DEFR14A 1 d517828ddefr14a.htm DEFR14A DEFR14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. 1)

 

 

Filed by the Registrant

Filed by a party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

Mercato Partners Acquisition Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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EXPLANATORY NOTE

Mercato Partners Acquisition Corporation is filing this Amendment No. 1 (“Amendment No. 1”) to its definitive proxy statement on Schedule 14A, dated September 7, 2023 and filed with the Securities and Exchange Commission on September 8, 2023 (the “Original Proxy Statement”), solely to include the cover page required under 17 CFR § 240.14a-101 inadvertently omitted from the Original Proxy Statement.

Except as otherwise expressly noted herein, this Amendment No. 1 does not modify or update in any way the Original Proxy Statement.


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LOGO

PROXY STATEMENT/PROSPECTUS

PROXY STATEMENT FOR SPECIAL MEETING OF MERCATO PARTNERS ACQUISITION CORPORATION AND PROSPECTUS FOR ORDINARY SHARES OF NVNI GROUP LIMITED

LETTER TO STOCKHOLDERS OF MERCATO PARTNERS ACQUISITION CORPORATION

Dear Mercato Partners Acquisition Corporation Stockholders:

On February 26, 2023, Nvni Group Limited, an exempted company incorporated with limited liability in the Cayman Islands (“New Nuvini”), Nuvini Holdings Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Nuvini”), Nuvini Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Mercato Partners Acquisition Corporation, a Delaware corporation (“Mercato”), entered into a Business Combination Agreement (as may be amended from time to time, the “Business Combination Agreement”), pursuant to which, among other things, Nuvini Shareholders will contribute (the “Contribution”) to New Nuvini all of the issued and outstanding ordinary shares, par value $0.00001 per share, of Nuvini (“Nuvini Ordinary Shares”) in exchange for newly issued ordinary shares, par value $0.00001 per share, of New Nuvini (“New Nuvini Ordinary Shares”) and (ii) Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini (the “Merger” and together with the Contribution and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).

At the closing of the Business Combination (the “Closing”), (i) each unit (“Mercato Unit”) issued in Mercato’s initial public offering (the “Mercato IPO”) that is issued and outstanding immediately prior to the time the Merger becomes effective (the “Merger Effective Time”) will be automatically separated and the holder thereof will be deemed to hold one (1) share of Mercato’s Class A common stock, par value $0.0001 per share (“Mercato Class A Common Stock”) and one-half (1/2) of one public warrant to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share (a “Public Warrant”), (ii) each share of Mercato Class A Common Stock and each share of Mercato’s Class B common stock, par value $0.0001 per share (“Mercato Class B Common Stock” and together with Mercato Class A Common Stock, “Mercato Common Stock”), issued and outstanding immediately prior to the Merger Effective Time will be automatically canceled and converted into the right to receive one New Nuvini Ordinary Share, with a value ascribed to each such New Nuvini Ordinary Share of $10.00 and (iii) each Public Warrant and each private placement warrant, purchased concurrently with the closing of the Mercato IPO, to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share (“Private Placement Warrant”), outstanding and unexercised immediately prior to the Merger Effective Time will cease to represent a right to acquire Mercato Common Stock and will convert into a warrant to purchase one New Nuvini Ordinary Share at a price of $11.50 (“New Nuvini Warrant”), on substantially the same contractual terms and thereupon be assumed by New Nuvini pursuant to the warrant assignment, assumption and amendment agreement (the “New Nuvini Warrant Agreement”).

Mercato Units, Mercato Class A Common Stock and Public Warrants are currently listed on the Nasdaq Stock Market LLC (“Nasdaq”), under the symbols “MPRAU,” “MPRA,” and “MPRAW,” respectively. New Nuvini, Mercato, and Nuvini will use their respective reasonable best efforts to cause the New Nuvini Ordinary Shares issued in connection with the proposed transactions (including the New Nuvini Ordinary Shares issuable upon exercise of the Mercato Warrants to be issued by New Nuvini in connection with the Business Combination) and the New Nuvini Warrants to be approved for listing on Nasdaq (or another public stock market or exchange in the United States as may be agreed by Mercato and Nuvini) in connection with the Closing.

Mercato is holding a special meeting of its stockholders in order to obtain the stockholder approvals necessary to consummate the Business Combination. At the Mercato special meeting of stockholders, which will be held on September 28, 2023, at 9:00 a.m., Eastern time, via live webcast at https://www.cstproxy.com/mercatopartnersspac/sm2023, unless postponed or adjourned to a later date, Mercato will ask its stockholders to adopt the Business Combination Agreement, thereby approving the Business Combination, and approve the other proposals described in the accompanying proxy statement/prospectus.


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In addition, following the execution of the Business Combination Agreement, all of Nuvini’s shareholders entered into a Contribution and Exchange Agreement (the “Contribution Agreement”) with New Nuvini, pursuant to which, among other things, at the time the Contribution becomes effective (the “Contribution Effective Time”), each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed to New Nuvini, free and clear of all liens described under the Contribution Agreement, other than potential restrictions on resale under applicable securities laws, and the Nuvini Shareholders will subscribe for, and be issued in exchange for such contribution, a number of New Nuvini Ordinary Shares equal to the product of (a) the number of Nuvini Ordinary Shares outstanding at the Contribution Effective Time multiplied by (b) an “Exchange Ratio” (as calculated in accordance with the Business Combination Agreement), upon which Nuvini will become a direct, wholly-owned subsidiary of New Nuvini.

After careful consideration, the respective Mercato and Nuvini boards of directors have unanimously approved the Business Combination Agreement, the Mercato board of directors has approved the other proposals described in the accompanying proxy statement/prospectus, and each of the Mercato and Nuvini boards of directors has determined that it is advisable to consummate the Business Combination. The Mercato board of directors recommends that its stockholders vote “FOR” the proposals described in the accompanying proxy statement/prospectus.

More information about New Nuvini, Mercato, Nuvini, the Business Combination Agreement, the Business Combination and the proposed transactions is contained in the accompanying proxy statement/prospectus. You should read the accompanying proxy statement/prospectus, including the financial statements and annexes and other documents referred to therein, carefully and in their entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE SECTION ENTITLED “RISK FACTORS” BEGINNING ON PAGE 48 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Morrow Sodali LLC, Mercato’s proxy solicitor, toll-free at (800) 662-5200 or collect at (203) 658-9400 or email at MPRA.info@investor.morrowsodali.com.

On behalf of our board of directors, I thank you for your support and look forward to the successful consummation of the Business Combination.

 

   

Sincerely,

   

/s/ Greg Warnock

   

Greg Warnock

September 7, 2023

   

Chairman and Chief Executive Officer

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated September 7, 2023, and is expected to be first mailed or otherwise delivered to Mercato stockholders on or about September 7, 2023.


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ADDITIONAL INFORMATION

No person is authorized to give any information or to make any representation with respect to the matters that the accompanying proxy statement/prospectus describes other than those contained in the accompanying proxy statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by New Nuvini, Mercato or Nuvini. The accompanying proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of the accompanying proxy statement/prospectus nor any distribution of securities made under the accompanying proxy statement/prospectus will, under any circumstances, create an implication that there has been no change in the affairs of New Nuvini, Mercato or Nuvini since the date of the accompanying proxy statement/prospectus or that any information contained therein is correct as of any time subsequent to such date.


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

OF MERCATO PARTNERS ACQUISITION CORPORATION

TO BE HELD ON SEPTEMBER 28, 2023

To the Stockholders of Mercato Partners Acquisition Corporation:

NOTICE IS HEREBY GIVEN that a special meeting (the “Mercato Special Meeting”) in lieu of the 2023 annual meeting of stockholders of Mercato Partners Acquisition Corporation, a Delaware corporation (“Mercato,” “we,” “our” or “us”), will be held on September 28, 2023, at 9:00 a.m., Eastern time, via live webcast at https://www.cstproxy.com/mercatopartnersspac/sm2023. You are cordially invited to attend the Mercato Special Meeting for the following purposes:

 

1.

Proposal No. 1—The “Business Combination Proposal”—to approve and adopt the Business Combination Agreement, dated as of February 26, 2023 (as may be amended from time to time, the “Business Combination Agreement”), by and among Nvni Group Limited, an exempted company incorporated with limited liability in the Cayman Islands (“New Nuvini”), Nuvini Holdings Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Nuvini”), Nuvini Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Mercato Partners Acquisition Corporation, a Delaware corporation (“Mercato”), and the transactions contemplated thereby, pursuant to which, among other things, Nuvini shareholders will contribute (the “Contribution”) to New Nuvini all of the issued and outstanding ordinary shares, par value $0.00001 per share, of Nuvini ( “Nuvini Ordinary Shares”) in exchange for newly issued ordinary shares, par value $0.00001 per share, of New Nuvini ( “New Nuvini Ordinary Shares”) and (ii) Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini (the “Merger” and together with the Contribution and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”);

 

2.

Proposal No. 2—The “Merger Proposal”—to approve and adopt the Merger, pursuant to which, Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini, each unit (“Mercato Unit”) issued in Mercato’s initial public offering (the “Mercato IPO”) that is issued and outstanding immediately prior to the time the Merger becomes effective (the “Merger Effective Time”) will be automatically separated and the holder thereof will be deemed to hold one (1) share of Mercato’s Class A common stock, par value $0.0001 per share (“Mercato Class A Common Stock”) and one-half (1/2) of one public warrant to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share (“Public Warrant”), each share of Mercato Class A Common Stock and each share of Mercato’s Class B common stock, par value $0.0001 per share (“Mercato Class B Common Stock” and together with Mercato Class A Common Stock, “Mercato Common Stock”), issued and outstanding immediately prior to the Merger Effective Time will be automatically canceled and converted into the right to receive one New Nuvini Ordinary Share, with a value ascribed to each such New Nuvini Ordinary Share of $10.00 and each Public Warrant and each private placement warrant, purchased concurrently with the closing of the Mercato IPO, to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share (“Private Placement Warrant”), outstanding and unexercised immediately prior to the Merger Effective Time will cease to represent a right to acquire Mercato Common Stock and will convert into a warrant to purchase one New Nuvini Ordinary Share at a price of $11.50 (“New Nuvini Warrant”), on substantially the same contractual terms and thereupon be assumed by New Nuvini pursuant to the warrant assignment, assumption and amendment agreement (the “New Nuvini Warrant Agreement”) and

 

3.

Proposal No. 3—The “Adjournment Proposal”—to adjourn the Mercato Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Mercato Special Meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for a vote.

The closing of the Business Combination (the “Closing”) is conditioned upon the approval of the Business Combination Proposal and the Merger Proposal. The Adjournment Proposal is not conditioned on the approval of


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any other proposal set forth in the accompanying proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal and the Merger Proposal are not approved, Mercato will not consummate the Business Combination.

Only holders of record of Mercato Common Stock at the close of business on September 1, 2023 (the “Record Date”) are entitled to notice of the Mercato Special Meeting and to vote at, the Mercato Special Meeting and any adjournments or postponements of the Mercato Special Meeting. A complete list of Mercato stockholders of record entitled to vote at the Mercato Special Meeting will be available for ten days before the Mercato Special Meeting at the principal executive offices of Mercato for inspection by stockholders during ordinary business hours for any purpose germane to the Mercato Special Meeting.

Pursuant to the Mercato Certificate of Incorporation, Mercato is providing its public stockholders (“Public Stockholders”) with the opportunity to redeem, upon the Closing, the shares of Class A Common Stock (the “Public Shares”) issued in the Initial Public Offering then held by them for an amount in cash equal to their pro rata share of the aggregate amount on deposit (as of the second business days prior to the Closing) in the trust account (the “Trust Account”) that holds the proceeds (including interest but less franchise and income taxes payable) of the Mercato IPO. For illustrative purposes, based on funds in the Trust Account of approximately $45,903,619.26 on the Record Date, the estimated per share redemption price would be approximately $10.67. The amount of funds in the Trust Account as of the Record Date reflects the prior redemption of 18,699,637 shares of Mercato Class A Common Stock in connection with the extension meeting in February 2023, which represented approximately 81% of the Public Shares outstanding at the time of the extension meeting. Public Stockholders may elect to redeem Public Shares even if they vote for the Business Combination Proposal. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, with respect to 15% or more of the Public Shares issued in the Mercato IPO. As partial consideration for (i) the receipt of the 5,750,000 shares of Mercato Class B Common Stock purchased by Mercato Partners Acquisition Group, LLC (the “Sponsor”) in a private placement prior to the Mercato IPO and (ii) the covenants and commitments of the Sponsor included in a letter agreement entered into by the parties prior to the Mercato IPO, the Sponsor has agreed to waive its redemption rights with respect to any shares of Mercato Class B Common Stock and Private Placement Warrants and any Public Shares it may hold, and the Sponsor has also agreed to waive its redemption rights with respect to any other equity securities it holds in connection with the Closing, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor has agreed to vote any shares of Class B Common Stock, Private Placement Warrants and Public Shares owned by them, and the Sponsor has also agreed to vote any other equity securities in favor of the Business Combination Proposal, which represent approximately 55% of the voting power of Mercato as of the Record Date. The Sponsor has also agreed to vote its shares in favor of all other Proposals being presented at the Mercato Special Meeting.

Pursuant to Mercato’s bylaws, a majority of the voting power of all outstanding shares of Mercato Common Stock entitled to vote, represented at the Mercato Special Meeting in person or by proxy, will constitute a quorum for the transaction of business at the Mercato Special Meeting. Under the Delaware General Corporation Law (the “DGCL”), shares that are voted “abstain” or “withheld” are counted as present for purposes of determining whether a quorum is present at the Mercato Special Meeting. Because the Proposals are “non-discretionary” items, your broker will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting instructions, a broker “non-vote” will be deemed to have occurred for each of the Proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will not be treated as votes cast.

As of the Record Date, there was approximately $45,903,619.26 in the Trust Account. Each redemption of Public Shares by Public Stockholders will decrease the amount in the Trust Account. Mercato will not redeem Public Shares in an amount that would cause it to have net tangible assets of less than $5,000,001.

As a foreign private issuer incorporated under the laws of the Cayman Islands whose New Nuvini Ordinary Shares and New Nuvini Warrants will be listed on the Nasdaq Stock Market LLC (“Nasdaq”), under the symbols


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“NVNI” and “NVNIW,” respectively, New Nuvini will be permitted to follow certain Cayman Island corporate governance practices in lieu of certain Nasdaq stock exchange requirements. New Nuvini intends to take advantage of the exemptions available to it as a foreign private issuer so long as it continues to qualify as a foreign private issuer. For more information regarding these home country corporate governance practices and exemptions available to New Nuvini as a foreign private issuer, see the sections of the proxy statement/prospectus titled “Summary of the Proxy Statement/Prospectus - Emerging Growth Company; Foreign Private Issuer; Controlled Company” and “Risk Factors - Risks Related to the Business Combination - As a foreign private issuer, and as permitted by the listing requirements of the Nasdaq, New Nuvini will follow certain home country governance practices rather than the corporate governance requirements of the Nasdaq.

It is anticipated that, upon consummation of the Business Combination, whether in the “No Further Redemption Scenario,” “25% Redemption Scenario,” “Minimum Cash Redemption Scenario,” “50% Redemption Scenario,” “75% Redemption Scenario” or “Maximum Redemption Scenario” described in the proxy statement/prospectus, Pierre Schurmann, CEO of Nuvini, will own 50% of New Nuvini’s voting rights. Therefore, New Nuvini will be a “controlled company” within the meaning of the corporate governance standards of the Nasdaq listing rules for being a company of which more than 50% of the voting power is held by an individual, group or another company. For more information, please see the sections of the proxy statement/prospectus titled “Summary of the Proxy Statement/Prospectus - Emerging Growth Company; Foreign Private Issuer; Controlled Company” and “Risk Factors - Risks Related to the Business Combination - As a foreign private issuer, and as permitted by the listing requirements of the Nasdaq, New Nuvini will follow certain home country governance practices rather than the corporate governance requirements of the Nasdaq.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read the accompanying proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, toll-free at (800) 662-5200; banks and brokers can call collect at (203) 658-9400 or email at MPRA.info@investor.morrowsodali.com.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF MERCATO COMMON STOCK YOU OWN. Stockholders are urged to vote their proxies by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. You may also submit a proxy by telephone or via the internet by following the instructions printed on your proxy card. If you hold your shares through a brokerage firm, bank or other nominee, you should direct the vote of your shares in accordance with the voting instruction form provided by the broker, bank or nominee.

 

   

By Order of the Board of Directors,

   

/s/ Greg Warnock

   

Greg Warnock

September 7, 2023

   

Chairman and Chief Executive Officer


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     Page  

FREQUENTLY USED TERMS

     i  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     1  

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     3  

CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS

     3  

IMPORTANT INFORMATION ABOUT GAAP, IFRS AND NON-IFRS FINANCIAL MEASURES

     3  

TRADEMARKS AND TRADE NAMES

     4  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

     5  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     22  

RISK FACTORS

     48  

GENERAL INFORMATION

     133  

THE SPECIAL MEETING OF MERCATO STOCKHOLDERS

     134  

THE MERCATO BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THESE PROPOSALS .

     134  

THE BUSINESS COMBINATION

     142  

CERTAIN TAX CONSIDERATIONS

     168  

THE BUSINESS COMBINATION AGREEMENT AND ANCILLARY DOCUMENTS

     183  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     204  

BUSINESS OF NEW NUVINI BEFORE THE BUSINESS COMBINATION

     219  

BUSINESS OF NUVINI AND CERTAIN INFORMATION ABOUT NUVINI

     221  

NUVINI S.A. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     239  

INFORMATION ABOUT MERCATO

     272  

MERCATO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     281  

MANAGEMENT OF NEW NUVINI AFTER THE BUSINESS COMBINATION

     287  

NUVINI EXECUTIVE COMPENSATION

     294  

DESCRIPTION OF NEW NUVINI SECURITIES

     296  

COMPARISON OF SECURITYHOLDER RIGHTS

     311  

MERCATO RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     326  

NUVINI RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     329  

BENEFICIAL OWNERSHIP OF NEW NUVINI SECURITIES

     332  

SHARES ELIGIBLE FOR FUTURE RESALE

     335  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     338  

PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL

     340  

PROPOSAL NO. 2—THE MERGER PROPOSAL

     341  

PROPOSAL NO. 3—THE ADJOURNMENT PROPOSAL

     342  

LEGAL MATTERS

     343  

EXPERTS

     343  

ENFORCEMENT OF CIVIL LIABILITIES

     343  

HOUSEHOLDING INFORMATION

     343  

TRANSFER AGENT AND REGISTRAR

     344  

FUTURE SHAREHOLDER PROPOSALS

     344  

WHERE YOU CAN FIND MORE INFORMATION

     344  

INDEX TO FINANCIAL STATEMENTS

     F-1  

Annex A—Business Combination Agreement

     Annex A-1  

Annex B—Amended and Restated Memorandum and Articles of Association of New Nuvini

     Annex B-1  

Annex C—Contribution Agreement

     Annex C-1  

Annex D—Sponsor Support Agreement

     Annex D-1  

Annex E—Nuvini Holders Voting and Support Agreement

     Annex E-1  

Annex F—Registration Rights Agreement

     Annex F-1  

Annex G—Form of Lock-Up Agreement

     Annex G-1  


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FREQUENTLY USED TERMS

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires:

25% Redemption Scenario” means the scenario in which Public Shareholders exercise their redemption rights with respect to 1,075,091 of their respective Public Shares.

50% Redemption Scenario” means the scenario in which Public Shareholders exercise their redemption rights with respect to 2,150,181 of their respective Public Shares.

75% Redemption Scenario means the scenario in which Public Shareholders exercise their redemption rights with respect to 3,225,272 of their respective Public Shares.

Adjournment Proposal” means a proposal to adjourn the special meeting of stockholders of Mercato to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more Proposals presented to stockholders for vote at such special meeting.

Ancillary Documents” means the certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement, including the Sponsor Support Agreement, the Nuvini Holders Voting and Support Agreement, the Contribution Agreement, the Registration Rights Agreement, the Lock-up Agreement and all other agreements, documents, instruments and certificates executed or to be executed in connection with the transactions contemplated thereby, and any and all exhibits and schedules thereto.

Aggregate Mercato Stockholder Consideration” means the number of New Nuvini Ordinary Shares equal to the number of shares of Mercato Common Stock issued and outstanding immediately prior to the Merger Effective Time, after taking into account the Mercato Stockholder Redemptions.

B2B” means business-to-business.

B2C” means business-to-client.

broker non-vote” means the failure of a Mercato stockholder who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

Business Combination” means the transactions contemplated by the Business Combination Agreement.

Business Combination Agreement” means the Business Combination Agreement, dated February 26, 2023 and as may be amended from time to time, by and among Mercato, Nuvini, New Nuvini and Merger Sub, which is attached to the proxy statement/prospectus as Annex A.

Business Combination Proposal” means the proposal to approve the adoption of the Business Combination Agreement and the Business Combination.

Cayman Companies Law” means the Companies Act (As Revised) of the Cayman Islands.

CDI” means the average of interbank overnight rates in Brazil.

Central Bank” means the Banco Central do Brasil, or Brazilian Central Bank.

Closing” means the closing of the transactions contemplated by the Business Combination Agreement.

Closing Date” means the date on which the Closing occurs.

Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

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Continental” means Continental Stock Transfer & Trust Company.

Contribution” means the contribution by Nuvini Shareholders to New Nuvini of all their shareholdings in Nuvini in exchange for New Nuvini Ordinary Shares, as contemplated by the Contribution Agreement.

Contribution Agreement” means the Contribution and Exchange Agreement, dated as of March 3, 2023, by and between Nuvini and New Nuvini, pursuant to which, at the Contribution Effective Time, Nuvini Shareholders will contribute to New Nuvini all of the issued and outstanding equity of Nuvini in exchange for newly issued New Nuvini Ordinary Shares, which is attached to the proxy statement/prospectus as Annex C.

Contribution Effective Time” means the time the contribution contemplated by the Contribution Agreement becomes effective.

COVID-19” means the novel coronavirus known as SARS-CoV-2 or COVID-19, and any evolutions, mutations thereof or related or associated epidemics, pandemic or disease outbreaks.

COVID-19 Measures” means any quarantine, shelter-in-place or stay-at-home order, workforce reduction, social distancing, shut down, closure, sequester or any other law, governmental order, action, directive, guideline or recommendation by any Governmental Authority in connection with or in response to COVID-19, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (CARES).

CRM” means client relationship management.

Debentures” means the non-convertible debentures issued by Nuvini S.A. in a single series on May 14, 2021.

Debenture Agreement” means the agreements entered into with Debenture Holders on May 14, 2021.

Debenture First Issue” means the 61,000 Debentures issued by Nuvini S.A. to Debenture Holders.

Debenture Holders” means the holders of Debentures issued by Nuvini S.A. on May 14, 2021.

DGCL” means the General Corporation Law of the State of Delaware.

Dollars” or “$” means U.S. dollars.

DTC” means The Depository Trust Company.

ERP” means the enterprise resource planning software system which assists organizations automate and manage core business processes, such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

Exchange Ratio” means the quotient obtained by dividing (a) the Per Share Company Value by (b) $10.00.

Exposure Premium” means the additional contingent payment Nuvini S.A. agreed to provide Debenture Holders to mitigate the Debenture Holders’ risk related to the value of the Debentures.

extension meeting” means the special meeting held on February 3, 2023 for Mercato stockholders to vote on an extension proposal to amend the existing organizational documents of Mercato to extend the date on which Mercato is required to consummate a business combination.

Extension Promissory Instrument” means the promissory instrument issued by Mercato to the Sponsor in connection with the approval of the extension proposal, in the principal amount of up to $1,350,000, pursuant to which the Sponsor agreed to loan Mercato up to $1,350,000.

 

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Extension Period” means any extended time that Mercato has to consummate a business combination beyond the 20 months provided in the Mercato Certificate of Incorporation, either through up to five additional one-month extensions pursuant to the Mercato Certificate of Incorporation or as a result of the Mercato stockholders’ approval of the extension proposal during the extension meeting.

extension proposal” means the proposals that were voted upon by Mercato stockholders in connection with the extension meeting and the extension proxy statement, including any postponement or adjournment thereof.

extension proxy statement” means the definitive proxy statement filed by Mercato with the SEC on January 18, 2023 in connection with the extension meeting, as amended or supplemented.

FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended.

Founder Shares” means the 5,750,000 shares of Mercato Class B Common Stock held by the Initial Stockholders, purchased by the Sponsor in a private placement prior to the Mercato IPO.

Fully Diluted Share Count” means a number that is equal to, without duplication, (a) the aggregate number of Nuvini Ordinary Shares (i) that are issued and outstanding immediately prior to the Contribution Effective Time (including, for the avoidance of doubt, the Nuvini Ordinary Shares issued pursuant to Section 7.24 of the Business Combination Agreement), (ii) that are issuable upon the exercise of all Nuvini Options (whether or not vested) that remain outstanding as of the Contribution Effective Time, (iii) that are issuable upon the exercise of any warrant of Nuvini issued and outstanding immediately prior to the Contribution Effective Time, (iv) that are issuable upon conversion of any convertible securities of Nuvini issued and outstanding immediately prior to the Contribution Effective Time (other than those issuable under clauses (ii) and (iii) of this definition), plus (b) the aggregate number of Nuvini Earnout Shares, plus (c) the New Nuvini Equity Plan Amount, minus (d) the Nuvini Ordinary Shares held in the Nuvini’s treasury.

GAAP” means United States’ generally accepted accounting principles.

GDPR” means the General Data Protection Regulation.

Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.

HSR Act” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

IASB” means the International Accounting Standards Board.

IFRS” means the International Financial Reporting Standards, as issued by the IASB.

Incentive Plan” means the New Nuvini 2023 Incentive Award Plan.

Initial Stockholders” means the Sponsor and any other holders of Founder Shares (or their permitted transferees).

Intermediate 1” means Nvini Intermediate 1 Limited, an exempted company incorporated with limited liability in the Cayman Islands, and direct wholly-owned subsidiary of New Nuvini.

Intermediate 2” means Nvini Intermediate 2 Limited, an exempted company incorporated with limited liability in the Cayman Islands, and direct wholly-owned subsidiary of Intermediate 1.

Intermediate Companies” mean Intermediate 1 and Intermediate 2.

Investment Company Act” means the U.S. Investment Company Act of 1940, as amended.

JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.

 

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Latin America” means Mexico and the countries within South America, Central America and the Caribbean islands.

Lien” means any mortgage, pledge, security interest, bond, chattel mortgage (alienação fiduciária), encumbrance, lien, license, grant, guarantee, options, priority rights, preemptive rights, right of first offer or refusal, hypothecation, assignment, claim, easement, deed of trust, antichresis (anticrese), emphyteusis (enfiteuse), usufruct, penhora, arrolamento, covenant, servitude, put or call right, voting right, shareholders’ agreement, retention rights, restriction or charge of any kind (including, any conditional sale or other title retention agreement or lease in the nature thereof, any agreement to give any security interest and any restriction relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership), as defined in the Business Combination Agreement as Annex A hereto.

Lock-up Agreement” means the Lock-up Agreement, substantially in the form attached to the Business Combination Agreement as Annex G, hereto.

Lock-up Shares” means the New Nuvini Ordinary Shares subject to the lock-up period as set forth in the Sponsor Support Agreement.

Maximum Redemption Scenario” means the scenario in which the maximum amount of Public Shares held by Mercato’s Public Stockholders are redeemed in connection with the Business Combination.

Mercato” means Mercato Partners Acquisition Corporation, a Delaware corporation.

Mercato Board” means the board of directors of Mercato.

Mercato Bylaws” means Mercato’s bylaws, as amended.

Mercato Certificate of Incorporation” means Mercato’s second amended and restated certificate of incorporation, as amended.

Mercato Class A Common Stock” means Mercato’s Class A common stock, par value $0.0001 per share.

Mercato Class B Common Stock” means Mercato’s Class B common stock, par value $0.0001 per share.

Mercato Common Stock” means the Mercato Class A Common Stock and Mercato Class B Common Stock.

Mercato IPO” means Mercato’s initial public offering consummated on November 8, 2021.

Mercato Special Meeting” means a special meeting of the Mercato stockholders.

Mercato Stockholder Redemption” means the redemption rights provided for in the Mercato Certificate of Incorporation.

Mercato Units” means the units issued in Mercato IPO, each unit consisting of one share of Mercato Class A Common Stock and one-half of one Public Warrant.

Mercato Warrant Agreement” means the Warrant Agreement, dated as of November 3, 2021, by and between Mercato and Continental, governing the Mercato Warrants.

 

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Mercato Warrants” means the Private Placement Warrants and the Public Warrants.

Merger” means the merger of Merger Sub with and into Mercato with Mercato surviving the merger as a wholly-owned subsidiary of Intermediate 2.

Merger Effective Time” means the time the Merger becomes effective.

Merger Sub” means Nuvini Merger Sub, Inc., a Delaware corporation that will be a direct wholly-owned subsidiary of Intermediate 2 on and prior to the Closing Date.

Merger Sub Common Stock” means the shares of common stock, par value $0.0001 per share, of Merger Sub.

Minimum Cash Condition” means the Closing condition in the Business Combination Agreement that the SPAC Cash must equal or exceed $10,000,000.

Minimum Cash Redemption Scenario” means the scenario that assumes that Mercato stockholders exercise their redemption rights with respect to 1,803,651 Public Shares upon consummation of the Business Combination. This scenario represents the maximum number of Public Shares that may be redeemed in order for New Nuvini to meet the Minimum Cash Condition without waiving such condition.

Nasdaq” means the Nasdaq Stock Market LLC.

New Nuvini” means (i) prior to Closing, Nvni Group Limited, an exempted company incorporated with limited liability in the Cayman Islands, and (ii) after Closing, the public company contemplated by the Business Combination and all of its subsidiaries.

