideration will
be required to be paid by a holder of rights in order to receive his, her or its additional ordinary shares upon consummation of a business
combination as the consideration related thereto has been included in the unit purchase price paid for by investors in our IPO. The shares
issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours). Holders of rights are
not entitled to any redemption of voting rights. If we are unable to complete an business combination within the required time period
and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights,
nor will they receive any distribution from our assets held outside of the trust account with respect to such rights, and the rights
will expire worthless.
In
connection with our IPO and consummation of the private placement with our sponsor we issued an aggregate of 4,825,000 warrants to acquire
an aggregate of 2,412,500 ordinary shares. The warrants purchased in our IPO have been issued in registered form under a warrant agreement
between Vstock Transfer LLC, as warrant agent, and us. Each warrant entitles the registered holder to purchase one ordinary share at
a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the date
of our IPO prospectus or the completion of our business combination. Because the warrants may only be exercised for whole numbers of
shares, only an even number of warrants may be exercised at any given time. Pursuant to the warrant agreement, a warrantholder may exercise
its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by
a warrantholder. The warrants will expire five years after the completion of our business combination, at 5:00 p.m., New York City time,
or earlier upon redemption or liquidation.
We
will not be obligated to deliver any ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such
warrant exercise unless a registration statement under the Securities Act with respect to the ordinary shares underlying the warrants
is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect
to registration. We have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our business
combination, we will use our best efforts to file, and within 60 business days following our business combination to have declared effective,
a registration statement covering the ordinary shares issuable upon exercise of the warrants.
Once
the warrants become exercisable, we may call the warrants for redemption (excluding the private placement warrants):
● in
whole and not in part;
● at
a price of $0.01 per warrant;
● upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;
and
● if,
and only if, the reported last sale price of the ordinary shares equal or exceed $18.00 per share (as adjusted for share splits, share
capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading
day period ending on the third trading day prior to the date we send to the notice of redemption to the warrant holders.
If
and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares upon exercise of the
warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration
or qualification.
Holders
of warrants are not entitled to voting rights or any right to redemption in the event that we consummate a business combination.
Corporate
Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act
of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and
proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million
as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning
associated with it in the JOBS Act.
We
are a Cayman Islands exempted company incorporated on May 14, 2018. Our executive offices are located at 477 Madison Avenue, 6th Floor,
New York, NY 10022, and our telephone number is (917) 326-4568.

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ITEM 1A. RISK FACTORS
ITEM
1A. RISK FACTORS
As
a smaller reporting company, we are not required to include risk factors in this Annual Report. However, below is a partial list of material
risks, uncertainties and other factors that could have a material effect on the Company and its operations.
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 report, before making a decision to invest in our units. 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 risk factors related to the Business Combination, see the Registration
Statement on Form S-4 filed by the Company on June 29, 2021, and as subsequently amended.
Risk
Factor Summary
● We
are an early stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
● Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our
business combination even though a majority of our public shareholders do not support such a combination.
● Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
● If
we seek shareholder approval of our business combination, our sponsor, officers and directors have agreed to vote in favor of such business
combination, regardless of how our public shareholders’ vote.
● The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
● The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
● The
requirement that we complete our business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination
targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that
would produce value for our shareholders.
● 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 COVID-19 outbreak and the status of debt and equity markets.
● We
may only be able to complete one business combination with the proceeds of our IPO and the sale of the Private Units, which
will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
● If
we seek shareholder approval of our business combination, our sponsor, directors, officers, advisors and their affiliates may elect to
purchase shares from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float”
of our ordinary shares.
● If
a shareholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails
to comply with the procedures for tendering its shares, such shares may not be redeemed.
● You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares, rights or warrants, potentially at a loss.
● If
we are unable to complete our business combination, our public shareholders may receive only approximately $10.10 per share, or less
in certain circumstances, on our redemption, and our rights and warrants will expire worthless.
● If
the net proceeds of our IPO not being held in the trust account are insufficient to allow us to operate for at least for 12 months or
up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination, we may be unable to
complete our business combination.
● Past
performance by our management team and their respective affiliates may not be indicative of future performance of an investment in us.
● You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares, rights or warrants, potentially at a loss.
● NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions or reduce protections under NASDAQ rules available to them.
● If
we effect our initial business combination with a business located in the in the People’s Republic of China, the laws applicable
to such business will likely govern all of our material agreements and we may not be able to enforce our legal rights.
● If
the PRC government finds that the agreements that establish the structure for operating business in China do not comply with PRC regulations
relating to the relevant industries, or if these regulations or their interpretation change in the future, we could be subject to severe
penalties or be forced to relinquish our interests in those operations.
● Substantial
uncertainties exist with respect to the enactment timetable, interpretation and implementation of PRC Foreign Investment Law and how
it may impact the viability of VIYI’s current corporate structure, corporate governance and business operations.
● The
PRC government exerts substantial influence over the manner in which companies, including VIEs, must conduct their business activities.
If in the future our business combination target was required to obtain approval from Chinese authorities to list on U.S. exchanges,
we may not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
● The
recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable
Act all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China,
upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
● Our
current business combination target and the VIEs are subject to extensive and evolving legal system in the PRC, non-compliance with which,
or changes in which, may materially and adversely affect their business and prospects, and may result in a material change in their operations
and/or the value of their ordinary shares or could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of our securities to significantly decline or be worthless.
General
Risks Factors in Investing in a SPAC Entity and Completing a Business Combination
We
are an early stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
We
are an early stage company established under the laws of the Cayman Islands with no operating results. Because we lack an operating history,
you have no basis upon which to evaluate our ability to achieve our business objective of completing our business combination with one
or more target businesses. Although we have entered into an agreement for a business combination as described above, consummation of
the transactions contemplated by such agreements are subject to customary conditions of respective parties including the approval of
the Merger Agreement by our shareholders, and minimum net tangible assets immediately after the closing. Accordingly, we may be unable
to complete our business combination. If we fail to complete our business combination, we will never generate any operating revenues.
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our
business combination even though a majority of our public shareholders do not support such a combination.
We
may not hold a shareholder vote to approve our business combination unless the business combination would require shareholder approval
under applicable Cayman Islands law or the rules of the NASDAQ or if we decide to hold a shareholder vote for business or other reasons.
Examples of transactions that would not ordinarily require shareholder approval include asset acquisitions and share purchases, while
transactions such as direct mergers with our company or transactions where we issue more than 20% of our outstanding shares would require
shareholder. For instance, the NASDAQ rules currently allow us to engage in a tender offer in lieu of a shareholder meeting but would
still require us to obtain shareholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business
as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more
than 20% of our outstanding shares, we would seek shareholder approval of such business combination. Except as required by law or NASDAQ
rules, the decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to
sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such
as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Accordingly,
we may consummate our business combination even if holders of a majority of the issued and outstanding ordinary shares do not approve
of the business combination we consummate.
If
we seek shareholder approval of our business combination, our sponsor, officers and directors have agreed to vote in favor of such business
combination, regardless of how our public shareholders vote.
Unlike other blank check companies in which the shareholders agree
to vote their founder shares in accordance with the majority of the votes cast by the public shareholders in connection with an business
combination, our sponsor, officers and directors have agreed (and their permitted transferees will agree), pursuant to the terms of a
letter agreement entered into with us, to vote any founder shares and private placement shares held by them, as well as any public shares
purchased during or after our IPO, in favor of our business combination. We expect that our sponsor and its permitted transferees will
own approximately 22.7% of our issued and outstanding ordinary shares at the time of any such shareholder vote (taking into account ownership
of the Private Units). As a result, in addition to our shareholder’s founder shares, we would need only 1,575,001, or
approximately 34.24%, of the 4,000,000 public shares sold in our IPO to be voted in favor of a transaction (assuming all outstanding shares
are voted) in order to have our business combination approved (assuming the over-allotment option is not exercised). Accordingly, if we
seek shareholder approval of our business combination, it is more likely that the necessary shareholder approval will be received than
would be the case if such persons agreed to vote their founder shares in accordance with the majority of the votes cast by our public
shareholders.
Our
sponsor has the right to extend the term we have to consummate our business combination, without providing our stockholders with redemption
rights.
We
initially until 12 months from the closing of our IPO to consummate our business combination. However, if we anticipate that we may
not be able to consummate our business combination within 12 months, we may, by resolution of our board of directors if requested by
our sponsor, extend the period of time to consummate a business combination up to nine (9) times, each by an additional one month
(for a total of up to 21 months to complete a business combination), subject to the deposit of additional funds into the trust
account by our sponsor or its affiliates or designees as set out elsewhere in this report. On February 11, 2022, we elected to
extend the date by which we are required to complete a business combination to March 11, 2022 and deposited $153,333 into our trust
account. On March 11, 2022, we elected to further extend the date by which we are required to complete a business combination to
April 11, 2022 and deposited $153,333 into our trust account. 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 business combination to be extended,
our sponsors or their affiliates or designees must deposit into the trust account.
Any
such payments would be made in the form of a non-interest-bearing loan from our sponsor or its affiliates or designees and would be repaid,
if at all, from funds released to us upon completion of our business combination. The obligation to repay any such loans may reduce the
amount available to us to pay as purchase price in our business combination, and/or may reduce the amount of funds available to the combined
company following the 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. In order to extend the time frame, our sponsor (or its affiliates
or designees) must deposit into the trust account $153,333 (approximately $0.033 per public share in either case) per month, up to an aggregate of $1,380,000, or $0.30 per public share (representing the entire 9 months’ extension), on or prior
to the date of the applicable deadline, for each extension.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more
target businesses. Since our Board of Directors may complete a business combination without seeking shareholder approval, public shareholders
may not have the right or opportunity to vote on the business combination, unless we seek such shareholder approval. Accordingly, if
we do not seek shareholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in
our tender offer documents mailed to our public shareholders in which we describe our business combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in
no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting
commissions, to be less than $5,000,001 upon consummation of our business combination (so that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating
to our business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets
to be less than $5,000,001 upon consummation of our business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate
business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination
transaction with us.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our business combination, we will not know how many shareholders may exercise their redemption
rights, and therefore we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase
price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account
to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business
combination available to us or optimize our capital structure.
The
ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires
us to have a minimum amount of cash at closing, the probability that our business combination would be unsuccessful is increased. If
our business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust
account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our
shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to
sell your shares in the open market.
The
requirement that we complete our business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination
targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that
would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our business combination within 12 months from the closing of our IPO (or up to 21 months from the closing of our IPO if we extend the
period of time to consummate a business combination). We have already extended the time period within which we must complete our initial
business combination on two occasions. Consequently, such target business may obtain leverage over us in negotiating a business combination,
knowing that if we do not complete our business combination with that particular target business, we may be unable to complete our business
combination with any target business.
This
risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our business combination within the prescribed time frame, in which case we would cease all operations except
for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may only receive
$10.10 per share, or less than such amount in certain circumstances, and our rights and warrants will expire worthless.
Our
sponsor, officers and directors have agreed that we must complete our business combination within 12 months from the closing of our IPO
or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination. We have already
extended the time period within which we must complete our initial business combination on two occasions. We may not be able to find
a suitable target business and complete our business combination within such time period. If we have not completed our business combination
within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000
of interest to pay dissolution expenses) divided by the number of then issued and outstanding public shares, which redemption will completely
extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law. In such case, our public shareholders may only receive
$10.10 per share, and our rights and warrants will expire worthless. In certain circumstances, our public shareholders may receive less
than $10.10 per share on the redemption of their shares. If third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-share redemption amount received by shareholders may be less than $10.10 per share” and other risk
factors herein.
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 COVID-19 outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced, which has and is continuing to spread throughout the world.
On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International
Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for
the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization
characterized the outbreak as a “pandemic.” The COVID-19 outbreak has resulted in a widespread health crisis that has adversely
affected economies and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any
potential target business with which we consummate a business combination could be, or may already have been, materially and adversely
affected. Furthermore, we may be unable to complete a business combination if concerns relating to COVID-19 continue to restrict travel
or limit the ability to have meetings with potential investors, or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business
combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may
emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions
posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events, including as a result of increased market volatility and decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all.
Our
sponsor may decide not to extend the term we have to consummate our 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 warrants and rights will be worthless.
We initially had until 12 months or up to 21 months if we elect to
extend the period of time from the closing of our IPO to consummate our business combination. However, if we anticipate that we may not
be able to consummate our business combination within 12 months, we may, by resolution of our board if requested by our sponsor, extend
the period of time to consummate a business combination up to nine times, each by an additional one month (for a total of up to 21 months
to complete a business combination), subject to the sponsor depositing additional funds into the trust account as set out below. We have
already extended the time period within which we must complete our initial business combination on two occasions. In order for the time
available for us to consummate our business combination to be extended, our sponsor or its affiliates or designees must deposit into the
trust account $153,333 (approximately $0.033 per public
share in either case), up to an aggregate of $1,380,000, or $0.30 per public share, on or prior to the date of the applicable deadline, for each extension. Any such payments would be made
in the form of a loan made from our sponsor or its affiliates or designees to us. For the extensions that we have made, the loans are
interest free and will not be repaid unless and until we complete a business combination. For the extensions that may be made in the future,
the final and definitive terms of the loan in connection with any such loans have not yet been negotiated, but any such loan would be
interest free and not repaid unless and until we complete a business combination. Consequently, such loans might not be made on the terms
described in this report. Our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for
us to complete our business combination. Our sponsor and its affiliates or designees may not be financially capable of further fund the
cash we need in order to make the extension. If we are unable to consummate our 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 shareholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Cayman Islands
law to provide for claims of creditors and the requirements of other applicable law. In such event, the warrants and rights will be worthless.
If
we seek shareholder approval of our business combination, our sponsor, directors, officers, advisors and their affiliates may elect to
purchase shares from public shareholders, which may influence a vote on a proposed business combination and reduce the public “float”
of our ordinary shares.
If
we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the completion of our business combination, although they are under no
obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder
of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that
our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders
who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections
to redeem their shares. The price per share paid in any such transaction may be different than the amount per share a public shareholder
would receive if it elected to redeem its shares in connection with our business combination. The purpose of such purchases could be
to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the
business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or
a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met.
This may result in the completion of our business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our ordinary shares and the number of beneficial holders of our
securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on
a national securities exchange.
If
a shareholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails
to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination.
Despite our compliance with these rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable, such shareholder
may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares. In the event that a shareholder fails to comply with these
procedures, its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares, rights or warrants, potentially at a loss.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of
our business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our
amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete our business combination within 12 months from the closing of our IPO (or up to 21 months from
the closing of our IPO if we extend the period of time to consummate a business combination) or (B) with respect to any other provision
relating to shareholders’ rights or pre-business combination activity and (iii) the redemption of all of our public shares if we
are unable to complete our business combination within 12 months from the closing of our IPO (or up to 21 months from the closing of
our IPO if we extend the period of time to consummate a business combination), subject to applicable law and as further described herein.
In no other circumstances will a public shareholder have any right or interest of any kind in the trust account. Accordingly, to liquidate
your investment, you may be forced to sell your public shares, rights or warrants, potentially at a loss.
NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions or reduce protections under NASDAQ rules available to them.
Our
units, ordinary shares, rights and warrants are listed on the NASDAQ. We cannot guarantee that our securities will remain listed on NASDAQ for any specific period of time. Although after giving
effect to our IPO we expect to meet, on a pro forma basis, the minimum listing standards set forth in the NASDAQ listing standards, we
cannot assure you that our securities will continue to be, listed on NASDAQ in the future or prior to our business combination.
In order to continue listing our securities on NASDAQ prior to our business combination, we must maintain certain financial, distribution
and stock price levels. Generally, we must maintain a minimum amount in shareholders’ equity (generally $2,500,000) and a minimum
number of holders of our securities (generally 300 public holders). Additionally, following closing of our business combination, we will
be required to demonstrate compliance with NASDAQ’s listing requirements on a post-closing basis, 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,
after closing, our stock price would generally be required to be at least $4.00 per share, our shareholders’ 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 of our securities. We cannot
assure you that we will be able to meet those listing requirements at that time.
If
NASDAQ delists our securities prior to closing of any business combination, we and our investors could be subject to the following adverse
consequences:
● a
limited availability of market quotations for our securities;
● reduced
liquidity for our securities;
● a
determination that our ordinary shares is a “penny stock” which will require brokers trading in our ordinary shares to adhere
to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
and
● the
lack of protection afforded under NASDAQ rules that requires any business combination have a fair market value of at least 80% of the
assets held in trust.
If
NASDAQ delists our securities from trading on its exchange following the closing of our business combination and we are not able to list
our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this
were to occur, we and our investors could face significant material adverse consequences, including:
● a
limited availability of market quotations for our securities;
● reduced
liquidity for our securities;
● a
determination that our ordinary shares is a “penny stock” which will require brokers trading in our ordinary shares to adhere
to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
● a
limited amount of news and analyst coverage; and
● a
decreased ability to issue additional securities or obtain additional financing in the future.
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually
our ordinary shares, rights and warrants will be listed on NASDAQ, our units, ordinary shares, rights and warrants will be 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, including in connection with our business combination.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our IPO and the sale of the Private Units are intended to be used to complete an business combination with
a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities
laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of our IPO and the sale
of the Private Units and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact,
we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors
will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable
and we may have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover, if our
IPO were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless
and until the funds in the trust account were released to us in connection with our completion of an business combination.
If
we seek shareholder approval of our business combination and we do not conduct redemptions pursuant to the tender offer rules, and if
you or a “group” of shareholders are deemed to hold in excess of 15% of our ordinary shares, you will lose the ability to
redeem all such shares in excess of 15% of our ordinary shares.
If
we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our amended and restated memorandum and articles of association will provide that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 15% of the shares sold in our IPO, which we refer to as the “Excess Shares.” However, we would not be restricting our
shareholders’ ability to vote all of their shares (including Excess Shares) for or against our business combination. Your inability
to redeem the Excess Shares will reduce your influence over our ability to complete our business combination and you could suffer a material
loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our business combination. And as a result, you will continue to hold that number of
shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
If
we are unable to complete our business combination, our public shareholders may receive only approximately $10.10 per share, or less
in certain circumstances, on our redemption, and our rights and warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target
businesses we could potentially acquire with the net proceeds of our IPO and the sale of the Private Units, our ability to
compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.
This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore,
if we are obligated to pay cash for the ordinary shares redeemed and, in the event we seek shareholder approval of our business combination,
we make purchases of our ordinary shares, potentially reducing the resources available to us for our business combination. Any of these
obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete
our business combination, our public shareholders may receive only approximately $10.10 per share (or less in certain circumstances)
on the liquidation of our trust account and our rights and warrants will expire worthless. In certain circumstances, our public shareholders
may receive less than $10.10 per share on the redemption of their shares.
If
the net proceeds of our IPO not being held in the trust account are insufficient to allow us to operate for at least the next 12 months
(or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination), we may be unable
to complete our business combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 12 months (or up
to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination), assuming that our business
combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. However, our
affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated
parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue
as a going concern at such time.
We
believe that, upon the closing of our IPO, the funds available to us outside of the trust account, will be sufficient to allow us to
operate for at least the next 12 months (or up to 21 months from the closing of our IPO if we extend the period of time to consummate
a business combination); however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion
of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target
businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses)
with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into
a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct
due diligence with respect to, a target business. If we are unable to complete our business combination, our public shareholders may
receive only approximately $10.10 per share (or less in certain circumstances) on the liquidation of our trust account and our rights
and warrants will expire worthless. In such case, our public shareholders may only receive $10.10 per share, and our rights and warrants
will expire worthless. In certain circumstances, our public shareholders may receive less than $10.10 per share on the redemption of
their shares. If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by shareholders may be less than $10.10 per share” and other risk factors herein.
Our working capital position and the
requirement that we consummate an initial business combination within 21 months after the closing of our IPO give rise to substantial
doubt about our ability to continue as a going concern.
At December 31, 2021,
we had approximately $32,090 in cash. We have incurred and we expect to continue to incur significant costs in pursuit of a business
combination. Further, we need to consummate our business combination within 12 months (or up to 21 months from the closing of our
IPO if we extend the period of time to consummate a business combination) of the closing of our IPO, and it is uncertain that we
will be able to consummate a business combination within the applicable time period. If a business combination is not consummated
within the applicable time period, we will commence a mandatory liquidation and subsequent dissolution. These conditions raise
substantial doubt about our ability to continue as a going concern for a period of time within one year after the date of our financial
statements included in this report. Our financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
If
the net proceeds of our IPO and the sale of the Private Units not being held in the trust account are insufficient, it could
limit the amount available to fund our search for a target business or businesses and complete our business combination and we will depend
on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our business combination.
Of
the net proceeds of our IPO and the sale of the Private Units and after payment of estimated offering expenses, only approximately
$550,000 is available to us initially outside the trust account to fund our working capital requirements. In the event that our offering
expenses exceed our estimate of $500,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount
of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering
expenses are less than our estimate of $500,000, the amount of funds we intend to be held outside the trust account would increase by
a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team
or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their
affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held
outside the trust account or from funds released to us upon completion of our business combination. If we are unable to complete our
business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the
trust account. Consequently, our public shareholders may only receive approximately $10.10 per share (or less in certain circumstances)
on our redemption of our public shares, and our rights and warrants will expire worthless. In such case, our public shareholders may
only receive $10.10 per share, and our rights and warrants will expire worthless. In certain circumstances, our public shareholders may
receive less than $10.10 per share on the redemption of their shares. If third parties bring claims against us, the proceeds held in
the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.10 per share”
and other risk factors herein.
Subsequent
to the completion of our business combination, we may be required to take write-downs or write-offs, restructuring and impairment or
other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which
could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface
all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though
these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate
net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing. Accordingly, any shareholders who choose to remain shareholders following the business
combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction
in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by shareholders may be less than $10.10 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all
vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims
against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims
to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter
into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our business combination within the prescribed timeframe, or upon the exercise of
a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount
received by public shareholders could be less than the $10.10 per share initially held in the trust account, due to claims of such creditors.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to
us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in
the trust account to below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to
the trust account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including
liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party,
our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether
our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our sponsor’s only assets are securities
of our company. Our sponsor may not have sufficient funds available to satisfy those obligations. We have not asked our sponsor to reserve
for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims
were successfully made against the trust account, the funds available for our business combination and redemptions could be reduced to
less than $10.10 per public share. In such event, we may not be able to complete our business combination, and you would receive such
lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us
for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in
the trust account available for distribution to our public shareholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.10 per public share or (ii) such lesser amount
per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose
not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders
may be reduced below $10.10 per share.
If,
after we distribute the proceeds in the trust account to our public shareholders, 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 shareholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our shareholders. In addition, our Board of Directors may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public shareholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy 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
shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy 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 shareholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
● restrictions
on the nature of our investments; and
● restrictions
on the issuance of securities;
each
of which may make it difficult for us to complete our business combination.
In
addition, we may have imposed upon us burdensome requirements, including:
● registration
as an investment company;
● adoption
of a specific form of corporate structure; and
● reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust
account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money
market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company
Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the
exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company
Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may
hinder our ability to complete a business combination. If we are unable to complete our business combination, our public shareholders
may receive only approximately $10.10 per share, or less in certain circumstances, on the liquidation of our trust account and our rights
and warrants will expire worthless.
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 will be required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and
those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to
comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results
of operations.
If
we are unable to consummate our business combination within 12 months (or up to 21 months from the closing of our IPO if we extend the
period of time to consummate a business combination) of the closing of our IPO, our public shareholders may be forced to wait beyond
such 12 months (or up to 21 months) before redemption from our trust account.
If
we are unable to consummate our business combination within 12 months from the closing of our IPO (or up to 21 months from the closing
of our IPO if we extend the period of time to consummate a business combination), we will distribute the aggregate amount then on deposit
in the trust account (less the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of
redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. Any redemption
of public shareholders from the trust account shall be effected automatically by function of our amended and restated memorandum and
articles of association prior to any voluntary winding up. If we are required to windup, liquidate the trust account and distribute such
amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution
must comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond the 12 months (or
up to 21 months) before the redemption proceeds of our trust account become available to them and they receive the return of their pro
rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption
or liquidation unless we consummate our business combination prior thereto and only then in cases where investors have sought to redeem
their ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable
to complete our business combination.
Our
shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
If
we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment
if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall
due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore,
our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and
thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims
of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who
knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to
pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $18,292.68
and to imprisonment for five years in the Cayman Islands.
We
may not hold an annual meeting of shareholders until after the consummation of our business combination.
In
accordance with NASDAQ corporate governance requirements, we are not required to hold an annual meeting until no later than one year
after our first fiscal year end following our listing on NASDAQ. In connection with completion of any business combination, we would
expect to hold a special meeting of shareholders to obtain consent of our shareholders. Therefore we may complete a business combination
without holding an annual meeting of shareholders. There is no requirement under the Companies Act for us to hold annual or general meetings
or elect directors. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to discuss
company affairs with management.
We
have not registered the ordinary shares issuable upon exercise of the warrants sold in our IPO under the Securities Act or any state
securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding
such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We
did not register the ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at
the time of completion of our IPO. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but
in no event later than 15 business days after the closing of our business combination, we will use our best efforts to file, and within
60 business days following our business combination to have declared effective, a registration statement covering such shares and maintain
a current prospectus relating to the ordinary shares issuable upon exercise of the warrants, until the expiration of the warrants in
accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts
or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial
statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any
shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder, or an exemption is available. Notwithstanding the foregoing, if a registration
statement covering the ordinary shares issuable upon exercise of the warrants is not effective within a specified period following the
consummation of our business combination, warrant holders may, until such time as there is an effective registration statement and during
any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant
to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or
another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. We will use our best efforts
to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be
required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we
are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no exemption is available.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In
such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for
the ordinary shares included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right
if the issuance of shares upon exercise of the warrants is not exempt from registration or qualification under applicable state blue
sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares
under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our IPO.
In
the event that we are not the surviving entity upon the consummation of our business combination, and there is no effective registration
statement for the offering of the shares underlying the rights, the rights may expire worthless.
If
we enter into a definitive agreement for a business combination in which we will not be the surviving entity, the definitive agreement
will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in
the transaction on an as-converted into ordinary share basis, and each holder of a right will be required to affirmatively convert his,
her or its rights in order to receive the 1/10 share underlying each right (without paying any additional consideration) upon consummation
of the business combination. More specifically, the right holder will be required to indicate his, her or its election to convert the
rights into underlying shares as well as to return the original rights certificates to us. In the event that we are not the surviving
entity upon the consummation of our business combination, and there is no effective registration statement for the offering of the shares
underlying the rights, the rights may expire worthless.
The
grant of registration rights to our sponsor and holders of our Private Units may make it more difficult to complete our business
combination, and the future exercise of such rights may adversely affect the market price of our ordinary shares.
Pursuant
to an agreement to be entered into concurrently with the issuance and sale of the securities in our IPO, our sponsor and its permitted
transferees can demand that we register their founder shares. In addition, holders of our Private Units and their permitted
transferees can demand that we register the Private Units and their underlying securities, and holders of units that may be
issued upon conversion of working capital loans, may demand that we register such units and their underlying securities. We will bear
the cost of registering these securities. The registration and availability of such a significant number of securities for trading in
the public market may have an adverse effect on the market price of our ordinary shares. In addition, the existence of the registration
rights may make our business combination more costly or difficult to conclude. This is because the shareholders of the target business
may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the
market price of our ordinary shares that is expected when the ordinary shares owned by our sponsor, holders of our Private Units or holders of our working capital loans or their respective permitted transferees are registered.
Because
we are not limited to a particular industry or any specific target businesses with which to pursue our business combination, you will
be unable to ascertain the merits or risks of any particular target business’s operations.
We
may seek to complete a business combination with an operating company in any industry or sector. However, we will not, under our amended
and restated memorandum and articles of association, be permitted to effectuate our business combination with another blank check company
or similar company with nominal operations. Because we have not yet identified or approached any specific target business with respect
to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations,
results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination, we
may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable entity. Although our officers and directors will endeavor to evaluate the risks inherent in
a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that
we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with
no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that
an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were
available, in a business combination target. Accordingly, any shareholders who choose to remain shareholders following the business combination
could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
Past
performance by our management team and their respective affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team and their affiliates is presented for informational purposes
only. Past performance by our management team, including their affiliates’ past performance, is not a guarantee either (i) of success
with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our business
combination. You should not rely on the historical record of our management team and their affiliates as indicative of our future performance.
Additionally, in the course of their respective careers, members of our management team have been involved in businesses and deals that
were unsuccessful. Except for Mr. Liu, none of our officers or directors has had experience operating a blank check company in the past.
We
may seek acquisition opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We
will consider a business combination outside of our management’s areas of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue
an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this report regarding the areas of our management’s expertise
would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors. Accordingly, any shareholders who choose to remain shareholders following our
business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such
reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our business combination with a target that does not meet such criteria and guidelines, and as a result, the target business
with which we enter into our business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our business combination will not have all of these positive attributes. If we complete our business combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target
that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which
may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval
for business or other legal reasons, it may be more difficult for us to attain shareholder approval of our business combination if the
target business does not meet our general criteria and guidelines. If we are unable to complete our business combination, our public
shareholders may receive only approximately $10.10 per share on the liquidation of our trust account and our rights and warrants will
expire worthless.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue or earnings.
To
the extent we complete our business combination with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking or from an independent accounting firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we complete our business combination with an affiliated entity, or our Board of Directors cannot independently determine the fair market
value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another
independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting
firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our
shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the
standard used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome
from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our business combination. However, if our Board of Directors is unable to determine the fair value of an entity with which
we seek to complete an business combination based on such standards, we will be required to obtain an opinion as described above.
We
may issue additional ordinary or preference shares to complete our business combination or under an employee incentive plan after completion
of our business combination. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our
amended and restated memorandum and articles of association authorizes the issuance of up to 50,000,000 ordinary shares, par value $0.001
per share. Immediately after our IPO and as of March 25, 2022, there were 41,055,500 authorized but unissued ordinary shares available
for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants and conversion of outstanding
rights.
We
may issue a substantial number of additional ordinary shares, and may issue preference shares, in order to complete our business combination
or under an employee incentive plan after completion of our business combination. However, our amended and restated memorandum and articles
of association will provide, among other things, that prior to our business combination, we may not issue additional ordinary shares
that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any business combination. The issuance
of additional ordinary shares or preference shares:
● may
significantly dilute the equity interest of investors in our IPO;
● may
subordinate the rights of holders of ordinary shares if preference shares are issued with rights senior to those afforded our ordinary
shares;
● could
cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability to
use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
and
● may
adversely affect prevailing market prices for our units, ordinary shares and/or warrants.
We
may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences
to U.S. investors.
If
we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder (as defined in the section
of the prospectus used in our IPO captioned “Income Tax Considerations - Certain U.S. Federal Income Tax Considerations -
U.S. Holders”) of our ordinary shares, rights or warrants, the U.S. holder may be subject to adverse U.S. federal income tax consequences
and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether
we qualify for the PFIC start-up exception (see the section of the prospectus used in our IPO captioned “Income Tax Considerations
- Certain U.S. Federal Income Tax Considerations - U.S. Holders - Passive Foreign Investment Company Rules”).
Depending on the particular circumstances the application of the start-up exception may be subject to uncertainty, and there cannot be
any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as
a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, however, will not be
determinable until after the end of such taxable year. Moreover, if we determine we are a PFIC for any taxable year, we will endeavor
to provide to a U.S. holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual
information statement, in order to enable the U.S. holder to make and maintain a “qualified electing fund” election, but
there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect
to our warrants in all cases. We urge U.S. holders to consult their own tax advisors regarding the possible application of the PFIC rules
to holders of our ordinary shares, rights and warrants.
We
may reincorporate in another jurisdiction in connection with our business combination and such reincorporation may result in taxes imposed
on shareholders.
We
may, in connection with our business combination and subject to requisite shareholder approval under the Companies Act, reincorporate
in the jurisdiction in which the target company or business is located. The transaction may require a shareholder to recognize taxable
income in the jurisdiction in which the shareholder is a tax resident or in which its members are resident if it is a tax transparent
entity. We do not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding
taxes or other taxes with respect to their ownership of us after the reincorporation.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our business combination, our public shareholders may receive
only approximately $10.10 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our
rights and warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific business combination, the costs incurred up to that point for the proposed
transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail
to complete our business combination for any number of reasons including those beyond our control. Any such event will result in a loss
to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our business combination, our public shareholders may receive only approximately $10.10 per share
on the liquidation of our trust account and our rights and warrants will expire worthless.
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, Mr. Liu and our other officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our business
combination. In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating management time among various business activities, including identifying potential business
combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life
of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
Our
ability to successfully effect our business combination and to be successful thereafter will be totally dependent upon the efforts of
our key personnel, some of whom may join us following our business combination. The loss of key personnel could negatively impact the
operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key personnel
in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our business combination, it is likely that some or all of the management of the
target business will remain in place. While we intend to closely scrutinize any individuals we engage after our business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become
familiar with such requirements.
Our
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 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, subject to his or her fiduciary
duties under Cayman Islands law. However, we believe the ability of such individuals to remain with us after the completion of our business
combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination. We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as
to whether any of our key personnel will remain with us will be made at the time of our business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our business combination
with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the
target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any shareholders who choose
to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such shareholders are
unlikely to have a remedy for such reduction in value.
The
officers and directors of an acquisition candidate may resign upon completion of our business combination. The departure of a business
combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The
role of an acquisition candidates’ key personnel upon the completion of our business combination cannot be ascertained at this
time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the
acquisition candidate following our business combination, it is possible that members of the management of an acquisition candidate will
not wish to remain in place.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our business
combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other businesses. We do not intend
to have any full-time employees prior to the completion of our business combination. Each of our officers is engaged in several other
business endeavors for which he or she may be entitled to substantial compensation and our officers are not obligated to contribute any
specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities.
If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact
on our ability to complete our business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Following
the completion of our IPO and until we consummate our business combination, we intend to engage in the business of identifying and combining
with one or more businesses. Our sponsor and officers and directors are, or may in the future become, affiliated with other blank check
companies like ours or other entities (such as operating companies or investment vehicles) that are engaged in making and managing investments
in a similar business.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to other entities prior to its presentation to us, subject to his or her fiduciary duties under Cayman
Islands law.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors
or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for
their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers and directors. Our officers and directors also serve as officers and board members for other entities,
Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our business combination with any entities with which they are affiliated, and there
have been no preliminary discussions concerning a business combination with any such entity or entities. Despite our agreement to obtain
an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type
of company we are seeking to acquire or an independent accounting firm, regarding the fairness to our company from a financial point
of view of a business combination with one or more domestic or international businesses affiliated with our officers, directors or existing
holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous
to our public shareholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our business combination.
In
August 2019, our sponsor purchased an aggregate of 1,150,000 founder shares for an aggregate purchase price of $25,000, or approximately
$0.02 per share. Prior to the investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible.
As such, our sponsor will own approximately 22.7% of our issued and outstanding shares after our IPO and taking into account ownership
of the Private Units). If we increase or decrease the size of the offering, we will effect a capitalization or share surrender
or redemption or other appropriate mechanism, as applicable, immediately prior to the consummation of the offering in such amount as
to maintain the ownership of our sponsor prior to our IPO at 20% of our issued and outstanding ordinary shares upon the consummation
of our IPO (assuming it does not purchase units in our IPO and not taking into account ownership of the Private Units). The
founder shares will be worthless if we do not complete a business combination. In addition, our sponsor has purchased an aggregate of
225,000 Private Units, for a purchase price of $ $2,250,000 or $10.00 per unit, that will also be worthless if we do not complete
a business combination.
Each
Private Unit consists of one private placement share, one private placement right, granting the holder thereof the right to
receive one-tenth (1/10) of an ordinary share upon the consummation of an business combination, and one private placement warrant. Each
private placement warrant may be exercised for one-half of one ordinary share at a price of $11.50 per whole share, subject to adjustment
as provided herein.
The
founder shares are identical to the ordinary shares included in the units being sold in our IPO except that (i) the founder shares are
subject to certain transfer restrictions and (ii) our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed (A) to waive their redemption rights with respect to their founder shares, private placement shares and public
shares in connection with the completion of our business combination, (B) to waive their redemption rights with respect to any founder
shares, private placement shares and public shares held by them in connection with a stockholder vote to approve an amendment to our
amended and restated memorandum and articles of association (x) to modify the substance or timing of our obligation to provide for the
redemption of our public shares in connection with an business combination or to redeem 100% of our public shares if we have not consummated
our business combination within the timeframe set forth therein or (y) with respect to any other provision relating to stockholders’
rights or pre-business combination activity and (C) to waive their rights to liquidating distributions from the trust account with respect
to their founder shares and private placement shares if we fail to complete our business combination within 12 months from the closing
of our IPO (or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination) (although
they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete
our business combination within the prescribed time frame).
The
personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business
combination, completing an business combination and influencing the operation of the business following the business combination.
Since
our sponsor, officers and directors may not be eligible to be reimbursed for their out-of-pocket expenses if our business combination
is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for
our business combination.
At
the closing of our business combination, our sponsor, officers and directors, or any of their respective affiliates, will be reimbursed
for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and
performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred in connection with activities on our behalf. These financial interests of our sponsor, officers and directors may influence
their motivation in identifying and selecting a target business combination and completing a business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although
we have no commitments as of the date of this report to issue any notes or other debt securities, or to otherwise incur outstanding debt
following our IPO, we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies
held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account.
Nevertheless, the incurrence of debt could have a variety of negative effects, including:
● default
and foreclosure on our assets if our operating revenues after an business combination are insufficient to repay our debt obligations;
● acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
● our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
● our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding;
● our
inability to pay dividends on our ordinary shares;
● using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
● limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
● increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
● limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of
our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We
may only be able to complete one business combination with the proceeds of our IPO and the sale of the Private Units, which
will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
Of
the net proceeds from our IPO and the sale of the Private Units, $46,460,000 is available to complete our business combination
and pay related fees and expenses (which includes up to approximately $1,150,000 for the payment of deferred underwriting commissions).
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a short
period of time. However, we may not be able to effectuate our business combination with more than one target business because of various
factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on
a combined basis. By completing our business combination with only a single entity our lack of diversification may subject us to numerous
economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
● solely
dependent upon the performance of a single business, property or asset; or
● dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our business combination. With multiple business combinations, we could
also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations
(if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or
products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We
may attempt to complete our business combination with a private company about which little information is available, which may result
in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our business combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable
as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our 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 a business combination so that the post-transaction company in which our public shareholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not
consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities
of the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new ordinary shares in exchange for all of the outstanding capital stock of a
target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of
new ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our issued and outstanding
ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting
in a single person or group obtaining a larger share of the company’s 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.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
a business combination with which a substantial majority of our shareholders do not agree.
Our
amended and restated memorandum and articles of association will not provide a specified maximum redemption threshold, except that in
no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting
commissions, to be less than $5,000,001 upon consummation of our business combination (such that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating
to our business combination. As a result, we may be able to complete our business combination even though a substantial majority of our
public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our business
combination and do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, have entered
into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event
the aggregate cash consideration we would be required to pay for all ordinary shares that are validly submitted for redemption plus any
amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of
cash available to us, we will not complete the business combination or redeem any shares, all ordinary shares submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
Investors
may view our units as less attractive than those of other blank check companies.
Unlike
other blank check companies that sell units comprised of shares and warrants each to purchase one full share in their public offerings,
we are selling units comprised of ordinary shares, rights entitling the holder to receive one-tenth (1/10) of one ordinary share, and
warrants to purchase one-half (½) of one ordinary share. The rights and warrants will not have any voting rights and will expire
and be worthless if we do not consummate an business combination. Furthermore, no fractional shares will be issued upon exercises of
the warrants and it is not our intent to issue fractional shares upon conversion of any rights. As a result, unless you acquire at least
two warrants, you will not be able to receive a share upon exercise of your warrants and if you acquire less than ten rights, you may,
in our discretion, not receive one whole share. Any rounding down and extinguishment may be done with or without any in lieu cash payment
or other compensation being made to the holder of the relevant rights. Accordingly, investors in our IPO will not be issued the same
securities as part of their investment as they may have in other blank check company offerings, which may have the effect of limiting
the potential upside value of your investment in our company.
Because
each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units
of other blank check companies.
Each
unit contains one redeemable warrant to acquire one-half ordinary share. No fractional warrants will be issued upon separation of the
units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade
a whole warrant. This is different from other offerings similar to ours whose units include one share and one warrant to purchase one
whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon
completion of a business combination since the warrants will be exercisable in the aggregate for one half of the number of shares compared
to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target
businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included a warrant to purchase one whole
share.
In
order to effectuate an business combination, blank check companies have, in the recent past, amended various provisions of their charters
and modified governing instruments. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles
of association or governing instruments in a manner that will make it easier for us to complete our business combination that our shareholders
may not support.
In
order to effectuate a business combination, blank check companies have, in the past, amended various provisions of their charters and
modified governing instruments. For example, blank check companies have amended the definition of business combination, increased redemption
thresholds and extended the period of time in which it had to consummate a business combination. We cannot assure you that we will not
seek to amend our amended and restated memorandum and articles of association or governing instruments or extend the time in which we
have to consummate a business combination through amending our amended and restated memorandum and articles of association, each of which
will require a special resolution of our shareholders as a matter of Cayman Islands law, meaning a resolution passed by holders of at
least two thirds of our ordinary shares who are eligible to vote and attend and vote in a general meeting of the company’s shareholders.
The
provisions of our amended and restated memorandum and articles of association that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account), including an amendment to permit us
to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is
substantially reduced or eliminated, may be amended with the approval of holders of at least two-thirds of our ordinary shares who attend
and vote in a general meeting, which is a lower amendment threshold than that of some other blank check companies. It may be easier for
us, therefore, to amend our amended and restated memorandum and articles of association and the trust agreement to facilitate the completion
of an business combination that some of our shareholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those
which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
shareholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s public
shareholders. Our amended and restated memorandum and articles of association will provide that any of its provisions, including those
related to pre-business combination activity (including the requirement to deposit proceeds of our IPO and the private placement of warrants
into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders
as described herein and in our amended and restated memorandum and articles of association or an amendment to permit us to withdraw funds
from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated), may be amended if approved by holders of at least two-thirds of our ordinary shares who attend and vote in a general
meeting, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if
approved by holders of 65% of our ordinary shares. We may not issue additional securities that can vote on amendments to our amended
and restated memorandum and articles of association. Our sponsor, which will beneficially own approximately 21.7% of our ordinary shares
upon the closing of our IPO (assuming it does not purchase units in our IPO and taking into account ownership of the Private Units), will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement
and will have the discretion to vote in any manner it chooses. As a result, we may be able to amend the provisions of our amended and
restated memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank
check companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may
pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
Certain
agreements related to our IPO may be amended without shareholder approval.
Certain
agreements, including the underwriting agreement relating to our IPO, the investment management trust agreement between us, Wilmington
Trust Company and Vstock Transfer LLC, the letter agreement among us and our sponsor, officers, directors and director nominees, the
registration rights agreement among us and our sponsor and the administrative services agreement between us and our sponsor, may be amended
without shareholder approval. These agreements contain various provisions that our public shareholders might deem to be material. For
example, the underwriting agreement related to our IPO contains a covenant that the target company that we acquire must have a fair market
value equal to at least 80% of the balance in the trust account at the time of signing the definitive agreement for the transaction with
such target business (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) so
long as we obtain and maintain a listing for our securities on the NASDAQ. While we do not expect our board to approve any amendment
to any of these agreements prior to our business combination, it may be possible that our board, in exercising its business judgment
and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection with the consummation
of our business combination. Any such amendment may have an adverse effect on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our business combination or to fund the operations and growth of a target business,
which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our IPO and the sale of the Private Units will be sufficient to allow us to complete our
business combination, because we have not yet identified any prospective target business we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of our IPO and the sale of the Private Units prove to be insufficient,
either because of the size of our business combination, the depletion of the available net proceeds in search of a target business, the
obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection with our business combination
or the terms of negotiated transactions to purchase shares in connection with our business combination, we may be required to seek additional
financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms,
if at all. To the extent that additional financing proves to be unavailable when needed to complete our business combination, we would
be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business
candidate. In addition, even if we do not need additional financing to complete our business combination, we may require such financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide
any financing to us in connection with or after our business combination. If we are unable to complete our business combination, our
public shareholders may only receive approximately $10.10 per share on the liquidation of our trust account, and our rights and warrants
will expire worthless. In certain circumstances, our public shareholders may receive less than $10.10 per share on the redemption of
their shares.
Our
sponsor paid an aggregate of $25,000, or approximately $0.02 per founder share, and, accordingly, you will experience immediate and substantial
dilution upon the purchase of our ordinary shares.
The
difference between the public offering price per share (allocating all of the unit purchase price to the ordinary shares, including the
ordinary shares underlying the rights included in the units, and none to the warrants included in the units) and the pro forma net tangible
book value per ordinary share after our IPO constitutes the dilution to you and the other investors in our IPO. Our sponsor acquired
the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of our IPO, and assuming no value
is ascribed to the warrants included in the units, you and the other public shareholders will incur an immediate and substantial dilution
of approximately 75.58% (or $6.87 per share, assuming no exercise of the underwriters’ over-allotment option), the difference between
the pro forma net tangible book value per share of $2.22 and the offering price of $9.09 per unit.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
a majority of the then issued and outstanding warrants.
Our
warrants have been 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, but requires the approval by the holders of a majority of the then issued and outstanding warrants (including private
warrants) to make any change that adversely affects the interests of the registered holders of warrants. Accordingly, we may amend the
terms of the warrants in a manner adverse to a holder if holders of a majority of the then issued and outstanding warrants (including
private warrants) approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of a majority
of the then issued and outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the warrants, shorten the exercise period or decrease the number of ordinary shares purchasable upon exercise of
a warrant.
Our
warrant agreement and rights agreement with our transfer agent will designate the courts of the State of New York or the United States
District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that
may be initiated by holders of our warrants, which could limit the ability of warrant holders or rights holders to obtain a favorable
judicial forum for disputes with our company.
Our
warrant agreement and rights agreement with our transfer agent, which govern the terms of the warrants and rights, respectively, will
provide 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 and rights 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 and rights 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.
Other
than with respect to claims under the Securities Act or Exchange Act, this choice-of-forum provision may limit a warrant holder’s
or right’s 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.
We
may amend the terms of the rights in a manner that may be adverse to holders of public rights with the approval by the holders of a majority
of the then issued and outstanding rights.
Our
rights have been issued in registered form under a rights agreement between Vstock Transfer LLC, as rights agent, and us. The rights
agreement provides that the terms of the rights may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of a majority of the then issued and outstanding rights (including private
rights) to make any change that adversely affects the interests of the registered holders of rights. Accordingly, we may amend the terms
of the rights in a manner adverse to a holder if holders of a majority of the then issued and outstanding rights (including private rights)
approve of such amendment.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of our ordinary shares equal or exceed $18.00 per share (as adjusted for
share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading
days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant
holders. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares upon exercise
of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such
registration or qualification. We will use our best efforts to register or qualify such shares under the blue sky laws of the state of
residence in those states in which the warrants were offered by us in our IPO. Redemption of the outstanding warrants could force you
(i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to
sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal
redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market
value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by our sponsor or its
permitted transferees.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive
fewer ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise their warrants
for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in this report have been satisfied, our
management will have the option to require any holder that wishes to exercise his warrant (including any warrants held by our sponsor,
officers or directors, other purchasers of our founders’ units, or their permitted transferees) to do so on a “cashless basis.”