New Nuvini Articles” means the means the Amended and Restated Memorandum and Articles of Association of New Nuvini, attached to this proxy statement/prospectus as Annex B.

New Nuvini Board” means the board of directors of New Nuvini.

New Nuvini Equity Plan Amount” means a number equal to five percent (5%) of the Fully Diluted Share Count (inclusive of the New Nuvini Equity Plan Amount).

New Nuvini Ordinary Shares” means the ordinary shares, par value $0.00001 per share, of New Nuvini.

New Nuvini Shareholder” means a holder of New Nuvini Ordinary Shares after Closing.

New Nuvini Warrant Agreement” means the form of Warrant, Assignment, Assumption and Amendment Agreement to be entered into at the Closing, by and between Mercato, New Nuvini and the Warrant Agent.

New Nuvini Warrants” means the Mercato Warrants that will be assumed by New Nuvini in connection with the Business Combination and, following the Business Combination, will represent warrants to purchase one New Nuvini Ordinary Share at a price of $11.50, subject to adjustment.

No Further Redemption Scenario” means a scenario in which all holders of the remaining 4,300,363 Public Shares did not exercise their redemption rights with respect to their respective Public Shares.

Non-Redeeming Stockholder” means a holder of Mercato Class A Common Stock who did not exercise its redemption right with respect to its shares of Mercato Class A Common Stock.

Nuvini” means Nuvini Holdings Limited, an exempted company incorporated with limited liability in the Cayman Islands.

 

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Nuvini Acquired Companies” means the subsidiaries that Nuvini S.A. acquires and operates prior the Closing, namely, Effecti Tecnologia Web Ltda., Leadlovers Tecnologia Ltda., Ipê Tecnologia Digital Ltda., Dataminer Dados, Informações E Documentos Ltda., Onclick Sistemas de Informação Ltda., Commit Consulting LTDA, APIE.COMM Tecnologia LTDA, Simplest Software Ltda. and Smart NX Tecnologica Ltda.

Nuvini Board” means the board of directors of Nuvini S.A.

Nuvini Earnout Agreements” means the agreements defined as Earnout Agreements in the Business Combination Agreement.

Nuvini Earnout Shares” means the shares issuable pursuant to the terms of the Nuvini Earnout Agreements (as defined in the Business Combination Agreement).

Nuvini Group” means Nuvini, Nuvini S.A., the Nuvini Acquired Companies and any other subsidiaries of Nuvini S.A. prior to Closing.

Nuvini Holders Voting and Support Agreement” means the Shareholder Voting and Support Agreement dated as of February 26, 2023, by and among Heru Investment Holdings Ltd, Mercato, Nuvini and New Nuvini.

Nuvini Option” means, as of any determination time, each option to purchase Nuvini Ordinary Shares that is outstanding and unexercised, whether granted under the Stock Option Plan of Nuvini S.A. or otherwise.

Nuvini Ordinary Shares” means the ordinary shares, par value $0.00001 per share, of Nuvini.

Nuvini S.A.” means Nuvini S.A., a corporation (sociedade por ações) duly incorporated and organized under the laws of Brazil.

Nuvini Shareholder” means a holder of Nuvini Ordinary Shares prior to the Closing.

Nuvini Warrants” means those outstanding warrants to acquire Nuvini Ordinary Shares or the equity securities of any of the subsidiaries of Nuvini.

Outside Date” means July 8, 2023, as such date may be extended in accordance with Section 9.1(b) of the Business Combination Agreement, including the Extension Period.

PCAOB” means the U.S. Public Company Accounting Oversight Board.

Per Share Company Value” means the quotient obtained by dividing (a) the sum of (i) $235,000,000 plus (ii) the aggregate amount of exercise price that would be payable for all Nuvini Options and Nuvini Warrants outstanding immediately prior to the Contribution Effective Time by (b) the Fully Diluted Share Count.

PIPE Investments” means potential private financings on terms to be agreed to by Nuvini and Mercato and that would be consummated prior to or substantially concurrently with the Closing.

Private Placement Warrants” means the 10,050,000 warrants held by the Sponsor, that were purchased by the Sponsor in the private placement that occurred concurrently with the closing of the Mercato IPO, each of which is a warrant to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share, subject to adjustment in accordance with the Mercato Warrant Agreement.

Proposals” means each of the proposals to be considered at the special meeting, as set forth in the section entitled “The Special Meeting of Mercato Stockholders” below.

Public Shares” means the shares of Mercato Class A Common Stock included in the Mercato Units.

Public Stockholders” means the holders of Public Shares.

 

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Public Warrants” means the 11,500,000 warrants included in the Mercato Units, each of which is a warrant to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share, subject to adjustment in accordance with the Mercato Warrant Agreement.

Record Date” means September 1, 2023.

Registration Rights Agreement” means the form of Registration Rights Agreement to be entered into at the Closing, by and among New Nuvini, Mercato, certain Shareholders of Nuvini, the form of which is attached to this proxy statement/prospectus as Annex F.

“Rollover Options” means each option to purchase Mercato Common Stock, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Contribution Effective Time and is subsequently canceled and extinguished in exchange for an option to purchase New Nuvini Ordinary Shares.

Sarbanes-Oxley Act” means the U.S. Sarbanes-Oxley Act of 2002.

SaaS” means Software as a Service.

SEC” means the U.S. Securities and Exchange Commission.

Securities Act” means the U.S. Securities Act of 1933, as amended.

SPAC Cash” means an amount equal to (a) the aggregate amount of cash contained in the Trust Account immediately prior to the Closing and after payment of all amounts required to be paid to Mercato’s redeeming Public Stockholders, plus (b) the aggregate amount of any cash of Mercato on hand immediately prior to the Closing, less (c) the aggregate amount of any amounts payable from the Trust Account as repayment of working capital loans, reimbursement of expenses to directors, officers and shareholders of Mercato and any other indebtedness of Mercato, if any, plus (d) the net amount of proceeds actually contributed by investors, less (e) the aggregate amount of Mercato’s outstanding transaction expenses (but, in each case, excluding any taxes required to be paid by Mercato in respect of redemptions by Mercato’s Public Stockholders to the U.S. Inflation Reduction Act of 2022), less (f) the aggregate amount of Nuvini’s outstanding transaction expenses.

Sponsor” means Mercato Partners Acquisition Group, LLC, a Delaware limited liability company.

Sponsor Support Agreement” means the Sponsor Support Agreement, dated as of February 26, 2023, by and among the Sponsor, the persons listed on Schedule I thereto, Mercato, Nuvini and New Nuvini, which is attached to this proxy statement/prospectus as Annex D.

Stock Option Plan” means Nuvini S.A.’s stock option plan, as of November 27, 2020, as amended (Plano de Outorga de Opção de Subscrição de Ações da Nuvini).

Transactions” means the Merger, the Contribution and the other transactions contemplated by the Business Combination Agreement.

Transfer Agent” means Continental, as transfer agent.

Trust Account” means the U.S.-based trust account at Continental Stock Transfer and Trust Company, maintained by Trustee, established by Mercato containing the proceeds of the Mercato IPO and from certain private placements occurring simultaneously with the Mercato IPO for the benefit of the Public Stockholders.

Trustee” means Continental, as trustee.

Tuck-in Acquisition” means a type of acquisition where an entity acquires another entity smaller than the acquirer for the purpose of incorporating a specific resource of that smaller company (such as technology or intellectual property) into the acquirer or growing the acquirer’s market share.

Warrant Agent” means Continental, as warrant agent.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and other documents incorporated by reference into this proxy statement/prospectus include or may include “forward-looking statements” within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies regarding the future. The forward-looking statements contained in this proxy statement/prospectus are based on current expectations and beliefs concerning future developments and their potential effects on Mercato or Nuvini. There can be no assurance that future developments affecting us will be those that we have anticipated. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. All statements other than statements of historical fact may be forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “forecast,” “outlook,” “aim,” “target,” “will,” “could,” “should,” “may,” “likely,” “plan,” “probably” or similar words may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, but are not limited to, statements relating to:

 

   

trends in the SaaS market in Latin America;

 

   

the ability to complete the Business Combination, or, if Mercato does not consummate the Business Combination, any other initial business combination;

 

   

the benefits of the Business Combination;

 

   

the future financial performance of the combined company following the Business Combination;

 

   

expansion plans and opportunities;

 

   

Mercato’s potential ability to obtain financing to complete the Business Combination;

 

   

Mercato’s public securities’ potential liquidity and trading;

 

   

the lack of a market for Mercato’s securities;

 

   

the Trust Account not being subject to claims of third parties; and

 

   

New Nuvini’s financial performance following the Business Combination.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Mercato’s or Nuvini’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

 

   

satisfaction of conditions to the Business Combination;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;

 

   

the ability to obtain and/or maintain the listing of the New Nuvini Ordinary Shares and New Nuvini Warrants on Nasdaq following the Business Combination;

 

   

New Nuvini’s ability to raise financing on commercially reasonable terms in the future;

 

   

Mercato’s or Nuvini’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination, as a result of which they would then receive expense reimbursements;

 

   

the use of proceeds not held in the Trust Account or available to Mercato from interest income on the Trust Account balance;

 

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changes adversely affecting the business in which Nuvini is engaged;

 

   

the risks associated with Nuvini’s business model and vulnerability to technological advancement, industry downturns and regional or national downturns;

 

   

the risk that New Nuvini could be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code as a result of the Business Combination;

 

   

the costs and risks associated with the client demand of software solution performance guarantees;

 

   

inability to sell and support existing products or to develop new products due to recruitment and retention of qualified sales personnel, client service personnel and software developers;

 

   

increase in operating expenses due to loss of rights to use software currently licensed to Nuvini by third parties;

 

   

claims of infringement involving Nuvini’s proprietary technology and related intellectual property rights, resulting in Nuvini at a competitive disadvantage;

 

   

software product development delays, redesign of products and failure to develop or market new products, which may lead to a reduction of revenue and harm of competitive position;

 

   

errors or defects in software products that could result in lost revenue, delayed or limited market acceptance, or product liability claims with substantial litigation costs;

 

   

unexpected interruption in the operation of data centers leading to client dissatisfaction and a loss of revenues;

 

   

fluctuations in Nuvini’s revenue and operating results;

 

   

unfavorable conditions or further disruptions in the capital and credit markets;

 

   

Nuvini’s ability to generate cash, service indebtedness and incur additional indebtedness;

 

   

competition from existing and new competitors;

 

   

Nuvini’s ability to recruit and retain experienced personnel;

 

   

risks related to legal proceedings or claims, including liability claims;

 

   

exchange rate instability;

 

   

general economic or political conditions, including economic disruption caused by terrorist attacks, including cybersecurity threats, health crises or unforeseen events; and

 

   

other factors detailed under the section entitled “Risk Factors” herein.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Before a stockholder grants its proxy or instructs how its votes should be cast or vote on the Proposals, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect Mercato or Nuvini.

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or SEC, by New Nuvini (File No. 333-272688), constitutes a prospectus of New Nuvini under Section 5 of the Securities Act, with respect to the New Nuvini securities to be issued to Mercato stockholders and Nuvini Shareholders if the Business Combination is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act with respect to the special meeting of Mercato stockholders at which Mercato stockholders will be asked to consider and vote upon proposals to adopt and approve the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination, and to adopt and approve the Merger, by the approval and adoption of the Business Combination Proposal and the Merger Proposal, respectively.

CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS

In this proxy statement/prospectus, unless otherwise specified or the context otherwise requires:

 

   

“$” and “U.S. dollar” each refer to the United States dollar; and

 

   

“R$” and “Brazilian real” each refer to the Brazilian real.

The exchange rate used for conversion between U.S. dollars and Brazilian reais is based on the real/U.S. dollar exchange rate published by the Central Bank as of the dates specified herein.

IMPORTANT INFORMATION ABOUT GAAP, IFRS AND NON-IFRS FINANCIAL MEASURES

Unless indicated otherwise, the financial statements of Mercato included in this proxy statement/prospectus have been prepared in conformity with U.S. GAAP and pursuant to the rules and regulations of the SEC.

Unless indicated otherwise, the financial statements of Nuvini included in this proxy statement/prospectus have been prepared in conformity with IFRS as issued by IASB.

This proxy statement/prospectus includes certain references to prospective and historical financial measures for Nuvini that were not prepared in accordance with IFRS, including EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow. The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for Nuvini’s consolidated financial results prepared in accordance with IFRS. For additional information, see the section entitled “Nuvini S.A. Managements Discussion and Analysis of Financial Condition and Results of OperationsCertain Unaudited Projected Financial Information.”

 

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TRADEMARKS AND TRADE NAMES

The Nuvini name, logos and other trademarks of Nuvini appearing in this proxy statement/prospectus are the property of Nuvini. Solely for convenience, some of the trademarks logos and trade names referred to in this proxy statement/prospectus are presented without the ® and symbols, but such references are not intended to indicate, in any way, that we or Nuvini will not assert, to the fullest extent under applicable law, our or Nuvini’s rights or the rights of the applicable licensors to these trademarks and trade names. This proxy statement/prospectus contains additional trademarks and trade names of others. All trademarks and trade names appearing in this proxy statement/prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the Proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to Mercato stockholders. Mercato stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the special meeting.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

Mercato has entered into the Business Combination Agreement with Nuvini, New Nuvini and Merger Sub, pursuant to which, among other things, Nuvini Shareholders will contribute to New Nuvini all of the issued and outstanding Nuvini Ordinary Shares in exchange for newly issued New Nuvini Ordinary Shares and (ii) Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

At the Closing, as a result of the Business Combination, Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini. Each Mercato Unit that is issued and outstanding immediately prior to the time the Merger Effective Time will be automatically separated, and the holder thereof will be deemed to hold one (1) share of Mercato Class A Common Stock and one-half (1/2) of one (1) Public Warrant. Each share of Mercato Common Stock held in treasury of Mercato issued and outstanding immediately prior to the Merger Effective Time will be automatically canceled and converted into the right to receive one (1) New Nuvini Ordinary Share, with a value ascribed to each such New Nuvini Ordinary Share of $10.00. Each share of Merger Sub Common Stock outstanding immediately prior to the Merger Effective Time will automatically convert into one (1) share of Mercato Common Stock, par value $0.01 per share, New Nuvini will issue the number of New Nuvini Ordinary Shares to which such Mercato stockholder is entitled in respect of its shares of Mercato Common Stock and each Public Warrant and each Private Placement Warrant outstanding and unexercised immediately prior to the Merger Effective Time will cease to represent a right to acquire Mercato Common Stock and will convert into a warrant to purchase one New Nuvini Warrant, on substantially the same contractual terms and thereupon be assumed by New Nuvini pursuant to the New Nuvini Warrant Agreement. See the sections entitled “Summary of the Proxy Statement/Prospectus—Ownership of New Nuvini Following the Closing” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

Mercato stockholders are being asked to consider and vote upon the Business Combination Proposal to approve the adoption of the Business Combination Agreement and the Business Combination, among other Proposals.

The Mercato Class A Common Stock, Mercato Warrants and Mercato Units are currently listed on Nasdaq under the symbols “MPRA,” “MPRAW” and “MPRAU,” respectively. At the Closing, as a result of the Business Combination, each outstanding share of Mercato Common Stock will be exchanged for the issuance of one New Nuvini Ordinary Share in connection with the Merger. New Nuvini has applied to list New Nuvini Ordinary Shares and New Nuvini Public Warrants on Nasdaq under the symbols “NVNI” and “NVNIW,” respectively, in connection with the Closing. All outstanding Mercato Units will be separated into their underlying securities prior to the Closing. There will be no Mercato Units, Mercato Warrants or shares of Mercato Class A Common stock nor any Nasdaq listing of any such securities following the Closing.

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the Proposals to be acted upon at the special meeting. You should read this proxy

 

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statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of New Nuvini with respect to the New Nuvini Ordinary Shares issuable in connection with the Business Combination.

YOUR VOTE IS IMPORTANT. YOU ARE ENCOURAGED TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND ITS ANNEXES.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will be held on September 28, 2023 at 9:00 AM, Eastern time, via live webcast at https://www.cstproxy.com/mercatopartnersspac/sm2023.

 

Q:

What are the specific Proposals on which I am being asked to vote at the special meeting?

 

A:

Mercato stockholders are being asked to approve the following Proposals:

Proposal No. 1—The Business Combination Proposal—a proposal to approve and adopt the Business Combination Agreement and the Business Combination;

Proposal No. 2—The Merger Proposal—a proposal to approve and adopt the Merger, pursuant to which Merger Sub will merge with and into Mercato with Mercato as the surviving company and a direct, wholly-owned subsidiary of Intermediate 2; and

Proposal No. 3—The Adjournment Proposal—a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote.

 

Q:

Are the Proposals conditioned on one another?

 

A:

The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal and the Merger Proposal are not approved, Mercato will not consummate the Business Combination. If Mercato does not consummate the Business Combination and fails to complete an initial business combination or obtain an extension by October 8, 2023 (or by December 8, 2023, if the Sponsor deposits the requisite funds into the Trust Account to extend each month for a total of up to two additional months), Mercato will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in the Trust Account to its Public Stockholders.

 

Q:

Why is Mercato proposing the Business Combination?

 

A:

Mercato is a special purpose acquisition company and was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Mercato initially intended to acquire a business in either the technology or branded consumer products sector, but it is not limited to any particular industry or sector.

Mercato received net proceeds of $233,450,000 from the Mercato IPO (including net proceeds from the exercise in full by the underwriters of their over-allotment option) and sale of the Private Placement Warrants, which was placed into the Trust Account immediately following the Mercato IPO. In accordance with the Mercato Certificate of Incorporation, the funds held in the Trust Account will be released upon the Closing. See the question entitled “What happens to the funds held in the Trust Account upon Closing of the Business Combination?”

There currently are 10,050,363 shares of Mercato Common Stock outstanding, consisting of 4,300,363 Public Shares and 5,750,000 shares of Mercato Class B Common Stock held by the Initial Stockholders. The

 

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Sponsor currently owns 5,573,000 shares of Mercato Class B Common Stock. Bullfrog Bay Trust (a family trust managed by the wife and two adult sons of Greg Warnock, Mercato’s Chief Executive Officer and Chair of Mercato’s board of directors) is the manager of the Sponsor. The Sponsor is not a U.S. person, and is not controlled by, nor does it have substantial ties to, any non-U.S. person and, to Mercato’s knowledge, no person or entity associated with the Sponsor is, is controlled by, or has substantial ties with, a non-U.S. person. In addition, there currently are 21,550,000 Mercato Warrants outstanding, consisting of 11,500,000 Public Warrants and 10,050,000 Private Placement Warrants. Each whole Mercato Warrant entitles the holder thereof to purchase one share of Mercato Class A Common Stock at a price of $11.50 per share. The Mercato Warrants will be assumed by New Nuvini and will become exercisable 30 days after the Closing, and expire at 5:00 p.m., New York City time, five years after the Closing or earlier upon redemption or liquidation. The Private Placement Warrants, however, are non-redeemable so long as they are held by the Sponsor or its permitted transferees (except as described in the section entitled “Description of New Nuvini’s Securities”).

Under the Mercato Certificate of Incorporation, Mercato must generally provide the holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of Mercato’s initial business combination in conjunction with a stockholder vote.

 

Q:

Why is Mercato providing stockholders with the opportunity to vote on the Business Combination?

 

A:

The approval of the Business Combination is required under the Mercato Certificate of Incorporation. In addition, such approval is also a condition to the Closing under the Business Combination Agreement. Under the Mercato Certificate of Incorporation, Mercato must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of its initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, Mercato has elected to provide its stockholders with the opportunity to have their Public Shares redeemed in connection with a stockholder vote rather than a tender offer. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to the Transfer Agent in order to validly redeem its shares. Therefore, Mercato is seeking to obtain the approval of its stockholders of the Business Combination and also allow its Public Stockholders to effectuate redemptions of their Public Shares in connection with the Closing of the Business Combination in accordance with the Mercato Certificate of Incorporation.

 

Q:

How long does Mercato have to complete a business combination?

 

A:

On each of June 30, 2023, August 4, 2023 and September 6, 2023, and in accordance with the Mercato Certificate of Incorporation, the Sponsor deposited $135,000 into the Trust Account on behalf of Mercato to extend the period available for Mercato to consummate a business combination (including the Business Combination with Nuvini) from July 8, 2023 to October 8, 2023. Thereafter, and without any stockholder vote, Mercato may extend the time to complete its initial business combination up to two additional times for an additional one month each time (so long as Mercato deposits into the Trust Account an amount equal to the lesser of (a) $135,000 or (b) $0.045 for each Public Share that is not redeemed in connection with the extension meeting). Alternatively, Mercato may dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to its Public Stockholders.

 

Q:

What revenues and profits/losses has Nuvini generated in the last two years?

 

A:

Nuvini conducts all of its business through Nuvini S.A. and the Nuvini Acquired Companies and their combined financial positions, results of operations and cash flows are reported by and under Nuvini S.A. For the fiscal years ended December 31, 2022 and 2021, Nuvini S.A. had revenues of R$124.5 million and R$89.9 million, and net loss of R$114.2 million and R$77.7 million, respectively. As of December 31, 2022, Nuvini S.A.’s total assets were R$367.1 million and its total liabilities were R$462.0 million. For

 

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  additional information, please see Nuvini S.A.’s audited consolidated financial statements for the years ended December 31, 2022 and 2021 included elsewhere in this proxy statement/prospectus.

 

Q:

What will happen in the Business Combination?

 

A:

At the Contribution Effective Time, each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed to New Nuvini, free and clear of all Liens, other than potential restrictions on resale under applicable securities laws, and the Nuvini Shareholders will subscribe and be issued in exchange for such contribution a number of New Nuvini Ordinary Shares equal to the product of (a) the number of Nuvini Ordinary Shares outstanding at the Contribution Effective Time multiplied by (b) an Exchange Ratio, upon which Nuvini will become a direct, wholly-owned subsidiary of New Nuvini. At the Closing, as a result of the Business Combination, Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, direct subsidiary of Intermediate 2, each Mercato Unit that is issued and outstanding immediately prior to the time the Merger Effective Time will be automatically separated and the holder thereof will be deemed to hold one (1) share of Mercato Class A Common Stock and one-half (1/2) of one Public Warrant, each share of Mercato Common Stock issued and outstanding immediately prior to the Merger Effective Time will be automatically canceled and converted into the right to receive one New Nuvini Ordinary Share, with a value ascribed to each such New Nuvini Ordinary Share of $10.00 and each Public Warrant and each Private Placement Warrant outstanding and unexercised immediately prior to the Merger Effective Time will cease to represent a right to acquire Mercato Common Stock and will convert into a warrant to purchase one New Nuvini Warrant, on substantially the same contractual terms and thereupon be assumed by New Nuvini pursuant to the New Nuvini Warrant Agreement.

New Nuvini has applied to list the New Nuvini Ordinary Shares and New Nuvini Warrants on Nasdaq under the symbols “NVNI” and “NVNIW,” respectively, upon the closing of the Business Combination. We cannot assure you that the New Nuvini Ordinary Shares and New Nuvini Warrants will be approved for listing on Nasdaq. In addition, New Nuvini will be a “foreign private issuer” and as a “foreign private issuer,” New Nuvini will be subject to different U.S. securities laws than domestic U.S. issuers. The rules governing the information that New Nuvini must disclose differ from those governing U.S. corporations pursuant to the Exchange Act. New Nuvini will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to stockholders. As a foreign private issuer, New Nuvini will be exempt from a number of rules under U.S. securities laws and will be permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of the New Nuvini Ordinary Shares and New Nuvini Warrants. See “Risk Factors—New Nuvini will be a foreign private issuer and, as a result, New Nuvini will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

 

Q:

How has the announcement of the Business Combination affected the trading price of Mercato’s Class A Common Stock?

 

A:

On February 24, 2023, the last trading date before the public announcement of the Business Combination, the Mercato Units, Mercato Class A Common Stock and Warrants closed at $10.45, $10.43 and $0.086, respectively. On September 1, 2023, the Record Date, the Mercato Units, Mercato Class A Common Stock and Mercato Warrants closed at $10.75, $10.66 and $0.0974, respectively.

 

Q:

Following the Business Combination, will Mercato’s securities continue to trade on a stock exchange?

 

A:

No. Mercato anticipates that, following consummation of the Business Combination, the Mercato Units, Mercato Class A Common Stock and Warrants will be delisted from Nasdaq, and Mercato will be deregistered under the Exchange Act. However, New Nuvini has applied to list the New Nuvini Ordinary Shares and New Nuvini Public Warrants on Nasdaq under the symbols “NVNI” and “NVNIW,” respectively, upon the Closing of the Business Combination.

 

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Q:

Will the management of Nuvini change in the Business Combination?

 

A:

The current executive officers of Nuvini are Pierre Schurmann, Chief Executive Officer and member of the Nuvini Board, Carolina Carioba, Chief of People, Luiz Busnello, Chief Operating Officer and member of the Nuvini Board, and Walter Leandro, Head of Mergers & Acquisitions. These individuals are intended to continue to serve as New Nuvini’s executive officers upon consummation of the Business Combination. The management team will consist solely of Nuvini’s current management team immediately prior to the Closing.

Pursuant to the Business Combination Agreement, effective immediately upon Closing, the New Nuvini Board will be comprised of seven directors, consisting of the following: Pierre Schurmann, Luiz Busnello, Scott Klossner, Greg Warnock, Marcello Gonçalves, Roberto Sahade and Randy Millian.

For an explanation of the roles and responsibilities of the New Nuvini Board, please see the section entitled “Management of New Nuvini After the Business Combination”.

 

Q:

What will Mercato stockholders receive in the Business Combination?

 

A:

Upon consummation of the Merger, each issued and outstanding share of Mercato Common Stock will be subject to the terms and conditions of the Business Combination Agreement and will be exchanged for a New Nuvini Ordinary Share.

 

Q:

What will Mercato Warrant holders receive in the Business Combination?

 

A:

At Closing, each Mercato Warrant that is outstanding immediately prior to the Merger Effective Time will automatically cease to represent a right to acquire shares of Mercato Class A Common Stock and will represent, immediately following the Merger Effective Time, a right to acquire New Nuvini Ordinary Shares on substantially the same contractual terms and conditions as were in effect immediately prior to the Merger Effective Time under the terms of the Mercato Warrant Agreement and thereupon be assumed by New Nuvini pursuant to the New Nuvini Warrant Agreement; provided, that each converted warrant will represent the right to acquire the number of New Nuvini Ordinary Shares equal to the number of shares of Mercato Class A Common Stock subject to each such Mercato Warrant immediately prior to the Merger Effective Time.

 

Q:

What will Mercato Unit holders receive in the Business Combination?

 

A:

In connection with the Closing of the Business Combination, the Mercato Units will automatically separate into their component parts and those component parts will be treated as described above.

 

Q:

What will Nuvini Shareholders receive in the Business Combination?

 

A:

At the Contribution Effective Time, by virtue of the Contribution and in accordance with the Contribution Agreement and the Business Combination Agreement: each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed to New Nuvini, free and clear of all Liens, other than potential restrictions on resale under applicable securities laws, and the Nuvini Shareholders will subscribe and be issued in exchange for such contribution a number of New Nuvini Ordinary Shares equal to the product of (a) the number of Nuvini Ordinary Shares outstanding at the Contribution Effective Time multiplied by (b) the Exchange Ratio.

 

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Q:

What equity stake will the current stockholders of Mercato and the current shareholders of Nuvini hold in New Nuvini after the Closing of the Business Combination?

 

A:

It is anticipated that, upon Closing of the Business Combination, the ownership of New Nuvini will be as follows:

 

    Assuming
No Further
Redemption
Scenario
    Assuming
25%
Redemption
Scenario
    Assuming
Minimum Cash
Redemption
Scenario(4)
    Assuming
50%
Redemption
Scenario
    Assuming
75%
Redemption
Scenario
    Assuming
Maximum
Redemption
Scenario
 
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
 

Shares held by former Nuvini Shareholders (1)

    23,500,000       70.04     23,500,000       72.36     23,500,000       74.02     23,500,000       74.84     23,500,000       77.49     23,500,000       80.34

Shares held by current Public Stockholders (2)

    4,300,363       12.82     3,225,272       9.93     2,496,712       7.86     2,150,181       6.85     1,075,091       3.55     —         0.00

Shares held by the Mercato Founders (3)

    5,750,000       17.14     5,750,000       17.71     5,750,000       18.11     5,750,000       18.31     5,750,000       18.96     5,750,000       19.66
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total New Nuvini Ordinary Shares

    33,550,363       100.00     32,475,272       100.00     31,746,712       100.00     31,400,181       100.00     30,325,091       100.00     29,250,000       100.00

 

 

(1)

Pursuant to the Business Combination Agreement, the aggregate number of New Nuvini Ordinary Shares issued to the existing Nuvini Shareholders will be approximately 21,072,546 shares, based on shares of Nuvini Holdings Limited outstanding as of September 7, 2023. At the Contribution Effective Time, (i) each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed in kind to New Nuvini and (ii) each Nuvini Option will automatically cease to represent the right to purchase Nuvini Ordinary Shares and will be canceled and extinguished in exchange for an option to purchase New Nuvini Ordinary Shares. For more information, see “The Business Combination Agreement and Ancillary Documents.”

(2)

Underlying shares of Mercato Class A Common Stock are subject to possible redemption.

(3)

The Initial Stockholders have waived their redemption rights in connection with the consummation of the Business Combination with respect to any shares of Mercato Common Stock held by them.

(4)

Should the Public Stockholders exercise their redemption rights over more than 1,803,651 shares of Mercato Class A Common Stock, the Minimum Cash Condition would not be met and Nuvini would have to waive such condition to proceed with the consummation of the Business Combination. Nuvini has no intention to waive the Minimum Cash Condition.

For more information, please see the sections entitled “The Business Combination—Ownership of New Nuvini” and “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Q:

Will New Nuvini adopt an equity incentive plan in anticipation of the Business Combination?

 

A:

New Nuvini intends to adopt, and expects New Nuvini shareholders to approve prior to Closing, the Incentive Plan in anticipation of the Business Combination in order to promote ownership in New Nuvini by employees, non-employee directors and consultants of New Nuvini and its subsidiaries, and align incentives between these service providers and shareholders of New Nuvini by permitting them to receive compensation in the form of equity awards denominated in, or based on the value of, New Nuvini Ordinary Shares. See “Management of New Nuvini After the Business Combination.”

 

Q:

Why is Mercato proposing the Adjournment Proposal?

 

A:

Mercato is proposing the Adjournment Proposal to allow the Mercato Board to adjourn the special meeting to a later date or dates, (A) in order to solicit additional proxies from Mercato stockholders in favor of the Business Combination Proposal, (B) if as of the time for which the special meeting is scheduled, there are insufficient shares of Mercato Common Stock represented (either in person virtually or by proxy) to constitute a quorum necessary to conduct business at the special meeting, or (C) to allow reasonable time for

 

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  the filing or mailing of any supplemental or amended disclosures that Mercato has determined, based on the advice of outside legal counsel, is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by Mercato stockholders prior to the special meeting. The Adjournment Proposal will only be presented to Mercato stockholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal. Please see the section entitled “Proposal No. 3—The Adjournment Proposal” for additional information.

 

Q:

What happens if I sell my shares of Mercato Common Stock before the special meeting?

 

A:

The Record Date for the special meeting of Mercato stockholders that hold their shares in “street name” is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Mercato Common Stock after the Record Date for Mercato stockholders that hold their shares in “street name,” but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares of Mercato Common Stock because you will no longer be able to deliver them for cancellation upon Closing of the Business Combination. If you transfer your shares of Mercato Common Stock prior to the Record Date for Mercato stockholders that hold their shares in “street name,” you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in the Trust Account.

 

Q:

What vote is required to approve the proposals presented at the special meeting?

 

A:

The approval of each of the Business Combination Proposal, Merger Proposal and Adjournment Proposal requires the affirmative vote (in person virtually or by proxy) of holders of at least a majority of the outstanding shares of Mercato Common Stock that are entitled to vote at the special meeting. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will not be treated as votes cast. The Sponsor has agreed to vote its Founder Shares and any Public Shares purchased by them during or after the Mercato IPO in favor of the Business Combination Proposal and the Merger Proposal.

 

Q:

How many votes do I have at the special meeting?

 

A:

Mercato stockholders that hold their shares in “street name” are entitled to one vote on each Proposal presented at the special meeting for each share of Mercato Common Stock held of record as of September 1, 2023, the Record Date for the special meeting. As of the close of business on the Record Date, there were 10,050,363 outstanding shares of Mercato Common Stock. The amount of funds in the Trust Account as of the Record Date reflects the prior redemption of 18,699,637 shares of Mercato Class A Common Stock in connection with the extension meeting in February 2023.

 

Q:

What constitutes a quorum at the special meeting?

 

A:

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares of Mercato Common Stock on the Record Date, including those shares held as a constituent part of the Mercato Units, are represented virtually or by proxy at the special meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote virtually at the special meeting. Abstentions will be counted towards the quorum requirement. The shares of Mercato Common Stock held by the Sponsor, who currently owns 55% of the issued and outstanding shares of Mercato Common Stock, will count towards this quorum. If there is no quorum, the presiding officer of the special meeting may adjourn the special meeting to another date. As of the Record Date, 5,025,182 shares of Mercato Common Stock would be required to achieve a quorum.

 

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Q:

How will the Sponsor and Mercato’s current directors and officers vote?

 

A:

Prior to the Mercato IPO, Mercato entered into agreements with the Sponsor, pursuant to which it has agreed to vote any shares of Mercato Common Stock owned by the Sponsor or its permitted transferees in favor of a proposed initial business combination. As of the Record Date, the Sponsor and Mercato’s directors and officers and certain affiliates owned 5,750,000 Founder Shares, representing 57% of the shares of Mercato Common Stock entitled to vote at the special meeting.

 

Q:

What interests do the Sponsor and Mercato’s current officers and directors have in the Business Combination?

 

A:

The Sponsor and Mercato’s current officers and directors have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination Proposal. These interests include:

 

   

the Sponsor and its permitted transferees have agreed not to redeem any shares of Mercato Common Stock in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $61,295,000, based on the closing price of Mercato Class A Common Stock of $10.66 on Nasdaq on as of the Record Date, but given the transfer restrictions on such shares, Mercato believes such shares have less value;

 

   

the Sponsor and its permitted transferees have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Mercato fails to complete an initial business combination by October 8, 2023, pursuant to Mercato’s or Nuvini’s termination right, and, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation;

 

   

the Registration Rights Agreement and Lock-Up Agreement will be entered into by the Sponsor upon the closing of the Business Combination;

 

   

the Sponsor paid an aggregate of $10,050,000 for its 10,050,000 Private Placement Warrants with an aggregate market value of approximately $978,870 based on the closing price of the Public Warrants of $0.0974 on Nasdaq as of the Record Date, and that such Private Placement Warrants will expire worthless if a business combination is not consummated by October 8, 2023, pursuant to Mercato’s or Nuvini’s termination right, and, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation;

 

   

the Sponsor has made loans in the aggregate of $2,403,677 to Mercato and may convert up to $1,500,000 of the loans into 1,500,000 warrants on the same terms as the Private Placement Warrants (as contemplated by the Mercato Warrant Agreement pursuant to which the Private Placement Warrants were issued) at the same time the Business Combination is completed. Such warrants would have an aggregate market value of approximately $146,100 based on the closing price of the Public Warrants of $0.0974 on Nasdaq as of the Record Date;

 

   

the Sponsor has the right to receive 5,573,000 New Nuvini Ordinary Shares with an aggregate market value of approximately $59,408,180 based on the closing price of Mercato Class A Common Stock of $10.66 on Nasdaq as of the Record Date, subject to certain lock-up periods;

 

   

the indemnification of Mercato’s existing directors and officers will continue after the Business Combination and a “tail” or “runoff” directors’ and officers’ liability insurance policy in respect of acts or omissions occurring prior to the closing of the Business Combination for Mercato’s directors’ and officers’ liability insurance will be purchased and maintained after the Business Combination;

 

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the Sponsor and Mercato’s officers and directors will lose their entire investment in Mercato and will not be reimbursed for any out-of-pocket expenses to the extent such expenses exceed the amount not required to be retained in the Trust Account if an initial business combination is not consummated by October 8, 2023, pursuant to Mercato’s or Nuvini’s termination right, and, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation. Mercato’s officers and directors do not currently have any unreimbursed out-of-pocket expenses and do not expect to incur any out-of-pocket expenses for which they are entitled to reimbursement;

 

   

if the Trust Account is liquidated, including in the event Mercato is unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify Mercato to ensure that the proceeds in the Trust Account are not reduced below $10.15 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Mercato has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Mercato, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

the Sponsor has invested an aggregate of $12,478,677 (in respect of the Founder Shares, the Private Placement Warrants and aggregate loans of $2,403,677 ) that will have zero value in the event Mercato is not able to complete a business combination; and

 

   

the Sponsor and its affiliates can earn a positive return on their investment, even if the Public Stockholders have a negative return on their investment in New Nuvini.

 

Q:

Did the Mercato Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

No. The Mercato Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Mercato’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Mercato’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, Mercato’s officers, directors and advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the Mercato Board in valuing Nuvini’s business and will be assuming the risk that the Mercato Board may not have properly valued such business.

 

Q:

What happens if I vote against the Business Combination Proposal?

 

A:

If you vote against the Business Combination Proposal but the Business Combination Proposal still obtains the affirmative vote of holders of at least the majority of the shares of Mercato Common Stock that are entitled to vote at the special meeting, then the Business Combination Proposal will be approved, and, assuming the satisfaction or waiver of the other conditions to Closing, the Business Combination will be consummated in accordance with the terms of the Business Combination Agreement.

If you vote against the Business Combination Proposal and the Business Combination Proposal does not obtain the affirmative vote of holders of the majority of the shares of Mercato Common Stock that are entitled to vote at the special meeting, then the Business Combination Proposal will fail and Mercato will not consummate the Business Combination. If Mercato does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until October 8, 2023, or such later time as provided by the Mercato Certificate of Incorporation or otherwise approved by Mercato stockholders.

 

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Q:

Do I have redemption rights?

 

A:

Pursuant to the Mercato Certificate of Incorporation, holders of Public Shares may elect to have their shares of Mercato Class A Common Stock redeemed for cash in connection with the Business Combination at the applicable redemption price per share calculated in accordance with the Mercato Certificate of Incorporation. As of September 1, 2023, this would have amounted to approximately $10.67 per share. Each Public Stockholder may seek to redeem all or a portion of his or her Public Shares 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 approval of the Business Combination, including any interest earned on the Trust Account deposits (which interest will be net of taxes payable), divided by the number of then outstanding Public Shares. If a holder of Public Shares exercises its redemption rights, then such holder will be exchanging its shares of Mercato Class A Common Stock for cash and will not own shares of New Nuvini following the closing of the Business Combination. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to the Transfer Agent in accordance with the procedures described herein. In order to validly redeem Public Shares, a holder must (i) (a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and (ii) prior to 5:00 p.m. Eastern Time, on September 26, 2023 (two business days prior to the scheduled vote at the special meeting), (a) submit a written request, including the legal name, phone number, and address of the beneficial owner of the shares for which redemption is requested, to Continental Stock Transfer & Trust Company, Mercato’s transfer agent, at Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, New York 10004, Attn: SPAC Redemption Team, Email: spacredemptions@continentalstock.com, that Mercato redeem your Public Shares for cash and (b) deliver your Public Shares to the transfer agent, physically or electronically through DTC.

Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than fifteen percent (15%) of the shares of Mercato Class A Common Stock included in the Mercato Units sold in the Mercato IPO. Accordingly, all Public Shares in excess of the 15% threshold beneficially owned by a Public Stockholder or group will not be redeemed for cash.

Mercato has no specified maximum redemption threshold under the Mercato Certificate of Incorporation. Each redemption of Shares of Mercato Class A Common Stock by Public Stockholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $45,903,619.26 as of September 1, 2023. The Business Combination Agreement provides that Nuvini’s obligation to consummate the Business Combination is conditioned on the SPAC Cash being greater than or equal to $10,000,000. The conditions to Closing in the Business Combination Agreement are for the sole benefit of the parties thereto and may be waived by such parties. In no event will Mercato redeem its shares of Mercato Class A Common Stock in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Mercato Certificate of Incorporation.

Mercato stockholders who wish to redeem their Public Shares for cash must refer to and follow the procedures set forth in the section entitled “The Special Meeting of Mercato Stockholders—Redemption Rights” in order to properly redeem their Public Shares.

Holders of Public Warrants will not have redemption rights with respect to such warrants.

 

Q:

Can the Sponsor redeem its Founder Shares in connection with the Closing of the Business Combination?

 

A:

No. The Sponsor has agreed, in consideration for receipt of the Founder Shares and for the covenants and commitments of Mercato included in a letter agreement entered into by the parties prior to the Mercato IPO, to waive its redemption rights with respect to its Founder Shares and any Public Shares it may hold in connection with the Closing of the Business Combination.

 

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Q:

Is there a limit on the number of shares I may redeem?

 

A:

A Public Stockholder, together with any affiliate or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares. Accordingly, all shares in excess of 15% of the Public Shares owned by a holder will not be redeemed. On the other hand, a Public Stockholder who holds less than 15% of the Public Shares may redeem all of the Public Shares held by him or her for cash. In no event will Mercato redeem its shares of Mercato Class A Common Stock in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Mercato Certificate of Incorporation.

 

Q:

Is there a limit on the total number of Public Shares that may be redeemed?

 

A:

The Mercato Certificate of Incorporation provides that it may not redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Other than this limitation and the aforementioned 15% threshold, the Mercato Certificate of Incorporation does not provide a specified maximum redemption threshold. However, Closing of the Business Combination is conditioned, among other things, on the amount of SPAC Cash being greater than or equal to $10,000,000. As a result, assuming satisfaction of the Minimum Cash Condition, Mercato may be able to complete its initial business combination even though a substantial majority or substantially all of its Public Stockholders have redeemed their shares.

 

Q:

Will how I vote affect my ability to exercise redemption rights?

 

A:

No. You may exercise your redemption rights whether you vote your Mercato Class A Common Stock for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Proposal. As a result, the Business Combination Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq.

 

Q:

How do I exercise my redemption rights?

 

A:

In order to exercise your redemption rights, you must (i) if you hold Mercato Units, separate the underlying Mercato Class A Common Stock and Public Warrants, and (ii) prior to 5:00 p.m., New York City time, on September 26, 2023 (two business days before the date of the special meeting), tender your shares physically or electronically and identify yourself in writing as a beneficial holder and provide your legal name, phone number and address to the Transfer Agent in order to validly redeem your shares and submit a request in writing that Mercato redeem your shares of Mercato Class A Common Stock for cash to the Transfer Agent at the following address:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

Attention: SPAC Redemption Team

Email: spacredemptions@continentalstock.com

You do not have to be a Record Date holder in order to exercise your redemption rights. Mercato stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, Depository Trust Company (DTC), and the Transfer Agent will need to act together to facilitate this request. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge the tendering broker $100 and the broker would determine whether or not to pass this cost on to the redeeming holder. It is Mercato’s understanding that Mercato stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Mercato does not have any control over this process

 

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and it may take longer than two weeks. Mercato stockholders who hold their shares in “street name” will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.

Mercato stockholders seeking to exercise their redemption rights, whether they are registered holders or hold their shares in “street name,” are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/prospectus, or up to two business days prior to the vote on the Business Combination Proposal at the special meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such stockholder’s option. The requirement for physical or electronic delivery prior to the special meeting ensures that a redeeming stockholder’s election to redeem is irrevocable once the Business Combination is approved.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and, thereafter with Mercato’s consent, until the consummation of the Business Combination, or such other date as determined by the Mercato Board. If you delivered your shares for redemption to the Transfer Agent and decide within the required timeframe not to exercise your redemption rights, you may request that the Transfer Agent return the shares (physically or electronically). You may make such request by contacting the Transfer Agent at the email or physical address listed under the question, “Who can help answer my questions?” below.

If you hold Mercato Units registered in your own name, you must deliver the certificate for such Mercato Units to the Transfer Agent with written instructions to separate such Mercato Units into Mercato Class A Common Stock and Public Warrants. This must be completed far enough in advance to permit the mailing of the Public Share certificates back to you so that you may then exercise your redemption rights upon the separation of Public Shares from the Mercato Units.

If a broker, dealer, commercial bank, trust company or other nominee holds your Mercato Units, you must instruct such nominee to separate your Mercato Units. Your nominee must send written instructions by facsimile to the Transfer Agent. Such written instructions must include the number of Mercato Units to be split and the nominee holding such Mercato Units. Your nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant units and a deposit of an equal number of Mercato Class A Common Stock and Public Warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the Public Shares from the Mercato Units. While this is typically done electronically on the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your Mercato Units to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

There is a nominal cost associated with the above-referenced process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming stockholder. However, this fee would be incurred regardless of whether or not stockholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

It is expected that a U.S. holder (as defined below in “Certain Tax Considerations—U.S. Federal Income Tax Considerations”) that exercises its redemption rights to receive cash from the Trust Account in exchange for all of its Mercato Class A Common Stock will generally be treated as selling such shares resulting in the recognition of capital gain or capital loss. However, there are certain circumstances in which a redemption of corporate stock may be treated as a distribution for U.S. federal income tax purposes, depending on the particular circumstances applicable to the redeemed stockholder. For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights in connection

 

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  with the Business Combination, see “Certain Tax Considerations—U.S. federal income tax considerationsMaterial U.S. Federal Income Tax Consequences of an exercise of redemption rights to Holders of Mercato Class A Common Stock.

All holders are urged to consult their own tax advisor regarding the specific tax consequences of an exercise of redemption rights to them.

 

Q:

What are the U.S. federal income tax consequences to me of the Business Combination?

 

A:

For U.S. federal income tax purposes, the Merger should be treated as a taxable exchange of Mercato Class A Common Stock (and, if the relevant holder owns any Public Warrants immediately prior to the Merger, of Public Warrants) for New Nuvini Ordinary Shares (or New Nuvini Warrants), and a U.S. holder (as defined below in “Certain Tax Considerations—U.S. Federal Income Tax Considerations”) that participates in the Merger would generally recognize gain or loss in an amount equal to the excess of (i) the fair market value of the New Nuvini Ordinary Shares (and, if the relevant holder owns any Public Warrants immediately prior to the Merger, of the New Nuvini Warrants) received over (ii) such holder’s adjusted tax basis in its Mercato Class A Common Stock (and, if the relevant holder owns any Public Warrants immediately prior to the Merger, in such Public Warrants) surrendered in the Merger.

All holders are urged to consult their own tax advisor regarding the specific tax consequences of the Business Combination to them. For a more complete discussion of the material U.S. federal income tax considerations of the Business Combination, see “Certain Tax Considerations—U.S. Federal Income Tax Considerations” and “Risk Factors—Risks Related to U.S. Federal Income Taxation.”

 

Q:

If I am a Warrant holder, can I exercise redemption rights with respect to my Public Warrants?

 

A:

No. The holders of Public Warrants have no redemption rights with respect to such warrants.

 

Q:

Do I have appraisal rights or dissenters’ rights if I object to the proposed Business Combination?

 

A:

No. There are no appraisal rights available to holders of shares of Mercato Common Stock in connection with the Business Combination.

 

Q:

What happens to the funds held in the Trust Account upon Closing of the Business Combination?

 

A:

At Closing, the funds held in the Trust Account will be used to: (i) pay Public Stockholders who properly exercise their redemption rights, (ii) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by Mercato and other parties to the Business Combination Agreement in connection with the Business Combination pursuant to the terms of the Business Combination Agreement and (iii) any remaining funds held in the Trust Account will be paid to New Nuvini.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

There are a number of closing conditions in the Business Combination Agreement, including the approval by Mercato stockholders of the Business Combination Proposal and satisfaction of the Minimum Cash Condition. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “The Business Combination Agreement and Ancillary Documents—Conditions to Complete the Business Combination.

 

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Q:

What happens if the Business Combination Agreement is terminated or the Business Combination is not consummated?

 

A:

There are certain circumstances under which the Business Combination Agreement may be terminated.

Please see the section entitled “The Business Combination Agreement and Ancillary Documents” for information regarding the parties’ specific termination rights.

If Mercato does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until October 8, 2023, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation. If Mercato fails to complete an initial business combination within the Extension Period, then Mercato 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 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 will be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Mercato’s remaining stockholders and the Mercato Board, dissolve and liquidate, subject in each case to the Mercato’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Mercato IPO. Please see the section entitled “Risk Factors—Risks Related to Mercato” for additional information.

Holders of Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, there will be no redemption rights or liquidating distributions with respect to the Public Warrants and Private Placement Warrants, which will expire worthless if Mercato fails to complete an initial business combination within the Extension Period.

 

Q:

When is the Business Combination expected to be completed?

 

A:

It is currently anticipated that the Business Combination will be consummated promptly following the special meeting of Mercato stockholders, provided that all other conditions to the Closing have been satisfied or waived. For a description of the conditions to the completion of the Business Combination, see the section entitled “The Business Combination Agreement and Ancillary Documents—Conditions to Complete the Business Combination.

 

Q:

What do I need to do now?

 

A:

You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/ prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q:

How do I vote?

 

A:

If you hold your shares in “street name” and were a holder of record of shares of Mercato Common Stock on September 1, 2023, the Record Date for the special meeting, you may vote with respect to the Proposals virtually at the special meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Voting by Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the special meeting in the

 

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manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the special meeting so that your shares will be voted if you are unable to attend the special meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Votes submitted by mail must be received by 5:00 p.m., New York City time, on September 27, 2023.

Voting Virtually at the Meeting. If you attend the special meeting and plan to vote virtually, you will be provided with a ballot at the virtual special meeting. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote virtually at the special meeting. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting and vote virtually, you must obtain a legal proxy from your broker, bank or nominee authorizing you to vote these shares. For additional information, please see the section entitled “The Special Meeting of Mercato Stockholders.

 

Q:

What will happen if I abstain from voting or fail to vote at the special meeting?

 

A:

At the special meeting, a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal will be counted as present for purposes of determining whether a quorum is present, but will not be counted for votes cast.

 

Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A:

Signed and dated proxies received by Mercato without an indication of how the stockholder intends to vote on a Proposal will be voted “FOR” each Proposal presented to the Mercato stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the special meeting.

 

Q:

If I am not going to attend the special meeting, should I return my proxy card instead?

 

A:

Yes. Whether you plan to attend the special meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee.

Mercato believes that all of the Proposals presented to the stockholders at this special meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the Proposals presented at the special meeting. If you do not provide instructions with your proxy card, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares. This indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Because a broker is not permitted to provide a proxy for your shares unless you provide your broker with voting instructions, such shares are not counted as present for quorum purposes nor would they be treated as votes cast. Your broker, bank or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker, bank or other nominee to vote your shares in accordance with directions you provide.

 

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Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. You may change your vote by sending a later-dated, signed proxy card to Mercato’s Secretary at the address listed below so that it is received by Mercato’s Secretary prior to the special meeting or attend the special meeting virtually and vote. You also may revoke your proxy by sending a notice of revocation to Mercato’s Secretary, which must be received by Mercato’s Secretary prior to the special meeting.

 

Q:

What happens if I fail to take any action with respect to the meeting?

 

A:

If you fail to take any action with respect to the meeting and the Business Combination is approved by stockholders and consummated, you will become a shareholder of New Nuvini and/or your Mercato Warrants will be assumed by New Nuvini and will entitle you to purchase New Nuvini Ordinary Shares on the same terms as your Mercato Warrants. If you fail to take any action with respect to the meeting and the Business Combination Proposal and the Merger Proposal are not approved, you will continue to be a stockholder and/or warrant holder of Mercato.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/ prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the special meeting?

 

A:

Mercato will pay the cost of soliciting proxies for the special meeting. Mercato has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the special meeting. Mercato has agreed to pay a fee of $20,000, plus disbursements, and will reimburse Morrow Sodali LLC for its reasonable out-of-pocket expenses and indemnify and its affiliates against certain claims, liabilities, losses, damages and expenses. Mercato will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Mercato Common Stock for their expenses in forwarding soliciting materials to beneficial owners of shares of Mercato Common Stock and in obtaining voting instructions from those owners. The directors, officers and employees of Mercato may also solicit proxies by telephone, by facsimile, by mail, on the Internet, in person or virtually. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the Proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

Mercato Partners Acquisition Corporation

2750 E. Cottonwood Parkway, Suite #500

Cottonwood Heights, Utah 84121

Telephone: (801) 220-0055

Attention: Scott Klossner

You may also contact the proxy solicitor for Mercato at:

Morrow Sodali LLC

333 Ludlow Street, 5th Floor, South Tower

Stamford, CT 06902

Individuals call toll-free (800) 662-5200

Banks and brokers call (203) 658-9400

Email: MPRA.info@investor.morrowsodali.com, as proxy solicitor

 

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To obtain timely delivery, Mercato stockholders must request the materials no later than September 21, 2023, or five business days prior to the special meeting.

You may also obtain additional information about Mercato from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your Public Shares (either physically or electronically) to the Transfer Agent prior to the special meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your Public Shares, please contact the Transfer Agent:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

Attention: SPAC Redemption Team

Email: spacredemptions@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information contained in this proxy statement/prospectus and does not contain all of the information that is important to you. You should read carefully this entire proxy statement/ prospectus, including the Annexes and accompanying financial statements of Mercato and Nuvini, to fully understand the proposed Business Combination (as described below) before voting on the Proposals to be considered at the special meeting (as described below). Please see the section entitled “Where You Can Find More Information.”

Parties to the Business Combination

Mercato

Mercato is a Delaware corporation formed on February 22, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Mercato and one or more target businesses.

Mercato Class A Common Stock, Mercato Units and Public Warrants are traded on Nasdaq under the ticker symbols “MPRA,” “MPRAU” and “MPRAW,” respectively. Upon the Closing, Mercato Class A Common Stock, Mercato Units and Public Warrants will be delisted from Nasdaq.

The mailing address of Mercato’s principal executive office is 2750 E. Cottonwood Parkway, Suite 500, Cottonwood Heights, Utah 84121, and its telephone number is (801) 220-0055.

Nuvini and Nuvini S.A.

Nuvini is an exempted company incorporated with limited liability in the Cayman Islands on November 2, 2022. Nuvini is a holding company that conducts all of its business through Nuvini S.A. and the Nuvini Acquired Companies.

Nuvini S.A. is a corporation (sociedade por ações) duly incorporated and organized on October 21, 2020 under the laws of Brazil, with its head office at Rua Jesuíno Arruda, No. 769, Suite 20B, Itaim Bibi, São Paulo, Brazil. 04.532-082. Nuvini S.A. acquires and operates software companies within SaaS markets in Brazil. Nuvini S.A. is the leading private serial software business acquirer in Brazil and intends to use funding and capital markets access to continue expanding its acquisition strategy in Brazil and Latin America.

To date, Nuvini S.A. has acquired controlling interests in seven SaaS companies comprising the Nuvini Acquired Companies:

 

   

Effecti—On October 30, 2020, Nuvini S.A. acquired 100% of the equity interest in Effecti. Effecti operates the “My Effecti” bidding platform, through which bidders can find, register, dispute and monitor the notices issued by the Brazilian federal, state and municipal government through electronic trading sessions. Effecti’s team of specialists works on developing industry leading tools to deliver safer and more efficient performance to contract bidders conducting business with the Brazilian government. Effecti’s services simplify processes through automated innovative solutions in a transparent and secure way, reduce the time their clients spend performing tasks during the contract bidding process and enable their clients to focus on increasing their revenues. The software allows clients to: (i) screen and find related bids that are to their product and services through smart filters, (ii) register the proposals in the main public bidding portals, (iii) automate bids, which allows for several simultaneous trading sessions and (iv) centralize all messages in one environment, which optimizes the end to end process. Effecti’s revenue is based entirely on monthly software licensing and does not participate or generate any commission, directly or indirectly, from the transactions its platform facilitates. Although Effecti is the third largest revenue generator in the Nuvini Group, its most relevant client represents less than 0.5% of Nuvini S.A.’s total revenues.

 

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Leadlovers—On February 5, 2021, Nuvini S.A. acquired 100% of the equity in Leadlovers. Leadlovers provides an easy-to-use platform that assists entrepreneurs in creating digital products and supports entrepreneurs’ online businesses by providing them samples and templates of webpages, digital marketing tools and client service support in Portuguese. Leadlovers renders client support via marketing lead capture and generation (5,000 leads, page builder, page templates, forms Facebook lead ads, unlimited shipping emails, lead tracking), engagement (e-mail automation, sales funnel, SMS marketing, e-learning, members area) and analysis (open rate, click and shipping, lead scoring, leads segmentation and metrics reports). The software is built on three pillars: content, management and integration. The first pillar, content, not only focuses on personalization, such as allowing a client to customize email chains and SMS to be sent to a client’s desired contact list, but also educates potential clients through online course offerings in a personalized environment. The second pillar, management, focuses on creation and organization. Entrepreneurs may be able to create web pages, advertise and convert visitors into leads, as well as track and manage traded sales opportunities in real time. The third pillar, integration, deals with access and use of application programming interfaces of major financial institutions and Nuvini S.A.’s CRM technology, which clients can integrate into their marketing and sales operations. Leadlovers has a diverse database of clients, as it targets autonomous workers and small and medium-sized enterprises.

 

   

Ipê Digital. On February 19, 2021, Nuvini S.A. acquired 100% of the equity interest in Ipe Tecnologia LTDA., a limited liability company duly incorporated and organized under the laws of Brazil, (“Ipê Digital”) and based in Uberlândia, Minais Gerais, Brazil, which serves as the largest Enterprise Resource Planning (“ERP”) service provider for eyeglass shops. Ipê Digital offers store owners the ssOtica platform, an ERP system subscription that aims to help manage stores, meet tax obligations and optimize sales.

 

   

Datahub—On February 19, 2021, Nuvini S.A. acquired 100% of the equity interest in Datahub. Datahub offers marketing and sales solutions including, market analysis, historical market studies, knowledge of client portfolios, visualization of results in thematic maps and lead generation, that aim to enrich its client base and prospects. Datahub also renders risk and compliance services, including fraud prevention, collection and recovery, credit risk, anti-money laundering, Know Your Customer and M&A due diligence services. Datahub uses Big Data Analytics, meaning the process of examining large and complex data sets to help organizations make informed business decisions, Machine Learning and client knowledge, connecting Datahub’s data to its clients’ systems in an effort to lower client costs and provide more accurate results.

 

   

OnClick—On April 22, 2021, Nuvini S.A. acquired 100% of the equity interest in OnClick. OnClick is a SaaS B2B company focused on developing ERP solutions for retail, e-commerce, industry, distribution and services. OnClick has four ERP systems: OnClick ERP (enables real-time management views that ensure practicality in processes, reliability in decision-making and more efficiency and productivity), OnClick KPL (offers solutions to the challenges faced by online retailers, whether in inventory management, financial management or order flow agility), OnClick KPL Start (streamlined version of the leading back office software for e-commerce), and OnClick PDV (offers features that deliver more performance, security and connectivity to a client’s business). Additionally, OnClick offers OnClick Partner, which is a program aimed at clients interested in expanding their portfolio of solutions and adding value to their businesses. OnClick Partner includes training and certification through OnClick Academy, generation and routing of qualified leads by region, client relationship management access, cooperative marketing actions, invitations to industry events in which OnClick participates, sharing of business and technical content, business indication and promotion of the channel on the OnClick website. OnClick seeks to improve the management of its clients’ businesses through technology and innovation by building smart tools to assist with creating quality relationships with its clients.