If our management chooses to require holders to exercise their warrants on a cashless basis, the number of ordinary shares received by
a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect
of reducing the potential “upside” of the holder’s investment in our company.
Our
rights, warrants and founder shares may have an adverse effect on the market price of our ordinary shares and make it more difficult
to effectuate our business combination.
We
have issued rights to acquire 460,000 of our ordinary shares and warrants to purchase 2,300,000 of our ordinary shares as part of the
units offered in our IPO and, simultaneously with the closing of our IPO, an aggregate of 225,000 Private Units in a private
placement, each unit consisting of one private placement share, one private placement right, granting the holder thereof the right to
receive one-tenth (1/10) of an ordinary share upon the consummation of an business combination, and one private placement warrant. In
each case, the warrants are exercisable to purchase one-half of one ordinary share at a price of $11.50 per whole share, subject to adjustment
as provided herein. Prior to our IPO, our sponsor purchased an aggregate of 1,150,000 founder shares in a private placement. In addition,
if our sponsor makes any working capital loans, up to $1,500,000 of such loans may be converted into units, at the price of $10.00 per
unit (which, for example, would result in the holders being issued 165,000 ordinary shares if $1,500,000 of notes were so converted (including
15,000 shares upon the closing of our business combination in respect of 150,000 rights included in such units), as well as 150,000 warrants
to purchase 75,000 shares) at the option of the lender. Such units would be identical to the Private Units. To the extent we
issue ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial number of additional ordinary
shares upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business.
Any such issuance will increase the number of issued and outstanding ordinary shares and reduce the value of the ordinary shares issued
to complete the business transaction. Therefore, our rights, warrants and founder shares may make it more difficult to effectuate a business
combination or increase the cost of acquiring the target business.
The
Private Units are identical to the units sold in our IPO except that, so long as the private placement warrants are held by
our sponsor, or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the ordinary shares issuable upon
exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the sponsor until 30
days after the completion of our business combination and (iii) they may be exercised by the holders on a cashless basis.
The
determination of the offering price of our units and the size of our IPO is more arbitrary than the pricing of securities and size of
an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our
units properly reflects the value of such units than you would have in a typical offering of an operating company.
Prior
to our IPO there had been no public market for any of our securities. The public offering price of the units and the terms of the warrants
and rights were negotiated between us and the underwriters. In determining the size of our IPO, management held customary organizational
meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets,
generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the
size of our IPO, prices and terms of the units, including the ordinary shares, rights and warrants underlying the units, include:
● the
history and prospects of companies whose principal business is the acquisition of other companies;
● prior
offerings of those companies;
● our
prospects for acquiring an operating business at attractive values;
● a
review of debt to equity ratios in leveraged transactions;
● our
capital structure;
● an
assessment of our management and their experience in identifying operating companies;
● general
conditions of the securities markets at the time of our IPO; and
● other
factors as were deemed relevant.
Although
these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an operating
company in a particular industry since we have no historical operations or financial results.
Because
we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards Board,
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the
standards of the Public Company Accounting Oversight Board (United States), or the Public Company Accounting Oversight Board (United
States) (“PCAOB”). These financial statement requirements may limit the pool of potential target businesses we may acquire
because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy
rules and complete our business combination within the prescribed time frame.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more
difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including
if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case
we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities
less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading
market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accountant standards used.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated
filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control
over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public
companies because a target company with which we seek to complete our business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Because
we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to
protect your rights through the U.S. Federal courts may be limited.
We
are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service
of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against
our directors or officers.
Our
corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (as the same may
be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against
the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are
to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively
limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive
authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of
our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions
in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and
certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman
Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We
have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce
against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of
the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated
upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed
by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of
judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign
court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes
upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign
judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in
respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the
grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy
of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court
may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As
a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken
by management, members of the Board of Directors or controlling shareholders than they would as public shareholders of a United States
company.
Provisions
in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our ordinary shares and could entrench management.
Our
amended and restated memorandum and articles of association will contain provisions that may discourage unsolicited takeover proposals
that shareholders may consider to be in their best interests. These provisions include two-year director terms and the ability of the
Board of Directors to designate the terms of and issue new series of preference shares, which may make more difficult the removal of
management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Risks
Associated with Acquiring and Operating a Business Outside of the United States
If
we effect our business combination with a company located outside of the United States, we would be subject to a variety of additional
risks that may negatively impact our operations.
If
we effect our business combination with a company located outside of the United States, 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:
● rules
and regulations or currency redemption or corporate withholding taxes on individuals;
● laws
governing the manner in which future business combinations may be effected;
● tariffs
and trade barriers;
● regulations
related to customs and import/export matters;
● longer
payment cycles;
● tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
● currency
fluctuations and exchange controls;
● rates
of inflation;
● challenges
in collecting accounts receivable;
● cultural
and language differences;
● employment
regulations;
● crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and
● deterioration
of political relations with the United States which could result in any number of difficulties, both normal course such as above or extraordinary
such as sanctions being imposed. We may not be able to adequately address these additional risks. If we were unable to do so, our operations
might suffer.
After
our business combination, it is possible that a majority of our directors and officers will live outside the United States and all of
our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their
other legal rights.
It
is possible that after our business combination, a majority of our directors and officers will reside outside of the United States and
all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for
investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to
enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under
United States laws.
In
particular, investors should be aware that there is uncertainty as to whether the courts of the Cayman Islands or any other applicable
jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the
civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions
brought in the Cayman Islands or any other applicable jurisdiction’s courts against us or our directors or officers predicated
upon the securities laws of the United States or any state in the United States.
If
our management following our business combination is unfamiliar with United States securities laws, they may have to expend time and
resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our business combination, any or all of our management could resign from their positions as officers of the Company, and the management
of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar
with United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time
and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues
which may adversely affect our operations.
If
we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates
will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able
to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets
would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a
result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our
directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our
directors and officers under Federal securities laws.
Because
of the costs and difficulties inherent in managing cross-border business operations after we acquire it, our results of operations may
be negatively impacted following a business combination.
Managing
a business, operations, personnel or assets in another country is challenging and costly. Management of the target business that we may
hire (whether based abroad or in the U.S.) may be inexperienced in cross-border business practices and unaware of significant differences
in accounting rules, legal regimes and labor practices. Even with a seasoned and experienced management team, the costs and difficulties
inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely domestic
business) and may negatively impact our financial and operational performance.
Many
countries, and especially those in emerging markets, have difficult and unpredictable legal systems and underdeveloped laws and regulations
that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.
Our
ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to defend
ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could adversely impact
our operations, assets or financial condition.
Rules
and regulations in many countries, including some of the emerging markets within the regions we will initially focus, are often ambiguous
or open to differing interpretation by responsible individuals and agencies at the municipal, state, regional and federal levels. The
attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent.
Delay
with respect to the enforcement of particular rules and regulations, including those relating to customs, tax, environmental and labor,
could cause serious disruption to operations abroad and negatively impact our results.
After
our business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may
be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant
extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. The economies in developing markets we will initially focus on differ from the economies of most developed countries in
many respects. Such economic growth has been uneven, both geographically and among various sectors of the economy and such growth may
not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our business combination and if we effect
our business combination, the ability of that target business to become profitable.
Exchange
rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In
the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, the dollar equivalent
of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value
of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions.
Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business
or, following consummation of our business combination, our financial condition and results of operations. Additionally, if a currency
appreciates in value against the dollar prior to the consummation of our business combination, the cost of a target business as measured
in dollars will increase, which may make it less likely that we are able to consummate such transaction.
Because
our business objective includes the possibility of acquiring one or more operating businesses with primary operations in emerging markets
we will focus on, changes in the exchange rate between the U.S. dollar and the currency of any relevant jurisdiction may affect our ability
to achieve such objective. For instance, the exchange rates between the Turkish lira or the Indian rupee and the U.S. dollar has changed
substantially in the last two decades and may fluctuate substantially in the future. If the U.S. dollar declines in value against the
relevant currency, any business combination will be more expensive and therefore more difficult to complete. Furthermore, we may incur
costs in connection with conversions between U.S. dollars and the relevant currency, which may make it more difficult to consummate a
business combination.
Because
foreign law could govern almost all of our material agreements, we may not be able to enforce our rights within such jurisdiction or
elsewhere, which could result in a significant loss of business, business opportunities or capital.
Foreign
law could govern almost all of our material agreements. The target business may not be able to enforce any of its material agreements
or that remedies will be available outside of such foreign jurisdiction’s legal system. The system of laws and the enforcement
of existing laws and contracts in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
Judiciaries in such jurisdiction may also be relatively inexperienced in enforcing corporate and commercial law, leading to a higher
than usual degree of uncertainty as to the outcome of any litigation. As a result, the inability to enforce or obtain a remedy under
any of our future agreements could result in a significant loss of business and business opportunities.
Corporate
governance standards in foreign countries may not be as strict or developed as in the United States and such weakness may hide issues
and operational practices that are detrimental to a target business.
General
corporate governance standards in some countries are weak in that they do not prevent business practices that cause unfavorable related
party transactions, over-leveraging, improper accounting, family company interconnectivity and poor management. Local laws often do not
go far to prevent improper business practices. Therefore, shareholders may not be treated impartially and equally as a result of poor
management practices, asset shifting, conglomerate structures that result in preferential treatment to some parts of the overall company,
and cronyism. The lack of transparency and ambiguity in the regulatory process also may result in inadequate credit evaluation and weakness
that may precipitate or encourage financial crisis. In our evaluation of a business combination we will have to evaluate the corporate
governance of a target and the business environment, and in accordance with United States laws for reporting companies take steps to
implement practices that will cause compliance with all applicable rules and accounting practices. Notwithstanding these intended efforts,
there may be endemic practices and local laws that could add risk to an investment we ultimately make and that result in an adverse effect
on our operations and financial results.
Companies
in foreign countries may be subject to accounting, auditing, regulatory and financial standards and requirements that differ, in some
cases significantly, from those applicable to public companies in the United States, which may make it more difficult or complex to consummate
a business combination. In particular, the assets and profits appearing on the financial statements of a foreign company may not reflect
its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance
with U.S. GAAP and there may be substantially less publicly available information about companies in certain jurisdictions than there
is about comparable United States companies. Moreover, foreign companies may not be subject to the same degree of regulation as are United
States companies with respect to such matters as insider trading rules, tender offer regulation, shareholder proxy requirements and the
timely disclosure of information.
Legal
principles relating to corporate affairs and the validity of corporate procedures, directors’ fiduciary duties and liabilities
and shareholders’ rights for foreign corporations may differ from those that may apply in the U.S., which may make the consummation
of a business combination with a foreign company more difficult. We therefore may have more difficulty in achieving our business objective.
Because
a foreign judiciary may determine the scope and enforcement of almost all of our target business’ material agreements under the
law of such foreign jurisdiction, we may be unable to enforce our rights inside and outside of such jurisdiction.
The
law of a foreign jurisdiction may govern almost all of our target business’ material agreements, some of which may be with governmental
agencies in such jurisdiction. We cannot assure you that the target business or businesses will be able to enforce any of their material
agreements or that remedies will be available outside of such jurisdiction. The inability to enforce or obtain a remedy under any of
our future agreements may have a material adverse impact on our future operations.
A
slowdown in economic growth in the markets that our business target operates in may adversely affect our business, financial condition,
results of operations, the value of its equity shares and the trading price of our shares following our business combination.
Following
the business combination, our results of operations and financial condition may be dependent on, and may be adversely affected by, conditions
in financial markets in the global economy, and, particularly in the markets where the business operates. The specific economy could
be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies,
business corruption, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, inflation,
commodity and energy prices and various other factors which may adversely affect our business, financial condition, results of operations,
value of our equity shares and the trading price of our shares following the business combination.
Regional
hostilities, terrorist attacks, communal disturbances, civil unrest and other acts of violence or war may result in a loss of investor
confidence and a decline in the value of our equity shares and trading price of our shares following our business combination.
Terrorist
attacks, civil unrest and other acts of violence or war may negatively affect the markets in which we may operates our business following
our business combination and also adversely affect the worldwide financial markets. In addition, the countries we will focus on, have
from time to time experienced instances of civil unrest and hostilities among or between neighboring countries. Any such hostilities
and tensions may result in investor concern about stability in the region, which may adversely affect the value of our equity shares
and the trading price of our shares following our business combination. Events of this nature in the future, as well as social and civil
unrest, could influence the economy in which our business target operates, and could have an adverse effect on our business, including
the value of equity shares and the trading price of our shares following our business combination.
The
occurrence of natural disasters may adversely affect our business, financial condition and results of operations following our business
combination.
The
occurrence of natural disasters, including hurricanes, floods, earthquakes, tornadoes, fires and pandemic disease may adversely affect
our business, financial condition or results of operations following our business combination. The potential impact of a natural disaster
on our results of operations and financial position is speculative, and would depend on numerous factors. The extent and severity of
these natural disasters determines their effect on a given economy. Although the long term effect of diseases such as the H5N1 “avian
flu,” or H1N1, the swine flu, cannot currently be predicted, previous occurrences of avian flu and swine flu had an adverse effect
on the economies of those countries in which they were most prevalent. An outbreak of a communicable disease in our market could adversely
affect our business, financial condition and results of operations following our business combination. We cannot assure you that natural
disasters will not occur in the future or that its business, financial condition and results of operations will not be adversely affected.
Any
downgrade of credit ratings of the country in which the company we acquire does business may adversely affect our ability to raise debt
financing following our business combination.
No
assurance can be given that any rating organization will not downgrade the credit ratings of the sovereign foreign currency long-term
debt of the country in which our business target operates, which reflect an assessment of the overall financial capacity of the government
of such country to pay its obligations and its ability to meet its financial commitments as they become due. Any downgrade could cause
interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our future
variable rate debt and our ability to access the debt markets on favorable terms in the future. This could have an adverse effect on
our financial condition following our business combination.
Returns
on investment in foreign companies may be decreased by withholding and other taxes.
Our
investments will incur tax risk unique to investment in developing economies. Income that might otherwise not be subject to withholding
of local income tax under normal international conventions may be subject to withholding of income tax in a developing economy. Additionally,
proof of payment of withholding taxes may be required as part of the remittance procedure. Any withholding taxes paid by us on income
from our investments in such country may or may not be creditable on our income tax returns. We intend to seek to minimize any withholding
tax or local tax otherwise imposed. However, there is no assurance that the foreign tax authorities will recognize application of such
treaties to achieve a minimization of such tax. We may also elect to create foreign subsidiaries to effect the business combinations
to attempt to limit the potential tax consequences of a business combination.
Risks
Related to Our Possible Business Combination in China
We
may consummate our initial Business Combination with a target company in PRC, or a company with its operations conducted through its
subsidiary in the PRC or through contractual arrangements with a variable interest entity (“VIE”) in the PRC. Under
a VIE structure, we do not own any direct equity interest in the VIE, and control and receive the economic benefits of the VIE’s
business operations through certain contractual arrangements in lieu of direct equity ownership by us or any of our subsidiaries.
A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without
additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such
as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of
the entity. We will have the power to direct activities at the VIE that most significantly impacts the VIE’s economic performance,
and has the right to receive benefits from the VIE. As such, we will exert control over the VIE and is the primary beneficiary of the
VIE, for accounting purposes, based upon such contractual arrangements. Accordingly, under U.S. GAAP, the financial results of the VIE
are consolidated in our financial statements. All the agreements under our contractual arrangements with the VIE and its equity
owners are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts
would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. As of the
date hereof, the agreements governed by PRC law that serve as the basis for a VIE arrangement have not been tested in a court of law.
As a result, uncertainties in the PRC legal system may limit our ability to enforce these contractual arrangements. Currently, there
are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or
enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action
become necessary. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles
in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the VIE. These uncertainties
or an adverse outcome of an arbitration may adversely affect our operations and could render our securities worthless.
Our
business combination target, VIYI, is not an operating company in the PRC but a Cayman Islands holding company with its operations conducted
through its subsidiaries in the PRC and through contractual arrangements with the VIE, Shenzhen Yitian, which is incorporated
in the PRC. VIYI does not own any direct equity interest in Shenzhen Yitian, instead, VIYI controls and receives the economic benefits
of Shenzhen Yitian’s business operations through certain contractual arrangements in lieu of direct equity ownership by VIYI’s
wholly owned foreign entity, or WFOE or any of its subsidiaries. If we complete the Business Combination, we anticipate that VIYI will
continue conducting its business operations through Shenzhen Yitian and will continue to control and receive economic benefits from Shenzhen
Yitian and its subsidiary through a series of contractual arrangements and VIYI will continue to be the primary beneficiary of the
VIE.
If
we merge with a target company with major operation in PRC through the VIE structure, after the completion of the Business Combination,
our ordinary shares will not represent equity interest of the VIE or its subsidiary in the PRC. As a result of our corporate structure
after the consummation of the Business Combination, investors in our ordinary shares are subject to unique risks affecting our business
due to uncertainty of the interpretation and application of the PRC laws and regulations, including but not limited to, limitations on
foreign ownership and investment in certain areas, regulatory review of overseas listing of PRC companies through a special purpose vehicle,
and the validity and enforcement of the contractual agreements with the VIE.
In
light of the recent statements and regulatory actions by the PRC government, such as those related to the use of variable interest entities,
data security, and anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the PRC government
in this regard, which may result in a material change in our operations, including the ability of us to carry on our current business
or accept foreign investments, and the resulting adverse change in value to our ordinary shares. We may also be subject to penalties
and sanctions imposed by the PRC regulatory agencies, including the Chinese Securities Regulatory Commission (“CSRC”), if
we fail to comply with such rules and regulations, which could adversely affect the ability of us to continue to be listed for trading
on Nasdaq or another foreign exchange, which may cause the value of our securities to significantly decline or become worthless. The
Holding Foreign Companies Accountable Act (“HFCAA”) and related regulations call for additional and more stringent criteria
to be applied to emerging market companies upon assessing the qualification of their auditors and could add uncertainties to us that
trading in our securities may be prohibited under the HFCAA. Currently, our auditor is registered with PCAOB. Therefore, it is not subject
to the determinations announced by the PCAOB on December 16, 2021.
If
we effect our initial business combination with a business located in the in the People’s Republic of China, the laws applicable
to such 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 business located in the PRC, the laws of the country in which such business operates
will govern almost all of the material agreements relating to its operations, including any contractual arrangements through which we
acquire control of target business as described above. We cannot assure you that we or the target business will be able to enforce any
of its material agreements or that remedies will be available in this 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. In addition, the judiciary
in the PRC is relatively inexperienced compared to others in enforcing corporate and commercial law, leading to a higher than usual degree
of uncertainty as to the outcome of any litigation. In addition, to the extent that our target business’s material agreements are
with governmental agencies in the PRC, we may not be able to enforce or obtain a remedy from such agencies due to sovereign immunity,
in which the government is deemed to be immune from civil lawsuit or criminal prosecution. The inability to enforce or obtain a remedy
under any of our future agreements could result in a significant loss of business, business opportunities or capital.
If
the PRC government finds that the agreements that establish the structure for operating business in China do not comply with PRC regulations
relating to the relevant industries, or if these regulations or their interpretation change in the future, we could be subject to severe
penalties or be forced to relinquish our interests in those operations.
Foreign
ownership of the telecommunication business and certain other businesses in China is extensively regulated and subject to numerous restrictions.
Pursuant to the Special Administrative Measures for Access of Foreign Investment (Negative List) (2020 Edition), or the Negative List,
and Administrative Provisions on Foreign-Invested Telecommunications Enterprises (Revised in 2016), foreign investors are generally
not allowed to own more than 50% of the equity interests in a commercial internet content provider or other value-added telecommunication
service provider other than operating e-commerce, and the major foreign investor in a value-added telecommunication service provider
in China must have experience in providing value-added telecommunications services overseas and maintain a good track record in
accordance with the Negative List, Administrative Provisions on Foreign-Invested Telecommunications Enterprises (Revised in 2016)
and other applicable laws and regulations. In addition, foreign investors are prohibited from investing in companies engaged in online
operating business, internet audio-visual programs business, internet culture business and radio and television program production
business.
Our
current business combination target, VIYI, is a Cayman Islands exempted company and its PRC subsidiaries are currently considered foreign-invested enterprises.
Accordingly, none of VIYI’s PRC subsidiaries are eligible to operate internet content services, online culture activities or other
businesses which foreign-owned companies are prohibited or restricted from conducting in the PRC. To ensure strict compliance with
the PRC laws and regulations, VIYI conducts such business activities through the VIEs and their subsidiaries. Its subsidiaries in the
PRC have entered into a series of contractual arrangements with the VIEs and their respective shareholders, in order for VIYI to (i) exercise
effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive
option to purchase the equity interests in the VIEs. As a result of these contractual arrangements, VIYI has control over and is the
primary beneficiary of the VIEs and hence consolidates their financial results as the VIEs under U.S. GAAP.
We
have been advised that in the opinion of VIYI’s PRC counsel: (a) VIYI’s ownership structure and contractual agreements with
the VIE comply with PRC laws and do not and will not violate applicable PRC laws currently in effect; (b) each of the agreements between
VIYI and the VIE and the associated contractual agreements which form the basis of VIYI’s control over Shenzhen Yitian is valid,
binding and enforceable in accordance with its terms and applicable PRC laws currently in effect, and will not violate any applicable
PRC laws currently in effect. However, VIYI has been further advised by its PRC counsel that there are substantial uncertainties regarding
the interpretation and application of the current and future PRC laws and regulations, and there can be no assurance that the PRC Authorities
will not take a view that is contrary to or otherwise different from the opinions stated above.
If
the PRC government finds that these contractual arrangements do not comply with its restrictions on foreign investment in the telecommunication
business and certain other businesses, or if the PRC government otherwise finds that VIYI, the VIEs, or any of its subsidiaries is in
violation of PRC laws or regulations or lacks the necessary permits or licenses to operate its business, the relevant PRC regulatory
authorities, including the MIIT and the Ministry of Commerce of the People’s Republic of China (“MOFCOM”), would have
broad discretion in dealing with such violations or failures, including:
● revoking
the business licenses and/or operating licenses of such entities;
● discontinuing
or placing restrictions or onerous conditions on its operation through any transactions between its PRC subsidiaries and VIEs;
● imposing
fines, confiscating the income from VIYI’s PRC subsidiaries or the VIEs, or imposing other requirements with which they may not
be able to comply;
● requiring
VIYI to restructure ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering
the equity pledges of the VIEs, which in turn would affect its ability to consolidate, derive economic interests from, or exert effective
control over the VIEs; or
● restricting
or prohibiting VIYI’s use of the proceeds it receives from its offshore financing activities to finance its business and operations
in China.
Any
of these events could cause significant disruption to VIYI’s business operations and severely damage its reputation, which would
in turn materially and adversely affect its business, financial condition and results of operations. If occurrence of any of these events
results in its inability to direct the activities of the VIEs or assert contractual control rights over the assets of its PRC subsidiaries
that most significantly impacts their economic performance and/or its failure to receive the economic benefits from the VIEs, VIYI may
not be able to consolidate the entities in its consolidated financial statements in accordance with U.S. GAAP and its shares may decline
in value or become worthless.
Substantial
uncertainties exist with respect to the enactment timetable, interpretation and implementation of PRC Foreign Investment Law and how
it may impact the viability of VIYI’s current corporate structure, corporate governance and business operations.
In
March 2019, the Standing Committee of the National People’s Congress of the PRC passed the Foreign Investment Law of the People’s
Republic of China (“Foreign Investment Law”). Among other things, the Foreign Investment Law defines the “foreign investment”
as the investment activities in China conducted by foreign individuals, enterprises and other organizations (collectively, the “Foreign
Investors”) in a direct or indirectly manner, including any of the following circumstances: (1) the foreign investor establishes
a foreign-invested enterprise within the territory of China, independently or jointly with any other investor; (2) the foreign
investor acquires shares, equities, property shares or any other similar rights and interests of an enterprise within the territory of
China; (3) the foreign investor makes investment to initiate a new project within the territory of China, independently or jointly
with any other investor; and (4) the foreign investor makes investment in any other way stipulated by laws, administrative regulations
or provisions of the State Council. The Foreign Investment Law leaves uncertainty with respect to whether Foreign Investors control PRC
onshore variable interest entities via contractual arrangements will be recognized as “foreign investment.” PRC governmental
authorities will administrate foreign investment by applying the principal of pre-entry national treatment together with a “negative
list” (the “Negative List”, which shall be promulgated by or promulgated with approval by the State Counsel), to be
specific, Foreign Investors are prohibited from making any investments in the fields which are catalogued into prohibited industries
for foreign investment based on the Negative List, while Foreign Investors are allowed to make investments in the restricted industries
provided that all the requirements and conditions as set forth in the Negative List have been satisfied; when Foreign Investors make
investments in the fields other than those included in the Negative List, the national treatment principle shall apply. Besides, certain
approval and/or filing requirements shall be fulfilled in accordance with applicable foreign investment laws and regulations.
The
internet content service and online culture activities that our current business combination target, VIYI, conducts through the VIEs
are subject to Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2020 Version) (the “2020
Negative List”) issued by MOFCOM and the National Development and Reform Commission. It is unclear whether any new “negative
list” to be issued under the Foreign Investment Law will be different from the 2020 Negative List. If VIYI’s control over
the VIEs through contractual arrangements are deemed as foreign investment in the future, and any business of the VIEs is restricted
or prohibited from foreign investment under the “negative list” effective at the time, VIYI may be deemed to be in violation
of the Foreign Investment Law, the contractual arrangements that allow VIYI to have control over the VIEs may be deemed as invalid and
illegal, and VIYI may be required to unwind such contractual arrangements and/or restructure its business operations, any of which may
have a material adverse effect on its business operation.
If
we effect our initial business combination with a business located in the PRC, we may be subject to certain risks associated with acquiring
and operating businesses in the PRC.
We
may be subject to certain risks associated with acquiring and operating business in the PRC in our search for a business combination
and operation of any target business with which we ultimately consummate a business combination.
First,
certain rules and regulations concerning mergers and acquisitions by foreign investors in the PRC may make merger and acquisition activities
by foreign investors more complex and time consuming, including, among others:
● the
requirement that the MOFCOM be notified in certain circumstances in advance of any change-of-control transaction in which a foreign investor
takes control of a PRC domestic enterprise or any concentration of undertaking if certain thresholds are triggered;
● the
authority of certain government agencies to have scrutiny over the economics of an acquisition transaction and requirement for consideration
in a transaction to be paid within stated time limits; and
● the
requirement for mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers
and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security”
concerns to be subject to strict review by the MOFCOM.
As
disclosed above, our current business combination target, VIYI, operates its business through its PRC Subsidiaries in the PRC pursuant
to a VIE structure. Accordingly, our proposed business combination is subject to these risks.
Complying
with these and other requirements could be time-consuming, and any required approval processes, including obtaining approval from the
MOFCOM or its local counterparts, may delay or inhibit our ability to complete such transactions, which could affect our ability to acquire
PRC-based businesses. A business combination we propose may not be able to be completed if the terms of the transaction do not satisfy
aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by
the approvals granted.
In
addition, the PRC currently prohibits and/or restricts foreign ownership in certain “important industries,” including telecommunications,
food production and heavy equipment. There are uncertainties under certain regulations whether obtaining a majority interest through
contractual arrangements will comply with regulations prohibiting or restricting foreign ownership in certain industries. There is no
assurance that the PRC government will not apply restrictions in other industries. In addition, there can be restrictions on the foreign
ownership of businesses that are determined from time to time to be in “important industries” that may affect the national
economic security or those having “famous brand names” or “well-established brand names.” Subject to the review
and approval requirements of the relevant agencies and the various percentage ownership limitations that exist from time to time, acquisitions
involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated
using contractual arrangements with permitted local parties. If we choose to effect a business combination that employs the use of these
types of contractual arrangements, these arrangements may not be as effective in providing us with the same economic benefits, accounting
consolidation or control over a target business as would direct ownership due to limited implementation guidance provided with respect
to such regulations. If the government of the PRC finds that the agreements we entered into to acquire control of a target business through
contractual arrangements with one or more operating businesses do not comply with local governmental restrictions on foreign investment,
or if these regulations or the interpretation of existing regulations change in the future, we could be subject to significant penalties
or be forced to relinquish our interests in those operations. If, for example, our potential initial business combination is with a target
company operating in the PRC in “important industries”, the transaction may be subject to the PRC government’s review,
and we may have to spend additional resources and incur additional time delays to complete any such business combination. There is no
guarantee that we can receive such approval in a timely manner, and we may also be prevented from pursuing certain investment opportunities
if the PRC government considers that the potential investments will result in a significant national security issue. Since our business
combination period is 12 months from the closing of the IPO (or up to 21 months from the closing of IPO if we extend the period of time
to consummate a business combination), and the approval process may take a period longer than we expect before we enter into a definitive
agreement with a target company, we may be unable to complete a business combination within 12 months from the closing of the IPO (or
up to 21 months from the closing of the IPO if we extend the period of time to consummate a business combination).
If
we effect our initial business combination with a business located in the PRC, a substantial portion of our operations may be conducted
in the PRC, and a significant portion of our net revenues maybe derived from customers where the contracting entity is located in the
PRC. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may undertake may be
subject, to a significant extent, to economic, political and governmental and legal developments, laws and regulations in the PRC. For
instance, all or most of our material agreements may be governed by PRC law and we may have difficulty in enforcing our legal rights
because the system of laws and the enforcement of existing laws in the PRC may not be as certain in implementation and interpretation
as in the United States. In addition, contractual arrangements we enter into with potential future subsidiaries and affiliated entities
or acquisitions of offshore entities that conduct operations through affiliates in the PRC may be subject to a high level of scrutiny
by the relevant PRC tax authorities. We may also be subject to restrictions on dividend payments after we consummate a business combination
and if we rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our other obligations.
Contractual
arrangements we enter into with potential future subsidiaries and affiliated entities or acquisitions of offshore entities that conduct
operations through affiliates in the PRC may be subject to a high level of scrutiny by the relevant tax authorities.
Under
the laws of the PRC, arrangements and transactions among related parties may be subject to audit or challenge by the relevant tax authorities.
If any of the transactions we enter into with potential future subsidiaries and affiliated entities are found not to be on an arm’s-length
basis, or to result in an unreasonable reduction in tax under local law, the relevant tax authorities may have the authority to disallow
any tax savings, adjust the profits and losses of such potential future local entities and assess late payment interest and penalties.
A finding by the relevant tax authorities that we are ineligible for any such tax savings, or that any of our possible future affiliated
entities are not eligible for tax exemptions, would substantially increase our possible future taxes and thus reduce our net income and
the value of a shareholder’s investment. In addition, in the event that in connection with an acquisition of an offshore entity
that conducted its operations through affiliates in the PRC, the sellers of such entities failed to pay any taxes required under local
law, the relevant tax authorities could require us to withhold and pay the tax, together with late-payment interest and penalties. The
occurrence of any of the foregoing could have a negative impact on our operating results and financial condition.
If
the government of the PRC finds that the agreements we entered into to acquire control of a target business through contractual arrangements
with one or more operating businesses, or VIE Agreements, do not comply with local governmental restrictions on foreign investment, or
if these regulations or the interpretation of existing regulations change in the future, we could be subject to significant penalties
or be forced to relinquish our interests in those operations or we could be unbale to assert our contractual control rights over the
assets of the post-combination target company, which could cause the value of our common stock to depreciate significantly or become
worthless.
The
PRC currently prohibits and/or restricts foreign ownership in certain “important industries” or businesses, including telecommunications,
food production and heavy equipment, or those having “famous brand names” or “well-established brand names.”
There are uncertainties under certain regulations whether obtaining a majority interest through contractual arrangements will comply
with regulations prohibiting or restricting foreign ownership in certain industries. Moreover, the PRC may apply restrictions in other
industries in the future. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time
to time to be in “important industries” that may affect the national economic security.
If
we or any of our potential future target businesses are found to be in violation of any existing or future local laws or regulations
(for example, if we are deemed to be holding equity interests in certain of our affiliated entities in which direct foreign ownership
is prohibited), the relevant regulatory authorities might have the discretion to:
● revoke
the business and operating licenses of the potential future target business;
● confiscate
relevant income and impose fines and other penalties;
● discontinue
or restrict the operations of the potential future target business;
● require
us or the potential future target business to restructure the relevant ownership structure or operations;
● restrict
or prohibit our use of funds to finance our businesses and operations in the relevant jurisdiction; or
● impose
conditions or requirements with which we or the potential future target business may not be able to comply.
If
we acquire control of a target business through contractual arrangements with one or more operating businesses in the PRC, such contracts
may not be as effective in providing operational control as direct ownership of such business and may be difficult to enforce. As our
current business combination target, VIYI, operates its business through its PRC Subsidiaries in the PRC pursuant to a VIE structure,
our proposed business combination is subject to these risks.
PRC
regulations relating to offshore investment activities by PRC residents may limit our ability to inject capital in our Chinese subsidiaries
and Chinese subsidiaries’ ability to change their registered capital or distribute profits to us or otherwise expose us or our
PRC resident beneficial owners to liability and penalties under PRC laws.
In
July 2014, The State Administration of Foreign Exchange of the PRC, or the State Administration of Foreign Exchange (“SAFE”)
promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and
Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including
PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration
purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE
Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in
the future.
Under
SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition,
any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch
of SAFE with respect to that SPV, to reflect any material change, including, among other things, any major change of a PRC resident shareholder,
name or term of operation of the SPVs, or any increase or reduction of the SPVs’ registered capital, share transfer or swap, merger
or division. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration
with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously
filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital
reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions
into its subsidiary in China. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration
Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign
exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under
SAFE Circular 37, will be filed with qualified banks instead of SAFE or its branches. The qualified banks will directly examine the applications
and accept registrations under the supervision of SAFE.
We
cannot provide assurance that our shareholders that are PRC residents comply with all of the requirements under SAFE Circular 37 or other
related rules. Failure or inability of our PRC resident shareholders to comply with the registration procedures set forth in these regulations
may subject us to fines and legal sanctions, restrict our cross-border investment activities, limit the ability of our wholly foreign-owned
subsidiary in China to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us, and
we may also be prohibited from injecting additional capital into the subsidiary. Moreover, failure to comply with the various foreign
exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange
restrictions. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.
Furthermore,
as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving,
it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted,
amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval
process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings,
which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company,
we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our
acquisition strategy and could adversely affect our business and prospects.
The
PRC government exerts substantial influence over the manner in which companies, including VIEs, must conduct their business activities.
If in the future our business combination target was required to obtain approval from Chinese authorities to list on U.S. exchanges,
we may not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
The
PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. The ability of our business combination target to operate in China may be harmed by changes in its laws
and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central
data security, anti-monopoly policies or local PRC governments may impose new, stricter regulations or interpretations of existing
regulations that would require additional expenditures and efforts to ensure its compliance with such regulations or interpretations.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return
to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant
effect on economic conditions in the PRC or particular regions thereof, and could require our target to divest itself of any interest
it then hold in Chinese properties.
Additionally,
on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State
Council jointly issued the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the Opinions, which emphasized the
need to strengthen administration over illegal securities activities and supervision of overseas listings by China-based companies.
The Opinions proposed promoting regulatory systems to deal with risks facing China-based overseas-listed companies, and provided
that the State Council will revise provisions regarding the overseas issuance and listing of shares by companies limited by shares and
will clarify the duties of domestic regulatory authorities. However, the Opinions did not provide detailed rules and regulations. As
a result, uncertainties remain regarding the interpretation and implementation of the Opinions.
As
such, our business combination target, and its VIE’s, business segments may be subject to various government and regulatory interference
in the provinces in which they operate. They could be subject to regulation by various political and regulatory entities, including
various local and municipal agencies and government sub-divisions. Further, they may incur increased costs necessary to comply with
existing and newly adopted laws and regulations or penalties for any failure to comply. Furthermore, it is uncertain when and whether
our business combination target will be required to obtain permission from the PRC government to list on U.S. exchanges in the future,
and even when such permission is obtained, whether it will be denied or rescinded. Although our business combination target is currently
not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any
denial to list on the U.S. exchange, it’s operations could be adversely affected, directly or indirectly, by existing or future
laws and regulations relating to its business or industry.
Though
we expressly exclude any target whose financial statements are audited by an accounting firm that is not subject to PCAOB inspection,
we cannot assure you that certain existing or future U.S. laws and regulations may restrict or eliminate our ability to complete a business
combination with certain companies, particularly those target companies in China.
The
Public Company Accounting Oversight Board, or PCAOB is currently unable to conduct inspections on accounting firms in the PRC without
the approval of the Chinese government authorities. The auditor and its audit work in the PRC may not be inspected fully by the PCAOB.
Inspections of other auditors conducted by the PCAOB outside China have at times identified deficiencies in those auditors’ audit
procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality.
The lack of PCAOB inspections of audit work undertaken in China prevents the PCAOB from regularly evaluating the PRC auditor’s
audits and its quality control procedures.
Further,
future developments in U.S. laws may restrict our ability or willingness to complete certain business combinations with companies. For
instance, the recently enacted HFCAA would restrict our ability to consummate a business combination with a target business unless that
business met certain standards of the PCAOB and would require delisting of a company from U.S. national securities exchanges if the PCAOB
is unable to inspect its public accounting firm for three consecutive years. The HFCAA also requires public companies, specifically,
those based in China, to disclose, among other things, whether they are owned or controlled by a foreign government, specifically, those
based in China. As a result, we expressly exclude any target if the PCAOB is not able to inspect its auditor for three consecutive years
and thus, we may not be able to consummate a business combination with a favored target business due to these laws.
Additionally,
other developments in U.S. laws and regulatory environment, including but not limited to executive orders such as Executive Order (E.O.)
13959, “Addressing the Threat from Securities Investments That Finance Communist Chinese Military Companies,” may further
restrict our ability to complete a business combination with certain China-based businesses.
The
recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable
Act all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China,
upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
On
April 21, 2020, the Chairman of the SEC and the Chairman of the PCAOB, along with other senior SEC staff, released a joint statement
highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China.
The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China
and higher risks of fraud in emerging markets.
On
May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily
operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board
of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company
based on the qualifications of the company’s auditors.
On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (“HFCA Act”) requiring a foreign
company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the
company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three
consecutive years, the issuer’s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House
of Representatives approved the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable
Act was signed into law. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act. The
bill, if enacted, would shorten the three-consecutive-year compliance period under the HFCA Act to two consecutive years. On December 2,
2021, the SEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the Holding Foreign
Companies Accountable Act.
The
lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the
auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB
to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit
procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections.
The
auditor of our business combination target is subject to laws in the United States pursuant to which the PCAOB conducts regular
inspections to assess its compliance with the applicable professional standards. VIYI’s auditor is headquartered in Manhattan,
New York, and has been inspected by the PCAOB on a regular basis with the last inspection in June 2018. Therefore, it is not
subject to the determinations announced by the PCAOB on December 16, 2021. However, in the event the PRC authorities would further
strengthen regulations over auditing work of Chinese companies listed on the U.S. stock exchanges, which would prohibit our business
combination target’s current auditor to perform work in China, then they would need to change its auditor and the audit workpapers
prepared by such new auditor may not be inspected by the PCAOB without the approval of the PRC authorities, in which case the PCAOB may
not be able to fully evaluate the audit or the auditors’ quality control procedures. Furthermore, we cannot assure you whether
the SEC, Nasdaq or other regulatory authorities would apply additional and more stringent criteria to our business combination target
after considering the effectiveness of its auditor’s audit procedures and quality control procedures, adequacy of personnel and
training, or sufficiency of resources, geographic reach or experience as it relates to the audit of VIYI’s financial statements.
The requirement in the HFCA Act that the PCAOB be permitted to inspect the issuer’s public accounting firm within three years,
may result in the delisting in the future if the PCAOB is unable to inspect their accounting firm at such future time.
As
a result of merger and acquisition regulations implemented on September 8, 2006 (amended on June 22, 2009) relating to acquisitions of
assets and equity interests of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject
to economic scrutiny by the PRC government authorities such that we may not be able to complete a transaction.
On
September 8, 2006, the Ministry of Commerce, together with several other government agencies, promulgated the Regulations on Merger and
Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Regulations”, including its amendment on June 22,
2009), which implemented a comprehensive set of regulations governing the approval process by which a Chinese company may participate
in an acquisition of its assets or its equity interests and by which a Chinese company may obtain public trading of its securities on
a securities exchange outside the PRC. Although there was a complex series of regulations in place prior to September 8, 2006 for approval
of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the M&A Regulations have largely
centralized and expanded the approval process to the Ministry of Commerce, the State Administration of Industry and Commerce (“SAIC”),
SAFE or its branch offices, the State Asset Supervision and Administration Commission (“SASAC”), and the CSRC. Depending
on the structure of the transaction, these M&A Regulations will require the Chinese parties to make a series of applications and
supplemental applications to one or more of the aforementioned agencies, some of which must be made within strict time limits and depending
on approvals from one or the other of the aforementioned agencies. The application process has been supplemented to require the presentation
of economic data concerning a transaction, including appraisals of the business to be acquired and evaluations of the acquirer which
will permit the government to assess the economics of a transaction in addition to the compliance with legal requirements. If obtained,
approvals will have expiration dates by which a transaction must be completed. Also, completed transactions must be reported to the Ministry
of Commerce and some of the other agencies within a short period after closing or be subject to an unwinding of the transaction. Therefore,
acquisitions in China may not be able to be completed because the terms of the transaction may not satisfy aspects of the approval process
and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted.
Compliance
with the PRC Antitrust law may limit our ability to effect our initial business combination.
The
PRC Antitrust Law became effective on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust
Commission and other antitrust authorities under the State Council.
The
PRC Antitrust Law regulates (1) monopoly agreements, including decisions or actions in concert that preclude or impede competition, entered
into by business operators; (2) abuse of dominant market position by business operators; and (3) concentration of business operators
that may have the effect of precluding or impeding competition. To implement the Antitrust Law, in 2008, the State Council formulated
the regulations that require filing of concentration of business operators, pursuant to which concentration of business operators refers
to (1) merger with other business operators; (2) gaining control over other business operators through acquisition of equity interest
or assets of other business operators; and (3) gaining control over other business operators through exerting influence on other business
operators through contracts or other means. In 2009, the Ministry of Commerce, to which the Antitrust Commission is affiliated, promulgated
the Measures for Filing of Concentration of Business Operators (amended by the Guidelines for Filing of Concentration of Business Operators
in 2014), which set forth the criteria of concentration and the requirement of miscellaneous documents for the purpose of filing. The
business combination we contemplate may be considered the concentration of business operators, and to the extent required by the Antitrust
Law and the criteria established by the State Council, we must file with the antitrust authority under the PRC State Council prior to
conducting the contemplated business combination. If the antitrust authority decides not to further investigate whether the contemplated
business combination has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt of
relevant materials, we may proceed to consummate the contemplated business combination. If antitrust authority decides to prohibit the
contemplated business combination after further investigation, we must terminate such business combination and would then be forced to
either attempt to complete a new business combination prior to the end of 21 months from the closing of the IPO or we would be required
to return any amounts which were held in the trust account to our stockholders. When we evaluate a potential business combination, we
will consider the need to comply with the Antitrust Law and other relevant regulations which may limit our ability to effect an acquisition
or may result in our modifying or not pursuing a particular transaction.
Our
initial business combination may be subject to national security review by the PRC government and we may have to spend additional resources
and incur additional time delays to complete any such business combination or be prevented from pursuing certain investment opportunities.
On
February 3, 2011, the PRC government issued a Notice Concerning the Establishment of Security Review Procedure on Mergers and Acquisitions
of Domestic Enterprises by Foreign Investors, or Security Review Regulations, which became effective on March 5, 2011. The Security Review
Regulations cover acquisitions by foreign investors of a broad range of PRC enterprises if such acquisitions could result in de facto
control by foreign investors and the enterprises are relating to military, national defense, important agriculture products, important
energy and natural resources, important infrastructures, important transportation services, key technologies and important equipment
manufacturing. The scope of the review includes whether the acquisition will impact the national security, economic and social stability,
and the research and development capabilities on key national security related technologies. Foreign investors should submit a security
review application to the Department of Commerce for its initial review for contemplated acquisition. If the acquisition is considered
to be within the scope of the Security Review Regulations, the Department of Commerce will transfer the application to a joint security
review committee within five business days for further review. The joint security review committee, consisting of members from various
PRC government agencies, will conduct a general review and seek comments from relevant government agencies. The joint security review
committee may initiate a further special review and request the termination or restructuring of the contemplated acquisition if it determines
that the acquisition will result in significant national security issue.
The
Security Review Regulations will potentially subject a large number of mergers and acquisitions transactions by foreign investors in
China to an additional layer of regulatory review. Currently, there is significant uncertainty as to the implication of the Security
Review Regulations. Neither the Department of Commerce nor other PRC government agencies have issued any detailed rules for the implementation
of the Security Review Regulations. If, for example, our potential initial business combination is with a target company operating in
the PRC in any of the sensitive sectors identified above, the transaction will be subject to the Security Review Regulations, and we
may have to spend additional resources and incur additional time delays to complete any such acquisition. We may also be prevented from
pursuing certain investment opportunities if the PRC government considers that the potential investments will result in a significant
national security issue.
In
light of recent events indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign
exchange, companies with more than one million users’ personal information in China, especially some internet and technology companies,
may not be willing to list on a U.S. exchange or enter into a definitive business combination agreement with us. Further, we may also
avoid conduct a business combination with a company with more than one million users’ personal information in China due to the
limited timeline for us to complete a business combination.
Our
initial business combination may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of
confidential and private information, such as personal information and other data. These laws continue to develop, and the PRC government
may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.
Companies
in China are subject to various risks and costs associated with the collection, use, sharing, retention, security, and transfer of confidential
and private information, such as personal information and other data. This data is wide ranging and relates to our investors, employees,
contractors and other counterparties and third parties. If we decide to initiate a business combination with a company in China, our
compliance obligations include those relating to the Data Protection Act (As Revised) of the Cayman Islands and the relevant PRC laws
in this regard. These PRC laws apply not only to third-party transactions, but also to transfers of information between a holding company
and its subsidiaries. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance
could result in penalties or other significant legal liabilities.
Pursuant
to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7,
2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure
operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases
internet products and services that affects or may affect national security, it should be subject to cybersecurity review by the CAC.
Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear.
On July 10, 2021, the CAC publicly issued the Measures for Cybersecurity Censorship (Revised Draft for Comments) aiming to, upon its
enactment, replace the existing Measures for Cybersecurity Censorship. The draft measures extend the scope of cybersecurity reviews to
data processing operators engaging in data processing activities that affect or may affect national security, including listing in a
foreign country. The draft measures require a company holding more than one million personal information to submit its IPO materials
prepared for submission for cybersecurity review before listing on a foreign exchange.
It
is unclear whether the draft measures will apply to a company planning to list on a U.S. exchange by business combination with a special
purpose acquisition corporation like us. If cybersecurity review applies to our business combination with a company holding more than
one million personal information in China, we cannot guarantee that we will receive such approval in a timely manner. Further, due to
limited business combination period that we have, we may avoid searching for a target and completing an initial business combination
that will be subject to Chinese cybersecurity review. Therefore, we may avoid searching for a company with one million personal information
in China or a company operating critical information infrastructure in China.