 

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Mercos—On June 30, 2021, Nuvini S.A. entered into an investment agreement with the shareholders of Mercos to acquire 100% of the total share capital of Mercos, and assumed control on August 10, 2021. To date, Nuvini S.A. has a 57.91% equity interest in Mercos. Mercos provides B2B software that focuses on sales management, automation and e-commerce to industries, distributors and representatives. This software helps to organize clients’ business operations by automating the issuance of orders, selling online to clients and integrating into ERP systems. Mercos supports clients through sales automation and integration with the client’s ERP and provided B2B e-commerce sectors for consumer goods. Mercos’ B2B software primarily provides solutions for: (i) delays in receiving orders (which are often times hand-typed and susceptible to errors), (ii) seller’s mistakes (where often sellers forget important information related to transactions due to focus on client guided sales), (iii) lack of a structured trade policy (due to multiple and varied business policies on each sales channel), (iv) disoriented business operation (due to sellers not having visibility on performance, which then leads limited reach to commercial managers) and (iv) inefficient face-to-face sales (due to high processing costs, limited availability for meetings between sellers and clients, and inefficiency in ordering goods). Mercos’ client database is not concentrated – Mercos’ most valuable client represents less than 1% of Mercos’ total gross revenue. As a result, Mercos does not rely on any one account in order to deliver financial results. Overall, Mercos’ software offers a holistic approach in seamlessly integrating sales and management processes for industries, distributors and representatives.

 

   

Smart NX—On January 25, 2023, Nuvini S.A. entered into a business combination agreement by and among Guilherme Honorio De Souza and Smart NX Tecnologia Ltda. (“Smart NX”) and Smart NX LTDA, as intervening and consenting parties, as amended on February 23, 2023, June 8, 2023 and August 1, 2023. To date, Nuvini S.A. has a 55% equity interest in Smart NX. Smart NX is a limited liability company duly organized under the laws of Brazil and based in Matias Barbosa, Minas Gerais, Brazil. Smart NX builds digital client experience journeys that connect B2C companies with their clients via sales billing and client service. Smart NX delivers a full digital journey for its clients for higher client service efficiency, increases in sales and collections, cost reductions through digitalized operation and higher client satisfaction.

For more information of the Nuvini Acquired Companies, see “Business of Nuvini and Certain Information about Nuvini Capabilities of the Nuvini Acquired Companies.”

New Nuvini

New Nuvini is an exempted company incorporated with limited liability in the Cayman Islands on November 16, 2022. To date, New Nuvini has not conducted any material activities other than those incident to its formation, the incorporation of the Intermediate Companies and Merger Sub and the pending Business Combination and only has nominal assets consisting of cash and cash equivalents. Accordingly, no financial statements of New Nuvini have been included in this proxy statement/prospectus. New Nuvini has applied to list the New Nuvini Ordinary Shares and New Nuvini Warrants on Nasdaq under the symbols “NVNI” and “NVNIW,” respectively, upon the closing of the Business Combination.

The mailing address of New Nuvini’s registered office in the Cayman Islands is CO Services Cayman Limited, P.O. Box 10008, Willow House, Cricket Square, Grand Cayman, KY1-1001, Cayman Islands.

Merger Sub

Merger Sub is a Delaware corporation and wholly-owned subsidiary of New Nuvini that was incorporated in 2023 to facilitate the consummation of the Business Combination. Merger Sub will be directly owned by Intermediate 2 prior to and on the Closing Date. As part of the Business Combination, Merger Sub will merge with and into Mercato, with Mercato continuing as the surviving entity and a direct, wholly-owned subsidiary of Intermediate 2.

 

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The mailing address of Merger Sub’s registered office is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.

The Business Combination

On February 26, 2023, New Nuvini, Nuvini, Mercato and Merger Sub entered into the Business Combination Agreement, pursuant to which New Nuvini, Nuvini, Intermediate 1, Intermediate 2, Merger Sub and Mercato will consummate the Business Combination. The Business Combination Agreement contains customary representations and warranties, covenants, closing conditions and other terms relating to the Contribution and Merger and the other transactions contemplated thereby.

In accordance with the terms and subject to the conditions of the Business Combination Agreement, the parties to the Business Combination Agreement will undertake a series of transactions pursuant to which, among other things (i) at 5:00 p.m. New York time on the business day prior to the date on which the Closing Date occurs, Nuvini Shareholders will contribute to New Nuvini all of the issued and outstanding Nuvini Ordinary Shares in exchange for newly issued New Nuvini Ordinary Shares equal to the product of (a) the number of Nuvini Ordinary Shares outstanding at the Contribution Effective Time multiplied by (b) the Exchange Ratio, (ii) New Nuvini will issue New Nuvini Ordinary Shares to potential investors and (iii) Merger Sub will merge with and into Mercato, with Mercato surviving as a wholly-owned, indirect subsidiary of New Nuvini.

No later than two business days following the satisfaction or waiver of the conditions set forth in the Business Combination Agreement (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of each such conditions), or at such other time, date and place as Mercato and Nuvini may mutually agree in writing, the Closing will occur by electronic exchange of the documents and the Merger will be consummated by the filing of a certificate of merger with the Secretary of State of the State of Delaware. For the avoidance of doubt, the Merger, may not occur prior to the first business day following the date that includes the Contribution Effective Time.

For more information about the transactions contemplated in the Business Combination Agreement, please see the section entitled “The Business Combination Agreement and Ancillary Documents.” The Business Combination Agreement is incorporated by reference into this proxy statement/prospectus, a copy of which is attached to this proxy statement/prospectus as Annex A.

Effect on Mercato

At the Merger Effective Time, by virtue of the Merger and without any action on the part of New Nuvini, Mercato, Merger Sub or the holders of the following securities:

 

   

each Mercato Unit issued and outstanding immediately prior to the Merger Effective Time will be automatically separated and the holder thereof will be deemed to hold one (1) share of Mercato Class A Common Stock and one-half of one (1/2) Mercato Warrant;

 

   

each share of Mercato Class A Common Stock issued and outstanding immediately prior to the Merger Effective Time (including each share of Class A Common Stock into which Mercato Class B Common Stock will automatically convert pursuant to the terms of the Mercato Certificate of Incorporation) will be automatically canceled and converted into the right to receive one fully paid and non-assessable New Nuvini Ordinary Share, with a value ascribed to each such New Nuvini Ordinary Share of $10.00;

 

   

each Mercato Warrant outstanding and unexercised immediately prior to the Merger Effective Time, whether or not vested, will cease to represent a right to acquire Mercato Common Stock and will convert into New Nuvini Warrants; and

 

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each share of Merger Sub Common Stock issued and outstanding immediately prior to the Merger Effective Time will automatically convert into one share of common stock, par value $0.01 per share, of the surviving entity of the Merger.

Consideration to Nuvini Shareholders

At the Contribution Effective Time, by virtue of the Contribution and in accordance with the Contribution Agreement and the Business Combination Agreement:

 

   

each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed to New Nuvini, free and clear of all Liens, other than potential restrictions on resale under applicable securities laws, and the Nuvini Shareholders will subscribe and be issued in exchange for such contribution a number of New Nuvini Ordinary Shares equal to the product of (a) the number of Nuvini Ordinary Shares outstanding at the Contribution Effective Time multiplied by (b) the Exchange Ratio; and

 

   

each Nuvini Option, whether vested or unvested, outstanding and unexercised as of immediately prior to the Contribution Effective Time will automatically cease to represent the right to purchase Nuvini Ordinary Shares and will be canceled and extinguished in exchange for an option to purchase New Nuvini Ordinary Shares equal to the product of (x) the number of Nuvini Ordinary Shares subject to such Nuvini Option immediately prior to the Contribution Effective Time multiplied by (y) the Exchange Ratio, rounded down to the nearest whole share, at an exercise price per share immediately prior to the Contribution Effective Time divided by the Exchange Ratio, rounded up to the nearest whole cent. Each such option will, from and after the Merger Effective, be subject to, the same terms and conditions as applied to the corresponding Nuvini Option immediately prior to the Merger Effective Time.

Nuvini Earnout Shares

All Nuvini Earnout Shares relate to acquisitions previously made by Nuvini S.A. and represent prior, contingent or deferred payments based on the terms contained in the respective Nuvini Earnout Agreements, as discussed below.

Any Nuvini Earnout Shares subject to payment pursuant to the Nuvini Earnout Agreements that remain outstanding immediately prior to the Contribution Effective Time will be issued in accordance with the terms of each applicable Nuvini Earnout Agreement, as detailed below.

Pursuant exclusively to the Nuvini Earnout Agreements, prior to and up to the Contribution Effective Time, there are no circumstances under which any Nuvini Earnout Shares will be issued to persons other than those designated in each of the Nuvini Earnout Agreements.

For earnouts payments relating to the Nuvini Acquired Companies to be made after the Contribution Effective Time, 2,427,454 shares will be reserved for issuance prior to the Contribution Effective Time, which shares will be used as payment to the extent such become due, pursuant to each Nuvini Earnout Agreement. However, in the event that: (i) a Nuvini Acquired Company does not achieve the estimated revenues; or (ii) the person designated in the Nuvini Earnout Agreements voluntarily leaves the employment of Nuvini before the end of the applicable earnout period, or is terminated for cause, in the case of each of clauses (i) and (ii), the applicable designee(s) will no longer be entitled to such Nuvini Earnout Shares, and, in accordance with the Business Combination Agreement, such Nuvini Earnout Shares will be issued, in part or in whole, as the case may be, to the Nuvini Shareholders pro-rata in accordance with the Closing Payment Schedule (as defined in the Business Combination Agreement).

On January 25, 2023, Nuvini S.A. entered into the “Termo de Fechamento” dated January 25, 2023, by and among Guilherme Honorio De Souza, as seller-assignor, GHJ Technology Holdings Limited, as assignee which is a

 

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Cayman Islands limited company wholly owned by the seller-assignor, and Smart NX and SmartNX LTDA., as intervening and consenting parties (as amended on February 23, 2023, June 8, 2023 and August 1, 2023) wherein the seller-assignor assigned its rights to the assignee and the parties amended the transactions in contemplation of the Business Combination “Contrato de Compra e Venda e de Subscrição de Quotas e Outras Avenças” dated November 1, 2022. Pursuant to these agreements, Nuvini S.A. agreed to: (i) an equity swap in exchange for 50.2% of Smart NX’s total outstanding capital stock valued at R$23.6 million by issuing 2,834,657 Nuvini Ordinary Shares, subject to the terms of a Share Swap Agreement to be entered by Nuvini S.A. and the GHJ Technology Holdings Limited prior to Closing; and (ii) subscribe for 4.8% of Smart NX’s total outstanding capital stock by contributing R$5.0 million as a capital contribution to Smart NX on the later of October 2, 2023 or five business days after New Nuvini’s receipt of proceeds from the Closing. In addition, Nuvini S.A. has a call option to acquire the remaining 45% of Smart NX’s total outstanding capital stock via three installment payments due on January 25, 2024, January 25, 2025 and January 25, 2026 at the price determined using the methodology prescribed under the foregoing agreements described in this paragraph. Smart NX develops technology and management solutions that help transform businesses and align with the Group’s current market strategy. On August 1, 2023, an amendment was signed in order to defer the payment until the later of October 2, 2023 or five business days after New Nuvini’s receipt of proceeds from the Closing.

Pursuant to the “Contrato de Compra e Venda de Quotas e Outras Avenças” dated February 5, 2021, by and among Nuvini S.A., as purchaser, Diego Luiz Carmona and Fábio Leandro Verschoor, as sellers, and such other intervening and consenting parties (as amended on August 13, 2021, April 22, 2022, October 31, 2022, March 13, 2023 and August 1, 2023), Nuvini S.A. agreed to pay in Brazilian reais and Nuvini Ordinary Shares, or New Nuvini Ordinary Shares (if such payments are made after the consummation of the Business Combination), on the earlier of October 2, 2023 or on the date which New Nuvini Ordinary Shares are listed on Nasdaq, an earnout amount equaling a 4x multiple of Leadlovers’s cumulative gross revenue corresponding to the 12-month period preceding each payment date, to the sellers, in equal parts, consisting of (a) Brazilian reais for 50% of such earnout amount, R$32.1 million, and (b) such number of Nuvini Ordinary Shares whose value corresponds to 50% of the earnout amount based on the valuation and equity value of Nuvini or New Nuvini, as applicable, on the date of issuance. On August 1, 2023, an amendment was signed in order to defer the payment of (i) the amount of shares, until the earlier of October 2, 2023 or the date which New Nuvini Ordinary Shares are listed on Nasdaq; and (ii) the amount of cash, until the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing. In accordance with the terms of the agreement, as amended, in case of late payment, a penalty may be applicable to the remaining amount due, which will also be monetarily adjusted on the date of payment.

Pursuant to the “Contrato de Compra e Venda de Quotas e Outras Avenças” dated October 30, 2020, by and among Fernando Augusto Salla, Everton Porath and Lenilson Porath, as the sellers, Nuvini S.A., Effecti and Keiretsu Tenologia S.A. (as amended on December 21, 2021, May 26, 2023 and August 1, 2023), Nuvini S.A. agreed to pay the following: (i) on the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing, to the sellers R$13.4 million representing 33.3% of the ownership interests in Effecti; (ii) on the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing, to the sellers R$28.0 million representing 33.3% of the ownership interests in Effecti; and (iii) on October 31, 2023 or November 10, 2023 if the Business Combination is not consummated by then, for the 12-month period following from October 30, 2022, to the seller shares in the amount of 33.34% of 5.2x New Nuvini’s revenue in the 12 months immediately preceding the payment. This third installment will be payable in Nuvini Ordinary Shares, or New Nuvini Ordinary Shares (if such payments are made after the consummation of the Business Combination). If consummation of the Business Combination does not occur on or before October 30, 2023, the third installment, if any, shall be paid in Brazilian reais and due on November 10, 2023. On May 26, 2023, an amendment was signed in order to defer the payment of the first two installments until the earlier of July 31, 2023 or on the date New Nuvini receives the proceeds from the Closing. On August 1, 2023, an additional amendment was entered into in order to defer the payment of the installments until the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing. In accordance with the terms of the agreement, as amended, in case of late payment, an interest may be applicable to the remaining amount due.

 

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Pursuant to the “Contrato de Compra e Venda de Quotas e Outras Avenças” dated April 22, 2021, by and among Nuvini S.A., Marcel André Jordão Farto, André Luiz Macedo, Leavening Participações Ltda, André Luiz Vaz Martins, Bruno Boso Marques, as the sellers, and OnClick, Commit, and Apiecomm as intervening and consenting parties (as amended on December 29, 2022, May 26, 2023 and August 1, 2023), Nuvini S.A. agreed to pay on the following in Brazilian reais and/or Nuvini Ordinary Shares, or New Nuvini Ordinary Shares (if such payments are made after the consummation of the Business Combination), computed based on the terms of the agreement: first and second installments will be due on October 2, 2023 and April 22, 2024, respectively, or upon the date which New Nuvini Ordinary Shares are listed on Nasdaq, whichever is earlier, with total payable in cash of R4.0 million and the remaining in shares of Nuvini Ordinary Shares or New Nuvini Ordinary Shares (if payments are made after the consummation of the Business Combination). The number of shares to be issued will be based on the valuation and equity value of Nuvini or New Nuvini, as applicable, on the date of issuance. The installments must be paid by May 31, 2023 and April 22, 2024, respectively. On May 26, 2023, an additional amendment was entered into in order to defer the May 31, 2023 installment until the earlier of July 31, 2023 or at the consummation of the Business Combination. On August 1, 2023, an additional amendment was entered into in order to defer the payment of the July 31, 2023 installment (i) to be paid to André Luiz Macedo, André Luiz Vaz Martins and Bruno Boso Marques until the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing; and (ii) to be paid to Walter Leandro Marques, until the earlier of October 2, 2023 or the date which New Nuvini Ordinary Shares are listed on Nasdaq. In accordance with the terms of the agreement, as amended, in case of late payment, a penalty may be applicable to the remaining amount due, which will also be monetarily adjusted on the date of payment.

Pursuant to the “Contrato de Compra e Venda de Quotas e Outras Avenças” dated February 24, 2021, by and among Nuvini S.A., Datapar Gestão de Participações Ltda., as seller, and Dataminer, as an intervening and consenting party (as amended on February 24, 2021, December 22, 2022 and August 1, 2023), Nuvini S.A. agreed to pay on the following dates, in Brazilian reais and Nuvini Ordinary Shares calculated pursuant the formula provided in, and paid subject to the conditions under, the agreement: on October 2, 2023 (originally payable on February 24, 2023), to the sellers, cash in the amount of R$5.8 million, and Nuvini Ordinary Shares or New Nuvini Ordinary Shares in the amount of $8.6 million; a second installment on October 2, 2023 in cash in the amount of R$5.7 million and part in Nuvini Ordinary Shares or New Nuvini Ordinary Shares (if payment is made after consummation of the Business Combination) in the amount of R$0.7 million; on February 24, 2024, a third installment in cash in the amount of R$5.7 million and part in Nuvini Ordinary Shares or New Nuvini Ordinary Shares (if payment occurs after consummation of the Business Combination) in the amount of R$0.5 million. On August 1, 2023, an additional amendment was entered into in order to defer the payment of the first two installments until the earlier of October 2, 2023 or the date New Nuvini receives proceeds from the Closing. In accordance with the terms of the agreement, as amended, in case of late payment, penalties and interest may be applicable to the remaining amount due.

For more information on Nuvini Earnout Shares, see “The Business Combination—Nuvini Earnout Shares.”

Conditions to the Closing

Under the Business Combination Agreement, the Closing is subject to customary and other conditions (subject to the parties’ ability to waive such conditions permitted by the Business Combination Agreement), including:

 

   

the receipt of all necessary pre-Closing governmental authorizations as contemplated by the Business Combination Agreement;

 

   

the approval of the Business Combination Proposal and related transactions by the Mercato stockholders;

 

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the approval of the Business Combination and the transactions contemplated thereby by the shareholders of Nuvini, New Nuvini and Merger Sub;

 

   

the effectiveness of this proxy statement/prospectus and the absence of any issued or pending stop order by the SEC;

 

   

the absence of any Legal Requirement enjoining or prohibiting the consummation of the Business Combination and other related transactions;

 

   

the full force and effect of all transaction agreements, having not been rescinded by any of the parties thereto;

 

   

Mercato having net tangible assets of at least $5,000,001 remaining after accounting for the Mercato stockholder redemptions and giving effect to the receipt by New Nuvini of the net proceeds from the PIPE Investments; and

 

   

the receipt of approval for the New Nuvini Ordinary Shares to be listed on the Nasdaq (or another public stock market or exchange in the United States as may be mutually agreed upon by Mercato and Nuvini).

The obligations of the parties to the Business Combination Agreement to consummate the Business Combination are subject to additional conditions, as described more fully below in the section entitled “The Business Combination Agreement—Closing Conditions.

Related Agreements

Sponsor Support Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsor entered into the Sponsor Support Agreement, a copy of which is attached to this proxy statement/prospectus as Annex D, with certain stockholders of Mercato (together with the Sponsor, the “Stockholders”), New Nuvini, Mercato and Nuvini pursuant to which the Stockholders agreed, among other things, (i) to vote all shares of Mercato Common Stock beneficially owned by them in favor of each of the proposals at the Mercato Special Meeting, (ii) to vote against any proposal that would impede the Business Combination and (iii) waive any anti-dilution rights in Mercato’s governing documents with respect to any founder shares. In addition, New Nuvini agreed to indemnify the Sponsor from and against certain liabilities relating to the Business Combination for a period of six years after the Closing.

Nuvini Holders Voting and Support Agreement

Concurrently with the execution of the Business Combination Agreement, Mercato entered into the Nuvini Holders Voting and Support Agreement, a copy of which is attached to this proxy statement/prospectus as Annex E, with Nuvini and certain Nuvini Shareholders thereto. Pursuant to the Nuvini Holders Voting and Support Agreement, the Nuvini Shareholders party thereto agreed to, among other things, (i) vote to adopt and approve, upon the effectiveness of this proxy statement/prospectus, the Business Combination Agreement and all other documents and transactions contemplated thereby and (ii) vote against any proposals that run counter to any provision of the Nuvini Holders Voting and Support Agreement or to the consummation of the Business Combination, in each case, subject to the terms and conditions of the Nuvini Holders Voting and Support Agreement. The Nuvini Holders Voting and Support Agreement will terminate in its entirety, and be of no further force or effect, upon the earliest to occur of (a) the Merger Effective Time, (b) such date and time as the Business Combination Agreement will be terminated in accordance with Section 9.1 thereof, and (c) the written agreement of Mercato, Nuvini, New Nuvini and such Nuvini Shareholders party thereto.

 

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Contribution Agreement

On March 3, 2023, New Nuvini and the holders of Nuvini Ordinary Shares (such holders collectively, the “Nuvini Shareholders”) entered into the Contribution Agreement, a copy of which is attached to this proxy statement/prospectus as Annex C, under which Mercato is a third-party beneficiary. Pursuant to the Contribution Agreement, the Nuvini Shareholders will, at the Contribution Effective Time, contribute to New Nuvini all of the issued and outstanding all of the issued and outstanding equity of Nuvini in exchange for newly issued New Nuvini Ordinary Shares, and, as a result thereof, Nuvini will become a direct, wholly-owned subsidiary of New Nuvini.

Registration Rights Agreement

The Business Combination Agreement contemplated that, at the Closing, New Nuvini, Sponsor, certain former stockholders of Mercato and certain former stockholders of Nuvini (collectively, the “Registration Rights Holders”), will enter into the Registration Rights Agreement, a form of which is attached to this proxy statement/prospectus as Annex F, pursuant to which New Nuvini will be obligated to file with the SEC within 30 calendar days following the Closing Date a registration statement to register for resale, pursuant to Rule 415 under the Securities Act, the New Nuvini Ordinary Shares and other the securities of New Nuvini that are held by the parties thereto from time to time. In addition, subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised in any twelve (12) month period, the Registration Rights Holders may demand at any time or from time to time to sell all or any portion of their registrable securities in an underwritten offering so long as the total offering price is reasonably expected to exceed $50 million. The Registration Rights Agreement will also provide the Registration Rights Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions.

Lock-up Agreement

Pursuant to the Business Combination Agreement, at the Closing, New Nuvini and each of the Nuvini Shareholders subject to the transfer restrictions will enter into the Lock-up Agreement, a copy of which is attached to this proxy statement/prospectus as Annex G. Pursuant to the terms of the Lock-up Agreement, each Nuvini Shareholder subject to the transfer restrictions will be contractually restricted from selling or transferring (i) the New Nuvini Ordinary Shares owned by such Nuvini Shareholder immediately following the Closing, (ii) the New Nuvini Ordinary Shares issuable to such Nuvini Shareholder upon the settlement or exercise of restricted stock units, stock options or other equity awards outstanding immediately following the Closing in respect of awards of Nuvini outstanding immediately prior to the Closing (along with such securities themselves) and (iii) the New Nuvini Ordinary Shares acquirable upon the conversion, exercise or exchange of any securities convertible into or exercisable or exchangeable for New Nuvini Ordinary Shares held by such Nuvini Shareholder immediately after the Closing in respect of securities of Nuvini outstanding immediately prior to the Closing (along with such securities themselves). Such restrictions begin on the Closing Date and end on the date that is one year following the Closing Date, subject to earlier release if (a) the last reported sale price per New Nuvini Ordinary Share equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing or (b) if New Nuvini consummates a liquidation, merger, stock exchange or other similar transaction after the Closing which results in all of New Nuvini Shareholders having the right to exchange their New Nuvini Ordinary Shares for cash, securities or other property. If the date that is one year from the Closing Date is scheduled to be during, or within five trading days prior to, the Blackout Period, the lock-up period will end ten trading days prior to such Blackout Period.

Ownership of New Nuvini Following the Closing

Upon Closing of the Business Combination, the Nuvini Shareholders and the Mercato stockholders will become New Nuvini Shareholders.

 

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Closing of the Business Combination is conditioned, among other things, on the SPAC Cash being greater than or equal to $10,000,000. As a result, assuming satisfaction of the Minimum Cash Condition, Mercato may be able to complete its initial business combination even though a substantial majority or substantially all of its Public Stockholders have redeemed their shares.

The following table illustrates the varying ownership levels of New Nuvini after the Business Combination under six scenarios: with no further redemptions by Public Stockholders, with redemption of 25% of the outstanding Public Shares in connection with the Business Combinations, with redemption of the maximum number of Public Shares that could occur while still satisfying the Minimum Cash Condition in the Business Combination Agreement, with redemption of 50% of the outstanding Public Shares in connection with the Business Combination, with redemption of 75% of the outstanding Public Shares in connection with the Business Combination and with the redemption of 100% of the Public Shares in connection with the Business Combination. The following table also assumes that there are no other issuances of equity interests of Mercato, the Nuvini Group or New Nuvini prior to Closing and does not take into account Mercato warrants that will be converted into New Nuvini Warrants in connection with the Closing and may be exercised at a later date:

 

    Assuming
No Further
Redemption
Scenario
    Assuming
25%
Redemption
Scenario
    Assuming
Minimum Cash
Redemption
Scenario(4)
    Assuming
50%
Redemption
Scenario
    Assuming
75%
Redemption
Scenario
    Assuming
Maximum
Redemption
Scenario
 
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
    Number
of Shares
    Percent
of
Shares
 

Shares held by former Nuvini Shareholders (1)

    23,500,000       70.04     23,500,000       72.36     23,500,000       74.02     23,500,000       74.84     23,500,000       77.49     23,500,000       80.34

Shares held by current Public Stockholders (2)

    4,300,363       12.82     3,225,272       9.93    
2,496,712
 
    7.86     2,150,181       6.85     1,075,091       3.55     —         0.00

Shares held by the Mercato Founders (3)

    5,750,000       17.14     5,750,000       17.71     5,750,000       18.11     5,750,000       18.31     5,750,000       18.96     5,750,000       19.66
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total New Nuvini Ordinary Shares

    33,550,363       100.00     32,475,272       100.00    
31,746,712
 
    100.00     31,400,181       100.00     30,325,091       100.00     29,250,000       100.00

 

(1)

Amount presents shares on a fully diluted, net exercise basis. Pursuant to the Business Combination Agreement, the aggregate number of New Nuvini Ordinary Shares issued to the existing Nuvini Shareholders at the Closing is expected to be approximately 21,072,546 shares (2,427,454 shares will be reserved for payment under each Nuvini Earnout Agreement prior to the Contribution Effective Time), based on shares of Nuvini Holdings Limited outstanding as of September 7, 2023. At the Contribution Effective Time, (1) each issued and outstanding Nuvini Ordinary Share held by the Nuvini Shareholders will be contributed to New Nuvini and (2) each Nuvini Option will automatically cease to represent the right to purchase Nuvini Ordinary Shares and will be canceled and extinguished in exchange for an option to purchase New Nuvini Ordinary Shares. For more information, see “The Business Combination Agreement and Ancillary Documents.”

(2)

Underlying shares of Mercato Class A Common Stock are subject to possible redemption.

(3)

The Initial Stockholders have waived their redemption rights in connection with the consummation of the Business Combination with respect to any shares of Mercato Common Stock held by them.

(4)

Should the Public Stockholders exercise their redemption rights over more than 1,803,651 shares of Mercato Class A Common Stock, the Minimum Cash Condition would not be met and Nuvini would have to waive such condition to proceed with the consummation of the Business Combination. Nuvini has no intention to waive the Minimum Cash Condition.

See the section entitled “The Business Combination Agreement and Ancillary Documents—Consideration to Nuvini Shareholders—Ownership of New Nuvini Following the Closing” for more information.

 

 

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Description of New Nuvini Securities

If the Business Combination is successfully completed, Nuvini Shareholders and Mercato stockholders will become New Nuvini Shareholders, and their rights as New Nuvini Shareholders will be governed by New Nuvini’s organizational documents as at Closing and Cayman Islands law. Please see section entitled “Description of New Nuvini Securities” elsewhere in this proxy statement/prospectus for additional information.

The Mercato Board’s Reasons for Approval of the Business Combination

After careful consideration, the Mercato Board recommends that Mercato stockholders vote “For” the approval of the Business Combination Proposal. For a more complete description of the Mercato Board’s reasons for the approval of the Business Combination and the recommendation of the Mercato Board, see the section entitled “The Business Combination—Mercato Board’s Reasons for Approval.

Satisfaction of 80% Test

It is a requirement under the Mercato Certificate of Incorporation and the Nasdaq listing requirements that the business or assets acquired in an initial business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting discounts and commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for an initial business combination. In connection with its evaluation and approval of the Business Combination, the Mercato Board determined that the fair market value of Nuvini is $235,000,000, based on, among other things, comparable company revenue and other financial performance multiples.

Special Meeting

Date, Time and Place of the Special Meeting

The special meeting will be virtually held at 9:00 a.m., Eastern time, on September 28, 2023, via live webcast at the following website: https://www.cstproxy.com/mercatopartnersspac/sm2023, or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the Proposals.

Proposals

At the special meeting, Mercato stockholders will be asked to consider and vote upon the following Proposals:

 

  1.

The Business Combination Proposal—a proposal to approve and adopt the Business Combination Agreement and the Business Combination (the “Business Combination Proposal or “Proposal No. 1”).

 

  2.

The Merger Proposal—a proposal to approve and adopt the Merger, pursuant to which Merger Sub will merge with and into Mercato with Mercato as the surviving company and a direct, wholly-owned subsidiary of Intermediate 2 (the “Merger Proposal” or “Proposal No. 2”).

 

  3.

The Adjournment Proposal—a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more Proposals presented to shareholders for vote (the “Adjournment Proposal” or “Proposal No. 3” and, together with the Business Combination Proposal and the Merger Proposal, the “Proposals”).

Voting Power; Record Date

You will be entitled to vote or direct votes to be cast at the virtual special meeting if you owned shares of Mercato Class A Common Stock or Mercato Class B Common Stock at the close of business on September 1, 2023, which is the Record Date for the special meeting. You are entitled to one vote for each share of Mercato Class A Common Stock or Mercato Class B Common Stock that you owned as of the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were 10,050,363 shares of Mercato Class A Common Stock and Mercato Class B Common Stock outstanding in the aggregate, of which 4,300,363 were Public Shares (which reflects the

 

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redemption of 18,699,637 shares of Mercato Class A Common Stock in connection with the extension meeting in February 2023) and 5,750,000 were Founder Shares held by the Initial Stockholders.

Proxy Solicitation

Proxies may be solicited by mail. Mercato has engaged Morrow Sodali LLC to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares online if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting—Revoking Your Proxy.

Quorum and Required Vote for Proposals for the Special Meeting

A quorum of Mercato stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if holders of a majority of the outstanding shares of Mercato Class A Common Stock and Mercato Class B Common Stock entitled to vote thereat attend virtually or are represented by proxy at the special meeting. Abstentions will count as present for the purposes of establishing a quorum, but will not be treated as votes cast. A broker non-vote with respect to a matter occurs when a broker, bank or other institution or nominee holding shares on behalf of a beneficial owner has not received voting instructions from the beneficial owner on a particular proposal and does not have, or chooses not to exercise, discretionary authority to vote the shares on such proposals. Because a broker is not permitted to provide a proxy for your shares unless you provide your broker with voting instructions, such shares are not counted as present for quorum purposes nor would they be treated as votes cast. Mercato does not expect any broker non-votes at the special meeting because there are no routine proposals to be voted on at the special meeting.

Approval of the Business Combination Proposal, the Merger Proposal and the Adjournment Proposal requires the affirmative vote (in person virtually or by proxy) of the holders of a majority of the outstanding shares of Mercato Class A Common Stock and Mercato Class B Common Stock entitled to vote thereon at the special meeting, voting as a single class. Accordingly, a stockholder’s failure to vote, whether in person, by proxy or online at the special meeting or an abstention will not be counted towards the number of shares of Mercato Class A Common Stock and Mercato Class B Common Stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will have the same effect as a vote “Against” the Business Combination Proposal, the Merger Proposal and the Adjournment Proposal.

The Closing is conditioned on the approval of the Business Combination Proposal and the Merger Proposal. The Merger Proposal is non-binding and is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

Recommendation to Mercato Stockholders

The Mercato Board believes that each of the Business Combination Proposal, the Merger Proposal and the Adjournment Proposal is in the best interests of Mercato and Mercato stockholders and recommends that Mercato stockholders vote “For” each Proposal being submitted to a vote of the Mercato stockholders at the special meeting.

When you consider the recommendation of the Mercato Board in favor of approval of these Proposals, you should keep in mind that, aside from their interests as stockholders, Sponsor and certain of Mercato’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder. Please see the section entitled “The Business Combination—Interests of Certain Persons in the Transactions.”

 

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Vote of the Sponsor and Mercato’s Directors and Officers

Prior to the Mercato IPO, Mercato entered into a letter agreements with the Sponsor and Mercato’s directors and officers, pursuant to which each agreed to vote any Mercato Common Stock owned by them in favor of an initial business combination. The letter agreement applies to the Sponsor and Mercato’s directors and officers, as it relates to the Founder Shares and the requirement to vote all of the Founder Shares in favor of the Business Combination Proposal and for all other Proposals presented to Mercato stockholders in this proxy statement/prospectus. As of the Record Date, the Sponsor and Mercato’s directors and officers and certain affiliates own 5,750,000 Founder Shares, representing approximately 57% of the Mercato Common Stock then outstanding and entitled to vote at the special meeting. Sponsor and Mercato’s directors and officers have waived any redemption rights, including with respect to shares of Mercato Class A Common Stock purchased in the Mercato IPO or in the aftermarket, in connection with the Business Combination. The Founder Shares held by Sponsor and Mercato’s independent directors have no redemption rights upon Mercato’s liquidation and will be worthless if no Business Combination is effected by Mercato by October 8, 2023, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation. However, Sponsor and Mercato’s directors and officers are entitled to redemption rights upon Mercato’s liquidation with respect to any shares of Mercato Class A Common Stock they may own.

Interests of Certain Persons in the Transactions

In considering the recommendation of the Mercato Board to vote in favor of the Business Combination, Mercato stockholders should be aware that aside from their interests as stockholders, the Sponsor and permitted transferees and Mercato’s officers and directors have interests in the Transactions that are different from, or in addition to, those of other Mercato stockholders generally. The Mercato Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to Mercato stockholders that they approve the Business Combination Proposal. Mercato stockholders should take these interests into account in deciding whether to approve the Business Combination Proposal.

These interests include the fact that:

 

   

the Sponsor and its permitted transferees have agreed not to redeem any shares of Mercato Common Stock in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $61,295,000, based on the closing price of Mercato Class A Common Stock of $10.66 on Nasdaq as of the Record Date, but given the transfer restrictions on such shares, Mercato believes such shares have less value;

 

   

the Sponsor and its permitted transferees have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Mercato fails to complete an initial business combination by October 8, 2023, pursuant to Mercato’s or Nuvini’s termination right, and, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation;

 

   

the Registration Rights Agreement and Lock-Up Agreement will be entered into by the Sponsor upon the closing of the Business Combination;

 

   

the Sponsor paid an aggregate of $10,050,000 for its 10,050,000 Private Placement Warrants with an aggregate market value of approximately $978,870 based on the closing price of the Public Warrants of $0.0974 on Nasdaq as of the Record Date, and that such Private Placement Warrants will expire worthless if a business combination is not consummated by October 8, 2023, pursuant to Mercato’s

 

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or Nuvini’s termination right, and, subject to up to two additional one-month extensions pursuant to the Mercato Certificate of Incorporation;

 

   

the Sponsor has made loans in the aggregate of $2,403,677 to Mercato and may convert up to $1,500,000 of the loans into 1,500,000 warrants on the same terms as the Private Placement Warrants (as contemplated by the Mercato Warrant Agreement pursuant to which the Private Placement Warrants were issued) at the same time the Business Combination is completed. Such warrants would have an aggregate market value of approximately $146,100 based on the closing price of the Public Warrants of $0.0974 on Nasdaq as of the Record Date;

 

   

the Sponsor has the right to receive 5,573,000 New Nuvini Ordinary Shares with an aggregate market value of approximately $59,408,180 based on the closing price of Mercato Class A Common Stock of $10.66 on as of the Record Date, subject to certain lock-up periods;

 

   

the indemnification of Mercato’s existing directors and officers will continue after the Business Combination and a “tail” or “runoff” directors’ and officers’ liability insurance policy in respect of acts or omissions occurring prior to the closing of the Business Combination for Mercato’s directors’ and officers’ liability insurance will be purchased and maintained after the Business Combination;

 

   

the Sponsor and Mercato’s officers and directors will lose their entire investment in Mercato and will not be reimbursed for any out-of-pocket expenses to the extent such expenses exceed the amount not required to be retained in the Trust Account if an initial business combination is not consummated by October 8, 2023, pursuant to Mercato’s or Nuvini’s termination right, and, subject to up to three additional one-month extensions pursuant to the Mercato Certificate of Incorporation. Mercato’s officers and directors do not currently have any unreimbursed out-of-pocket expenses and do not expect to incur any out-of-pocket expenses for which they are entitled to reimbursement;

 

   

if the Trust Account is liquidated, including in the event Mercato is unable to complete an initial business combination within the required time period, the Sponsor has agreed to indemnify Mercato to ensure that the proceeds in the Trust Account are not reduced below $10.15 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Mercato has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Mercato, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

the Sponsor has invested an aggregate of $12,478,677 (in respect of the Founder Shares, the Private Placement Warrants and aggregate loans of $2,403,677) that will have zero value in the event Mercato is not able to complete a business combination; and

 

   

the Sponsor and its affiliates can earn a positive return on their investment, even if the Public Stockholders have a negative return on their investment in New Nuvini.

Redemption Rights

Under the Mercato Certificate of Incorporation, holders of Mercato Class A Common Stock may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to Mercato to pay its franchise and income taxes, by (b) the total number of shares of Mercato Class A Common Stock issued in the Mercato IPO less any shares that were redeemed in connection with the extension meeting; provided that Mercato will not redeem any Public Shares to the extent that such redemption would result in Mercato having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001, unless the Public Shares otherwise do not constitute “penny stock” as such term is defined in Rule 3a51-1 of the Exchange Act. As of the Record Date, this would have amounted to approximately

 

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$10.67 per share. Under the Mercato Certificate of Incorporation, in connection with an initial business combination, a Public Stockholder, together with any affiliate or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act), that holds in aggregate more than 15% of the Public Shares is restricted from seeking redemption rights.

If a holder exercises its redemption rights, then such holder will be exchanging its shares of Mercato Class A Common Stock for cash and will no longer own shares of Mercato Class A Common Stock and will not receive New Nuvini Ordinary Shares or participate in New Nuvini’s future growth, if any. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Mercato’s transfer agent in accordance with the procedures described herein. See the section entitled “The Special Meeting of Mercato Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Certain Information Relating to New Nuvini

Listing of New Nuvini Ordinary Shares and New Nuvini Warrants on Nasdaq

New Nuvini Ordinary Shares and New Nuvini Warrants currently are not traded on any stock exchange. New Nuvini has applied to list the New Nuvini Ordinary Shares and New Nuvini Warrants on Nasdaq under the symbols “NVNI” and “NVNIW,” respectively, upon the closing of the Business Combination. We cannot assure you that the New Nuvini Ordinary Shares and New Nuvini Warrants will be approved for listing on Nasdaq.

Emerging Growth Company; Foreign Private Issuer; Controlled Company

New Nuvini is an “emerging growth company” as defined in the JOBS Act. New Nuvini will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the effective date of the registration statement of which this proxy statement/prospectus is a part, (b) in which New Nuvini has total annual gross revenue of at least $1.235 billion or (c) in which New Nuvini is deemed to be a large accelerated filer, which means the market value of New Nuvini Ordinary Shares held by non-affiliates exceeds $700 million as of the last business day of New Nuvini’s prior second fiscal quarter, and (ii) the date on which New Nuvini issued more than $1.0 billion in non-convertible debt during the prior three-year period. New Nuvini intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that New Nuvini’s independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting.

As a “foreign private issuer,” New Nuvini will be subject to different U.S. securities law rules than domestic U.S. issuers. The rules governing the information that New Nuvini must disclose differ from those governing U.S. corporations pursuant to the Exchange Act. New Nuvini will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders. In addition, as a “foreign private issuer,” New Nuvini’s officers and directors and holders of more than 10% of the issued and outstanding New Nuvini Ordinary Shares, will be exempt from the rules under the Exchange Act requiring insiders to report purchases and sales of ordinary shares as well as from Section 16 short swing profit reporting and liability.

Immediately following the completion of the Business Combination, Pierre Schurmann and Luiz Busnello will control a majority of the voting power of outstanding New Nuvini Ordinary Shares. As a result, New Nuvini will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

 

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the requirement that a majority of New Nuvini’s board of directors consist of “independent directors” as defined under the rules of Nasdaq;

 

   

the requirement that New Nuvini have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

 

   

the requirement that New Nuvini have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

 

   

the requirement for an annual performance evaluation of the compensation and nominating and corporate governance committees.

Following the Business Combination, New Nuvini intends to utilize some or all of these exemptions. As a result, New Nuvini’s nominating and corporate governance committee and compensation committee may not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Comparison of Securityholder Rights

There are certain differences in the rights of Mercato stockholders prior to the Business Combination and the rights of New Nuvini Shareholders after the Business Combination. Please see the section entitled “Comparison of Securityholder Rights” elsewhere in this proxy statement/prospectus for additional information.

Appraisal or Dissenters’ Rights

Neither Mercato stockholders nor Mercato unitholders nor Mercato warrant holders have appraisal or dissenters’ rights in connection with the Business Combination under the laws of the State of Delaware. Although under the Delaware General Corporation Law, stockholders of a Delaware corporation have appraisal rights with respect to a merger, however, appraisal rights are not considered to be available under the Delaware General Corporation Law if the consideration under the proposed merger consists of shares listed on a national securities exchange. Therefore, no appraisal rights are available under the Business Combination; however, holders have a redemption right as further discussed in this proxy statement/prospectus. See the section entitled “The Special Meeting of Mercato Stockholders—Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

U.S. Federal Income Tax Considerations

Holders of Mercato Class A Common Stock and Warrants should carefully read the discussion under the caption “Certain Tax Considerations—U.S. Federal Income Tax Considerations” included elsewhere in this proxy statement/prospectus for a discussion of material U.S. federal income tax considerations with respect to electing to have their shares of Mercato Class A Common Stock redeemed for cash if the Business Combination is completed, the Merger, and, if applicable, the ownership and disposition of New Nuvini Ordinary Shares and New Nuvini Warrants following the Business Combination.

Holders of Mercato Class A Common Stock and Warrants (i) who exercise their redemption rights with respect to their shares of Mercato Class A Common Stock, (ii) who exchange their Mercato Class A Common Stock for New Nuvini Ordinary Shares and/or (iii) whose Warrants will automatically convert into New Nuvini Warrants in the Merger should consult with, and rely solely upon, their tax advisors to determine the specific tax consequences to them of the Business Combination and, to the extent applicable, of owning New Nuvini Ordinary Shares or New Nuvini Warrants following the completion of the Business Combination, including the

 

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applicability and effect of any U.S. federal, state, local, or non-U.S. tax laws and tax treaties (and any potential future changes thereto).

Material Cayman Tax Considerations

There is currently no form of income, inheritance, gift, withholding, corporate or capital gains tax applicable to Nuvini or New Nuvini in the Cayman Islands.

Anticipated Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a capital transaction. Under this method of accounting, the acquisition of Mercato will be treated at historical cost, with no goodwill or other intangible assets recorded. Please see the section entitled “The Business Combination—Anticipated Accounting Treatment” elsewhere in this proxy statement/prospectus for additional information.

Price Range of Securities and Dividends

Mercato

The Mercato Units, each of which consists of one share of Mercato Class A Common Stock and one-half of one Public Warrant to acquire one share of Mercato Class A Common Stock, began trading on Nasdaq under the symbol “MPRAU” on November 4, 2021. On December 23, 2021, Mercato announced that holders of its Mercato Units could elect to separately trade the Mercato Class A Common Stock and Public Warrants. On December 27, 2021, the Mercato Class A Common Stock and Public Warrants began trading on Nasdaq under the symbols “MPRA” and “MPRAW,” respectively.

On February 24, 2023, the trading date before the public announcement of the Business Combination, the Mercato Units, Mercato Class A Common Stock and Public Warrants closed at $10.45, $10.43 and $0.086, respectively. As of the Record Date, the closing price for each Mercato Unit, share of Mercato Class A Common Stock, and Public Warrant was $10.75, $10.66 and $0.0974, respectively.

Mercato has not paid any cash dividends on its Mercato Common Stock to date and does not intend to pay cash dividends prior to the Closing of the Business Combination.

Nuvini

Historical market price information regarding Nuvini Ordinary Shares is not provided because they do not have a public market. Nuvini has never declared or paid any cash dividends on the Nuvini Ordinary Shares.

New Nuvini

Historical market price information regarding New Nuvini Ordinary Shares is not provided because, as of the date of this proxy statement/prospectus, there is no public market for the New Nuvini Ordinary Shares. Please see the section entitled “Price Range of Securities and Dividends—New Nuvini—Dividend Policy” elsewhere in this proxy statement/prospectus for additional information.

 

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Risk Factor Summary

The Nuvini Group’s business and an investment in New Nuvini Ordinary Shares and New Nuvini Warrants are subject to numerous risks and uncertainties. In evaluating the Proposals, you should carefully read this proxy statement/prospectus, including the financial statements and annexes attached hereto, and especially consider the factors discussed in the section entitled “Risk Factors.” Some of these risks include:

 

   

Nuvini S.A. is an early-stage company with a history of operating losses and expects to incur significant expenses and continuing losses at least for the near- and medium-term, which may affect Nuvini’s ability to continue as a going concern.

 

   

The Nuvini Group’s growth strategy depends in large part on continued acquisitions of SaaS business. Nuvini S.A. may not be able to identify suitable acquisition candidates or complete acquisitions successfully. Nuvini may require additional capital to support the growth of its business, and this capital might not be available on acceptable terms, if at all.

 

   

The financial and operating projections in this proxy statement/prospectus rely in large part on assumptions and analyses developed by New Nuvini and third-party sources and are based on the New Nuvini’s ability to achieve, among other factors, certain growth milestones in accordance with Nuvini Group’s business plans. If these assumptions or analyses prove to be incorrect, New Nuvini’s actual operating results may materially differ from its forecasted results.

 

   

The Nuvini Acquired Companies and their suppliers could suffer disruptions, outages, defects and other performance and quality problems with the Nuvini Acquired Companies’ solutions or with the public cloud and internet infrastructure on which their solutions rely. If the availability of the Nuvini Acquired Companies’ proprietary SaaS solutions does not meet the Nuvini Acquired Companies’ service-level commitments to their clients, Nuvini S.A.’s current and future revenue may be negatively impacted.

 

   

If the Nuvini Group loses key members of its management teams or is unable to attract and retain the executives and employees it needs to support its operations and growth (especially skilled software engineers and developers), the Nuvini Group’s business and future growth prospects may be harmed.

 

   

Some of the markets for the Nuvini Acquired Companies’ SaaS solutions are characterized by frequent technological advances, and the Nuvini Acquired Companies must continually improve their software products to remain competitive.

 

   

The Nuvini Group relies on information and technology for many of its business operations which could fail and cause disruption to its business operations.

 

   

The Nuvini Group is mainly concentrated in one geographic area, which increases the Nuvini Group’s exposure to various risks in that location.

 

   

Brazil has experienced, and may continue to experience, adverse economic or political conditions that may impact the Nuvini Group’s business, financial condition and results of operations.

 

   

Internet regulation in Brazil is recent and still limited and several legal issues related to the Internet are uncertain.

 

   

The Nuvini Group’s clients may be subject to new and evolving privacy and data protection-related laws and regulations that impose obligations in connection with the collection, storage, use, processing, disclosure, protection, transmission, retention and disposal of personal, sensitive, regulated or confidential data.

 

   

The Nuvini Group may face restrictions and penalties under the Brazilian Consumer Protection Code in the future.

 

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Nuvini S.A.’s payment obligations under Nuvini S.A.’s indebtedness may limit the funds available to the Nuvini Group and may restrict the Nuvini Group’s flexibility in operating its businesses.

 

   

Nuvini S.A.’s existing loan agreements contain restrictive covenants, exposure premiums and events of default that impose significant operating and financial restrictions on Nuvini S.A., and Nuvini S.A. is currently not in compliance with certain financial covenants included in Nuvini S.A.’s loan agreements.

 

   

The consummation of the Business Combination may trigger the acceleration or termination of certain Nuvini S.A.’s loan and operating agreements if Nuvini S,A. does not obtain the counterparties’ consent or waiver, which could adversely affect the Nuvini Group.

 

   

Changes in tax laws or differing interpretations of tax laws may adversely affect the Nuvini Group’s results of operations.

 

   

Nuvini S.A. has identified material weaknesses in its internal control over financial reporting and information technology general controls and, as a result, restated its previous period’s financial statements. If Nuvini S.A. fails to remediate such material weaknesses (and any other ones) or establish and maintain effective internal controls over financial reporting, Nuvini S.A. may be unable to accurately report its results of operations, meet its reporting obligations and/or prevent fraud.

 

   

The Mercato Board did not obtain a fairness opinion in determining whether or not to proceed with the Business Combination.

 

   

Since the Sponsor and Mercato’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of Mercato stockholders, a conflict of interest may have existed in determining whether the Business Combination is appropriate as its initial business combination. Such interests include that Sponsor will lose its entire investment in Mercato if an initial business combination is not completed.

 

   

Mercato may be subject to a new 1% U.S. federal excise tax in connection with redemptions of Mercato A Common Stock.

 

   

An active trading market for New Nuvini Ordinary Shares may not be sustained to provide adequate liquidity.

 

   

New Nuvini does not expect to pay any dividends in the foreseeable future.

 

   

Public Stockholders will experience immediate dilution as a consequence of the issuance of New Nuvini Ordinary Shares as consideration in the Business Combination as well as dilution due to future issuances pursuant to equity incentive plans put in place at New Nuvini. Having a minority share position in New Nuvini following the Business Combination may reduce the influence that Mercato’s current stockholders have on the management of New Nuvini.

 

   

Upon consummation of the Business Combination, the rights of holders of New Nuvini Ordinary Shares arising under Cayman Companies Law as well as the governing documents of New Nuvini will differ from and may be less favorable to the rights of holders of Mercato Common Stock arising under the DGCL as well as the Mercato Certificate of Incorporation and Mercato Bylaws.

 

   

As a foreign private issuer, and as permitted by the listing requirements of the Nasdaq, New Nuvini will follow certain home country governance practices rather than the corporate governance requirements of the Nasdaq. The unaudited pro forma financial information included herein may not be indicative of what New Nuvini’s actual financial position or results of operations would have been.

 

   

The Merger should be a taxable transaction for U.S. federal income tax purposes.

 

   

New Nuvini could be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code as a result of the Business Combination.

 

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Summary Historical Consolidated Financial Information of Nuvini

The following table sets forth summary historical financial information of Nuvini S.A. for the periods and as of the dates indicated.

The summary historical financial information of Nuvini S.A. as of and for the years ended December 31, 2022 and December 31, 2021 were derived from the audited historical financial statements of Nuvini included elsewhere in this proxy statement/prospectus. All amounts reflected below are in Brazilian reais.

The following summary historical financial information should be read together with the consolidated financial statements and accompanying notes and “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The financial summary historical financial information in this section is not intended to replace Nuvini S.A.’s consolidated financial statements and the related notes. Nuvini S.A.’s historical results are not necessarily indicative of Nuvini S.A.’s future results.

As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to Nuvini, prior to and without giving pro-forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of the combined entity going forward. See the sections entitled “Summary of the Proxy Statement/Prospectus—Parties to the Business Combination—Nuvini” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

 

(In thousands of Brazilian reais, unless otherwise indicated)

   For the Year
Ended
December 31,
2022
     For the Year
Ended
December 31,
2021
 

Balance Sheet Data:

     

Total current assets

     20,275        23,703  

Intangible assets, net

     138,951        151,383  

Goodwill

     199,512        286,409  

Other long-term assets

     8,327        5,028  
  

 

 

    

 

 

 

Total assets

     367,065        466,523  
  

 

 

    

 

 

 

Total current liabilities

     332,096        226,789  

Non-current deferred and contingent consideration on acquisitions

     39,984        168,571  

Provisions for risks

     31,032        32,586  

Deferred taxes

     45,838        48,951  

Other long-term liabilities

     13,076        26,426  
  

 

 

    

 

 

 

Total liabilities

     462,026        503,323  

Share capital

     40,404        38,904  

Capital reserves

     54,632        3,738  

Accumulated losses

     (193,850      (79,442

Non-controlling interest

     3,853        0  
  

 

 

    

 

 

 

Total shareholders’ deficit

     (94,961      (36,800
  

 

 

    

 

 

 

Total liabilities and shareholders’ deficit

     367,065        466,523  

Statement of Cash Flows Data:

     

Net cash from (used) in operating activities

     14,196        (6,728

Net cash used in investing activities

     (4,322      (94,787

Net cash (used in) from financing activities

     (12,760      110,768  

 

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     For the Year
Ended
December 31,
2022
     For the Year
Ended
December 31,
2021
 

Consolidated Statement of Loss and Comprehensive Loss

     

Net operating revenue

     124,545        89,864  

Cost of services provided

     (52,813      (35,833
  

 

 

    

 

 

 

Gross profit

     71,732        54,031  
  

 

 

    

 

 

 

Sales and marketing expenses

     (27,370      (22,597

General and administrative expenses

     (53,347      (56,073

Impairment of goodwill

     (86,897      (6,758

Other operating income (expenses), net

     182        12  
  

 

 

    

 

 

 

Operating loss

     (95,700      (31,385
  

 

 

    

 

 

 

Financial income and expenses, net

     (16,730      (42,479
  

 

 

    

 

 

 

Loss before income tax

     (112,430      (73,864
  

 

 

    

 

 

 

Income tax, net

     (1,776      (3,835
  

 

 

    

 

 

 

Net loss representing total comprehensive loss for the year

     (114,206      (77,699
  

 

 

    

 

 

 

Net loss attributed to:

     

Owners of the Company

     (114,408      (77,699

Non-controlling interests

     202        —    

Loss per share

     

Basic and diluted loss per share (R$)

     (.94      (.71

Summary Historical Consolidated Financial Information of Mercato

The following table shows summary historical financial information of Mercato for the periods and as of the dates indicated.

The summary historical financial information of Mercato as of December 31, 2022 and 2021 and for the year ended December 31, 2022 and for the period from February 22, 2021 (inception) through December 31, 2021 were derived from the audited historical financial statements of Mercato included elsewhere in this proxy statement/prospectus. All amounts reflected below are in U.S. dollars.

The following summary historical financial information should be read together with the financial statements and accompanying notes and “Mercato Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The financial summary historical financial information in this section is not intended to replace Mercato’s financial statements and the related notes. Mercato’s historical results are not indicative of the combined company’s future results.

As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to Mercato, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of the combined entity following the Business Combination. See the sections entitled, “Summary to the Proxy Statement/Prospectus—Parties to the Business Combination—Mercato” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

 

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     As of
December 31,
2022
    As of
December 31,
2021
 

Balance Sheet Data:

    

Total current assets

   $ 156,446     $ 865,940  

Prepaid expenses—long-term

     —         42,295  

Cash held in Trust Account

     236,940,614       233,450,000  

Total Assets

     237,097,060       234,358,235  

Current liabilities

     2,115,680       256,343  

Derivative liabilities

     323,250       12,930,000  

Deferred underwriting commissions

     —         8,050,000  

Total Liabilities

     2,438,930       21,236,343  

Total Stockholders’ Deficit

     (1,263,508     (20,328,108

Total liabilities, Class A Common Stock subject to possible redemption and stockholders’ deficit

     237,097,060       234,358,235  

 

    For the Year
Ended
December 31,
2022
    From
February 22,
2021 (Inception)
through
December 31,
2021
 

(in millions)

   

Statement of Operations Data:

   

Loss from operations

  $ (1,927,527   $ (268,933

Other income (expenses):

   

Change in fair value of derivative liabilities

    12,606,750       124,990  

Gain from extinguishments of deferred underwriting commissions on public warrants

    245,525       —    

Income from investments held in Trust Account

    3,490,614       —    

Offering costs associated with derivative liabilities

    —         (447,881

Net income (loss) before income taxes

    14,415,362       (591,824

Income tax expense

    (683,599     —    

Net income (loss)

    13,731,763       (591,824

Weighted average shares outstanding of Class A Common Stock, basic and diluted

    23,000,000       3,862,620  

Basic and diluted net loss per share, Class A Common Stock

    0.48     $ (0.07

Weighted average shares outstanding of Class B Common Stock, basic and diluted

    5,750,000       4,943,291  

Basic and diluted net loss per share, Class B Common Stock

    0.48     $ (0.07

Statement of Cash Flows Data:

   

Net cash used in operating activities

    (938,960   $ (664,332

Net cash used in investing activities

    —       $ (233,450,000

Net cash provided by financing activities

    604,709     $ 234,501,538  

 

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Summary Unaudited Pro Forma Condensed Combined Financial Information

Nuvini is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.

The unaudited pro forma condensed combined statement of financial position as of December 31, 2022 combines the historical audited consolidated statement of financial position of Nuvini S.A. as of December 31, 2022 with the historical audited balance sheet of Mercato as of December 31, 2022, giving pro forma effect to the Business Combination as if it had been consummated as of December 31, 2022.

The unaudited pro forma condensed statements of income for the year ended December 31, 2022 combines the historical audited consolidated statement of loss and comprehensive income of Nuvini S.A. for the year ended December 31, 2022 with the historical audited statement of operations of Mercato for the year ended December 31, 2022, giving pro forma effect to the Business Combination as if it had been consummated as of January 1, 2022, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information has been prepared assuming two redemption scenarios, as follows:

 

   

No Further Redemption Scenario: While 23,000,000 shares of Mercato Class A Common Stock were subject to possible redemption by the Public Stockholders as of December 31, 2022, 18,699,637 shares of Mercato Class A Common Stock were redeemed in connection with the extension proposal, which resulted in 4,300,363 outstanding redeemable shares of Mercato Class A Common Stock. This scenario assumes that no additional Public Stockholders exercised their redemption rights in connection with the Business Combination with respect to their Mercato Class A Common Stock for a pro rata share of the funds in the Trust Account.

 

   

Minimum Cash Redemption Scenario: This presentation assumes that Public Stockholders exercise their redemption rights with respect to 1,803,651 shares of Mercato Class A Common Stock upon consummation of the Business Combination. Under this scenario, an estimated 31,756,482 New Nuvini Ordinary Shares would be issued and outstanding upon closing of the Business Combination. This scenario represents the maximum number of shares of Mercato Class A Common Stock that may be redeemed in order for New Nuvini to meet the Minimum Cash Condition of having cash and cash equivalents of approximately $10 million upon closing of the Business Combination. In the event that the aggregate cash consideration Mercato would be required to pay for all Mercato Class A Common Stock that are validly submitted for redemption plus any amount required by the Minimum Cash Condition are less than $10 million, and such condition is not waived by Nuvini, Mercato will not complete the Business Combination or redeem any shares, all Mercato Class A Common Stock submitted for redemption will be returned to the holders thereof, and Mercato instead may search for an alternate business combination, as discussed under “Risks for New Nuvini’s Stockholders Related to the Business Combination.” Nuvini currently has no intention to waive the Minimum Cash Condition.