Furthermore,
if we were found to be in violation of applicable laws and regulations in China during such review, we could be subject to administrative
penalties, such as warnings, fines, or service suspension. Therefore, cybersecurity review could materially and adversely affect our
business, financial condition, and results of operations.
In
addition, the PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June
10, 2021 and takes effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates
that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical
protection system for data security. After the Data Security Law takes effect, if our post-combination entity’s data processing
activities were found to be not in compliance with this law, our post-combination entity could be ordered to make corrections, and under
certain serious circumstances, such as severe data divulgence, we and post- combination entity could be subject to penalties, including
the revocation of our business licenses or other permits. As a result, we and post-combination entity may be required to suspend our
relevant businesses, shut down our website, take down our operating applications, or face other penalties, which may materially and adversely
affect our business, financial condition, and results of operations.
If,
for example, our potential initial business combination is with a target business operating in the PRC and if the enacted version of
the draft measures mandates clearance of cybersecurity review and other specific actions to be completed by the target business, we may
face uncertainty as to whether such clearance can be timely obtained, or at all, and incur additional time delays to complete any such
acquisition. Cybersecurity review could also result in negative publicity with respect to our initial business combination and diversion
of our managerial and financial resources. We may also be prevented from pursuing certain investment opportunities if the PRC government
considers that the potential investments will result in a significant national security issue.
In
the event we successfully consummate a business combination with a target business with primary operations in the PRC, we will be subject
to restrictions on dividend payments following consummation of our initial business combination.
After
we consummate our initial business combination, we may rely on dividends and other distributions from our operating company to provide
us with cash flow and to meet our other obligations. Current regulations in China would permit our operating company in China to pay
dividends to us only out of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards
and regulations. In addition, our operating company in China will be required to set aside at least 10% (up to an aggregate amount equal
to half of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash dividends.
In addition, if our operating company in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict
its ability to pay dividends or make other payments to us.
If
we make equity compensation grants to persons who are PRC citizens, they may be required to register with SAFE. We may also face regulatory
uncertainties that could restrict our ability to adopt equity compensation plans for our directors and employees and other parties under
PRC laws.
On
April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock
Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as “Circular 78.” It is not clear whether Circular
78 covers all forms of equity compensation plans or only those which provide for the granting of shares options. For any plans which
are so covered and are adopted by a non-PRC listed company, such as our company, after April 6, 2007, Circular 78 requires all participants
who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular
78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas
listed company’s covered equity compensation plan prior to April 6, 2007. We believe that the registration and approval requirements
contemplated in Circular 78 will be burdensome and time consuming.
Upon
consummation of business combination with a target business with primary operations in the PRC, we may adopt an equity incentive plan
and make shares option grants under the plan to our officers, directors and employees, whom may be PRC citizens and be required to register
with SAFE. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions
may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being
able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity
compensation would be hindered and our business operations may be adversely affected.
Enhanced
scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue
in the future.
The
PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular,
equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular
698, which became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became
effective in February 2015.
Under
Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC
“resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise,
being the transferor, may be subject to PRC corporate income tax, if the indirect transfer is considered to be an abusive use of company
structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at
a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident
enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable
adjustment to the taxable income of the transaction.
In
February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced
a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect
transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer
of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable
commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public
securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated
to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring
the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being
the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority
such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the
overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring
PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC corporate income tax, and the transferee or other
person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer
of equity interests in a PRC resident enterprise.
We
face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions
involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue
such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC
subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject
to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources
to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed
under these circulars, which may have a material adverse effect on our financial condition and results of operations.
The
PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital
gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. We may pursue acquisitions
in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC corporate income
tax law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698
and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect
on our financial condition and results of operations.
The
Chinese government may exert substantial interventions and influences over the manner in which our post-combination entity must conduct
its business activities that we cannot expect when we enter into a definitive agreement with a target company with major operation in
China. If the Chinese government establish some new policies, regulations, rules, or laws in the industries where our post-combination
entity is in, our post-combination entity may subject to material changes in its operations and the value of our common stock.
The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our post-combination entity’s ability to operate in China may be harmed by changes in its laws
and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central
or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly,
government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally
planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic
conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
For
example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE:
DIDI) and two days later ordered that the company’s app be removed from smartphone app stores. On July 24, 2021, the General Office
of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further
Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which
foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from
this sector.
As
such, the post-combination entity’s business segments may be subject to various government and regulatory interference in the provinces
in which they operate. The post-combination entity could be subject to regulation by various political and regulatory entities, including
various local and municipal agencies and government sub-divisions. We and our post-combination entity may incur increased costs necessary
to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
Furthermore,
it is uncertain when and whether we and our post-combination entity will be required to obtain permission from the PRC government to
list on U.S. exchanges or enter into VIE Agreements in the future, and even when such permission is obtained, whether it will be denied
or rescinded. Although we are currently not required to obtain permission from any of the PRC federal or local government and have not
received any denial to list on the U.S. exchange or to enter into VIE Agreements, our post-combination operations could be adversely
affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.
Our
current business combination target and the VIEs are subject to extensive and evolving legal system in the PRC, non-compliance with which,
or changes in which, may materially and adversely affect their business and prospects, and may result in a material change in their operations
and/or the value of their ordinary shares or could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of our securities to significantly decline or be worthless.
PRC
companies are subject to various PRC laws, regulations and government policies and the relevant laws, regulations and policies continue
to evolve. Recently, the PRC government is enhancing supervision over companies seeking listings overseas and some specific business
or activities such as the use of variable interest entities and data security or anti-monopoly. The PRC government may adopt new measures
that may affect our business combination target and the VIEs’ operations, or may exert more oversight and control over offerings
conducted outside of China and foreign investment in China-based companies, and we, our business combination target and the VIEs
may be subject to challenges brought by these new laws, regulations and policies. However, since these laws, regulations and policies
are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are
not always uniform and enforcement of these laws, regulations and rules involve uncertainties. Furthermore, we may be subject to additional,
yet undetermined, laws and regulations, compliance may require our business combination target to obtain additional permits and licenses,
complete or update registrations with relevant regulatory authorities, adjust business operations, as well as allocate additional resources
to monitor developments in the relevant regulatory environment. However, under the stringent regulatory environment, it may take much
more time for the relevant regulatory authorities to approve new applications for permits and licenses, and complete or update registrations
and we cannot assure you that our business combination target and the VIEs will be able to comply with these laws and regulations in
a timely manner or at all. The failure to comply with these laws and regulations may delay, or possibly prevent, our business combination
target to conduct business, accept foreign investments, or be listed overseas.
The
occurrence of any of these events may materially and adversely affect our business and prospects and may result in a material change
in the operations of our business combination target, the value of their equity securities, or could significantly limit or completely
hinder its ability to offer or continue to offer securities to investors. In addition, if any of changes causes our business combination
target unable to direct the activities of the VIEs or lose the right to receive its economic benefits, it may not be able to consolidate
the VIEs into it’s consolidated financial statements in accordance with U.S. GAAP, which could cause the value of its ordinary
shares to significantly decline or become worthless.
PRC
laws and regulations governing our post-combination entity’s business operations are sometimes vague and uncertain and any changes
in such laws and regulations may impair our ability to operate profitably.
There
are substantial uncertainties regarding the interpretations and application of PRC laws and regulations including, but not limited to,
the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement
may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments
to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently
adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect
existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing
or new PRC laws or regulations may have on our post-combination entity’s business.
The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil
law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively new and the
PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the
enforcement of these laws, regulations and rules involves uncertainties.
In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The
overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign
investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may
not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and
regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing
statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the
level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability
to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous
legal actions or threats in attempts to extract payments or benefits from us.
Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime
after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs
and diversion of resources and management attention.
From
time to time, our post-combination entity may have to resort to administrative and court proceedings to enforce our legal rights. However,
since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual
terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection our
post-combination entity enjoys than in more developed legal systems. Furthermore, the PRC legal system is based in part on government
policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result,
we and our post-combination entity may not be aware of our violation of these policies and rules until sometime after the violation.
Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and
procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect
our business and impede our post-combination entity’s ability to continue its operations.
Changes
in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could
have a significant impact upon our ability to operate profitably in the PRC.
Our
post-combination entity may conduct most of our operations and most of our revenue is generated in the PRC. Accordingly, economic, political
and legal developments in the PRC will significantly affect our post- combination entity’s business, financial condition, results
of operations and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant effects
on economic conditions in the PRC and the ability of businesses to operate profitably. Our post-combination entity’s ability to
operate profitably in the PRC may be adversely affected by changes in policies by the PRC government, including changes in laws, regulations
or their interpretation, particularly those dealing with the Internet, including censorship and other restriction on material which can
be transmitted over the Internet, security, intellectual property, money laundering, taxation and other laws that affect our post-combination
entity’s ability to operate its business.
China
Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over foreign investment in
China-based issuers. Additional compliance procedures may be required in connection with our business combination process, and, if required,
we cannot predict whether we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions
by the PRC government that could significantly affect our ability to continue to offer securities to investors and cause the value of
our securities to significantly decline or be worthless.
On
July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation
to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed
implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations
will have on our future business combination with a company with major operation in China. Therefore, China Securities Regulatory Commission
and other Chinese government agencies may exert more oversight and control over foreign investment in China-based issuers. Additional
compliance procedures may be required in connection with our business combination process, and, if required, we cannot predict whether
we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions by the PRC government that
could significantly affect our ability to continue to offer securities to investors and cause the value of our securities to significantly
decline or be worthless.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.

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ITEM 2. PROPERTIES
ITEM
2. PROPERTIES
We
do not own any real estate or other physical properties materially important to our operations. The Company entered into short-term agreements
for temporary office space expiring through October 31, 2021. For the years ended December 31, 2021 and 2020, the Company incurred
rent expense of $23,639 and $3,978, respectively. The remaining amounts due under these agreements for the year ended December 31, 2021
and 2022 is approximately $16,812 and $0, respectively.
Effective
February 1, 2021, the Company entered into a new lease for office space located in Shanghai China for a one-year period. The
cost is 16,000 RMB per month. We consider our current office space, combined with other office space otherwise available to our executive
officers, adequate for our current operations.

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ITEM 3. LEGAL PROCEEDINGS
ITEM
3. LEGAL PROCEEDINGS
We
are not currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal
proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect
on our business, financial condition, or results of operations.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
PART
II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our
units are currently traded on The Nasdaq Capital Market under the symbol “VENAU” and started trading on The Nasdaq Capital
Market on February 11, 2021. The ordinary shares, rights and warrants comprising the units began separate trading on April 13, 2021 and
are traded on NASDAQ under the symbols “VENA,” “VENAR” and “VENAW,” respectively.
Holders
of Record
At March 21, 2022, there were
354,743 of our units issued and outstanding held by 2 holders of record.
At March 21, 2022, there were
4,825,000 rights issued and outstanding held by 2 holders of record (assuming all the units were separated into their component parts on such date).
At March 21, 2022, there were
4,825,000 warrants issued and outstanding held by 2 holders of record (assuming all the units were separated into their component parts on such date).
At March 21, 2022, there were
6,050,000 ordinary shares issued and outstanding and 3 holders of record (assuming all the units were separated into their component parts on such date).
The
number of record holders was determined from the records of our transfer agent and does not include beneficial owners of any of our securities
whose securities are held in the names of various security brokers, dealers, and registered clearing agencies.
The
transfer agent for our units and ordinary shares and warrant agent for our warrants and the rights agent for our rights is Vstock Transfer
LLC. We have agreed to indemnify Vstock Transfer LLC in its roles as transfer agent and warrant agent, its agents and each of its shareholders,
directors, officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out
of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct
or bad faith of the indemnified person or entity.
Dividends
We
have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of a
business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements
and general financial condition subsequent to completion of a business combination. The payment of any cash dividends subsequent to a
business combination will be within the discretion of our Board of Directors at such time. In addition, our Board of Directors is not
currently contemplating and does not anticipate declaring any share capitalizations in the foreseeable future, except if we increase
the size of the offering, in which case we will effect a share capitalization with respect to our ordinary shares immediately prior to
the consummation of the offering in such amount as to maintain the ownership of founder shares by our sponsor prior to the IPO at 20%
of our issued and outstanding ordinary shares upon the consummation of the IPO (assuming it does not purchase units in the IPO and not
taking into account ownership of the Private Units). Further, if we incur any indebtedness, our ability to declare dividends
may be limited by restrictive covenants we may agree to in connection therewith.
Sales
of Unregistered Securities
In
August 2019, our sponsor purchased an aggregate of 1,150,000 founder shares, for an aggregate offering price of $25,000 at an average
purchase price of approximately $0.02 per share. Such securities were issued in connection with our organization pursuant to the exemption
from registration contained in Section 4(a)(2) of the Securities Act. Our sponsor is an accredited investor for purposes of Rule 501
of Regulation D.
In
addition, at the time of our IPO complete on February 11, 2021, our sponsor purchased an aggregate of 225,000 Private Units,
at a price of $10.00 per unit for an aggregate purchase price of $2,250,000. Each unit consists of one private placement ordinary share,
one private placement right granting the holder thereof the right to receive one-tenth (1/10) of an ordinary share upon the consummation
of a business combination, and one private placement warrant. Each private placement warrant is exercisable to purchase one-half of one
ordinary share at a price of $11.50 per whole share, in a private placement that will close simultaneously with the closing of the IPO.
These purchases will take place on a private placement basis simultaneously with the completion of our public offering. These issuance
will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts
or commissions were paid with respect to such sales.
Securities
Authorized for Issuance Under Equity Compensation Plans
None.
Use
of Proceeds
On
February 11, 2021, we consummated our initial public offering 4,600,000 units, inclusive of the over-allotment option of Units. Each
Unit consists of one ordinary share, par value $0.001 per share, one Warrant entitling its holder to purchase one-half of one ordinary
share at a price of $11.50 per ordinary share, and one right to receive one-tenth (1/10) of one ordinary share upon the consummation
of the Company’s initial business combination.
The
Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $46,000,000.
In
addition, the Company sold to Ladenburg Thalmann & Co., Inc., the lead bookrunner for the underwriting group, for $75, a total of
75,000 ordinary shares.
Simultaneously
with the closing of the IPO, the Company consummated the Private Placement with its sponsor, Yolanda Management Corporation, a British
Virgin Islands company for the purchase of 225,000 Private Units at a price of $10.00 per Private Unit, generating total proceeds of
$2,250,000, pursuant to the Private Placement Unit Purchase Agreement, a copy of which was filed as an exhibit to the Registration Statement
for the IPO as filed with the Commission.
The
sponsor had previously loaned the Company the sum of $289,000, evidenced by a note dated as of December 20, 2020 (as previously filed
as Exhibit 10.9 to the Registration Statement) which loan was payable upon the earlier of completion of the IPO or December 31, 2021.
In connection with the completion of the IPO, the Sponsor instructed the Company to offset payment of the note with a corresponding portion
of the subscription price for the Private Unit purchase.
Each
Private Unit purchased by the Sponsor consists of one ordinary share, one right to receive one-tenth (1/10) of an ordinary share upon
the consummation of a business combination and one private placement warrant exercisable to purchase one-half of one ordinary share at
a price of $11.50 per whole share.
A
total of $46,460,000 of the net proceeds from the IPO and the Private Placement were deposited in a trust account established for the
benefit of the Company’s public shareholders, established with Wilmington Trust, National Association acting as trustee, at an
account at Morgan Stanley.
The
Company incurred transaction costs for its IPO of $2,462,765, consisting of $805,000 of underwriting fees, $1,150,000 of deferred underwriting
fees and $507,765 of other offering costs. In addition, at February 11, 2021, cash of $5,355 and cash held in escrow of $1,960,956 were
held outside of the Trust Account (as defined below) and was available for the payment of offering costs and for working capital purposes
net with $1,339,925 transferred to Trust Account on February 18, 2021.
The
funds held in trust has been invested only 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, so that we are not deemed
to be an investment company under the Investment Company Act. Except with respect to interest earned on the funds held in the trust account
that may be released to us to pay our income or other tax obligations, the proceeds will not be released from the trust account until
the earlier of the completion of a business combination or our redemption of 100% of the outstanding public shares if we have not completed
a business combination in the required time period. The proceeds held in the trust account may be used as consideration to pay the sellers
of a target business with which we complete a business combination. Any amounts not paid as consideration to the sellers of the target
business may be used to finance operations of the target business.
Officers,
directors and founders will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business
combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their
operations. Our audit committee will review and approve all reimbursements and payments made to our founders, officers, directors or
our or their respective affiliates, with any interested director abstaining from such review and approval. There is no limit on the amount
of such expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited
in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination. Since the role
of present management after a business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid
to those persons after a business combination.
The
net proceeds from our IPO available to us out of trust for our working capital requirements in searching for a business combination and
for working capital requirements are currently approximately $32,090. We intend to use the proceeds for legal, accounting and other expenses
of structuring and negotiating business combinations, due diligence of prospective target businesses, legal and accounting fees related
to SEC reporting obligations, our monthly office rent, as well as for reimbursement of any out-of-pocket expenses incurred by our founders,
officers and directors in connection with activities on our behalf as described above.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM
6. RESERVED
Not applicable

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business
strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form 10-K,
words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and
similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s
management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors
detailed in our filings with the SEC.
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set
forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We
are a blank check company incorporated on May 14, 2018 in the Cayman Islands with limited liability (meaning our shareholders have no
liability, as members of the Company, for the liabilities of the Company over and above the amount already paid for their shares) formed
for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially
all of the assets of, or engaging in any other similar business combination with one or more businesses or entities. We intend to effectuate
our business combination using cash from the proceeds of our initial public offering and the sale of the Private Units that occurred
simultaneously with the completion of our initial public offering, our shares, debt or a combination of cash, shares and debt.
The
issuance of additional shares in a business combination:
● may
significantly dilute the equity interest of investors who would not have pre-emption rights in respect of any such issue;
● may
subordinate the rights of holders of ordinary shares if the rights, preferences, designations and limitations attaching to the
preferred shares are created by amendment of our memorandum and articles of association by resolution of the board of directors
and preferred shares are issued with rights senior to those afforded our ordinary shares;
● could
cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability
to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and
directors;
● may
have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person
seeking to obtain control of us; and
● may
adversely affect prevailing market prices for our ordinary shares.
Similarly,
if we issue debt securities or otherwise incur significant indebtedness, it could result in:
● default
and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt
obligations;
● acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
● our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
● our
inability to obtain necessary additional financing if any document governing such debt contains covenants restricting our ability
to obtain such financing while the debt security is outstanding;
● our
inability to pay dividends on our ordinary shares;
● using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
● limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
● increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
● limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
a Business Combination will be successful.
Recent
Developments
Business
Combination with VIYI and WiMi
On
June 10, 2021, we, VIYI, Merger Sub, and WiMi, entered into the Merger Agreement. WiMi holds approximately 73% of the share capital of
VIYI.
Pursuant
to the Merger Agreement, upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Cayman Islands
Companies Act (as revised), the parties intend to effect a business combination transaction whereby the Merger Sub will merge with and
into VIYI, with VIYI being the surviving entity and becoming a wholly owned subsidiary of us on the terms and subject to the conditions
set forth in the Merger Agreement and simultaneously with the closing we will change our name to “MicroAlgo Inc.”
The
Board of Directors of both us and VIYI and the stockholders of VIYI have approved the Merger Agreement and the transactions contemplated
by it.
Pursuant
to the Merger Agreement, the merger is structured as a stock for stock transaction and is intended to be qualified as a tax-free reorganization.
The terms of the merger provide for a valuation of VIYI and its subsidiaries and businesses of $400,000,000. Based upon a per share value
of $10.10 per share, the VIYI stockholders will receive approximately 39,600,000 ordinary shares of us which will represent approximately
85% of the combined outstanding shares following the closing, assuming no redemptions by our stockholders and assuming conversion of
our outstanding rights into 485,000 ordinary shares. Currently, there are 6,050,000 ordinary shares of us issued and outstanding
(including 4,600,000 ordinary shares subject to possible redemption) (assuming all the units were separated into their component parts on such date).
At
the effective time of the Merger Agreement, all outstanding options and other convertible securities of VIYI will be cancelled or converted
into ordinary shares of VIYI and exchanged for our ordinary shares as part of the consideration described above.
As
contemplated by and as a condition of the Merger Agreement, we entered into a backstop agreement with Ever Abundant Investments
Limited, dated as of June 10, 2021. On January 24, 2022, we agreed with Ever Abundant Investments Limited to terminate the backstop
agreement.
In
addition, on January 24, 2022, we entered into an amendment to the Merger Agreement with VIYI and WiMi. The purposes of the amendment
were to:
1.
extend the outside termination date of the proposed merger to June 30, 2022;
2.
provide for the termination of the original backstop agreement and the execution of the new backstop agreement with the majority shareholder
of VIYI; and
3.
acknowledge the existence of new potential governmental approvals required under recent changes in China law.
Pursuant
to the amendment to the Merger Agreement, on January 24, 2022, we entered into a backstop agreement with WiMi. Under the new agreement,
WiMi agreed to purchase (i) ordinary shares in open market transactions in connection with any tendered or proposed redemptions, and
(ii) from us ordinary shares in a private placement transaction exempt from registration under the Securities Act of 1933, as amended.
Any purchases, either from our shareholders seeking to redeem ordinary shares, or from us are limited to up to $15 million in gross amount.
WiMi has agreed that any ordinary shares acquired by it will not be subject to redemption under our corporate organizational documents
and also waived any claims against our Trust Account.
Consummation
of the transactions contemplated by the Merger Agreement are subject to customary conditions of the respective parties, including the
approval of the Merger Agreement by our shareholders, and minimum net tangible assets immediately after the closing. Other than as specifically
discussed, this report does not assume the closing of the business combination with VIYI.
Extensions
On
February 11, 2022, we elected to extend the date by which we are required to complete a business combination to March 11, 2022 and deposited
$153,333 into our trust account. On February 11, 2022, we issued an unsecured promissory note, each in an amount of $153,333 to the Sponsor, pursuant to which such amount had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination until March 11, 2022. The note is non-interest bearing and payable upon the closing of a business combination. In addition, the note may be converted, at the lender's discretion, into additional Private Units at a price of $10.00 per unit.
On March 11, 2022, we elected to further extend the date by which we are required to complete a business
combination to April 11, 2022 and deposited $153,333 into our trust account.
Results
of Operations
We
have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through December 31, 2021
were organizational activities, those necessary to prepare for the initial public offering, described below, and identifying a target
business for a business combination and activities in connection with the proposed acquisition of VIYI. We do not expect to generate
any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest
income on marketable securities held after the initial public offering.
We
are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses in connection with completing a Business Combination.
For
the year ended December 31, 2021, we had a net loss of $812,413, which consists of formation and operating costs of $785,096.
For
the year ended December 31, 2020, we had a net loss of $117,787, which consists of formation and operating costs of $117,787.
Liquidity
and Capital Resources
On
February 11, 2021, we consummated the initial public offering of 4,600,000 Units at a price of $10.00 per Unit, generating gross proceeds
of $46,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 225,000 Private Units to the
sponsor and the underwriter at a price of $10.00 per unit, generating gross proceeds of $2,250,000.
Following
the initial public offering and the sale of the Private Units, a total of $45,120,075 was placed in the Trust Account and we had $1,339,925
of cash held outside of the Trust Account, after payment of costs related to the initial public offering, and available for working capital
purposes. On February 18, 2021, we transferred $1,339,925 of such amount to the trust account. We incurred $2,462,765 in transaction
costs, including $805,000 of underwriting fees, $1,150,000 of deferred underwriting fees and $507,765 of offering costs.
For
the year ended December 31, 2021, cash used in operating activities was $748,227, consisting primarily of a net loss of $812,413. Changes
in our operating assets and liabilities provided cash of $36,869.