The Business Combination Agreement provides that Nuvini’s obligation to consummate the Business Combination is conditioned on satisfaction of the Minimum Cash Condition. If the Minimum Cash Condition is not satisfied and such condition is not waived by Nuvini, the Business Combination will not be completed and the shares of Mercato Class A Common Stock submitted for redemption in connection with the Business Combination will not be redeemed. In the event of the termination of the Business Combination Agreement, Mercato would thereafter be able to search for an alternate business combination, subject to the terms of the Mercato Certificate of Incorporation.

 

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The historical financial statements of Nuvini S.A. have been prepared in accordance with IFRS and in its presentation currency of the Brazilian real (R$). The historical financial statements of Mercato have been prepared in accordance with U.S. GAAP and in its presentation currency of the U.S. dollar ($). The unaudited pro forma condensed combined financial information reflects IFRS, the basis of accounting to be used by New Nuvini, and the accounting policy differences identified are discussed in Note 2 to the unaudited pro forma condensed combined financial information. Mercato and Nuvini S.A. did not have any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the entities.

This information should be read together with the audited and unaudited historical financial statements of each of Nuvini S.A. and Mercato, including the notes thereto, as well as the disclosures contained in the sections titled “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Mercato Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “The Business Combination,” “The Special Meeting of Mercato Stockholders” and other financial information included elsewhere in this proxy statement/prospectus.

The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only. Such information is only a summary and should be read in conjunction with the section titled “Unaudited Pro Forma Combined Financial Information.” The financial results may have been different had the companies always been combined. You should not rely on the selected unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the Combined Company will experience.

 

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     Assuming No
Further
Redemption
Scenario
    Minimum
Cash
Redemption
Scenario
 
     Pro Forma
Combined
    Pro Forma
Combined
 

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 154,942     $ 58,399  

Other current assets

     12,800       12,800  
  

 

 

   

 

 

 

Total current assets

     167,742       71,199  

Non-current assets

    

Intangible assets, net

     138,951       138,951  

Other non-current assets

     207,839       207,839  
  

 

 

   

 

 

 

Total non-current assets

     346,790       346,790  
  

 

 

   

 

 

 

TOTAL ASSETS

     514,532       417,989  

LIABILITIES AND EQUITY

    

Current liabilities

    

Debentures

     60,873       60,873  

Deferred and contingent consideration on acquisitions

     111,060       111,060  

Other current liabilities

     40,693       40,693  
  

 

 

   

 

 

 

Total current liabilities

     212,626       212,626  

Non-current liabilities

    

Redeemable shares liability

     —         —    

Deferred and contingent consideration on acquisitions

     39,984       39,984  

Other non-current liabilities

     91,868       91,868  
  

 

 

   

 

 

 

Total non-current liabilities

     131,852       131,852  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     344,478       344,478  

Equity:

    

Share capital

     —         —    

Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding

     —         —    

Share premium and Class A Ordinary Shares, R$0.00001 par value; 500,000,000 shares authorized; 33,550,363 issued and outstanding under the No Further Redemption Scenarios

     759,580       666,347  

Capital reserves

     54,632       54,632  

Accumulated losses

     (648,302     (651,612

Other comprehensive income

     291       291  
  

 

 

   

 

 

 

Equity attributable to owners of the Company

     166,201       69,658  

Non-controlling interest

     3,853       3,853  
  

 

 

   

 

 

 

Total equity

     170,054       73,511  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

     514,532       417,989  

 

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     Assuming No
Further
Redemption
Scenario
    Minimum
Cash
Redemption
Scenario
 
     Pro Forma
Combined
    Pro Forma
Combined
 

REVENUE

    

Net operating revenue

   $ 124,545     $ 124,545  

Cost of services provided

     (52,813     (52,813
  

 

 

   

 

 

 

Gross profit (loss)

     71,732       71,732  

COST AND EXPENSES

    

Sales and marketing expenses

     (27,370     (27,370

General and administrative expenses

     (447,264     (450,574

Other operating income (expenses), net

     (87,740     (87,740
  

 

 

   

 

 

 

Operating loss

     (490,642     (493,952
  

 

 

   

 

 

 

Financial loss, net

     58,480       58,480  
  

 

 

   

 

 

 

Loss before income tax

     (432,162     (435,472

Income tax and social contribution

     (5,307     (5,307
  

 

 

   

 

 

 

Net income (loss) representing total comprehensive loss for the year

     (437,469     (440,779

Net loss attributed to:

    

Owners of the Company

     (437,671     (440,981

Non-controlling interests

     202       202  

NET INCOME (LOSS) PER SHARE

    

Basic and Diluted

   $ (13.04   $ (13.88

 

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RISK FACTORS

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, including matters addressed in the “Cautionary Statement Regarding Forward-Looking Statements” before you decide whether to vote or instruct your vote to be cast to approve the Proposals. These risks could have a material adverse effect on the business, results of operations or financial condition of Nuvini and could adversely affect the trading price of New Nuvini Ordinary Shares and New Nuvini Warrants. The Nuvini Group will face additional risks and uncertainties that are not presently known to it, or that the Nuvini Group currently deems immaterial, which may also impair its business and financial condition. The following discussion should be read in conjunction with the “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements and accompanying notes thereto included in this proxy statement/prospectus.

Risks Related to the Nuvini Group’s Business

Nuvini S.A. is an early-stage company with a history of operating losses and expects to incur significant expenses and continuing losses at least for the near- and medium-term, which may affect its ability to continue as a going concern.

Nuvini S.A. commenced operations in October 2020. Nuvini S.A. has a history of operating losses and negative operating cash flows. Nuvini S.A. incurred a net loss of R$114.2 million and R$$77.7 million for the years ended December 31, 2022, and 2021, respectively, and, as of December 31, 2022, had a working capital deficit of approximately R$311.8 million. Nuvini S.A. believes it will continue to incur operating and net losses each quarter at least for the medium term. Even if it achieves profitability, there can be no assurance that it will be able to maintain profitability in the future. Nuvini S.A.’s potential future profitability and liquidity is particularly dependent upon the organic growth and operating performance of the Nuvini Acquired Companies and the expansion of its businesses through additional acquisitions of SaaS companies or SaaS-related assets, any of which may not occur at the levels Nuvini S.A. currently anticipates or at all. Nuvini S.A.’s businesses will likely require significant additional amount of capital resources to sustain and expand operations to generate sufficient cash flow to meet their obligations on a timely basis and Nuvini S.A. may need to raise additional financing through loans, sales of securities or additional investments in order to fund its ongoing operations. There is no assurance that Nuvini S.A. will be able to obtain such additional financing or that it will be able to obtain such additional financing on favorable terms.

Nuvini S.A.’s management has concluded that these conditions raise substantial doubt about Nuvini S.A.’s ability to meet its financial obligations as they become due for the next twelve months. In addition, the audit report of Nuvini S.A.’s independent registered public accounting firm for the year ended December 31, 2022 includes an explanatory paragraph relating to Nuvini S.A.’s ability to continue as a going concern due to the factors mentioned above. Nuvini S.A.’s audited consolidated financial statements as of and for the year ended December 31, 2022 do not include any adjustments that may result from the outcome of this uncertainty and do not reflect the transactions contemplated by the Business Combination. For further discussion on Nuvini S.A.’s assessment of going concern, see “Note 2—Basis of Presentation” of Nuvini S.A.’s consolidated financial statements included elsewhere in this proxy statement/prospectus.

The Nuvini Group’s growth strategy depends in large part on continued acquisitions of SaaS businesses. Nuvini S.A. may not be able to identify suitable acquisition candidates or complete acquisitions successfully.

The Nuvini Group’s future growth is dependent in large part on Nuvini S.A.’s ability to acquire new businesses. Nuvini S.A. has been continuously seeking additional acquisition opportunities to expand into new markets in Latin America and enhance Nuvini S.A.’s position in Brazil where the Nuvini Group’s substantial operations are. There are no assurances, however, that Nuvini S.A. will be able to successfully identify suitable candidates, negotiate appropriate terms, obtain financing on acceptable terms, complete proposed acquisitions or expand into new markets. Once acquired, operations of acquired businesses may not achieve anticipated levels of revenues, profitability or cash flows.

 

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Nuvini S.A.’s ability to successfully expand its business through acquisitions depends on several factors, including its ability to successfully integrate acquired businesses. Nuvini S.A. provides limited back-office support to the Nuvini Acquired Companies and does not integrate the Nuvini Acquired Companies’ actual proprietary SaaS business operations that are being conducted by the Nuvini Acquired Companies within their respective entities as subsidiaries to Nuvini S.A. Each Nuvini Acquired Company’s engineering, human resources and operations teams will continue to operate independently and report to such Nuvini Acquired Company’s own set of management. Such structures may delay the efficiencies that Nuvini S.A. expects to gain from any potential acquisition and Nuvini S.A.’s brand and reputation may be negatively affected by any damage or reputational harm to the Nuvini Acquired Company’s brand. Although Nuvini S.A.’s management will endeavor to evaluate the risks inherent in any particular transaction, there are no assurances that it will properly ascertain all such risks. Moreover, prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial additional indebtedness and other expenses. Future acquisitions may also result in potentially dilutive issuances of equity securities. Difficulties encountered with acquisitions may have a material adverse effect on the Nuvini Group’s business, financial condition and results of operations.

Any failure to effectively manage Nuvini S.A.’s growth through acquisitions may disrupt the Nuvini Group’s operations and adversely affect its operating results.

Since Nuvini S.A.’s inception, Nuvini S.A. has completed seven acquisitions and plans to continue acquiring other SaaS businesses in the future. Growth and expansion resulting from future acquisitions significantly require Nuvini S.A.’s management resources. Any future acquisitions involve a number of special risks, including the following:

 

   

failure to maximize the potential financial and strategic benefits of the transaction;

 

   

possible impairment of relationships with employees and clients of acquired companies as a result of acquisitions;

 

   

impairment of assets related to resulting goodwill; and

 

   

reductions in future operating results from amortization of intangible assets.

Future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected, if at all, in the historical financial statements of such company and the risk that such historical financial statements may be based on assumptions that are incorrect or inconsistent with Nuvini S.A.’s assumptions or accounting policies. Nuvini S.A. may not be able to manage such expansion effectively and its failure to do so could lead to a disruption in Nuvini S.A.’s business, a loss of clients and revenues, and increased expenses.

The Nuvini Group expects to expand beyond Brazil which causes a variety of operational challenges.

A component of the Nuvini Group’s growth strategy involves the expansion of the Nuvini Group’s operations through acquisitions internationally, particularly in Latin America. Nuvini S.A. is developing strategies to address international markets, but there is no guarantee that such efforts will have the desired effect. The Nuvini Group expects that its international activities will begin and continuously grow for the foreseeable future as it pursues opportunities in international markets, particularly in Latin America, which will require significant dedication of management attention and financial resources.

Nuvini S.A.’s future international business and operations involve a variety of risks, including:

 

   

slower than anticipated public cloud adoption by international businesses;

 

   

changes in a specific country’s or region’s political, economic or legal and regulatory environment, including the effects of pandemics, tariffs, trade wars or long-term environmental risks;

 

   

the need to adapt and localize the Nuvini Group’s solutions for specific countries;

 

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greater difficulty in collecting accounts receivable and longer payment cycles;

 

   

unexpected changes in trade relations, regulations or laws;

 

   

new, evolving and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information;

 

   

challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs that are specific to each jurisdiction;

 

   

difficulties in managing businesses in new markets with diverse cultures, languages, customs, legal systems, alternative dispute mechanisms and regulatory systems;

 

   

increased travel, real estate, infrastructure, legal and compliance costs associated with international operations;

 

   

currency exchange rate fluctuations and the resulting effect on Nuvini S.A.’s revenue and expenses, and the cost and risk in entering into hedging transactions if Nuvini S.A. chooses to do so in the future;

 

   

limitations on, or charges or taxes associated with, Nuvini S.A.’s ability to reinvest earnings from operations in one country to fund the capital needs of the Nuvini Group’s operations in other countries;

 

   

laws and business practices favoring local competitors or general market preferences for local vendors;

 

   

limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting or enforcing the Nuvini Group’s intellectual property rights, including its trademarks and patents;

 

   

political instability or terrorist activities;

 

   

COVID-19 or any other pandemics or epidemics that could result in decreased economic activity in certain markets, additional costs associated with travel, return to work or other restrictions that are specific to certain markets, decreased use of the Nuvini Group’s data solutions and services or in the Nuvini Group’s decreased ability to import, export or sell the Nuvini Group’s data solutions and services to existing or new clients in international markets;

 

   

exposure to liabilities under anti-corruption and anti-money laundering laws, including the FCPA, U.S. bribery laws and similar laws and regulations in other jurisdictions;

 

   

burdens of complying with laws and regulations related to labor and taxation; and

 

   

regulations, adverse tax burdens and foreign exchange controls that could make it difficult or costly to repatriate earnings and cash.

Nuvini S.A. expects to invest substantial time and resources to further expand internationally and its failure or inability to successfully and timely do so would adversely affect the Nuvini Group’s business, financial condition and results of operations.

Nuvini S.A. has experienced rapid growth and expects to invest in its growth for the foreseeable future. If Nuvini S.A. fails to manage its growth effectively, its business, operating results and financial condition would be adversely affected.

Nuvini S.A. has experienced rapid growth in recent periods. For example, Nuvini S.A.’s revenues for the year ended December 31, 2022 have grown 39% as compared to the year ended December 31, 2021. The expected continued growth and expansion of Nuvini S.A. and the Nuvini Acquired Companies’ businesses may place a significant strain on management, business operations, financial condition, infrastructure and corporate culture.

With continued growth, Nuvini S.A.’s information technology systems and internal control over financial reporting and procedures may not be adequate to support the Nuvini Acquired Companies’ operations and may

 

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be subject to data security incidents that may interrupt business operations and allow third parties to obtain unauthorized access to business information or misappropriate funds. Nuvini S.A. may also face risks to the extent such third parties infiltrate the information technology infrastructure of its contractors.

To manage growth in operations and personnel, the Nuvini Group have to continuously improve its operational, financial and management controls and reporting systems and procedures. Failure to effectively manage its growth could result in difficulty or delays in the Nuvini Acquired Companies’ ability to attract new clients, decline in quality or client satisfaction, increases in costs, introduction of new products and services , enhancements of existing products and services, loss of clients; information security vulnerabilities or other operational difficulties, any of which could adversely affect Nuvini’s business performance and operating results. Nuvini S.A.’s strategy is based on a combination of growth and M&A, and any inability to scale the Nuvini Acquired Companies while also acquiring new companies may impact Nuvini S.A.’s growth trajectory and results of operations.

Nuvini may require additional capital to support the growth of its business, and this capital might not be available on acceptable terms, if at all.

Nuvini S.A. has funded its operations since inception primarily through equity financings, loans and borrowings from financial institutions and the Nuvini Group’s operations. Nuvini S.A. is uncertain when or if the Nuvini Acquired Companies’ operations will generate sufficient cash to fully fund their ongoing operations or the growth of the Nuvini Group’s business. Nuvini S.A. intends to continue to make investments to support the Nuvini Group’s business, which may require Nuvini S.A. to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to Nuvini S.A., if at all. If adequate funds are not available on acceptable terms, Nuvini S.A. may be unable to invest in future growth opportunities, which could harm the Nuvini Group’s businesses, operating results and financial conditions. If Nuvini S.A. incurs new debt, the creditors would have rights senior to holders of common stock to make claims on Nuvini S.A.’s assets, and the terms of any debt could restrict the Nuvini Group’s operations, including New Nuvini’s ability to pay dividends on New Nuvini Ordinary Shares. Furthermore, after the completion of the Business Combination, if New Nuvini issues additional equity securities, shareholders will experience dilution, and the new equity securities could have rights senior to those of New Nuvini Ordinary Shares. Because the decision to issue securities in the future will depend on numerous considerations, including factors beyond New Nuvini’s control, New Nuvini cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities. As a result, New Nuvini Shareholders bear the risk of future issuances of debt or equity securities reducing the value of New Nuvini Ordinary Shares and diluting their interests. For more information on Nuvini S.A.’s indebtedness see “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Loans and Financing and Debenture.

If the Nuvini Group is unable to obtain sufficient funding on a timely basis and on acceptable terms and continue as a going concern, the Nuvini Group may be required to significantly curtail, delay or discontinue its operations.

If the Nuvini Group is unable to obtain sufficient funding on a timely basis and on acceptable terms and continue as a going concern, the Nuvini Group may be required to significantly curtail, delay or discontinue its operations. In general, the Nuvini Group may be unable to expand its operations or otherwise capitalize on business opportunities and defend against and prosecute litigation necessary to conduct the Nuvini Group’s businesses as desired, which could materially affect the Nuvini Group’s businesses, financial condition and results of operations. If the Nuvini Group is ultimately unable to continue as a going concern, it may have to seek the protection of bankruptcy laws or liquidate its assets and may receive less than the value at which those assets are carried on its financial statements, and it is likely that New Nuvini’s securityholders will lose all or a part of their investment.

 

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Nuvini’s market opportunity estimates and market growth forecasts included in this proxy statement/prospectus may prove to be inaccurate. Even if the market in which the Nuvini Group competes achieves the forecasted growth, the Nuvini Group’s businesses could fail to grow at similar rates, if at all.

This proxy statement/prospectus contains market and industry data, estimates and statistics obtained from third-party sources. While Nuvini believes such information to be reliable in general, Nuvini has not independently verified the accuracy or completeness of any such third-party information. Such information may not have been prepared on a comparable basis or may not be consistent with other sources. Similarly, this proxy statement/prospectus contains information based on or derived from internal company surveys, studies and research that have not been independently verified by third-party sources. Industry data, projections and estimates are subject to inherent uncertainty as they necessarily require certain assumptions and judgments.

In addition, the market for SaaS in Latin America is relatively new and will experience changes over time. Growth forecasts, including for the Nuvini Acquired Companies’ SaaS businesses, are uncertain and based on assumptions and estimates that may be inaccurate. The Nuvini Acquired Companies’ addressable market depends on a number of factors, including changes in the competitive landscape, technology, data security or privacy concerns, client budgetary constraints, business practices, regulatory environment and economic conditions. Moreover, geographic markets and the industries the Nuvini Acquired Companies operate in are not rigidly defined or subject to standard definitions.

Accordingly, Nuvini’s use of the terms referring to its geographic markets and industries may be subject to interpretation, and the resulting industry data, projections and estimates may not be reliable. Nuvini’s estimates and forecasts relating to the size and expected growth of its market may prove to be inaccurate and Nuvini’s ability to produce accurate estimates and forecasts may in the future be impacted by the economic uncertainty associated with the COVID-19 pandemic, as well as with other macroeconomic factors to which the Nuvini Group is subject (see “—Risks Related to the Nuvini Group’s Substantial Operations in Brazil” below). Even if the market where Nuvini competes meets the size estimates and growth rate forecasts, its business could fail to grow. For these reasons, you should not place undue reliance on such information.

The financial and operating projections in this proxy statement/prospectus rely in large part on assumptions and analyses developed by Nuvini S.A. and third-party sources and are based on New Nuvini’s ability to achieve, among other factors, certain growth milestones in accordance with the Nuvini Group’s business plans. If these assumptions or analyses prove to be incorrect, New Nuvini’s actual operating results may materially differ from its forecasted results.

Nuvini S.A. does not, as a matter of course, make public projections as to future sales, earnings or other results. However, Nuvini S.A.’s management has prepared the financial projections set forth elsewhere in this proxy statement/prospectus to provide Mercato information to conduct its comprehensive analysis and the financial projections are included in this proxy statement/prospectus solely to provide Mercato stockholders with access to information made available in connection with the Mercato Board’s consideration of the Business Combination. The financial projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to financial projections, but, in the view of Nuvini S.A.’s management, was prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of New Nuvini. However, this information should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the financial projections.

Nuvini S.A.’s independent auditors or any other independent accountants have neither compiled, examined or performed any procedures with respect to the prospective financial information contained in this proxy statement/prospectus, nor expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the prospective financial information.

 

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There can be no assurance that the management projections appearing elsewhere in this proxy statement/prospectus will be realized, and actual results may differ materially from those shown. The inclusion of the management projections in this proxy statement/prospectus should not be regarded as an indication that New Nuvini, Nuvini, Mercato or any of their respective affiliates, officers, directors, advisors or other representatives considered or consider the management projections necessarily predictive of actual future events, and the management projections should not be relied upon as such. None of New Nuvini, Nuvini, Mercato or any of their respective affiliates, officers, directors, advisors or other representatives can give any assurance that actual results will not differ from such management projections. None of New Nuvini, Nuvini, Mercato or any of their respective affiliates, officers, directors, advisors or other representatives has made or makes any representation to any shareholder or other person regarding the ultimate performance of New Nuvini compared to the information contained in the management projections or that forecasted results will be achieved. For additional information regarding the limitations of Nuvini’s projections, see “The Business Combination—Certain Unaudited Projected Financial Information.”

Some of the industries in which the Nuvini Group operates are cyclical, and, accordingly, the Nuvini Group’s businesses are subject to changes in the economy.

Some of the business areas in which the Nuvini Group operates are subject to specific industry and general economic cycles including but not limited to, the SaaS markets. Accordingly, a downturn in these or other markets where the Nuvini Group participates could materially and adversely affect Nuvini S.A. If demand changes and the Nuvini Group fails to respond accordingly, Nuvini S.A.’s results of operations could be materially and adversely affected. The business cycles of the Nuvini Group’s different operations may occur contemporaneously. Consequently, the effect of an economic downturn may have a magnified negative effect on material portions of the Nuvini Group’s businesses.

The markets in which the Nuvini Acquired Companies operate are highly competitive, and if the Nuvini Acquired Companies do not compete effectively, the Nuvini Group’s business, financial condition and results of operations could be harmed.

The markets where the Nuvini Acquired Companies operate are intensely competitive and characterized by rapid changes in technology, client requirements and industry standards, and frequent new solutions, service introductions and improvements. As these markets continue to mature and new technologies and competitors enter such markets, the Nuvini Acquired Companies expect competition to intensify. The current competitors include other software holding companies, such as Constellation Software Inc., Roper Technologies, Inc., Vitec Software Group and Tyler Technologies, Inc.

The Nuvini Acquired Companies compete based on various factors, including price, performance, range of use cases, brand recognition and reputation, client support and differentiated capabilities, including ease of implementation, administration, use and scalability. Some of the Nuvini Acquired Companies’ competitors have substantially greater brand recognition, client relationships and financial, technical and other resources than what the Nuvini Group has, and may be able to respond more effectively than the Nuvini Acquired Companies to new or changing opportunities, technologies, standards, client requirements and buying practices.

New and innovative start-up companies and larger companies that are making significant investments in research and development may introduce competing SaaS solutions that have greater performance or functionality or are easier or cheaper to implement or use; incorporate technological advances that the Nuvini Group has not yet developed or implemented; or invent similar or superior SaaS solutions, including data platforms that are better, more powerful and client-friendly than the Nuvini Group’s.

The Nuvini Group may also face competition from in-house developments by the Nuvini Acquired Companies’ clients, academic and government institutions, and the open-source community that may offer similar services and solutions, or an adequate substitute for the Nuvini Acquired Companies’ services and solutions. These factors may force the Nuvini Group to compete on other fronts in addition to the quality of the Nuvini Acquired Companies’ services and to expend significant resources in order to remain competitive, which the Nuvini Group may be unable to do.

 

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Moreover, the markets in which the Nuvini Acquired Companies compete are subject to evolving industry standards and regulations, resulting in increasing data governance and compliance requirements for the Nuvini Group and its clients (for additional information, see “—Risks Related to Legal Matters and Regulations” below).

For these reasons, competition may negatively impact the Nuvini Group’s ability to grow prices and gross margins, any of which could materially harm the Nuvini Group’s business, results of operations and financial condition.

Failure to effectively develop and expand the Nuvini Acquired Companies’ sales and marketing capabilities could harm their ability to increase their client-base and achieve broader market acceptance of their data solutions and proprietary data platform.

The Nuvini Acquired Companies must expand their sales and marketing efforts to increase their respective sales to new and existing clients. The Nuvini Acquired Companies plan to continue expanding their direct and indirect sales force, both domestically and internationally. It may require significant time and resources to effectively onboard new sales and marketing personnel. Once a new client begins using the Nuvini Acquired Companies’ data solutions and services, their sales team will need to maintain and generate more sales from that client. These efforts will require the Nuvini Group to invest significant financial and other resources, including in industries and sales channels in which Nuvini has limited experience to date. The Nuvini Acquired Companies’ businesses and results of operations will be harmed if the Nuvini Acquired Companies’ sales and marketing efforts generate increases in revenue that are smaller than anticipated. Nuvini S.A. may not achieve anticipated revenue growth from expanding the Nuvini Acquired Companies’ sales force if it is unable to hire, develop, integrate and retain talented and effective sales personnel, if the Nuvini Acquired Companies’ new and existing sales personnel is unable to achieve desired productivity levels in a reasonable period of time, or if the Nuvini Acquired Companies’ sales and marketing programs are not effective.

The Nuvini Acquired Companies’ clients may choose not to renew existing engagements or enter into new engagements with the Nuvini Acquired Companies on terms acceptable to the Nuvini Group, or at all.

The Nuvini Acquired Companies’ contracts with their clients to provide SaaS solutions typically have a monthly term and will renew automatically. Based on the historical performance of the Nuvini Group, its clients have been consistently renewing their respective subscriptions on a monthly basis. The Nuvini Acquired Companies have been operating for more than 10 years on average and have a record of consistent monthly renewals even during the COVID-19 pandemic, which was a major disruption for most businesses. As of December 31, 2022 and 2021, 95.4% and 94.7%, respectively, of clients renewed their subscriptions to Nuvini Group services or products every month. However, these contracts may, in a majority of cases, be terminated without cause by the Nuvini Acquired Companies’ clients, so long as the clients provide 30 to 120 days prior notice. The Nuvini Acquired Companies’ clients may terminate or reduce their use of the Nuvini Acquired Companies’ SaaS solutions for several reasons, including (i) if they are not satisfied with the solution or service level,(ii) the value proposition for the Nuvini Acquired Companies’ SaaS solutions, or (iii) if the Nuvini Acquired Companies are unable to meet clients’ needs and expectations. If price increases make the Nuvini Acquired Companies’ SaaS solutions unaffordable, the possibility of client termination or reduction may be more likely. These price increases can be due to the Nuvini Acquired Companies’ businesses, inflation adjustments or supplier cost increases. Even if the Nuvini Acquired Companies successfully deliver on contracted data solutions and services and maintain close relationships with the Nuvini Acquired Companies’ clients, a number of factors outside of Nuvini’s control could cause the loss of or reduction in business or revenue from the Nuvini Acquired Companies’ existing clients. These factors include, among other things:

 

   

the business or financial condition of that client or the economy generally;

 

   

a change in strategic priorities by the Nuvini Acquired Companies’ clients, resulting in a reduced level of spending on technology solutions and services;

 

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a demand for price reductions by the Nuvini Acquired Companies’ clients; and

 

   

mergers, acquisitions or significant corporate restructurings involving one of the Nuvini Acquired Companies’ clients.

The ability of clients to terminate their engagements with the Nuvini Acquired Companies at any time makes Nuvini S.A.’s future revenue flow uncertain. The Nuvini Acquired Companies may not be able to replace any client that chooses to terminate or chooses not to renew its contract, which could materially and adversely affect Nuvini S.A.’s revenue. Furthermore, terminations in engagements may make it difficult to plan Nuvini’s project resource requirements.

If a significant number of clients cease using or reduce their usage of the Nuvini Acquired Companies’ SaaS solutions, the Nuvini Acquired Companies may be required to spend significantly more on sales and marketing than it currently plans to spend in order to maintain or increase revenue from clients. Such additional sales and marketing expenditures could adversely affect Nuvini’s business, results of operations and financial condition.

In addition, while the restrictions imposed by the COVID-19 pandemic have prompted a shift to digital solutions and services that benefited the Nuvini Group’s business in 2022 and 2021, there can be no assurance that this shift will continue and that the Nuvini Group will continue to benefit from the Nuvini Acquired Companies’ clients’ increased spending on digital transformation efforts in response to the COVID-19 pandemic.

The extent to which the COVID-19 pandemic and measures taken in response thereto impact the Nuvini Group’s business, financial condition, results of operations and prospects will depend on future developments, which are highly uncertain and are difficult to predict.

The global impact of the COVID-19 outbreak and the measures taken to reduce the spread of the virus and its variants have adversely affected the global macroeconomic environment, significantly increased economic uncertainty and reduced economic activity. Governmental authorities around the world, including in Brazil, have taken measures to contain the spread of COVID-19 by implementing travel bans and restrictions, quarantines, shelter-in-place, total lock-down orders and business limitations and shutdowns, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion or at all.

The Nuvini Group has taken numerous actions to protect its employees and businesses following the spread of COVID-19. The Nuvini Group may take further actions if and when required by government authorities or it determines to be in the best interests of its employees, clients and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19. In addition, the Nuvini Group’s management team has spent, and will likely continue to spend, significant time, attention and resources in monitoring the COVID-19 pandemic and associated global economic uncertainty and managing its effects on the Nuvini Group’s businesses and workforce.

The extent to which the COVID-19 outbreak impacts the Nuvini Group’s businesses, financial condition, results of operations and prospects in the longer term will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration, spread and severity of the outbreak, the actions taken to contain COVID-19 or treat its impact, how quickly and to what extent normal economic and operating conditions broadly resume, and the extent of the impact of these factors on the Nuvini Group’s employees, suppliers, partners and clients.

Public health threats or outbreaks of communicable diseases could have an adverse effect on the Nuvini Group operations and financial results.

The Nuvini Group may face risks related to public health threats or outbreaks of communicable diseases. The outbreak of communicable diseases could result in a widespread health crisis that could adversely affect the

 

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global economy and the Nuvini Group’s ability and the Nuvini Acquired Companies’ business partners’ ability to conduct business in Brazil for an indefinite period of time. For example, the recent outbreak of COVID-19 has spread across the globe, and is already resulting in a global or regional economic slowdown, a shutdown of production and supply chains and a disruption of international trade, all of which may negatively impact the Brazilian economy. Disruptions in public and private infrastructure, including communications and financial, could materially and adversely disrupt the Nuvini Acquired Companies’ normal business operations.

The COVID-19 pandemic is expected to have a continuous negative impact on global, regional and national economies and to disrupt supply chains and otherwise reduce international trade and business activity. Reflecting this, the COVID-19 pandemic has already caused, since early 2020, the levels of equity and other financial markets to decline sharply and to become volatile, and such effects may continue or worsen in the future. This may in turn further impact the stock market in Brazil. The current COVID-19 pandemic and its potential impact on the global economy may affect the Nuvini Group’s ability to meet its financial targets. While the Nuvini Group cannot predict the future impacts on its business or if it will be able to achieve its financial targets, the Nuvini Group would be materially adversely affected by a protracted downturn in local, regional or global economic conditions.

The Nuvini Acquired Companies may not be able to renew or maintain their data hosting agreements with their suppliers.

Amazon Web Services (“AWS”) and Google Cloud Platform (“GCP”) are the Nuvini Acquired Companies’ primary suppliers for data hosting, and may terminate their hosting agreements with the Nuvini Acquired Companies at any time without cause and without a prior notice (in the case of AWS, subject to a prior notice of 30 days’ prior notice where Nuvini fails to use the services) . Any such termination would be disruptive to the Nuvini Acquired Companies’ businesses, and it may not be possible to secure alternative data hosting suppliers on similar terms or with the same quality of solutions and services as those being provided by the Nuvini Acquired Companies’ current suppliers. Accordingly, if the Nuvini Acquired Companies lose their current arrangements with their main suppliers, the Nuvini Acquired Companies’ third-party software clients may engage another SaaS solutions company to fulfill their needs, and, in any such case, terminate their relationships with the Nuvini Acquired Companies. In this case, Nuvini may experience a material adverse effect on Nuvini S.A.’s cash position, revenue and, by extension, Nuvini’s results of operations and financial position.

The Nuvini Acquired Companies and their suppliers could suffer disruptions, outages, defects and other performance and quality problems with the Nuvini Acquired Companies’ solutions or with the public cloud and internet infrastructure on which their solutions rely. If the availability of the Nuvini Acquired Companies’ proprietary SaaS solutions does not meet the Nuvini Acquired Companies’ service-level commitments to their clients, Nuvini S.A.’s current and future revenue may be negatively impacted.

The Nuvini Acquired Companies’ businesses depend on the SaaS solutions that they offer to be available without disruption.

The Nuvini Acquired Companies and their suppliers have experienced, and may in the future experience, disruptions, outages, defects and other performance and quality issues with these data solutions. The Nuvini Acquired Companies have also experienced, and may in the future experience, disruptions, outages, defects and other performance and quality issues with the public cloud and internet infrastructure on which the Nuvini Acquired Companies’ proprietary data platform relies. These issues may arise from several factors, including introductions of new functionality, vulnerabilities and defects in proprietary and open source software, human error or misconduct, natural disasters (such as tornadoes, earthquakes or fires), capacity constraints, design limitations, denial-of-service attacks or other security-related incidents. Moreover, the Nuvini Acquired Companies typically commit to maintaining a minimum service-level of availability for the Nuvini Acquired Companies’ clients that use their proprietary SaaS solutions. If the Nuvini Acquired Companies are unable to meet these commitments, the Nuvini Acquired Companies may be obligated to provide clients with additional capacity, which could significantly affect Nuvini S.A.’s revenue.

 

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A material portion of the Nuvini Acquired Companies’ businesses is provided through software hosting services, which are sometimes hosted from and use computing infrastructure provided by third parties, including AWS and GCP. These hosting services depend on the uninterrupted operation of data centers and the ability to protect computer equipment and information stored in these data centers against damage that may be caused by natural disaster, fire, power loss, telecommunications or Internet failure, acts of terrorism, unauthorized intrusion, computer viruses and other similar damaging events.

If any of the Nuvini Acquired Companies’ data centers become inoperable for an extended period, such Nuvini Acquired Company might be unable to fulfill its contractual commitments. Although the Nuvini Acquired Companies take what they believe to be reasonable precautions against such occurrences, the Nuvini Group can give no assurance that damaging events such as these will not result in a prolonged interruption of the Nuvini Acquired Companies’ services, which could result in client dissatisfaction, loss of revenue to Nuvini S.A. and damage to the Nuvini Group’s businesses.

Furthermore, third-party hosting service providers have no obligation to renew their agreements with any of the Nuvini Acquired Companies on commercially reasonable terms or at all. If the Nuvini Acquired Companies are unable to renew these agreements on commercially reasonable terms, the Nuvini Acquired Companies may be required to transition to new providers and incur significant costs and possible service interruption in doing so. In addition, such service providers could decide to close their facilities or change or suspend their service offerings without adequate notice to the Nuvini Group. Moreover, any financial difficulties, such as bankruptcy, faced by such service providers may have negative effects on the Nuvini Group’s businesses, the nature and extent of which are difficult to predict. Because the Nuvini Acquired Companies cannot easily switch third-party hosting service providers, any disruption with respect to the current service providers would impact their operations and their business could be adversely impacted. Problems faced by the Nuvini Acquired Companies’ hosting service providers could adversely affect the experience of their clients. For example, AWS has experienced significant service outages in the past and may do so again in the future. In addition, the ongoing COVID-19 pandemic has disrupted and may continue to disrupt the supply chain of hardware needed to maintain these third-party systems or to run the Nuvini Acquired Companies’ businesses.

Each Nuvini Acquired Company depends on third parties that it engages or collaborates with for certain projects, deliverables and/or financial transaction processes. If these parties fail to satisfy their obligations to the Nuvini Acquired Companies or the Nuvini Acquired Companies fail to maintain these relationships, Nuvini’s operating results and business prospects could be adversely affected.

To satisfy the Nuvini Acquired Companies’ obligations under client contracts, each Nuvini Acquired Company often engages third parties to provide certain deliverables or fulfill certain requirements. The Nuvini Acquired Companies may also use third parties to ensure that their services and solutions integrate with the software, systems or infrastructure requirements of other vendors and service providers. The Nuvini Acquired Companies’ ability to serve their clients and deliver their solutions in a timely manner depends on the Nuvini Acquired Companies’ ability to retain and maintain relationships with third-party vendors and service providers and the ability of these third parties to meet their obligations in a timely manner, as well as on the Nuvini Acquired Companies’ effective oversight of their performance. If any third party fails to perform on a timely basis the services it agreed to render, the Nuvini Acquired Companies’ ability to fulfill their obligations may be jeopardized. Third-party performance deficiencies could result in breaches of the Nuvini Acquired Companies’ obligations with respect to, or the termination for default of, one or more of their client contracts. A breach or termination for default could expose the Nuvini Group to liability for damages and have an adverse effect on its business prospects, results of operations, cash flows and financial condition, and the Nuvini Acquired Companies’ ability to compete for future contracts and orders. Moreover, a global economic slowdown, the COVID-19 pandemic or similar circumstances could also adversely affect the businesses of the Nuvini Acquired Companies’ third-party providers, hindering their ability to provide the services they were engaged for. The Nuvini Acquired Companies’ agreements with third parties typically are non-exclusive and do not prohibit them from working with the Nuvini Group’s competitors. If the Nuvini Acquired Companies are unsuccessful in

 

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establishing or maintaining their relationships with these third parties, the Nuvini Group’s ability to compete in the marketplace or to grow its revenues could be impaired and the Nuvini Group’s business, operating results and financial condition could be adversely affected.

If the Nuvini Group loses key members of its management teams or is unable to attract and retain the executives and employees it needs to support its operations and growth (especially skilled software engineers and developers), the Nuvini Group’s business and future growth prospects may be harmed.

The Nuvini Group’s success depends in part on the continued services of Nuvini S.A.’s co-founder Pierre Schurmann, as well as the Nuvini Group’s other executive officers and key employees in the areas of research and development (particularly, skilled software engineers and developers), sales and marketing.

From time to time, there may be changes in the Nuvini Group’s executive, management and technical teams or other key employees resulting from the hiring or departure of these personnel. The Nuvini Group’s executives, officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with the Nuvini Group at any time. The loss of one or more of the Nuvini Group’s executives, officers, or the failure by its executive team to effectively work with its employees and lead the Nuvini Group, including as a result of remote working conditions, could harm the Nuvini Group’s business.

In addition, to execute the Nuvini Group’s growth plan, it must attract and retain highly qualified professionals. There is a high demand for qualified professionals in the market, especially for engineers experienced in designing and developing SaaS solutions, experienced sales professionals and expert client support personnel. The Nuvini Acquired Companies are also dependent on the continued service of their existing software engineers because of the sophistication of the Nuvini Acquired Companies’ proprietary SaaS solutions.

In the past, the Nuvini Group has experienced, and expects to continue experiencing, difficulty in hiring and retaining employees with appropriate qualifications, particularly skilled software engineers and developers. Many companies with greater resources compete with the Nuvini Group for these experienced personnel . If the Nuvini Group hires employees from competitors or other companies, their former employers may attempt to assert that these employees or the Nuvini Group has breached their legal obligations, resulting in a diversion of the Nuvini Group’s time and resources. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Nuvini S.A.’s equity awards declines, experiences significant volatility or increases such that prospective employees believe there is limited upside to the value of Nuvini S.A.’s equity awards, or if its existing employees receive significant proceeds from liquidating their previously vested equity awards, it may adversely affect the Nuvini Group’s ability to recruit and retain key employees.

The Nuvini Group also believes its culture has been a key contributor to its success to date and that the critical nature of the Nuvini Acquired Companies’ SaaS solutions promotes a sense of greater purpose and fulfillment among Nuvini Group’s employees. As the Nuvini Group’s workforce becomes more distributed around the world, the Nuvini Group may not be able to maintain important aspects of its culture. Any failure to preserve the Nuvini Group’s culture could negatively affect its ability to retain and recruit personnel. If the Nuvini Group fails to attract new personnel or fails to retain and motivate the Nuvini Group’s current personnel, its business and future growth prospects would be harmed.

Increases in salaries, wages and other compensation could prevent the Nuvini Group from sustaining the Nuvini Group’s competitive advantage and increase its costs.

Wages for technology professionals in emerging countries where the Nuvini Group has significant operations are lower than comparable wages in more developed countries. However, wages in the technology industry in these countries may increase at a faster rate than in the past, which may make the Nuvini Group less competitive unless it enhances the efficiency and productivity of its employees. If the Nuvini Group expands operations and hires technology professionals from more developed economies, it will incur higher costs associated with salaries, wages and other compensation, due to higher rates in those markets. In all countries

 

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where the Nuvini Group operates, wage inflation, regardless if driven by competition for talent or in the ordinary course, may also increase its cost of doing business and reduce its profitability if it fails to pass those costs on to its clients or to charge premium prices when justified by market demand.

If the Nuvini Group is unable to maintain its corporate culture while the Nuvini Group grows, it could lose the innovation, teamwork, passion and focus embedded in its corporate culture that it believes contributes to its success, and its businesses may be harmed.

The Nuvini Group believes its corporate culture has been a critical component to its success. The Nuvini Group has invested substantial time and resources in building its teams. As the Nuvini Group grows and develops its infrastructure as a public company, the Nuvini Group’s operations may become increasingly complex. The Nuvini Group may find it difficult to maintain important aspects of its corporate culture such as innovation, teamwork, passion and focus. In addition, the Nuvini Group believes that any potential transition to a fully or predominantly remote work environment in the aftermath of the COVID-19 pandemic may also present significant challenges to maintaining Nuvini Group’s corporate culture, including employee engagement and productivity. Any failure to preserve the Nuvini Group’s culture could negatively affect its future success, including New Nuvini’s ability to retain and recruit personnel, and to effectively focus on and pursue its corporate objectives.

Risks Related to Software Market

Demand for the Nuvini Acquired Companies’ SaaS solutions may fluctuate, which may make it difficult for the Nuvini Group to manage its businesses efficiently and may reduce its profitability and market share in the future.

The Nuvini Group depends upon the capital spending budgets of the Nuvini Acquired Companies’ clients. World and regional economic conditions have, in the past, adversely affected the Nuvini Acquired Companies’ licensing and support revenue. If economic or other conditions reduce the Nuvini Acquired Companies’ clients’ capital spending levels, the Nuvini Group’s businesses, results of operations and financial condition may be adversely affected. In addition, the purchase and implementation of the Nuvini Acquired Companies’ SaaS solutions can constitute a major portion of the Nuvini Acquired Companies’ clients’ overall technology budget, and the amount clients are willing to invest in acquiring and implementing such SaaS solutions has tended to vary in response to economic, financial or other business conditions.

The loss of the Nuvini Acquired Companies’ rights to use software currently licensed to them by third parties could increase Nuvini’s operating expenses by forcing Nuvini to seek alternative technologies and adversely affect Nuvini’s ability to compete.

The Nuvini Acquired Companies license certain technologies used in their products from third parties, generally on a non-exclusive basis. The termination of any of these licenses, or the failure of the licensors to adequately maintain or update their products, could delay the Nuvini Acquired Companies’ ability to deliver their products while the Nuvini Acquired Companies seek to implement alternative technology offered by other sources and require significant unplanned investments on their part. In addition, alternative technology may not be available on commercially reasonable terms. In the future, it may be necessary or desirable to obtain other third-party technology licenses relating to one or more of the Nuvini Acquired Companies’ products or relating to current or future technologies to enhance the Nuvini Acquired Companies’ product offerings. There is a risk that the Nuvini Acquired Companies will not be able to obtain licensing rights to the needed technology on commercially reasonable terms, if at all.

Some of the markets for the Nuvini Acquired Companies’ SaaS solutions are characterized by frequent technological advances, and the Nuvini Acquired Companies must continually improve their software products to remain competitive.

Frequent technological change and new product introductions and enhancements characterize the software industry in general. The Nuvini Acquired Companies’ current and potential clients increasingly require greater

 

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levels of functionality and more sophisticated product offerings. In addition, the life cycles of many of the Nuvini Acquired Companies’ software products are difficult to estimate. While the Nuvini Acquired Companies believe some of their software products may be nearing the end of their product life cycles, the Nuvini Acquired Companies cannot estimate the decline in demand from the Nuvini Acquired Companies’ clients of maintenance related to these software products. Accordingly, Nuvini believes that its future success depends upon the Nuvini Acquired Companies’ ability to enhance current software products, to develop and to introduce new products offering enhanced performance and functionality at competitive prices in a timely manner, and on the Nuvini Acquired Companies’ ability to enable their software products to work in conjunction with other products from other suppliers that their clients may utilize. The Nuvini Acquired Companies’ failure to develop and to introduce or to enhance products in a timely manner could have a material adverse effect on the Nuvini Acquired Companies’ businesses, results of operations and financial condition.

The Nuvini Acquired Companies may be unable to respond on a timely basis to the changing needs of the Nuvini Acquired Companies’ client bases and the new applications the Nuvini Acquired Companies design for their clients may prove to be ineffective. Nuvini Acquired Companies’ ability to compete successfully will depend in large measure on the Nuvini Acquired Companies’ ability to be among the first to market with effective new products or services, to maintain a technically competent research and development staff, and to adapt to technological changes and advances in the industry. The Nuvini Acquired Companies’ software products must remain compatible with evolving computer hardware and software platforms and operating environments. Nuvini cannot assure you that the Nuvini Acquired Companies will be successful in these efforts. In addition, competitive or technological developments and new regulatory requirements may require the Nuvini Acquired Companies to make substantial, unanticipated investments in new products and technologies, and the Nuvini Acquired Companies may not have sufficient resources to make these investments. If the Nuvini Acquired Companies were required to expend substantial resources to respond to specific technological or product changes, their operating results would be adversely affected.

Software product development delays could harm the Nuvini Group’s competitive position and reduce Nuvini S.A.’s revenues.

If the Nuvini Acquired Companies experience significant delays in releasing new or enhanced software products, the Nuvini Group’s position in the market could be harmed and Nuvini S.A.’s revenue could be substantially reduced, which would adversely affect its operating results. The Nuvini Acquired Companies have experienced software product development delays in the past and may experience delays in the future. In particular, the Nuvini Acquired Companies may experience software product development delays associated with the integration of recently acquired software products and technologies. Delays may occur for many reasons, including the inability to hire a sufficient number of developers, discover bugs and errors or conform the Nuvini Acquired Companies’ current or future software products to client and industry requirements.

The Nuvini Acquired Companies’ software products may contain errors or defects that could result in lost revenue, delayed or limited market acceptance or product liability claims with substantial litigation costs.

As a result of their complexity, software products may contain undetected errors or failures when introduced to the market. Despite testing performed by the Nuvini Acquired Companies and testing and use by current and potential clients, defects and errors may be found in new software products after commencement of commercial shipments or the offering of a network service using these software products. In these circumstances, the Nuvini Acquired Companies may be unable to successfully correct the errors in a timely manner or at all. The occurrence of errors and failures in the Nuvini Acquired Companies’ software products could result in negative publicity and a loss of, or delay in, market acceptance of those software products. Such publicity could reduce revenue from new licenses and lead to increased client attrition. Alleviating these errors and failures could require significant expenditure of capital and other resources by the Nuvini Acquired Companies. The consequences of these errors and failures could have a material adverse effect on New Nuvini’s businesses, results of operations and financial condition.

 

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Because many of the Nuvini Acquired Companies’ clients use their software products for critical business applications, any errors, defects or other performance issues could result in financial or other damage to the Nuvini Acquired Companies’ clients. The Nuvini Acquired Companies’ clients or other third parties could claim damages from the Nuvini Acquired Companies in the event of actual or alleged failures of their software solutions. The Nuvini Acquired Companies in the past have been, and may in the future continue to be, subject to these kinds of claims. Although the Nuvini Acquired Companies’ license agreements with clients typically contain provisions designed to limit the Nuvini Acquired Companies’ exposure to potential claims, as well as any liabilities arising from these claims, these provisions may not effectively protect against such claims, liability and associated costs. Accordingly, any such claim could have a material adverse effect on the Nuvini Acquired Companies’ businesses, results of operations and financial condition. In addition, defending against this kind of claim, regardless of its merits, or otherwise satisfying affected clients, could entail substantial expense and require the devotion of significant time and attention by key management personnel.

The Nuvini Acquired Companies face competition from other software solutions providers, which may reduce their market share or limit the prices they can charge for their software solutions.

Given that each of the Nuvini Acquired Companies serve specific vertical markets, the Nuvini Acquired Companies face competition from vertical market competitors, specifically from small, emerging software companies. As a result, in certain market segments, competition can be intense, and significant pricing pressure may exist. To maintain and improve the Nuvini Acquired Companies’ competitive position, they must continue to develop and to introduce, in a timely and cost-effective manner, new software solutions. In addition, the Nuvini Acquired Companies expect that a substantial portion of their revenues will continue to be derived from SaaS licensing to the Nuvini Acquired Companies’ clients. Although the Nuvini Acquired Companies have experienced relatively stable and predictable attrition relating to these arrangements, increased competition could reduce the need for the Nuvini Acquired Companies’ maintenance services, as clients could decide to stop using the Nuvini Acquired Companies’ SaaS solutions or maintenance services and, instead, avail of the software applications or services of competitors.

Nuvini anticipates additional competition as other established and emerging companies enter the software market and introduce new products and technologies. For example, companies that historically have not competed in one of the Nuvini Acquired Companies’ market segments could introduce new applications based on newer product architectures that could provide for a functionality similar to or better than what the Nuvini Acquired Companies’ software products provide. In addition, existing and potential competitors may enter into strategic acquisitions or arrangements among themselves or with third parties to enhance their products in better addressing the needs of the Nuvini Acquired Companies’ prospective clients. Accordingly, it is possible that new competitors or alliances among existing and/or new competitors may emerge. This competition could result in price reductions, fewer client orders, reduced gross margins and loss of market share for the Nuvini Acquired Companies’ software products.

Some of the Nuvini Acquired Companies’ existing and potential competitors have greater financial, technical, marketing and other resources, better name recognition and larger client base compared to what the Nuvini Acquired Companies have. Some Nuvini Acquired Companies’ competitors offer products that are based on more advanced product architectures and services with performance advantages. The Nuvini Acquired Companies’ competitors may be able to respond more quickly to new or emerging technologies and changes in client requirements or may devote greater resources to the development, promotion and sale of their products. Many competitive factors affect the market for the Nuvini Acquired Companies’ products and the Nuvini Acquired Companies’ ability to generate new license revenues. These competitive factors include vendor and product reputation; industry specific expertise; cost of ownership; ease and speed of implementation; client support; product architecture, quality, price and performance; product performance attributes, such as flexibility, scalability, compatibility, functionality and ease of use; and vendor financial stability.

 

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If the Nuvini Acquired Companies, their suppliers or third-party service providers experience an actual or perceived security breach or unauthorized parties otherwise obtain access to their clients’ data or their data, their data solutions and services may be perceived as not being secure, the Nuvini Group’s reputation may be harmed, demand for the Nuvini Acquired Companies’ data solutions and services may be reduced and Nuvini may incur significant liabilities.

The Nuvini Group is heavily dependent upon information technology systems, infrastructure and data to operate its businesses and solutions. The Nuvini Acquired Companies’ proprietary data platform offers, processes, stores and transmits the Nuvini Acquired Companies’ clients’ and partners’ proprietary, confidential and sensitive data, such as personal, health and financial information. The Nuvini Acquired Companies also rely on third-party information technology systems in connection with the Nuvini Acquired Companies’ operations. For example, some of the Nuvini Acquired Companies’ proprietary data platforms are built to be available on the infrastructure of third-party public cloud providers, such as AWS and GCP. The Nuvini Acquired Companies also use third-party service providers and sub-processors to help them deliver services to Nuvini Acquired Companies’ clients and their end-users. These vendors may store or process proprietary, confidential and sensitive data such as personal information, protected health information or other information of the Nuvini Acquired Companies’ employees, their partners, their clients or their clients’ end-users. The Nuvini Acquired Companies collect such information from individuals located both in Brazil and abroad and may store or process such information outside the country in which it was collected. While the Nuvini Acquired Companies, their suppliers, their third-party service providers and their sub-processors have implemented or are contractually obligated to implement security measures designed to protect against security breaches, these measures could fail or may be insufficient, resulting in the unauthorized disclosure, access, acquisition, modification, misuse, destruction or loss of the Nuvini Acquired Companies, their clients’ data. Any security breach of the Nuvini Acquired Companies’ proprietary data platform, their operational systems, physical facilities or the systems of their third-party service providers or sub-processors or the perception that one has occurred, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention and other liabilities and damage to the Nuvini Group’s business. Even though the Nuvini Acquired Companies may not control the security measures of their suppliers, third-party service providers or sub-processors, the Nuvini Acquired Companies may be responsible for any breach of such measures.

Cyber-attacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware viruses and social engineering (including phishing) are prevalent in the Nuvini Acquired Companies’ industry and the Nuvini Acquired Companies’ clients’ industries and have generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition to such attacks, the Nuvini Acquired Companies and the Nuvini Acquired Companies’ third-party vendors may experience unavailable systems, unauthorized accidental or unlawful access, acquisition or disclosure of information due to employee error, theft or misuse, sophisticated nation-state and nation-state supported actors and advanced persistent threat intrusions. The techniques used to sabotage or to obtain unauthorized access to the Nuvini Acquired Companies’ proprietary data platform, systems, networks or physical facilities in which data is stored or through which data is transmitted change frequently, and the Nuvini Acquired Companies may be unable to implement adequate preventative measures or stop security breaches prior to or while they are occurring. The recovery systems, security protocols, network protection mechanisms and other security measures that the Nuvini Acquired Companies have integrated into their proprietary data platform, systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, may not be adequate to prevent or detect service interruption, system failure or data loss. The Nuvini Acquired Companies may in the future become, the target of cyber-attacks by third parties seeking unauthorized access to them or their clients’ or their partners’ data or to disrupt the Nuvini Acquired Companies’ operations or ability to provide their services. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, systems, networks or physical facilities utilized by the Nuvini Acquired Companies’ suppliers or third-party processors. The Nuvini Acquired Companies may not be able to anticipate all types of security threats, and the Nuvini Acquired Companies may not be able to implement preventive measures effective against all such security

 

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threats. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups, such as external service providers and hostile foreign governments or agencies. In addition, the Nuvini Acquired Companies’ or their third-party vendors’ systems may be vulnerable to breakdown or other interruptions from system malfunctions, natural disasters, terrorism, war and telecommunication and electrical failures.

The Nuvini Acquired Companies have contractual and other legal obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. In addition, Nuvini’s agreements with certain clients and partners may require the Nuvini Acquired Companies to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, may cause the Nuvini Acquired Companies’ clients or partners to lose confidence in the effectiveness of the Nuvini Acquired Companies’ security measures, divert management’s attention, lead to governmental investigations and require the Nuvini Acquired Companies to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach. Any security breach or effort to mitigate security vulnerabilities could result in unexpected interruptions, delays, cessation of service and other harm to the Nuvini Acquired Companies’ businesses and their competitive positions.

A security breach of the Nuvini Acquired Companies or their third-party vendor’s systems may cause the Nuvini Acquired Companies to breach client contracts. The Nuvini Acquired Companies’ agreements with certain clients may require the Nuvini Acquired Companies to use industry-standard or reasonable measures to safeguard proprietary, personal or confidential information. A security breach of the Nuvini Acquired Companies or their third-party vendor’s systems could lead to claims by the Nuvini Acquired Companies’ clients, their end-users or other relevant stakeholders that the Nuvini Acquired Companies have failed to comply with such contractual or other legal obligations. As a result, the Nuvini Acquired Companies could be subject to legal action (including the imposition of fines or penalties) and the Nuvini Acquired Companies’ clients could end their relationships with the Nuvini Acquired Companies. There can be no assurance that any limitations of liability in the Nuvini Acquired Companies’ contracts would be enforceable or adequate or would otherwise protect the Nuvini Acquired Companies from liabilities or damages.

Litigation resulting from security breaches may adversely affect Nuvini’s business. Unauthorized access to Nuvini’s proprietary data platform, systems, networks or physical facilities could result in litigation with the Nuvini Acquired Companies’ clients, their clients’ end-users or other relevant stakeholders. These proceedings could force the Nuvini Group to spend money in defense or settlement, divert management’s time and attention, increase Nuvini Acquired Companies’ costs of doing business, or adversely affect the Nuvini Acquired Companies’ reputation. The Nuvini Acquired Companies could be required to fundamentally change their business activities and practices or modify the Nuvini Acquired Companies’ proprietary data platform capabilities in response to such litigation, which could be costly and have an adverse effect on the Nuvini Acquired Companies’ businesses. If a security breach were to occur and the confidentiality, integrity or availability of the Nuvini Acquired Companies’ data or the data of the Nuvini Acquired Companies’ partners, their clients or their clients’ end-users was disrupted, the Nuvini Acquired Companies could incur significant liability, or their proprietary data platform, systems or networks may be perceived as less desirable, which could negatively affect New Nuvini’s business and damage its reputation.

If the Nuvini Acquired Companies fail to detect or remediate a security breach in a timely manner, or a breach otherwise affects a large amount of data of one or more clients or partners, or if the Nuvini Acquired Companies suffer a cyber-attack that impacts the Nuvini Acquired Companies’ ability to operate their proprietary data platform, they may suffer material damage to its reputation, business, financial condition and results of operations. Further, the policy coverage of the Nuvini Groups’ current or any future cybersecurity insurance may be insufficient. Accordingly, the successful assertion of one or more large claims against the Nuvini Group could have an adverse effect on its businesses. The Nuvini Acquired Companies’ risks are likely to increase as New Nuvini continues to expand Nuvini Acquired Companies’ proprietary data platforms and geographic footprint, grow the Nuvini Acquired Companies’ client and partner base and process, store and transmit increasingly large amounts of data.

 

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In addition, the Nuvini Group’s workforce is generally working remotely and may continue to do so following the COVID-19 pandemic, which could increase the Nuvini Group’s cyber security risk, create data accessibility concerns and make the Nuvini Group more susceptible to security breaches or business disruptions. Moreover, the Nuvini Acquired Companies’ clients and the third-party suppliers on which the Nuvini Acquired Companies rely may be vulnerable to a heightened risk of cyber-attacks as a result of the military conflict between Russia and Ukraine, the impact of sanctions against Russia and the potential for retaliatory acts from Russia, given that nation-state actors may engage in cyber-attacks for geopolitical reasons and in conjunction with military conflicts and defense activities. For example, there have been publicized threats to increase cyber-attack activity against the critical infrastructure of any nation or organization that retaliates against Russia for its invasion of Ukraine. While the Nuvini Group maintains and continues to improve its security measures and reinforce the Nuvini Group’s internal control in anticipation of becoming a public company, the Nuvini Group may be unable to adequately anticipate security threats or to implement adequate preventative measures, in part, because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target. Other than reinforcement of the Nuvini Group’s cybersecurity policies in anticipation of being a public company, the Nuvini Group has not taken any other specific actions to mitigate the increased risk of cyber-attacks resulting from the ongoing conflict between Russia and Ukraine and do not immediately intend to implement any such actions given the Nuvini Group’s current assessment of risk and the current geographic scope of Nuvini Group’s operations. Any of the foregoing could have a material adverse effect on the New Nuvini’s business, financial condition, results of operations or prospects.

Risks Related to the Nuvini Group’s Technology, Intellectual Property and Infrastructure

The Nuvini Group relies on information and technology for many of its business operations which could fail and cause disruption to its business operations.