For
the year ended December 31, 2020, cash used in operating activities was $77,815, consisting primarily of a net loss of $117,787. Changes
in our operating assets and liabilities provided cash of $39,972.
At
December 31, 2021, we had cash of $32,090 held outside the Trust Account. We intend to use the funds held outside the Trust Account primarily
to identify and evaluate prospective acquisition candidates, perform business due diligence on prospective target businesses, travel
to and from the offices, plants or similar locations of prospective target businesses, review corporate documents and material agreements
of prospective target businesses, select the target business to acquire and structure, negotiate and consummate a Business Combination.
We
issued an unsecured promissory note to our sponsor in the aggregate amount of $450,000. On February 11, 2021, the outstanding balance
under the Promissory Note was repaid in full to the Sponsor.
As
of December 31, 2021 and 2020, we had temporary advances of $373,421 and $26,750 from a related party for the payment of costs related
to the initial public offering. The balance is unsecured, interest-free and has no fixed terms of repayment.
Other
than as described above, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination,
our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may
be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does
not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from
our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into Private Units, at a price
of $10.00 per unit at the option of the lender.
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However,
if our estimate of undertaking in-depth due diligence and negotiating a Business Combination is less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to
obtain additional financing either to consummate our Business Combination or because we become obligated to redeem a significant number
of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination. Subject to compliance with applicable securities laws, we would only consummate such financing
simultaneously with the consummation of our Business Combination. Following our Business Combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
If the Company is unable to raise additional capital,
it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing
operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern through one year from the date of these financial statements if a Business
Combination is not consummated. These consolidated financial statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-balance
sheet financing arrangements
We
have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2021. We do not
participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable
interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered
into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other
entities, or purchased any non-financial assets.
Contractual
obligations
As
of December 31, 2021, we have long-term liabilities, other than an agreement to pay an affiliate of our sponsor a monthly fee of $10,000
for office space, administrative and support services provided to the Company. We began incurring these fees on February 8, 2021 and
will continue to incur these fees monthly until the earlier of the completion of the business combination and the Company’s liquidation.
We
do not have any long-term debt, capital lease obligations or operating lease obligations.
In
addition, we have an agreement to pay the underwriters a deferred fee of two and one-half percent (2.5%) of the gross proceeds of the
Initial Public Offering, or $1,000,000. Pursuant to the agreement we have with the underwriter, we will have the right to pay up to $400,000
of such amount to other advisors retained by us to assist us in connection with a Business Combination; provided, however, that we may,
in its sole discretion, apply such 1.0% fee to other deal expenses instead.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual
results could materially differ from those estimates. We have identified the following critical accounting policies:
Ordinary
shares subject to redemption
We
account for our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified
as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence
of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders’ equity section of our balance sheets.
Warrant
liabilities
We
account for warrants (Public Warrants or Private Warrants) as either equity-classified or liability-classified instruments based on an
assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”)
ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary
shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. We have
elected to account for its Public Warrants as equity and the Private Warrants as liabilities.
Net
loss per ordinary share
We
calculate net loss per share in accordance with ASC Topic 260, “Earnings per Share”. In order to determine the net
income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss)
allocable to both the redeemable ordinary shares and non-redeemable ordinary shares and the undistributed income (loss) is calculated
using the total net loss less any dividends paid. We then allocated the undistributed income (loss) ratably based on the weighted average
number of shares outstanding between the redeemable and non-redeemable ordinary shares. Any remeasurement of the accretion to redemption
value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public stockholders. As of December
31, 2021, we have not considered the effect of the warrants sold in the initial public offering to purchase an aggregate of 2,412,500
shares in the calculation of diluted net loss per share, since the exercise of the warrants is contingent upon the occurrence of future
events and the inclusion of such warrants would be anti-dilutive and we did not have any other dilutive securities and other contracts
that could, potentially, be exercised or converted into ordinary share and then share in our earnings. As a result, diluted loss per
share is the same as basic loss per share for the years presented.
The
net loss per share presented in the statement of operations is based on the following:
Years Ended
December 31,
Net loss $ (812,412 ) $ (117,787 )
Accretion of carrying value to redemption value (3,641,991 ) -
Net income $ (4,454,403 ) $ (117,787 )
Years Ended
December 31,
Years Ended
December 31,
Redeemable
Ordinary
shares Non-Redeemable
Ordinary
shares Redeemable
Ordinary
shares Non-Redeemable
Ordinary
shares
Basic and diluted net loss per share:
Numerators:
Allocation of net loss including carrying value to redemption value $ (3,305,127 ) $ (1,149,276 ) $ - $ (117,787 )
Accretion of carrying value to redemption value 3,641,991 - - -
Allocation of net income (loss) $ 336,864 $ (1,149,276 ) $ - $ (117,787 )
Denominators:
Weighted-average shares outstanding 4,070,685 1,415,479 - 1,000,000
Basic and diluted net income (loss) per share $ 0.08 $ (0.81 ) $ - $ (0.12 )
Recent
accounting pronouncements
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
As
of December 31, 2021, we were not subject to any market or interest rate risk. The net proceeds of our initial public offering completed
February 11, 2021, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with
a maturity of 180 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of
these investments, we believe there will be no associated material exposure to interest rate risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item
8. Financial Statements and Supplemental Data
This
information appears following Item 15 of this Report and is included herein by reference.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item
9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures
Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the
SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated
and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure. Our management evaluated, with the participation of our principal executive officer and principal
financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures
as of December 31, 2021, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers
concluded that, as of December 31, 2021, solely due to the events that led to the Company's restatement of its financial statements to reclassify the Company's Public Warrants, as well as the restatement for the temporary equity subject to possible redemption, as described in the Explanatory Note to this Annual Report, our disclosure controls and procedures were not effective.
We
do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Our internal
control over financial reporting did not result in the proper classification of our warrants. Since their issuance on February 11, 2021,
our warrants have been accounted for as liabilities within our balance sheet. On April 12, 2021, the SEC Staff issued the SEC Staff
Statement in which the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the Public Warrants
to be classified as equity on the SPAC’s balance sheet as opposed to liabilities. After discussion and evaluation, taking into consideration
the SEC Staff Statement, including with our independent auditors, we have concluded that our Private warrants should be presented as liabilities
with subsequent fair value remeasurement.
As
previously disclosed, the Company concluded it should restate its financial statements to classify all ordinary shares subject to
possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments,
ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480), paragraph 10-S99, redemption provisions not solely
within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The
Company had previously classified a portion of its ordinary shares in permanent equity. Although the Company did not specify a
maximum redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount that
would cause its net tangible assets to be less than $5,000,001. The Company considered that the threshold would not change the
nature of the underlying shares as redeemable and thus would be required to be disclosed outside equity. As a result, the Company
restated its previously filed financial statements to classify ordinary shares subject to redemption as temporary equity and to
recognize accretion from the initial book value to redemption value at the time of its IPO and in accordance
with ASC 480. The change in the carrying value of redeemable shares of ordinary shares resulted in charges against additional
paid-in capital and accumulated deficit.
As a result, management
identified these material weaknesses in our internal control over financial reporting related to the accounting for warrants and ordinary
shares subject to possible redemption.
To
remediate these material weaknesses, we developed a remediation plan with assistance from our accounting advisors and have dedicated
significant resources and efforts to the remediation and improvement of our internal control over financial reporting. While
we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating
and implementing the complex accounting standards that apply to our financial statements. Our plans at this time include
providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel
and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation
plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended
effects.
Management’s
Report on Internal Controls Over Financial Reporting
As
required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, (as defined in Rules 13a-15(e) and 15-
d-15(e) under the Securities Exchange Act of 1934, as amended) our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance
with GAAP. Our internal control over financial reporting includes those policies and procedures that:
(1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of our company,
(2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors,
and
(3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed
the effectiveness of our internal control over financial reporting at December 31, 2021. In making these assessments, management used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Framework (2013).
In connection with this report and based on our assessments and those criteria, our management determined that
we did not maintain effective internal controls over financial reporting as of December 31, 2021. For more information, see the Explanatory Note at the front of this Annual Report and our Form 8-K/A
filed on January 18, 2022, and Item 4 included in our amended Quarterly Reports on Form 10-Q/A for the fiscal quarters ended March 31, 2021 and June 30, 2021, filed on January 18, 2022.
This
Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting
firm due to our status as an emerging growth company under the JOBS Act.
Changes
in Internal Control over Financial Reporting
Other
than the remedial activities disclosed above in connection with to the restatement of our financial statements, there was no change in our internal control over financial reporting that occurred during the fiscal
year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

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ITEM 9B. OTHER INFORMATION
Item
9B. Other Information
None

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our
current directors and executive officers are as follows:
Name
Age
Position
Yanming
Liu
Chairman
and Chief Executive Officer
River
Chi
Chief
Financial Officer
Yu
Chen
Director
Guojian
Chen
Director
Shan
Cui
Director
Yanming
Liu has served as our Chairman and Chief Executive Officer since January 2020. Mr. Liu served as the Chairman and Chief Executive Officer
of Greenland until its acquisition of Zhongchai in October 2019. Mr. Liu currently serves as a director of Greenland’s successor
entity, Greenland Technologies Holding Corp. Mr. has served as President of CoAdna (Suzhou), a fiber optics solutions company in China,
since March 2013. From November 2010 to February 2013, Mr. Liu served as President of two optical access business units of HiSense Broadband
and Multimedia Technologies, an optical communications company. From March to October 2010, Mr. Liu served as a senior advisor to EJ
McKay & Co., Inc. with respect to various technology matters. From August 2005 to February 2010, Mr. Liu served as President and
Chief Executive Officer of Salira Systems Inc., a producer of optical access products in China and the U.S. Previously, Mr. Liu served
as an executive of Optovia Corporation and Walsin Management Company. In addition, from 1993 to 2001, Mr. Liu worked in various roles
for Corning Incorporated, most recently as Director of Communications Electronics and Integration, where his roles included invention
of Corning’s award-winning patented LEAF fiber product and marketing such product in China and other markets. Mr. Liu received
a bachelor degree from Tianjin University in China, a MBA degree from the MIT Sloan School of Management and a Ph.D. and a MA degree
from Princeton University. We believe Mr. Liu is well qualified to serve on our board of directors because of his extensive knowledge
and experience operating companies in the U.S. and China.
River
Chi has served as the Chief Financial Officer since October 2020. Mr. Chi has served as the Chief Executive Officer of Alum Developing
(Shanghai), Inc., a distributor of alloys in China, since November 2017 and previously served as the company’s Chief Operating
Officer starting in 2013. From 2007 until 2012, Mr. Chi served as the operations manager of Salira (China) Network System Inc., where
he worked with Mr. Liu. From 2005 to 2007, Mr. Chi served as project manager for AsteelFlash Electronics (Shanghai) Co., Ltd., an international
electronic manufacturing services company. From 2003 to 2005, Mr. Chi served as manufacturing engineer for Darfon Electronics (SuZhou)
Co., Ltd., a manufacturer of telecommunication components and precision devices. Mr. Chi received a bachelor degree from Northeastern
University and a MBA from Shanghai Jiao Tong University.
Yu
Chen has served as a member of our board of directors since February 2021. Mr. Chen has served as founder and Chief Executive Officer
of Nanjing Covision Optoelectronics Co., Ltd., a developer of display and lighting applications in China, since October 2013. From 2009
to 2013, Mr. Chen worked at HiSense Broadband and Multimedia Technologies, where he worked with Mr. Liu, most recently serving as a Deputy
Director of Technology. In 2008, Mr. Chen served as a senior engineer for Luminus Devices, a designer of light extractions for LED products.
Prior to that, Mr. Chen worked as an engineer for various technology companies in China and North American and as a researcher at the
University of Waterloo, since 1986. Mr. Chen received a master degree from the University of Waterloo in Canada and a Ph.D. from McMaster
University in Canada. We believe Mr. Chen is well qualified to serve on our board of directors because of his extensive operating and
management experience.
Ms.
Shan Cui has served as a member of our board of directors since February 2021. She has been an independent director and chair of the
audit committee and compensation committee of Fuqin Fintech Limited, an online lending information intermediary platform, since August
28, 2018. She has been the Executive Director of First Capital International Limited since 2010 and provided consulting services for
private equity companies and venture capital companies. She was the CFO of Lizhan Environmental Corporation, a then Nasdaq-listed company
engaged in the business of green leather material manufacturing, from 2011 to 2013. From 2009 to 2010, she was the Manager of Planning
and Analysis for Greene, Tweed & Company, a manufacturer of high-performance engineering parts and products serving aerospace, oilfield,
and semi-conductor industries. Prior to that, Ms. Cui was the Senior Finance Manager at Ikon Office Solutions from 2005 to 2008, the
CFO for Invista from 2003 to 2004, the Senior Financial Consultant for the Peachtree Companies from 2001 to 2003, the Manager of Strategic
Planning and Analysis for General Time Corporation from 1998 to 2001, and the Senior Vice President for Seaboard Corporation from 1996
to 1998. Ms. Cui acquired her MBA degree in Business Administration from Georgia State University and her Bachelor’s degree in
International Business English from Ocean University of China. The Company believes that Ms. Cui is well-qualified to serve as director
of the Company due to her extensive experience and strong expertise in finance, investment and capital markets.
Guojian
Chen has served as a member of our board of directors since February 2021. Mr. Chen serves as the Secretary of Board of Beijing ChinaReel
Art Exchange Inc. a leading copyright operator focusing on high-quality video content, since May 2020, where he is in charge of investor
relations and corporate finance matters for the company. Mr Chen served as a director of Beijing Zhongqixinhe Enterprise Management Consulting
Co., Ltd., a financial advisory firm with focus on financial, real estate and TMT industry from May 2019 to May 2020. Mr. Chen served
as an analyst of Zhongrong Huitong Investment Fund Management (Zhuhai) Co. LTD. from July 2018 to May 2019. Mr. Chen received his Bachelor
of Management degree from Renmin University of China in 2015, and Master of Finance degree from the University of Chinese Academy of
Sciences in June 2018.
Director
Independence
Our
board has determined that each of Yu Chen, Guojian Chen and Shan Cui is an “independent director” under NASDAQ listing standards
and applicable SEC rules. Director Independence
The
NASDAQ listing standards require that a majority of our Board of Directors be independent. An “independent director” is defined
generally as a person who has no material relationship with the listed company (either directly or as a partner, shareholder or officer
of an organization that has a relationship with the company). Our independent directors expect to have regularly scheduled meetings at
which only independent directors are present.
Any
affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of directors
will review and approve all affiliated transactions with any interested director abstaining from such review and approval.
We
have adopted a written code of business conduct and ethics, which applies to our principal executive officer, principal financial or
accounting officer or person serving similar functions and all of our other employees and members of our board of directors. The code
of ethics codifies the business and ethical principles that govern all aspects of our business. We did not waive any provisions of the
code of business ethics during the year ended December 31, 2021 (we did not adopt a code of ethics until our IPO was completed).
Committees
of the Board of Directors
Upon
the effective date of the registration statement for our IPO, we established two standing committees: an audit committee and a
compensation committee. Each committee operates under a charter that has been approved by our board and will have the composition
and responsibilities described below. Subject to phase-in rules and a limited exception, NASDAQ rules and Rule 10A-3 of the Exchange
Act require that the audit committee of a listed company be comprised solely of independent directors, and NASDAQ rules require
that the compensation committee of a listed company be comprised solely of independent directors.
Audit
Committee
The
audit committee will at all times be composed exclusively of “independent directors” who are “financially literate”
as defined under NASDAQ’s listing standards. The members of our Audit Committee are Ms. Shan Cui, Mr. Guojian Chen and Mr.
Yu Chen. Ms. Shan Cui serves as chairman of the audit committee. Each member of the audit committee is financially literate and
our Board of Directors has determined that Ms. Shan Cui qualifies as an “audit committee financial expert” as defined
in applicable SEC rules.
Our
audit committee charter provides for the principal functions of the audit committee, including:
● the
appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent
registered public accounting firm engaged by us;
● pre-approving all audit and non-audit services to be
provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval
policies and procedures;
● reviewing
and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued
independence;
● setting
clear hiring policies for employees or former employees of the independent auditors;
● setting
clear policies for audit partner rotation in compliance with applicable laws and regulations;
● obtaining
and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal
quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review,
of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five
years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
● reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the
SEC prior to us entering into such transaction; and
● reviewing
with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters,
including any correspondence with regulators or government agencies and any employee complaints or published reports that raise
material issues regarding our financial statements or accounting policies and any significant changes in accounting standards
or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation
Committee
Upon
the effectiveness of the registration statement for our IPO, we established a compensation committee of the Board of Directors.
The members of our Compensation Committee are Messrs. Yu Chen and Guojian Chen and Ms. Shan Cui. Mr. Guojian Chen serves as chairman
of the compensation committee. We have adopted a compensation committee charter, which detail the principal functions of the compensation
committee, including:
● reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation,
evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving
the remuneration (if any) of our Chief Executive Officer’s based on such evaluation;
● reviewing
and approving the compensation of all of our other officers;
● reviewing
our executive compensation policies and plans;
● implementing
and administering our incentive compensation equity-based remuneration plans;
● assisting
management in complying with our proxy statement and annual report disclosure requirements;
● approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
● producing
a report on executive compensation to be included in our annual proxy statement; and
● reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
The
charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of
the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel
or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required
by the NASDAQ and the SEC.
Director
Nominations
We
do not have a standing nominating committee though we intend to form a corporate governance and nominating committee as and when
required to do so by law or NASDAQ rules. In accordance with Rule 5605 of the NASDAQ rules, a majority of the independent directors
may recommend a director nominee for selection by the Board of Directors. The Board of Directors believes that the independent
directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation
of a standing nominating committee. The directors who will participate in the consideration and recommendation of director nominees
are Messrs. Yu Chen and Guojian Chen and Ms. Cui. In accordance with Rule 5605 of the NASDAQ rules, all such directors are independent.
Prior
to our business combination, the Board of Directors will also consider director candidates recommended for nomination by holders
of our founder shares during such times as they are seeking proposed nominees to stand for election at an annual meeting of shareholders
(or, if applicable, a special meeting of shareholders). Prior to our business combination, holders of our public shares will not
have the right to recommend director candidates for nomination to our board.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors
to possess. In general, in identifying and evaluating nominees for director, the Board of Directors considers educational background,
diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and
the ability to represent the best interests of our shareholders.
Conflicts
Of Interest; Compensation Committee Interlocks and Insider Participation; Code of Ethics
Under
Cayman Islands law, directors and officers owe the following fiduciary duties:
● duty
to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
● duty
to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
● directors
should not improperly fetter the exercise of future discretion;
● duty
not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests;
and
● duty
to exercise independent judgment.
In
addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement
to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected
of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge
skill and experience which that director has.
As
set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in
self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach
of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors.
This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively
by shareholder approval at general meetings.
Each
of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary
or contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition
opportunities to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers
or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary
or contractual obligations, he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition
opportunity to such entity, and only present it to us if such entity rejects the opportunity. Our amended and restated memorandum
and articles of association will provide that, subject to his or her fiduciary duties under Cayman Islands law, we renounce our
interest in any corporate opportunity offered to any officer or director unless such opportunity is expressly offered to such
person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue. We do not believe, however, that any fiduciary duties
or contractual obligations of our directors or officers would materially undermine our ability to complete our business combination.
Potential
investors in our securities should also be aware of the following other potential conflicts of interest:
● None
of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of
interest in allocating his or her time among various business activities.
● In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may
have conflicts of interest in determining to which entity a particular business opportunity should be presented.
● Our
sponsor, officers and directors have agreed to waive their redemption rights with respect to our founder shares, private placement
shares and public shares in connection with the consummation of our business combination. Additionally, our sponsor, officers
and directors have agreed to waive their redemption rights with respect to their founder shares and private placement shares if
we fail to consummate our business combination within 12 months from the closing of this offering (or up to 21 months from the
closing of this offering if we extend the period of time to consummate a business combination). If we do not complete our business
combination within such applicable time period, the proceeds of the sale of the Private Units held in the trust account
will be used to fund the redemption of our public shares, and the Private Units and underlying securities will be worthless.
With certain limited exceptions, 50% of the founder shares will not be transferable, assignable or salable by our sponsor until
the earlier of (i) six months after the date of the consummation of our business combination or (ii) the date on which the closing
price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our business combination and
the remaining 50% of the founder shares may not be transferred, assigned or sold until six months after the date of the consummation
of our business combination, or earlier, in either case, if, subsequent to our business combination, we consummate a subsequent
liquidation, merger, stock exchange or other similar transaction which results in all of our shareholders having the right to
exchange their ordinary shares for cash, securities or other property. With certain limited exceptions, the Private Units and underlying securities will not be transferable, assignable or salable by our sponsor until 30 days after the completion
of our business combination. Since our sponsor and officers and directors may directly or indirectly own ordinary shares, rights
and warrants following this offering, our officers and directors may have a conflict of interest in determining whether a particular
target business is an appropriate business with which to effectuate our business combination.
● Our
officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect
to our business combination.
The
conflicts described above may not be resolved in our favor. Accordingly, as a result of multiple business affiliations, our officers
and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria
to multiple entities. Below is a table summarizing the entities to which our officers and directors currently have fiduciary duties
or contractual obligations:
Individual(1)
Entity
Entity’s Business
Affiliation
Yanming Liu
Greenland Technologies Holding Corp.
Transmission products
Director
CoAdna (Suzhou)
Fiber optic solutions
President
River Chi
Alum Developing
(Shanghai), Inc.
Distributor of alloys
CEO
Shan Cui
First Capital International
Limited
Consulting
Director
Guojian Chen
Beijing ChinaReel
Art Exchange Inc.
Media
Secretary of Board
Yu
Chen
Nanjing
Covision Optoelectronics Co., Ltd.
Lighting
applications
CEO
(1) Each
of the entities listed in this table has priority and preference relative to our company with respect to the performance by each
individual listed in this table of his obligations and the presentation by each such individual of business opportunities.
Accordingly,
if any of the above officers or directors become aware of a business combination opportunity which is suitable for any of the
above entities to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her
fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us
if such entity rejects the opportunity, subject to his or her fiduciary duties under Cayman Islands law. We do not believe, however,
that any of the foregoing fiduciary duties or contractual obligations will materially affect our ability to complete our business
combination, because the specific focuses of a majority of these entities differ from our focus and the type or size of the transaction
that such companies would most likely consider are of a size and nature substantially different than what we are targeting.	
We
are not prohibited from pursuing an business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our business combination with such a company, we, or a committee of independent directors, would
obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions
for the type of company we are seeking to acquire or an independent accounting firm, that such an business combination is fair
to our company from a financial point of view.
In
the event that we submit our business combination to our public shareholders for a vote, our sponsor, officers and directors have
agreed, pursuant to the terms of a letter agreement entered into with us, to vote any founder shares and private placement shares
held by them (and their permitted transferees will agree) and any public shares purchased during or after the offering in favor
of our business combination.
None
of our officers currently serves, and in the past year has not served, (i) as a member of the compensation committee or Board
of Directors of another entity, one of whose executive officers served on our compensation committee, or (ii) as a member of the
compensation committee of another entity, one of whose executive officers served on our Board of Directors.
We
have adopted a Code of Ethics applicable to our directors, officers and employees. We have previously filed a copy of our form
of Code of Ethics (and our audit committee charter and compensation committee charter) as exhibits to the registration statement
for our IPO. You will be able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov.
In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments
to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Limitation
on Liability and Indemnification of Officers and Directors
Cayman
Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification
of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to
public policy, such as to provide indemnification against willful default, fraud or the consequences of committing a crime. Our
amended and restated memorandum and articles of association will provide for indemnification of our officers and directors to
the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own
actual fraud or willful default. We may purchase a policy of directors’ and officers’ liability insurance that insures
our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures
us against our obligations to indemnify our officers and directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors, and persons who beneficially own more
than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of our common stock and other equity securities. These executive officers, directors, and greater
than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting
persons.
Based solely
on our review of such forms furnished to us and written representations from certain reporting persons, we believe that,
during our 2021 fiscal year, our directors, executive officers, and ten percent stockholders complied with all Section 16(a)
filing requirements except that the Form 3s for all our directors and officers were filed late due to administrative delays.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11.
EXECUTIVE COMPENSATION.
No
executive officer has received any cash compensation for services rendered to us.
No
compensation or fees of any kind, including finder’s, consulting fees and other similar fees, will be paid to our founders, members
of our management team or their respective affiliates, for services rendered prior to, or in order to effectuate the consummation of,
our initial business combination (regardless of the type of transaction that it is). We pay an affiliate of our sponsor a total of $10,000
per month for office space, administrative and support services.
Directors,
officers and founders will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business
combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their
operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us.
After
our initial business combination, members of our management team who remain with us may be paid employment, consulting, management or
other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the
proxy solicitation materials furnished to our stockholders. The amount of such compensation may not be known at the time of a stockholder
meeting held to consider an initial business combination, as it will be up to the directors of the post-combination business to determine
executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in
an Exchange Act filing such as Current Report on Form 8-K, as required by the SEC.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following table sets forth information regarding the beneficial ownership of our shares of common stock as of March 21, 2022 by:
● each
person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
● each
of our officers and directors; and
● all
of our officers and directors as a group.
Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares
of common stock beneficially owned by them. The following table does not reflect beneficial ownership of the warrants or rights offered
in our IPO or the private warrants included the private placement as the warrants are not exercisable and the rights are not convertible
within 60 days of the date of this Form 10-K. As of March 21, 2022, there were 6,050,000 ordinary shares (assuming all the units were
separated into their component parts on such date) issued and outstanding and upon which we base the information in the table below.
Name and Address of Beneficial Owner(1) Amount and
Nature of
Beneficial
Ownership(2) Approximate
Percentage
of
Outstanding
Shares(2)
Yolanda Management Corporation(3) 1,375,000 22.7 %
Yanming Liu(4) 1,375,000 22.7 %
River Chi - -
Shan Cui - -
Guojian Chen - -
Yu Chen - -
All directors and officers as a group (5 individuals) 1,375,000 22,7 %
Karpus Investment Management(5) 566,915 9.37 %
Mizuho Financial Group, Inc.(6) 482,497 7.98 %
WEISS ASSET MANAGEMENT LP(7) 342,006 5.65 %
Feis Equities LLC(8) 582,931 9.64 %
(1) Unless
otherwise indicated, the business address of each of the individuals is 477 Madison Avenue, 6th Floor, New York,
NY 10022.
(2) Based
on an aggregate of 6,050,000 ordinary shares (assuming all the units were separated into their component parts on such date).
(3) Includes
the 225,000 Private Units purchased by our sponsor simultaneously with the consummation of our IPO. The Private Units are the same as the IPO units and therefore include 225,000 ordinary shares. The rights and warrants included in the units
convertible or exercisable at this time or within the next 60 days.
(4) Represents
ordinary shares held by our sponsor. The ordinary shares held by our sponsor are beneficially owned by Yanming Liu, who, as the sole
director and sole shareholder of our sponsor, has sole voting and dispositive power over the ordinary shares held by our sponsor.
(5) Based
on a Schedule 13G/A filed with the SEC on February 14, 2022. The entity’s address is 183 Sully’s Trail, Pittsford, New
York 14534.
(6) Based
on a Schedule 13G filed with the SEC on February 14, 2022. The entity’s address is 1-5-5, Otemachi, Chiyoda-ku,
Tokyo 100-8176, Japan.
(7) Based
on a Schedule 13G/A filed with the SEC on February 7, 2022. The entity’s address is 222 Berkeley St., 16th floor, Boston, Massachusetts
02116.
(8) Based
on a Schedule 13G/A filed with the SEC on January 11, 2022. The entity’s address is 20 North Wacker Drive Suite 2115, Chicago,
Illinois 60606.
Our
sponsor, our officers and Mr. Tiger Zhang are deemed to be our “promoters” as such term is defined under the federal securities
laws. See “Certain Relationships and Related Party Transactions” for additional information regarding our relationships with
our promoters. Mr. Zhang is a member of our sponsor and has provided us with services related to our formation and the IPO. Mr. Zhang
will receive membership interests in our sponsor, as compensation for such services, such membership interests expected to reflect pecuniary
interest in approximately 50,000 founder shares.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13.
CERTAIN RELATIONSHIPS, AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
In August 2019, our sponsor
purchased 1,150,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.02 per share. Our sponsor owned approximately
22.7% of our issued and outstanding shares after the IPO (assuming it does not purchase units in the IPO and taking into account ownership
of the Private Units).
Our sponsor (and/or its designees) purchased an aggregate of 225,000
Private Units at a price of $10.00 per unit in a private placement that closed simultaneously with the closing of our IPO on
February 11, 2021. Each unit consists of one private placement share, one private placement right granting the holder thereof the right
to receive one-tenth (1/10) of an ordinary share upon the consummation of a business combination, and one private placement warrant. Each
private placement warrant entitles the holder upon exercise to purchase one-half of one ordinary share at a price of $11.50 per whole
share, subject to adjustment as provided herein. The Private Units (including the underlying securities) may not, subject to
certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of our business combination.
We
entered into an Administrative Services Agreement with Yolanda Management Corporation, an affiliate of our sponsor, pursuant to which
we will pay a total of $10,000 per month for office space, administrative and support services to such affiliate. Upon completion of
our business combination or our liquidation, we will cease paying these monthly fees. Accordingly, in the event the consummation of our
business combination takes the maximum 21 months, an affiliate of our sponsor will be paid a total of $210,000 ($10,000 per month) for
office space, administrative and support services and will be entitled to be reimbursed for any out-of-pocket expenses.
Our
sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business
combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or
our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling
on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our
sponsor had previously agreed to loan us up to $450,000 to be used for formation and offering expenses. As of December 31, 2020, the
amount owed to our sponsor was $228,483. These loans were non-interest bearing, unsecured and were due at the earlier of December 31,
2021 or the closing of our IPO. We repaid the sum of $262,250 to our sponsor at the completion of our IPO on February 11, 2021.
As
of December 31, 2021 and 2020, we had temporary advances of $373,421 and $26,750 from a related party for the payment of costs related
to the initial public offering. The balance is unsecured, interest-free and has no fixed terms of repayment.
In
order to finance transaction costs in connection with an intended business combination, our sponsor or an affiliate of our sponsor or
certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination,
we would repay such loaned amounts. In the event that the business combination does not close, we may use a portion of the working capital
held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment.
Up to $1,500,000 of such loans may be convertible into units at a price of $10.00 per unit (which, for example, would result in the holders
being issued 165,000 ordinary shares if $1,500,000 of notes were so converted (including 15,000 shares upon the closing of our business
combination in respect of 150,000 rights included in such units), as well as 150,000 warrants to purchase 75,000 shares) at the option
of the lender. The units would be identical to the placement units issued to the holder. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans
from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds
and provide a waiver against any and all rights to seek access to funds in our trust account.
Related
Party Policy
We
have adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions
approved by our Board of Directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under
our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any
indebtedness or guarantee of indebtedness) involving the company. A form of the code of ethics was filed as an exhibit to the registration
statement for our IPO as filed with the SEC.
In
addition, our audit committee, pursuant to its written charter, will be responsible for reviewing and approving related party transactions
to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at
a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of
the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit
committee will be required to approve a related party transaction. A form of the audit committee charter that we adopted was filed as
an exhibit to the registration statement for our IPO. We also require each of our directors and executive officers to complete a directors’
and officers’ questionnaire that elicits information about related party transactions.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a summary of fees paid or to be paid to Friedman LLP, for services rendered.
Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements
and services that are normally provided by Friedman LLP in connection with regulatory filings. The aggregate fees billed by
Friedman LLP for professional services rendered for the audit of our annual financial statements, review of the financial
information and other required filings with the SEC for the year ended December 31, 2021 totaled $82,000 and for the year
ended December 31, 2020 totaled $25,000. The above amounts include interim procedures and audit fees, as well as attendance
at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Friedman LLP for consultations concerning financial accounting and reporting standards for the years ended December 31, 2021 and 2020.
Tax
Fees. We did not pay Friedman LLP for tax planning and tax advice for either of the years ended December 31, 2021 and December 31,
2020.
All
Other Fees. We did not pay Friedman LLP for other services for either of the years ended December 31, 2021 and December 31, 2020.
Pre-Approval
Policy
Our
audit committee was formed upon the consummation of our IPO on February 8, 2021. As a result, the audit committee did not pre-approve
all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board
of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve
all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject
to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to
the completion of the audit).
PART
IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The
following documents are filed as part of this Form 10-K:
(1) Financial
Statements:
Page
Report of Independent Registered Public Accounting Firm - Friedman LLP
Consolidated Balance Sheets
Consolidated Statement of Operations
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
-
(2) Financial
Statement Schedules:
None.
(3) Exhibits
Exhibit
No.
Description
1.1
Underwriting
Agreement dated as of February 8, 2021 between Registrant and Ladenburg Thalmann & Co., Inc.***
3.1
Memorandum
and Articles of Association.**
3.2
Amended
and Restated Memorandum and Articles of Association.**
4.5
Warrant
Agreement dated as of February 8, 2021 between Vstock Transfer LLC and the Registrant.***
4.6
Rights
Agreement dated as of February 8, 2021 between Vstock Transfer LLC and the Registrant.***
4.7*
Description of Securities
10.1
Amended
and Restated Promissory Note, dated as of January 16, 2020, issued to Yolanda Management Corporation.**
10.2
Insider
Letter Agreement among the Registrant, Ladenburg Thalmann & Co., Inc. and its officers, directors and Yolanda Management Corporation.***
10.3
Investment
Management Trust Agreement between Wilmington Trust Company, Vstock Transfer LLC and the Registrant.***
10.4
Registration
Rights Agreement dated as of February 8, 2021 between the Registrant and certain security holders.***
10.5
Securities
Subscription Agreement, dated August 21, 2019, between the Registrant and Yolanda Management Corporation.**
10.6
Private
Placement Units Purchase Agreement between the Registrant and Yolanda Management Corporation.**
10.7
Form
of Indemnity Agreement.**
10.8
Form
of Administrative Services Agreement, by and between the Registrant and Yolanda Management Corporation.**
10.9
Amended
and Restated Promissory Note, dated as of December 10, 2020, in the principal amount of up to $450,000, issued to Yolanda Management
Corporation.**
10.10
Merger
Agreement dated as of June 10, 2021 by and among the Registrant, Viyi Algorithm Inc., Venus Merger Sub Corp. and WiMi Hologram Cloud
Inc. ****
10.11
Amendment No. 1 dated as of January 24, 2022 to Merger Agreement by and among the Registrant, VIYI Algorithm Inc., Venus Merger Sub Corp., and WiMi Hologram Cloud Inc. *****
10.12
Backstop Agreement dated as of January 24, 2022 by and between the Registrant and WiMi Hologram Cloud Inc. *****
31.1*
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
* Filed
with this Form 10-K
** Previously
filed with the Securities and Exchange Commission as an exhibit to our Form S-1 as filed on February 3, 2021 and declared effective on
February 8, 2020
*** Previously
filed as an exhibit to our Form 8-K as filed with the Securities and Exchange Commission on February 11, 2021
**** Previously
filed as an exhibit to our Form 8-K as filed with the Securities and Exchange Commission on June 14, 2021
***** Previously
filed as an exhibit to our Form 8-K as filed with the Securities and Exchange Commission on January 24, 2022
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of
Venus
Acquisition Corporation
Opinion
on the Financial Statements
We have audited the accompanying consolidated balance sheets of Venus Acquisition Corporation (the “Company”) as of December 31, 2021 and 2020 and the related consolidated statements of operations, changes in shareholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Explanatory
Paragraph - Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s
cash and working capital as of December 31, 2021 are not sufficient to complete its planned activities for a reasonable period of time,
which is considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
/s/
Friedman LLP
Friedman
LLP
We
have served as the Company’s auditor since 2020.
New
York, New York
March 25, 2022
VENUS
ACQUISITION CORPORATION
CONSOLIDATED
BALANCE SHEETS
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
As of
December 31,
ASSETS
Current assets:
Cash $ 32,090 $ 239
Prepayments 16,717 -
Total current assets 48,807 76,317
Security deposit 3,303
Deferred offering costs - 188,001
Cash and investments held in trust account 46,469,183 -
TOTAL ASSETS $ 46,518,212 $ 191,543
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accrued liabilities and other payable $ 93,558 $ 39,972
Advances from a related party 373,421 26,750
Promissory note- related party - 228,483
Total current liabilities 466,979 295,205
Warrant liabilities 410,000 -
Deferred underwriting compensation 1,150,000 -
TOTAL LIABILITIES 2,026,979 295,205
Commitments and contingencies
Ordinary shares, subject to possible redemption: 4,600,000 shares at $10.10 per share 46,469,183 -
Shareholders’ deficit:
Preferred shares, $0.001 par value; 1,000,000 shares authorized; no share issued - -
Ordinary shares, $0.001 par value; 50,000,000 shares authorized; 1,450,000 and 1,150,000 shares issued and outstanding (excluding 4,600,000 and no shares subject to possible redemption) 1,450 1,150
Additional paid-in capital - 23,850
Accumulated deficit (1,979,400 ) (128,662 )
Total shareholders’ deficit (1,977,950 ) (103,662 )
TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ DEFICIT $ 46,518,212 $ 191,543
See
accompanying notes to consolidated financial statements.
VENUS
ACQUISITION CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
Years ended
December 31,
Formation, general and administrative expenses $ (785,096 ) $ (117,787 )
Total operating expenses (785,096 ) (117,787 )
Other income
Change in fair value of warrant liabilities (30,000 ) -
Interest income 2,683 -
Total other income, net (27,317 ) -
Loss before income taxes (812,413 ) (117,787 )
Income taxes - -
NET LOSS $ (812,413 ) $ (117,787 )
Basic and diluted weighted average shares outstanding, ordinary share subject to possible redemption 4,070,685 -
Basic and diluted net income per share, ordinary share subject to possible redemption $ 0.08 $ -
Basic and diluted weighted average shares outstanding, ordinary share attributable to Venus Acquisition Corporation 1,415,479 1,000,000
Basic and diluted net loss per share, ordinary share attributable to Venus Acquisition Corporation $ (0.81 ) $ (0.12 )
See
accompanying notes to consolidated financial statements.
VENUS
ACQUISITION CORPORATION
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
Ordinary shares Additional
paid-in Accumulated Total
shareholders’
No. of shares Amount capital deficit equity (deficit)
Balance as of January 1, 2020 1,150,000 $ 1,150 $ 23,850 $ (10,875 ) $ 14,125
Net loss - - - (117,787 ) (117,787 )
Balance as of December 31, 2020 1,150,000 1,150 23,850 (128,662 ) (103,662 )
Sale of units in initial public offering 4,600,000 4,600 43,532,633 - 43,537,233
Fair value of underwriter’s unit purchase option 75,000 - -
Sale of units to the founder in private placement 225,000 1,869,775 - 1,870,000
Initial classification of ordinary shares subject to possible redemption (4,600,000 ) (4,600 ) (45,245,194 ) - (45,249,794 )
Allocation of offering costs to ordinary share subject to redemption - - 2,422,602 - 2,422,602
Accretion of carrying value to redemption value - - (2,603,666 ) (1,038,325 ) (3,641,991 )
Net loss - - - (812,413 ) (812,413 )
Balance as of December 31, 2021 1,450,000 $ 1,450 $ - $ (1,979,400 ) $ (1,977,950 )
See
accompanying notes to consolidated financial statements.
VENUS
ACQUISITION CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
Years ended
December 31,
Cash flows from operating activities
Net loss $ (812,413 ) $ (117,787 )
Adjustments to reconcile net loss to net cash used in operating activities
Change in fair value of warrant liabilities 30,000 -
Interest income earned in cash and investments held in trust account (2,683 ) -
Change in operating assets and liabilities:
Increase in prepayments (16,717 ) -
Increase in accrued liabilities 53,586 39,972
Cash used in operating activities (748,227 ) (77,815 )
Cash flows from investing activities
Proceeds deposited in Trust Account (46,466,500 ) -
Security deposit 3,081 (55 )
Net cash used in investing activities (46,463,419 ) (55 )
Cash flows from financing activities
Proceeds from unit purchase option -
Proceeds from public offering, net of expenses 44,875,234 (128,681 )
Proceeds from sale of private placement 2,250,000 -
Proceeds from promissory note - related party
78,483
Repayment of promissory note - related party (228,483 ) (300,000 )
Advances from a related party 346,671 -
Net cash provided by financing activities 47,243,497 (350,198 )
NET CHANGE IN CASH 31,851 (428,068 )
Cash, beginning of year 428,307
Cash, end of year $ 32,090 $ 239
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Initial classification of shares subject to redemption $ 45,249,794 $ -
Allocation of offering costs to ordinary share subject to redemption $ 2,422,602 $ -
Accretion of carrying value to redemption value $ (3,641,991 ) $ -
Deferred underwriting compensation $ 1,150,000 $ -
Recognition of warrant liabilities $ 380,000 $ -
See
accompanying notes to consolidated financial statements.
VENUS
ACQUISITION CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
NOTE
1 - ORGANIZATION AND BUSINESS BACKGROUND
Venus
Acquisition Corporation (“Venus” or the “Company”) is a blank check company incorporated in the Cayman Islands
on May 14, 2018. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (“Business Combination”).
On
June 10, 2021, the Company, VIYI Algorithm Inc., a Cayman Islands exempted company (“Viyi”), Venus Merger Sub Corp., a Cayman
Islands exempted company and wholly-owned subsidiary of the Company (the “Merger Sub”) and WiMi Hologram Cloud Inc., a Cayman
Islands company and the legal and beneficial owner of a majority of the issued and outstanding voting securities of Viyi (“Majority
Shareholder”), entered into a Merger Agreement (the “Merger Agreement”). Venus Merger Sub Corp. is a company incorporated
in the Cayman Islands for the purpose of effecting the Business Combination and to serve as the vehicle for, and be subsumed by, VIYI
Algorithm Inc., pursuant to the terms of the Merger Agreement Merger Sub is wholly owned by Venus. See the further description below
regarding the proposed business combination with Viyi.
The
Company is an early stage and an emerging growth company and, as such, the Company is subject to all of the risks associated with early
stage and emerging growth companies.
All
activities through December 31, 2021 relates to the Company’s formation, completion of its initial public offering (the “Initial
Public Offering”) which occurred on February 11, 2021 and negotiation and consummation of the proposed Business Combination with
Viyi. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The
Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering, which
proceeds are held in trust.
Financing
The
registration statement for the Company’s Initial Public Offering became effective on February 8, 2021. On February 11, 2021, the
Company consummated the Initial Public Offering of 4,600,000 units (the “Public Units”), which includes the full exercise
by the underwriter of its over-allotment option in the amount of 600,000 Public Units, at $10.00 per Public Unit, generating gross proceeds
of $46,000,000 which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of, 225,000 units (the “Private Units”)
at a price of $10.00 per Private Unit in a private placement to Yolanda Management Corporation (the “Sponsor”),
generating gross proceeds of $2,250,000, which is described in Note 4.
Transaction
costs amounted to $2,462,765, consisting of $805,000 of underwriting fees, $1,150,000 of deferred underwriting fees and $507,765 of other
offering costs.
Trust
Account
Following
the closing of the Initial Public Offering on February 11, 2021, the aggregate amount of $46,460,000 ($10.10 per Public Unit) was placed
in a trust account (the “Trust Account”) with Wilmington Trust, National Association acting as trustee. The funds held in
the Trust Account can be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting
certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion
of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described
below, except that interest earned on the Trust Account can be released to the Company to pay its tax obligations. At closing of the
Initial Public Offering, the sum of $418,430 was released to the Company to fund its working capital needs.
Business
Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and sale of the Private Units, although substantially all of the net proceeds are held in trust and are intended to be applied generally
toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses
that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred
underwriting commissions and taxes payable on interest earned) at the time of the signing of an agreement to enter into a Business Combination.
The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no
assurance that the Company will be able to successfully effect a Business Combination.
The
Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a
Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means
of a tender offer. In connection with an Initial Business Combination, the Company may seek shareholder approval of a Business Combination
at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against
a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least
$5,000,001 upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the outstanding
shares voted are voted in favor of the Business Combination.
Notwithstanding
the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Company’s amended and restated memorandum and articles of association provides that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
If
a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the
Company will, pursuant to its amended and restated memorandum and articles of association, offer such redemption pursuant to the tender
offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the
same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The
shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially
$10.10 per Public Share, subject to increase of up to an additional $0.30 per Public Share in the event that the Sponsor elects to extend
the period of time to consummate a Business Combination (see below), plus any pro rata interest earned on the funds held in the Trust
Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to shareholders
who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as
discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
rights or warrants. The ordinary shares will be recorded at redemption value and classified as temporary equity upon the completion of
the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity” (“ASC 480”).
The
Sponsor and any of the Company’s officers or directors that may hold Founder Shares (as defined in Note 6) (the “shareholders”)
and the underwriters will agree (a) to vote their Founder Shares, the ordinary shares included in the Private Units (the “Private
Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not
to propose an amendment to the Company’s amended and restated memorandum and articles of association with respect to the Company’s
pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public
shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares
(including the Founder Shares) and Private Shares into the right to receive cash from the Trust Account in connection with a shareholder
vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company
does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the amended and restated Memorandum
and Articles of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the Founder Shares
and Private Shares shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated.
However, the shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased
during or after the Initial Public Offering if the Company fails to complete its Business Combination.
On
June 10, 2021, the Company entered into the Merger Agreement, which provides for a Business Combination between Venus and VIYI Algorithm
Inc. Pursuant to the Merger Agreement, the Business Combination will be effected as a stock transaction and is intended to be qualified
as a tax-free reorganization. The Merger Agreement is by and among Venus, Merger Sub, VIYI, and WiMi Hologram Cloud Inc, a Cayman Islands
limited liability company as the representative of VIYI’s stockholders. The aggregate consideration for the Acquisition Merger
is $400,000,000, payable in the form of 39,600,000 newly issued ordinary shares of Merger Sub (“Merger Sub Ordinary Share”)
valued at $10.10 per share.
Upon
the closing of the Business Combination, the former Venus shareholders will receive the consideration specified below and the former
VIYI stockholders will receive an aggregate of 39,600,000 shares of Merger Sub Ordinary Share.
The
Company will be seeking approval from its shareholders of the proposed Business Combination and Merger with VIYI. The Company has filed
a Form S-4/Proxy Statement with the SEC regarding the terms and conditions of the proposed Merger with Viyi and other matters. The Form
S-4/Proxy Statement is under review by the SEC. Assuming that the S-4/Proxy Statement is declared effective by the SEC, of which there
can be no assurance, the Company will provide its shareholders with definitive materials to consider in connection with the solicitation
for approval of the Merger with Viyi and other matters as described in the S-4/Proxy Statement.
The
Company issued a Note in an amount of $153,333 to the Sponsor, pursuant to which such amount had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination until March 11, 2022. However, if the Company anticipates that it
may not be able to consummate a Business Combination within 12 months (including the proposed Business combination with Viyi), the
Company may extend the period of time to consummate a Business Combination up to nine times, each by an additional month (for a
total of 21 months to complete a Business Combination (the “Combination Period”). In order to extend the time available
for the Company to consummate a Business Combination, the Sponsor or its affiliate or designees must deposit into the Trust Account
$153,333
(approximately $0.033
per Public Share), up to an aggregate of $1,380,000,
or $0.30
per Public Share, on or prior to the date of the applicable deadline, for each one month extension. Any funds which may be provided
to extend the time frame will be in the form of a loan to us from our sponsor. For the extensions that we have made, the loans are interest free and will not be repaid unless and until we
complete a business combination. For the extensions that may be made in the future, the final and definitive terms of the loan in connection
with any such loans have not yet been negotiated, but any such loan would be interest free and not repaid unless and until we complete
a business combination.
On
February 11, 2022, the Company and the Sponsor extended the period of time for which the Company is required to consummate a
Business Combination from February 11, 2022 to March 11, 2022 and, accordingly, funded a sum of $153,333 into the Company’s
Trust Account. On March 11, 2022, the Company elected to further extend the date by which the Company is required to complete a
business combination to April 11, 2022 and deposited $153,333 into the Company’s Trust Account.
If
the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem 100% of
the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $50,000), divided by the number of
then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, proceed
to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide
for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting
commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period
and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption
of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for
distribution will be less than the Initial Public Offering price per Unit ($10.00).
The
Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amounts in the Trust Account to below (i) $10.10 per share or (ii) such lesser amount per Public Share held in the Trust Account
as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, except as to any claims by
a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s
indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against
a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek
to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have
all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
and going concern
Following
the closing of the Initial Public Offering on February 11, 2021, a total of $46,460,000 was placed in the Trust Account, and the Company
had $418,430 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available
for working capital purposes. As of December 31, 2021, the Company had a working deficit of $418,172. The Company has incurred and expects
to continue to incur significant costs in pursuit of its acquisition plans. In order to finance transaction costs in connection with
an intended initial Business Combination, the Sponsor, or an affiliate of the Sponsor or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required up to $1,500,000 as discussed in Note 6. Based on
the foregoing, the Company believes it will have sufficient cash to meet its needs to execute its intended initial Business Combination in the next twelve months from the date of the issuance of the accompanying consolidated financial statements.
If
the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead
expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at
all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through one year from
the date of these financial statements if a Business Combination is not consummated. These consolidated financial statements do not include
any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
the Company be unable to continue as a going concern.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
● Basis
of presentation
These
accompanying consolidated financial statements have been prepared in U.S. Dollars in conformity with generally accepted accounting principles
in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the consolidated financial
position, and the results of its consolidated operations and its consolidated cash flows.
● Principles
of Consolidation
The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany
transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries
are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to
govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a
majority of votes at the meeting of directors.
The
accompanying consolidated financial statements reflect the activities of the Company and each of the following entities:
Schedule of Subsidiary
Name
Background
Ownership
Venus
Merger Sub Corp.
A
Cayman Islands company Incorporated on May 25, 2021
100%
Owned by Venus
● Emerging
growth company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public
company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
● Use
of estimates
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results
could differ significantly from those estimates.
● Cash
and cash equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of December 31, 2021 or 2020.
● Cash
and investments held in trust account
At
December 31, 2021, the assets held in the Trust Account are held in cash and US Treasury securities. Investment securities in the Company’s
Trust Account consisted of $46,469,183 in United States Treasury Bills.
The
Company classified investments that are directly invested in U.S. Treasuries as available for sales and money market funds are classified
in accordance with the trading method. All marketable securities are recorded at their estimated fair value. Unrealized gains and losses
for available-for-sale securities are recorded in other comprehensive income (loss). The Company evaluates its investments to assess
whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered other than temporary if
they are related to deterioration in credit risk or if it is likely the Company will sell the securities before the recovery of the cost
basis. Realized gains and losses and declines in value determined to be other than temporary are determined based on the specific identification
method and are reported in other income (expense), net in the statements of operations and comprehensive (income) loss.
● Warrant
liabilities
The
Company accounts for warrants (Public Warrants or Private Warrants) as either equity-classified or liability-classified instruments based
on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board
(“FASB”) ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement”
in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The Company
has elected to account for its Public Warrants as equity and the Private Warrants as liabilities.
● Ordinary
shares subject to possible redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC 480. Ordinary share subject
to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary
shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other
times, ordinary shares are classified as shareholders’ equity. As of December 31, 2021 and 2020, the Company’s ordinary shares
feature certain redemption rights that are considered to be outside of the Company’s control. 4,600,000 and 0 ordinary shares subject
to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s consolidated
balance sheets.
The Company has made a policy election in accordance with ASC 480-10-S99-3A
and recognizes changes in redemption value in accumulated deficit immediately as if the end of the first reporting period after the Initial
Public Offering was the redemption date. Redemption value is remeasured to reflect the interest earned on the Trust Account balance that
are available for distribution to redeeming shareholders.
● Offering
costs
The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A -
“Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through
the balance sheet date that are related to the Public Offering and that were charged to shareholders’ equity upon the completion
of the Public Offering.
● Fair
value of financial instruments
ASC
Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to
measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining
fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure
fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing
the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer
and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable
inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability
developed based on the best information available in the circumstances.
The
fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1
- Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
Level 2
- Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
Level 3
- Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the consolidated balance sheet. The fair
values of cash and cash equivalents, and other current assets, accrued expenses, due to sponsor are estimated to approximate the carrying
values as of December 31, 2021 due to the short maturities of such instruments. See Note 9 for the disclosure of the Company’s
assets and liabilities that were measured at fair value on a recurring basis.
● Concentration
of credit risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash and trust accounts in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
● Income
taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” (“ASC 740”)
which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in
future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities. The Company’s management determined that the British Virgin Islands is the Company’s
major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income
tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and 2020.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position.
The
Company may be subject to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with
foreign tax laws.
The
Company’s tax provision is zero and it has no deferred tax assets. The Company is considered to be an exempted British Virgin Islands
Company, and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
● Net
loss per share
The
Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share”. In order to determine
the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed
income (loss) allocable to both the redeemable ordinary shares and non-redeemable ordinary shares and the undistributed income (loss)
is calculated using the total net loss less any dividends paid. The Company then allocated the undistributed income (loss) ratably based
on the weighted average number of shares outstanding between the redeemable and non-redeemable ordinary shares. Any remeasurement of
the accretion to redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public
stockholders. As of December 31, 2021, the Company has not considered the effect of the warrants sold in the Initial Public Offering
to purchase an aggregate of 2,412,500 shares in the calculation of diluted net loss per share, since the exercise of the warrants is
contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive and the Company did not have
any other dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary share and then share
in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
The
net loss per share presented in the statement of operations is based on the following:
Net loss per share presented in
the statement of operations
Years Ended
December 31,
Net loss $ (812,413 ) $ (117,787 )
Accretion of carrying value to redemption value (3,641,991 ) -
Net income $ (4,454,403 ) $ (117,787 )
Basic and diluted net loss per share:
Years Ended
December 31,
Years Ended
December 31,
Redeemable
Ordinary
shares Non-Redeemable
Ordinary
shares Redeemable
Ordinary
shares Non-Redeemable
Ordinary
shares
Basic and diluted net loss per share:
Numerators:
Allocation of net loss including carrying value to redemption value $ (3,305,127 ) $ (1,149,276 ) $ - $ (117,787 )
Accretion of carrying value to redemption value 3,641,991 - - -
Allocation of net income (loss) $ 336,864 $ (1,149,276 ) $ - $ (117,787 )
Denominators:
Weighted-average shares outstanding 4,070,685 1,415,479 - 1,000,000
Basic and diluted net income (loss) per share $ 0.08 $ (0.81 ) $ - $ (0.12 )
● Related
parties
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also
considered to be related if they are subject to common control or common significant influence.
● Recent
accounting pronouncements
The
Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material
impact on the consolidated results of operations, financial condition, or cash flows, based on the current information.
NOTE
3 - CASH AND INVESTMENT HELD IN TRUST ACCOUNT
As
of December 31, 2021, investment securities in the Company’s Trust Account consisted of $46,469,183 in United States Treasury Bills. The Company classifies its United States Treasury securities as available-for-sale. Available-for-sale marketable securities
are recorded at their estimated fair value on the accompanying December 31, 2021 consolidated balance sheet. The carrying value and fair value of marketable securities on December 31, 2021 are
as follows:
Schedule of carrying value,
including gross unrealized holding gain as other comprehensive income and fair value of held to marketable securities
Carrying Value
as of
December 31,
Gross Unrealized
Holding loss Fair Value
as of
December 31,
Available-for-sale marketable securities
U.S. Treasury Securities $ 46,469,183 $ - $ 46,469,183
NOTE
4 - INITIAL PUBLIC OFFERING
On
February 11, 2021, the Company sold 4,600,000 Units which includes a full exercise by the underwriters of their over-allotment option
in the amount of 600,000 Public Units, at a purchase price of $10.00 per Unit. Each Unit will consist of one ordinary share, one right
(“Public Right”) and one redeemable Public Warrant. Each Public Right will convert into one-tenth
(1/10) of one ordinary share. Each Public Warrant will entitle the holder to purchase one-half of one ordinary share at an exercise price
of $11.50 per whole share (see Note 7).
If
the Company does not complete its Business Combination within the necessary time period described in Note 1, the Public Rights will expire
and be worthless. Since the Company is not required to net cash settle the Rights and the Rights are convertible upon the consummation
of an initial Business Combination, the management determined that the Rights are classified within shareholders’ equity upon their issuance in accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and
Rights based on the relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares and Rights
will be based on the closing price paid by investors.
The
Company paid an upfront underwriting discount of $805,000 (1.75%) of the per unit offering price to the underwriter at the closing of
the Public Offering, with an additional fee of $1,150,000 (the “Deferred Discount”) of 2.5% of the gross offering proceeds
payable upon the Company’s completion of the Business Combination. The Deferred Discount will become payable to the underwriter
from the amounts held in the Trust Account solely in the event the Company completes its Business Combination. In the event that the
Company does not close the Business Combination, the underwriter has waived its right to receive the Deferred Discount. The underwriter
is not entitled to any interest accrued on the Deferred Discount.
NOTE
5 - PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering on February 11, 2021, the Sponsor purchased an aggregate of or 225,000 Private Units
at a price of $10.00 per Private Unit, ($2,250,000 in the aggregate), from the Company in a private placement. The proceeds from the
sale of the Private Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. The Private Units
are identical to the Units sold in the Initial Public Offering, except for the private warrants (“Private Warrants”), as
described in Note 8. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale
of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the
Private Units and underlying securities will be worthless.
NOTE
6 - RELATED PARTY TRANSACTIONS
Founder
Shares
In
May 2018, the Company issued one ordinary share to the Sponsor for no consideration. On August 21, 2019, the Company cancelled the
one share for no consideration and the Sponsor purchased 1,150,000 ordinary
shares for an aggregate price of $25,000.
The 1,150,000 founder
shares was for purposes hereof referred to as the “Founder Shares”.
The
founders and our officers and directors have agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted
transferees) until, with respect to 50% of the Founder Shares, the earlier of (i) six months after the date of the consummation of a
Business Combination, or (ii) the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per
share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading
day period commencing after a Business Combination, with respect to the remaining 50% of the Founder Shares, upon six months after the
date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates
a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders
having the right to exchange their ordinary shares for cash, securities or other property.
Advance
from A Related Party
As
of December 31, 2021 and 2020, the Sponsor had advanced the Company an aggregate of $373,421 and $26,750, respectively. The advances
are non-interest bearing and due on demand.
Promissory
Note Payable
On
June 10, 2019, as amended on January 16, 2020, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the
Company may borrow up to an aggregate principal amount of $450,000 (the “Promissory Note”). The Promissory Note is non-interest
bearing and payable on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering (see Note 3). The
outstanding balance under the Promissory Note was repaid at the closing of the Initial Public Offering on February 11, 2021. As of December
31, 2021 and 2020, the principal amount due and owing under the Promissory Note was $0 and $228,483 respectively.
Administrative
Services Agreement
An
affiliate of the Sponsor agreed, commencing on February 8, 2021 through the earlier of the Company’s consummation of a Business
Combination and its liquidation, to make available to the Company certain general and administrative services, including office space,
utilities and administrative services, as the Company may require from time to time. The Company has agreed to pay the affiliate of the
Sponsor $10,000 per month for these services.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation
of a Business Combination into additional Private Units at a price of $10.00 per Unit. In the event that a Business Combination does
not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans.
Related
Party Extensions Loan
As
discussed in Note 1, the Company may extend the period of time to consummate a Business Combination up to nine times, each by an additional
month (for a total of 21 months to complete a Business Combination). In order to extend the time available for the Company to consummate
a Business Combination, the Sponsor or its affiliates or designees must deposit into the Trust Account $153,333 (approximately $0.033
per Public Share), up to an aggregate of $1,380,000, or $0.30 per public share, on or prior to the date of the applicable deadline, for
each one month extension. Any such payments would be made in the form of a loan. The terms of the promissory note to be issued in connection
with any such loans have not yet been negotiated. If the Company completes a Business Combination, the Company would repay such loaned
amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete a Business Combination, the
Company will not repay such loans. Furthermore, the letter agreement with the shareholders contains a provision pursuant to which the
Sponsor has agreed to waive its right to be repaid for such loans in the event that the Company does not complete a Business Combination.
The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete
a Business Combination.
On
February 11, 2022, the Company issued an unsecured promissory note, each in an amount of $153,333 to the Sponsor, pursuant to which
such amount had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination
until March 11, 2022 (see Note 9). The Notes are non-interest bearing and are payable upon the closing of a business combination. In
addition, the Notes may be converted, at the lender’s discretion, into additional Private Units at a price of $10.00 per unit.
NOTE
7 - SHAREHOLDERS’ DEFICIT
Ordinary
Shares - The Company is authorized to issue 50,000,000
ordinary shares, with a par value of $0.001 per
share. Holders of the ordinary shares are entitled to one vote for each ordinary share. At December 31, 2021, there were 1,450,000
ordinary shares issued and outstanding, excluding 4,600,000
ordinary shares subject to possible redemption (assuming all the units were separated into their component parts on such date).
Rights
- Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even
if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued
upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional
shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price
paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in
which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same
per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary share basis
and each holder of a right will be required to affirmatively convert its rights in order to receive 1/10 share underlying each right
(without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent
held by affiliates of the Company).
If
the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the
Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless.
Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business
Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire
worthless.
Public
Warrants
Each
public warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary share at a price of $11.50 per full share, subject
to adjustment as described in this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for
a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrant holder.
No
public warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary
shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. It is the Company’s current
intention to have an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants
and a current prospectus relating to such ordinary shares in effect promptly following consummation of an initial business combination.
Notwithstanding
the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the public warrants is not effective
within 90 days following the consummation of our initial business combination, public warrant holders may, until such time as there is
an effective registration statement and during any period when we shall have failed to maintain an effective registration statement,
exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In such event, each
holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by
dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise
price of the warrants and the “Fair Market Value” (defined below) by (y) the Fair Market Value. The “Fair Market Value”
shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the day prior to the date of
exercise. For example, if a holder held 300 warrants to purchase 150 shares and the Fair Market Value on the date prior to exercise was
$15.00, that holder would receive 35 shares without the payment of any additional cash consideration. If an exemption from registration
is not available, holders will not be able to exercise their warrants on a cashless basis.
The Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12
months from the effective date of the registration statement relating to the IPO. The warrants will expire at 5:00 p.m., New York City
time, on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption.
The
Company may redeem the outstanding warrants (including any outstanding warrants issued upon exercise of the unit purchase option issued
to Ladenburg Thalmann & Co., Inc.,), in whole and not in part, at a price of $0.01 per warrant:
● at
any time while the Public Warrants are exercisable,
● upon
not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
● if,
and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within
a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and
● if,
and only if, there is a current registration statement in effect with respect to the issuance of the ordinary shares underlying such
warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter
until the date of redemption.
If
the foregoing conditions are satisfied and the Company would issue a notice of redemption, each warrant holder can exercise his, her
or its warrant prior to the scheduled redemption date. However, the price of the ordinary shares may fall below the $18.00 trigger price
as well as the $11.50 warrant exercise price per full share after the redemption notice is issued and not limit our ability to complete
the redemption.
The
redemption criteria for the warrants have been established at a price which is intended to provide warrant holders a reasonable premium
to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise
price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below
the exercise price of the warrants.
If
the Company calls the warrants for redemption as described above, our management will have the option to require all holders that wish
to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering
the whole warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary
shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “Fair Market Value”
(defined below) by (y) the Fair Market Value. The “Fair Market Value” shall mean the average reported last sale price of
the ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent
to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise their warrants on a “cashless
basis” will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption,
the Company’s cash needs at such time and concerns regarding dilutive share issuances.
NOTE
8 - FAIR VALUE MEASUREMENTS
The
fair value of the Company’s consolidated financial assets and liabilities reflects management’s estimate of amounts that
the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities
in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize
the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following
fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order
to value the assets and liabilities:
Level
1: Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level
2: Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
Level
3: Unobservable
inputs based on the assessment of the assumptions that market participants would use in pricing the asset or liability.
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
Schedule of Company's assets that are measured at fair
value on a recurring basis December 31, Quoted Prices In
Active Markets Significant Other
Observable Inputs Significant Other
Unobservable Inputs
Description (Level 1) (Level 2) (Level 3)
Assets:
U.S. Treasury Securities held in Trust Account* $ 46,469,183 $ 46,469,183 $ - $ -
Liabilities:
Warrant liabilities $ 410,000 $ - $ - $ 410,000
* included
in cash and investments held in trust account on the Company’s consolidated balance sheet.
The
private warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the consolidated
balance sheets.
The
Company determined the initial fair value for the private warrants at $380,000 on February 11, 2021, the date of the Company’s
Initial Public Offering, using a Black-Scholes model. The Company allocated the proceeds received from the sale of Private Units, first
to the private warrants based on their fair values as determined at initial measurement, with the remaining proceeds recorded as ordinary
shares subject to possible redemption, and ordinary shares based on their relative fair values recorded at the initial measurement date.
The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.
The
key inputs into the binomial model and Black-Scholes model were as follows at their measurement dates:
Schedule of binomial model and Black-Scholes model
December 31,
February 11,
(Initial measurement)
Input
Share price $ 10.08 $ 10.00
Risk-free interest rate 1.26 % 0.46 %
Volatility 44.26 % 44 %
Exercise price $ 11.50 $ 11.50
Warrant life 5 years 5 years
As
of December 31, 2021, the aggregate value of the Private Warrants was $0.41 million. The change in fair value from February 11, 2021
to December 31, 2021 was approximately $30,000.
To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair
value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower
than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised
by the Company in determining fair value is greatest for investments categorized in Level 3. Level 3 financial liabilities consist of
the Private Warrant liability for which there is no current market for these securities such that the determination of fair value requires
significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed
each period based on changes in estimates or assumptions and recorded as appropriate.
NOTE
9 - COMMITMENTS AND CONTINGENCIES
Risks
and Uncertainties
Management
has evaluated the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s future financial position, results of its operations and/or search for a target company,
there has been a significant impact as of the date of these consolidated financial statements. The consolidated financial statements
do not include any adjustments that might result from the future outcome of this uncertainty.
Registration
Rights
The
holders of our insider shares issued and outstanding on the date of this prospectus, as well as the holders of the Private Units (and
all underlying securities) and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment
of working capital loans made to us, will be entitled to registration rights pursuant to an agreement to be signed prior to or on the
effective date of this Initial Public Offering. In addition, the holders have certain “piggy-back” registration rights with
respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred
in connection with the filing of any such registration statements.
Leases
The
Company terminated into short-term agreements for temporary office space. For the years ended December 31, 2021 and 2020, the Company
incurred rent expense of $6,109 and $23,639, respectively.
Underwriting
Agreement
The
underwriters are entitled to a deferred fee of 2.5% of the gross proceeds of the Initial Public Offering, or $1,150,000. The deferred
fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms
of the underwriting agreement.
Merger
Agreement
On
June 10, 2021, the Company, VIYI, Merger Sub, and WiMi, entered into the Merger Agreement. WiMi holds approximately 73% of the share
capital of VIYI.
Pursuant
to the Merger Agreement, upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Cayman Islands
Companies Act (as revised), the parties intend to effect a business combination transaction whereby the Merger Sub will merge with and
into VIYI, with VIYI being the surviving entity and becoming a wholly owned subsidiary of the Company on the terms and subject to the
conditions set forth in the Merger Agreement and simultaneously with the closing the Company will change our name to “MicroAlgo
Inc.”
The
Board of Directors of both the Company and VIYI and the stockholders of VIYI have approved the Merger Agreement and the transactions
contemplated by it.
Pursuant
to the Merger Agreement, the merger is structured as a stock for stock transaction and is intended to be qualified as a tax-free
reorganization. The terms of the merger provide for a valuation of VIYI and its subsidiaries and businesses of $400,000,000.
Based upon a per share value of $10.10
per share, the VIYI stockholders will receive approximately 39,600,000
ordinary shares of the Company which will represent approximately 85% of the combined outstanding shares following the closing,
assuming no redemptions by our stockholders and assuming conversion of our outstanding rights into 485,000 ordinary shares.
Currently, there are 6,050,000
ordinary shares of the Company issued and outstanding (including 4,600,000
ordinary shares subject to possible redemption) (assuming all the units were separated into their component parts on such date).
At
the effective time of the Merger Agreement, all outstanding options and other convertible securities of VIYI will be cancelled or converted
into ordinary shares of VIYI and exchanged for the Company’s ordinary shares as part of the consideration described above.
As
contemplated by and as a condition of the Merger Agreement, the Company entered into a backstop agreement with Ever Abundant
Investments Limited, dated as of June 10, 2021. On January 24, 2022, the Company agreed with Ever Abundant Investments Limited to
terminate the backstop agreement.
In
addition, on January 24, 2022, the Company entered into an amendment to the Merger Agreement with VIYI and WiMi. The purposes of the
amendment were to:
1.
extend the outside termination date of the proposed merger to June 30, 2022;
2.
provide for the termination of the original backstop agreement and the execution of the new backstop agreement with the majority shareholder
of VIYI; and
3.
acknowledge the existence of new potential governmental approvals required under recent changes in China law.
Pursuant
to the amendment to the Merger Agreement, on January 24, 2022, the Company entered into a backstop agreement with WiMi. Under the new
agreement, WiMi agreed to purchase (i) ordinary shares in open market transactions in connection with any tendered or proposed redemptions,
and (ii) from the Company ordinary shares in a private placement transaction exempt from registration under the Securities Act of 1933,
as amended. Any purchases, either from our shareholders seeking to redeem ordinary shares, or from the Company are limited to up to $15
million in gross amount. WiMi has agreed that any ordinary shares acquired by it will not be subject to redemption under the Company’s
corporate organizational documents and also waived any claims against our Trust Account.
Consummation
of the transactions contemplated by the Merger Agreement are subject to customary conditions of the respective parties, including the
approval of the Merger Agreement by the Company’s shareholders, and minimum net tangible assets immediately after the closing.
Other than as specifically discussed, this report does not assume the closing of the business combination with VIYI.
NOTE
10 - SUBSEQUENT EVENTS
In
accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before consolidated financial statements are issued, the Company has evaluated
all events or transactions that occurred after December 31, 2021, up through the date the Company issued the consolidated financial statements.
On
January 24, 2022, Venus, VIYI and WiMi entered into an amendment to the Merger Agreement. The purposes of the amendment were to:
i) extend
the outside termination date of the proposed merger to June 30, 2022;
ii) provide
for the termination of the existing backstop agreement and the new backstop agreement with
the majority shareholder of VIYI as described below in this Form 8-K; and
iii) acknowledge
the existence of new potential governmental approvals under recent changes in China law.
On February 11, 2022, the Company elected to extend the date by which it is required to complete a business combination to March 11, 2022 and deposited $153,333 into its Trust Account. On March 11, 2022, the Company elected to further extend the date by which it is required to complete a business combination to April 11, 2022 and deposited $153,333 into its Trust Account.