The Nuvini Group’s business operations largely depend on information technology networks and systems to securely transmit, process and store electronic information and to communicate internally among the Nuvini Group’s various units and with clients and vendors. A shutdown of, or inability to access, one or more of the Nuvini Group’s facilities arising from a power outage or a failure of one or more of the Nuvini Group’s information technology, telecommunications or other systems could significantly impair the Nuvini Group’s ability to perform critical functions on a timely basis. The Nuvini Group relies on third party cloud platforms, such as AWB and GCP to host enterprise and client systems, and any disruptions of these services could impact the Nuvini Group’s business operations and the Nuvini Acquired Companies’ ability to service clients. Cyber-attacks, configuration or human error and/or other external hazards could result in the misappropriation of assets or sensitive information, corruption of data or operational disruption.

Global cybersecurity threats and attacks to networks, systems and endpoints can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Nuvini Group, its businesses, its clients and/or its third-party service providers, including, but not limited to, cloud providers and providers of network management services. These may include such things as unauthorized access, phishing attacks, account takeovers, denial of service, introduction of malware or ransomware and other disruptive problems caused by threat actors. Moreover, as more of the Nuvini Group’s employees work remotely due to the COVID-19 pandemic or otherwise, its employees are increasingly targeted by phishing attacks and endpoints may be more susceptible to threat exposures.

The Nuvini Acquired Companies’ clients are increasingly requiring cybersecurity protections and mandating cybersecurity standards in its products and services, and the Nuvini Group may incur additional costs to comply with such demands. The Nuvini Group has experienced, and expects to continue to experience, these types of threats and incidents. The Nuvini Group seeks to deploy measures to deter, prevent, detect, respond to and mitigate these threats, including identity and access controls, data protection, vulnerability assessments, product software designs which Nuvini believes are less susceptible to cyber-attacks, continuous monitoring of the

 

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Nuvini Group’s networks, endpoints and systems and maintenance of backup and recovery capabilities. Despite these efforts, the Nuvini Group can make no assurance that the Nuvini Group will be able to detect, prevent, timely and adequately detect, prevent and address or mitigate the negative effects of cyberattacks or other security compromises, and such cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (the Nuvini Group’s own or that of third parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include financial loss, reputational damage, damage to the Nuvini Group’s IT systems, litigation with third parties, theft of intellectual property, fines, decrease in the value of the Nuvini Group’s investment in research and development, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect the Nuvini Group’s competitiveness and results of operations. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of insurance coverage, could materially harm the Nuvini Group’s operating results and financial condition.

If the Nuvini Group is unable to adapt to rapidly changing technologies, methodologies and evolving industry standards, the Nuvini Acquired Companies may lose clients and the Nuvini Group’s business could be materially adversely affected.

Rapidly changing technologies, methodologies and evolving industry standards are inherent in the market for the Nuvini Group’s data solutions and services. The Nuvini Group’s ability to anticipate developments in the Nuvini Group’s industries, enhance the Nuvini Group’s existing data solutions and services, develop and introduce new data solutions, services or tools, provide enhancements and new features for the Nuvini Group’s data solutions and tools, and keep pace with changes and developments are critical to meeting changing client needs. Developing solutions for the Nuvini Acquired Companies’ clients are extremely complex and could become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems, technologies and methodologies. The Nuvini Group’s ability to keep pace with, anticipate or respond to changes and developments is subject to a number of risks, including that:

 

   

the Nuvini Group may not be able to develop new, or update existing, services, applications, tools and software quickly or inexpensively enough to meet the Nuvini Acquired Companies’ clients’ needs;

 

   

the Nuvini Group may find it difficult or costly in making existing software and tools to work effectively and securely over the internet or with new or changed operating systems;

 

   

the Nuvini Group may find it challenging to develop new, or update existing, software, services and tools to keep pace with evolving industry standards, methodologies and regulatory developments in the industries where the Nuvini Acquired Companies’ clients operate at a pace and cost that is acceptable to the Nuvini Acquired Companies’ clients; and

 

   

the Nuvini Group may find it difficult to maintain high quality levels of performance with new technologies and methodologies.

The Nuvini Group may not be successful in anticipating or responding to these developments in a timely manner, or if the Nuvini Group responds, the data solutions, services, tools, technologies or methodologies the Nuvini Group develops or implements may not be successful in the market. The Nuvini Group’s failure to enhance its existing data solutions and services and to develop and introduce new data solutions and services to promptly address the needs of the Nuvini Acquired Companies’ clients could have a material adverse effect on the Nuvini Group’s businesses.

Material portions of the Nuvini Group’s businesses require the Internet infrastructure to be reliable.

The Nuvini Group’s future success continues to depend in part on the use of the Internet as a means to access public information and perform transactions electronically, including, for example, electronic filing of court documents. This requires ongoing maintenance of the Internet infrastructure, especially to prevent interruptions in service, as well as additional development of that infrastructure. It also requires a reliable

 

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network backbone with the necessary speed, data capacity, security and timely development of complementary products for providing reliable Internet access and services. If this infrastructure fails to be sufficiently developed or be adequately maintained, Nuvini’s business would be harmed because clients may not be able to access the Nuvini Group’s services.

The Nuvini Group must timely respond to technological changes to be competitive.

The market for the Nuvini Acquired Companies’ products is characterized by technological change, evolving industry standards in software technology, changes in client requirements and frequent new product introductions and enhancements. The introduction of products embodying new technologies and the emergence of new industry standards can render existing products obsolete and unmarketable. As a result, the Nuvini Group’s future success will depend, in part, upon the Nuvini Group’s ability to enhance existing products and develop and introduce new products that keep pace with technological developments, satisfy increasingly sophisticated client requirements, and achieve market acceptance. The Nuvini Group cannot assure you that it will successfully identify new product opportunities and develop and bring new products to market in a timely and cost-effective manner. The products, capabilities or technologies developed by others could also render the Nuvini Acquired Companies’ products or technologies obsolete or noncompetitive. The Nuvini Group’s businesses may be adversely affected if the Nuvini Group is unable to develop or acquire new software products or develop enhancements to existing products on a timely and cost-effective basis, or if such new products or enhancements do not achieve market acceptance.

The Nuvini Group relies on third-party and open source software for its data solutions. The Nuvini Group’s inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect the Nuvini Group’s businesses, results of operations and financial condition. In addition, the Nuvini Group’s use of open source software could negatively affect its ability to sell the Nuvini Group’s data solutions and subject the Nuvini Group to possible litigation.

Some of the Nuvini Group’s offerings include software or other intellectual property licensed from third parties. It may be necessary in the future to renew the Nuvini Group’s license agreements relating to various aspects of the Nuvini Group’s offerings or to seek new licenses for existing or new offerings. Necessary licenses may not be available on acceptable terms that allow the Nuvini Acquired Companies’ data solutions offerings to remain competitive, or at all. In addition, a third party may assert that the Nuvini Group or the Nuvini Acquired Companies’ clients are in breach of the terms of a license, which could, among other things, give such third party the right to terminate a license with a Nuvini Acquired Company or seek damages from the Nuvini Group, or both. Termination by the licensor would cause the Nuvini Group to lose valuable rights and could prevent them from selling its products and services. The Nuvini Group’s inability to obtain certain licenses or other rights, or to obtain such licenses or rights on favorable terms, could result in delays in data solution releases until equivalent technology can be identified, licensed or developed, if at all, and integrated into the Nuvini Group’s proprietary data platform, which may have a material adverse effect on the Nuvini Group’s business, results of operations and financial condition. In addition, the Nuvini Group and the applicable the Nuvini Acquired Company may be subject to liability if third-party software that Nuvini Group’s license is found to infringe, misappropriate or otherwise violate intellectual property rights of others. Third parties may also allege that the Nuvini Group and/or the Nuvini Acquired Company is infringing, violating or otherwise misappropriating their intellectual property rights and that additional licenses are required for Nuvini Group’s use of its software or intellectual property, and the Nuvini Group may be unable to obtain such licenses on commercially reasonable terms or at all. The inclusion in the Nuvini Group’s offerings of software or other intellectual property licensed from third parties on a non-exclusive basis could also limit Nuvini Group’s ability to differentiate Nuvini Group’s offerings from those of the Nuvini Acquired Companies’ competitors. To the extent that Nuvini Group’s data solutions depend upon the successful operation of third-party software, any undetected errors or defects in or failures of, such third-party software could also impair the functionality of data solutions, delay new feature introductions, result in a failure of the Nuvini Group’s data solutions, and injure Nuvini Group’s reputations. Many third-party software providers attempt to impose limitations on their liability for such errors, defects or failures and if enforceable, the Nuvini Group may have additional liability to the Nuvini Acquired Companies’ clients that could harm the Nuvini Group’s reputation and increase the Nuvini Group’s operating costs.

 

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In addition, some of the Nuvini Group’s data solutions (including the Nuvini Acquired Companies’ proprietary data platforms) incorporate open source software, and the Nuvini Group expect to continue to incorporate open source software in the Nuvini Acquired Companies’ data solutions in the future. Open source software is generally freely accessible, usable and modifiable. Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on the Nuvini Group’s ability to commercialize Nuvini Group’s data solutions. Moreover, although the Nuvini Group has implemented policies to regulate the use and incorporation of open source software into its data solutions, Nuvini cannot be certain that the Nuvini Group has not incorporated open source software in their data solutions in a manner that is inconsistent with such policies. If the Nuvini Group fails to comply with open source licenses, they may be subject to certain requirements, including requirements that they offer their data solutions that incorporate the open source software for no cost, that discontinue their data solutions that incorporate the open source software, that they make available source code for modifications or derivative works the Nuvini Group creates, and that the Nuvini Group licenses such modifications or derivative works under the terms of applicable open source licenses. If an author or other third party that distributes such open source software were to allege that the Nuvini Group has not complied with the conditions of one or more of these licenses, that the Nuvini Group, and as a result, Nuvini, could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from generating revenue from clients using data solutions that contained the open source software and required to comply with onerous conditions or restrictions on these data solutions. In any of these events, the Nuvini Acquired Companies and their clients could be required to seek licenses from third parties in order to continue offering their data solutions and to re-engineer their data solutions or discontinue offering their data solutions to clients in the event the Nuvini Group cannot re-engineer them on a timely basis. Any of the foregoing could require the Nuvini Group to devote additional research and development resources to re-engineer the Nuvini Group’s data solutions, could result in client dissatisfaction and may adversely affect the Nuvini Group’s businesses, results of operations and financial condition. Additionally, the use of certain open source software can lead to greater risks that the use of third-party commercial software, as open source licensors generally make their open source software available “as-is” and do not provide updates, warranties, support, indemnities or other contractual protections regarding infringement or other intellectual property-related claims or quality of the code.

If the Nuvini Group is unable to protect its proprietary technologies, the Nuvini Group’s competitive position could be adversely affected.

The Nuvini Group has relied, and expect to continue to rely, on a combination of copyright, trademark and trade-secret laws, confidentiality procedures, and contractual provisions to establish, maintain and protect the Nuvini Group’s proprietary rights. The Nuvini Group typically enters into agreements with its respective employees, consultants, the Nuvini Acquired Companies’ clients, partners and vendors in an effort to control ownership of the Nuvini Group’s intellectual property and access to and distribution of the Nuvini Group’s software, documentation and other proprietary information. Despite these precautions, there may be authors of some of the intellectual property that form parts of Nuvini Group’s software products who have not assigned their intellectual property rights to the Nuvini Group and who have not waived their moral rights with respect thereto. The steps the Nuvini Group takes may not prevent misappropriation of the Nuvini Group’s intellectual property, and the agreements the Nuvini Group enters into may not be enforceable. Despite the Nuvini Group’s efforts to protect its proprietary rights in its intellectual property and that of other businesses the Nuvini Group may have acquired, unauthorized parties may copy or otherwise obtain and use the Nuvini Group’s proprietary technology or obtain information the Nuvini Group regards as proprietary. Policing unauthorized use of the Nuvini Group’s technology, if required, may be difficult, time-consuming and costly. the Nuvini Group’s means of protecting its technology may be inadequate.

Third parties may apply for and obtain patent protection for products and services that are similar to the Nuvini Group’s software solutions. Despite the Nuvini Group’s efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Nuvini Group’s products or services or to obtain and to use information that the Nuvini Group regards as proprietary. Third parties may also independently develop

 

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similar or superior technology without violating the Nuvini Group’s proprietary rights. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent, as do the laws of Canada and the United States.

Trademark protection is an important factor in establishing product recognition. The Nuvini Group’s inability to protect its trademarks from infringement could result in injury to any goodwill which may be developed in its trademarks. Moreover, the Nuvini Group may be unable to use one or more of its trademarks because of successful third-party claims.

Claims of infringement are becoming increasingly common as the software industry develops and legal protections, including patents, are applied to software products. Although Nuvini believes that the Nuvini Group’s software products and technology do not infringe proprietary rights of others, litigation may be necessary to protect the Nuvini Group’s proprietary technology and third parties may assert infringement claims against the Nuvini Group with respect to their proprietary rights.

Any claims or litigation can be time consuming and expensive regardless of their merit. Infringement claims against the Nuvini Group could cause product release delays, require the Nuvini Group to redesign products or to enter into royalty or license agreements that may not be available on terms acceptable to the Nuvini Group, or at all.

Disclosure of personally identifiable information and/or other sensitive client data could result in liability and harm the Nuvini Group’s reputation.

The Nuvini Group stores and processes increasingly large amounts of personally identifiable information and other confidential information of their clients. The continued occurrence of high-profile data breaches provides evidence of an external environment increasingly hostile to information security. Despite the Nuvini Acquired Companies’ efforts to improve security controls, it is possible their security controls over personal data, training of employees on data security and other practices followed by the Nuvini Group may not prevent the improper disclosure of sensitive client data that the Nuvini Group stores and manages. Disclosure of personally identifiable information and/or other sensitive client data could result in regulatory sanctions and harm the Nuvini Group’s reputation.

In addition, the Nuvini Group’s systems may be violated, through unauthorized access, misappropriation, loss or modification of client information or the disruption of the Nuvini Group’s business operations. Nuvini may be unable to prevent acts of misconduct by members of the Nuvini Group’s management, employees or third parties that, in each case, may or may not derive a financial benefit from such misconduct.

Since the strategies used to obtain unauthorized access and sabotage systems constantly change and may not be known until they are used against the Nuvini Group or its third party service providers, the Nuvini Group may be unable to anticipate or adopt appropriate measures to protect against such attacks. If such security breaches are not prevented, the Nuvini Group could be subject to penalties under the Brazilian Data Protection Law (Lei Geral de Proteção de Dados, Brazilian Law No. 13,709/18), or LGPD, the Brazilian Internet Code (Brazilian Law No. 12,965/14); and the Brazilian Consumer Protection Code (Código de Defesa do Consumidor), or the Consumer Protection Code, including but not limited to warnings, the obligation to disclose the incident, deletion of personal data and fines of up to 2% of the Nuvini Group’s revenue or the revenue of the Nuvini Group in Brazil during the most recently concluded fiscal year, excluding taxes, up to an aggregate amount of R$50.0 million per infraction. The occurrence of any incident could damage the Nuvini Group’s reputation, resulting in substantial revenue loss due to lost sales and client dissatisfaction.

The Nuvini Group’s intellectual property rights may not protect its businesses or provide the Nuvini Group with a competitive advantage.

To be successful, the Nuvini Group must protect the Nuvini Acquired Companies’ technologies and brands in Brazil and other jurisdictions through trademarks, trade secrets, patents, copyrights, intellectual property assignments, contractual restrictions and other intellectual property rights and confidentiality procedures.

 

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The Nuvini Group has taken measures to protect its trade secrets and proprietary information/assets, but these measures may not be effective. Despite the Nuvini Group’s efforts to implement these protections, they may not protect the Nuvini Group’s businesses or provide it with a competitive advantage for a variety of reasons, including:

 

   

failure by the Nuvini Group to obtain, maintain and defend patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain the Nuvini Group’s trade secrets;

 

   

uncertainty in, and evolution of, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights;

 

   

potential invalidation or narrowing of the Nuvini Group’s intellectual property rights through administrative processes or litigation;

 

   

any inability by the Nuvini Group to detect infringement, misappropriation or other violations of the Nuvini Group’s intellectual property rights by third parties; and

 

   

other practical, resource or business limitations on Nuvini Group’s ability to enforce its rights.

Moreover, the laws of certain jurisdictions, including where the Nuvini Group has not applied for patent trademark protection nor other intellectual property registration, may not be as protective of intellectual property and proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property and proprietary rights may be inadequate. Therefore, in certain jurisdictions, the Nuvini Group may be unable to protect its proprietary technology adequately against unauthorized third party copying, infringement or use, which could adversely affect the Nuvini Group’s competitive position. Filing, prosecuting, maintaining and defending the Nuvini Group’s intellectual property in all or many countries throughout the world may be prohibitively expensive, and the Nuvini Group may choose to forgo such activities in some applicable jurisdictions. The lack of adequate legal protections of intellectual property or failure of legal remedies or related actions in jurisdictions outside of the United States or failure to obtain sufficient intellectual property protection could impede the Nuvini Group’s ability to market the Nuvini Group’s products, negatively affect the Nuvini Acquired Companies’ competitive position and could have a material adverse effect on the Nuvini Group’s businesses, financial condition, results of operations and prospects. As a result, the Nuvini Group may encounter significant problems in protecting and defending the Nuvini Group’s intellectual property or proprietary rights abroad.

The Nuvini Group enters into confidentiality and invention assignment agreements with its employees and consultants. These agreements generally require that all confidential information or intellectual property developed by the individual or made known to the individual by the Nuvini Group during the course of the individual’s relationship with the Nuvini Group be kept confidential and not disclosed to third parties. The Nuvini Group cannot assure you that these agreements will be effective in controlling access to, use of, and distribution of the Nuvini Group’s proprietary information or in effectively securing exclusive ownership of intellectual property developed by the Nuvini Group’s employees and consultants, and that all intellectual property developed by individuals during the course of employment be assigned to the Nuvini Group. For example, the Nuvini Group may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that the Nuvini Group regards as its own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and the Nuvini Group may be forced to bring claims against third parties, or defend claims that they may bring against the Nuvini Group, to determine the ownership of what the Nuvini Group regards as its intellectual property. Further, these agreements may not prevent the Nuvini Group’s competitors from independently developing technologies that are substantially equivalent or superior to data solutions and services.

Additionally, the Nuvini Group may also be exposed to material risks of theft or unauthorized reverse engineering of the Nuvini Acquired Companies’ proprietary information and other intellectual property, including technical data, data sets or other sensitive information. The Nuvini Group’s efforts to enforce the

 

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Nuvini Group’s intellectual property rights may be inadequate to obtain a significant commercial advantage from the intellectual property that the Nuvini Group develops, which could have a material adverse effect on the Nuvini Group’s business, financial condition and results of operations. Moreover, if the Nuvini Group is unable to prevent the disclosure of the Nuvini Group’s trade secrets to third parties, or if the Nuvini Acquired Companies’ competitors independently develop any of the Nuvini Group’s trade secrets, the Nuvini Group may not be able to establish or maintain a competitive advantage in the Nuvini Group’s market, which could seriously harm its businesses.

Litigation may be necessary to enforce the Nuvini Group’s intellectual property or proprietary rights, protect the Nuvini Group’s trade secrets, or determine the validity and scope of proprietary rights claimed by others. Any enforcement of the Nuvini Group’s intellectual property may provoke third parties to assert counterclaims against the Nuvini Acquired Companies, which could result in the loss of the Nuvini Group’s intellectual property rights. If the Nuvini Group is unable to prevent third parties from infringing, misappropriating or otherwise violating the Nuvini Group’s intellectual property or are required to incur substantial expenses defending the Nuvini Group’s intellectual property rights, the Nuvini Group’s business, financial condition and results of operations may be materially adversely affected.

Furthermore, the Nuvini Group’s success depends, in part, on the Nuvini Group’s ability to develop the Nuvini Group’s businesses without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of others. Claims by third parties that the Nuvini Group infringes, misappropriates or otherwise violates its intellectual property rights could harm Nuvini Group’s business. The Nuvini Group’s competitors and other third parties may hold or obtain intellectual property rights that could prevent, limit or interfere with the Nuvini Group’s ability to make, use, develop, sell or market its data solutions and services. From time to time, the Nuvini Group may be subject to claims of infringement, misappropriation or other violation of patents or other intellectual property rights and related litigation. If the Nuvini Group is found to infringe, misappropriate or otherwise violate any third-party intellectual property, the Nuvini Group may be required to obtain a license to such third-party intellectual property, make ongoing royalty or license payments, cease offering the Nuvini Group’s products or using certain technologies, require the Nuvini Group to redesign affected products, enter into costly settlement or license agreements or pay substantial damage awards or face a temporary or permanent injunction prohibiting the Nuvini Group from marketing or selling certain of its products or comply with other unfavorable terms. Furthermore, the Nuvini Group could be found liable for treble damages and attorneys’ fees if the Nuvini Group is found to have willfully infringed a patent or other intellectual property right. If the Nuvini Group is required to obtain a license from any third party, such license may not be available at all or on commercially reasonable terms.

Any litigation, whether or not resolved in the Nuvini Group’s favor and regardless of merit, could result in significant expense to the Nuvini Group, be time consuming and divert the efforts of the Nuvini Group’s technical and management personnel. Additionally, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of the Nuvini Group’s confidential information could be compromised by disclosure during any intellectual property-related litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Nuvini’s ordinary shares. Any of the foregoing could cause potential clients to refrain from purchasing the Nuvini Group’s data solutions or services or otherwise cause the Nuvini Group reputational harm and result in substantial costs, negative publicity and diversion of resources and management attention, any of which could have a material adverse effect on Nuvini Group’s businesses, financial condition, results of operations and prospects.

If the Nuvini Group is unable to protect the confidentiality of the Nuvini Group’s trade secrets and know-how, its business and competitive position would be harmed.

The Nuvini Group relies on trade secrets and proprietary know-how protection for Nuvini Group’s confidential and proprietary information, including the Nuvini Group’s software code, and the Nuvini Group has

 

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taken security measures to protect this information, including by entering into confidentiality agreements with parties who have access to them, such as the Nuvini Group’s employees, collaborators, contract manufacturers, consultants, advisors and other third parties. These measures, however, may not provide adequate protection for the Nuvini Group’s trade secrets, know-how or other confidential information. The Nuvini Group cannot guarantee that the Nuvini Group has entered into such agreements with each party that may have or have had access to the Nuvini Group’s trade secrets or proprietary technology and processes. Moreover, there can be no assurance that any confidentiality agreements that the Nuvini Group has with its employees, consultants or other third parties will provide meaningful protection for the Nuvini Group’s trade secrets, know-how and confidential information or will provide adequate remedies in the event of unauthorized use or disclosure of such information. Despite these efforts, any of these parties may breach the agreements and disclose the Nuvini Group’s proprietary information, including the Nuvini Group’s trade secrets, and the Nuvini Group may not be able to obtain adequate remedies for such breaches. Monitoring unauthorized uses and disclosures is difficult. Accordingly, there also can be no assurance that the Nuvini Group’s trade secrets or know-how will not otherwise become known or be independently developed by competitors or other third parties, which could have a material adverse effect on the Nuvini Group’s business, financial condition, results of operations and prospects.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by the Nuvini Group. If any of the Nuvini Group’s confidential or proprietary information, such as the Nuvini Group’s trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, the Nuvini Group’s competitive position could be materially and adversely harmed.

If the Nuvini Group’s trademarks, service marks and trade names are not adequately protected, the Nuvini Group may not be able to build or maintain name recognition in the Nuvini Group’s markets of interest and the Nuvini Group’s competitive position may be harmed.

The registered or unregistered trademarks the Nuvini Group owns or uses may be challenged, infringed, circumvented, declared generic or descriptive, lapsed or determined to be infringing on or dilutive of other marks. During trademark registration proceedings, the Nuvini Group may receive rejections of the Nuvini Group’s applications by the U.S. Patent and Trademark Office (“USPTO”), or in other foreign jurisdictions. Although the Nuvini Group is given an opportunity to respond to such rejections, the Nuvini Group may be unable to overcome them. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against the Nuvini Group’s trademarks, which may not survive such proceedings. Furthermore, owning and maintaining a trademark registration may not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark. The Nuvini Group may not be able to protect the Nuvini Group’s rights in these trademarks, which the Nuvini Acquired Companies need in order to build name recognition with potential clients. In addition, third parties may file for registration of trademarks similar or identical to the Nuvini Group’s trademarks, thereby impeding the Nuvini Group’s ability to build brand identity and possibly leading to market confusion and loss of goodwill. If they succeed in registering or developing common-law rights in such trademarks, and if the Nuvini Group is not successful in challenging such third-party rights, the Nuvini Group may not be able to use these trademarks to develop brand recognition of the Nuvini Group’s technologies, products or services. In addition, there could be potential trademark infringement or unfair competition claims brought by owners of other registered trademarks or trademarks that incorporate variations of the Nuvini Group’s registered or unregistered trademarks. Over the long term, if the Nuvini Group is unable to establish name recognition based on the Nuvini Group’s trademarks, the lack of name recognition could have a material adverse effect on the Nuvini Group’s business, financial condition, results of operations and prospects.

 

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Risks Related to Nuvini Group’s Substantial Operations in Brazil

The Nuvini Group is mainly concentrated in one geographic area, which increases the impact to the Nuvini Group’s exposure to various risks in that location.

Operating in a concentrated area increases the potential impact that many of the risks in that location may have upon the Nuvini Group’s businesses. For example, the Nuvini Group has greater exposure to regulatory actions impacting Brazil, natural disasters in that geographical area, competition for equipment, services, personnel and materials available in that area and access to infrastructure and market, which could have a material adverse effect on its financial condition and results of operations.

Brazil has experienced, and may continue to experience, adverse economic or political conditions that may impact the Nuvini Group’s business, financial condition and results of operations.

The Nuvini Group’s business is dependent to a large extent upon the economic conditions prevalent in Brazil. Brazil has historically experienced uneven periods of economic growth, recessions, periods of high inflation and economic instability. Recently, the economic growth rates in Brazil have slowed down and the country has entered into mild recessions. Economic and political developments in Brazil, including future economic changes or crises (such as inflation, currency devaluation or recession), government deadlock, political instability, terrorism, civil strife, changes in laws and regulations, restrictions on the repatriation of dividends or profits, expropriation or nationalization of property, restrictions on currency convertibility, volatility of the foreign exchange market and exchange controls could impact the Nuvini Acquired Companies’ operations and/or the market value of New Nuvini Ordinary Shares and have a material adverse effect on the Nuvini Group’s business, financial condition and results of operations.

The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazil’s political and economic conditions, could harm the Nuvini Group and the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

The Brazilian federal government frequently exercises significant influence over the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, increases or decreases in interest rates, changes in fiscal policies, wage and price controls, foreign exchange rate controls, blocking access to bank accounts, currency devaluations, capital controls and import and export restrictions. The Nuvini Group has no control over and cannot predict what measures or policies the Brazilian government may take in the future. The Nuvini Group’s businesses and the market prices of New Nuvini Ordinary Shares and New Nuvini Warrants may be harmed by changes in Brazilian government policies, as well as general economic factors, including, without limitation:

 

   

growth or downturn of the economy;

 

   

interest rates and monetary policies;

 

   

exchange rates and currency fluctuations;

 

   

inflation;

 

   

liquidity of the capital and lending markets;

 

   

import and export controls;

 

   

exchange controls and restrictions on remittances abroad and payments of dividends;

 

   

modifications to laws and regulations according to political, social and economic interests;

 

   

fiscal policy and changes in tax laws and related interpretations by tax authorities;

 

   

economic, political and social instability, including general strikes and mass demonstrations;

 

   

labor and social security regulations;

 

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energy and water shortages and rationing;

 

   

commodity prices;

 

   

public health, including as a result of epidemics and pandemics, such as the COVID-19 pandemic;

 

   

changes in demographics; and

 

   

other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian federal government will implement reforms or changes in policy or regulations affecting these or other factors in the future may affect economic performance and contribute to economic uncertainty in Brazil, which may have an adverse effect on the Nuvini Acquired Companies’ activities and consequently the Nuvini Group’s results of operations, and may also adversely affect the trading prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

Further, Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. The recent economic instability in Brazil has contributed to a decline in market confidence in the Brazilian economy as well as to a deteriorating political environment. See “—The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm the Nuvini Group and the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

The current political and economic environment in Brazil has affected, and is continuing to affect, the confidence of investors and the general public, which has historically resulted in economic deceleration and heightened volatility in the securities offered by companies with significant operations in Brazil, and may adversely affect New Nuvini Ordinary Shares.

The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm the Nuvini Group and the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

The recent economic instability in Brazil has contributed to a decline in market confidence in the Brazilian economy as well as to a deteriorating political environment. The negative macroeconomic environment in Brazil in recent years was in part due to economic and political uncertainties resulting from a global decrease in commodities prices as well as due to corruption investigations of Brazilian state-owned and private sector companies, politicians and business executives, which, in turn, led to the ouster and arrest of several prominent politicians. Launched by the Brazilian Federal Prosecutor’s Office at the end of 2014, the so-called Lava Jato investigation investigated members of the Brazilian government and other members of the legislative branch, as well as senior officers and directors of large state-owned companies and other companies in connection with allegations of political corruption. The resulting fallout from the Lava Jato operation contributed to the impeachment of Brazil’s former president, Dilma Rousseff, in August 2016, the arrest and conviction of current Brazilian President Luiz Inácio Lula da Silva, in April 2018, and the destabilization of the Brazilian economy. In November 2019, President Luiz Inácio Lula da Silva was released from prison after a Brazilian Supreme Court ruling that allows defendants to remain free while their appeals are pending. In March 2021, a Brazilian Supreme Court ruling issued by Justice Edson Fachin annulled the decisions that had convicted former President Luiz Inácio Lula da Silva. As a result of this ruling, President Luiz Inácio Lula da Silva recovered his political rights and was elected and inaugurated as president on January 1, 2023.

These events and further political instability had, and may continue to have, an adverse effect on the Brazilian economy and may result in further political uncertainty and consequent macroeconomic instability. The potential effects of the 2022 presidential elections and the recently inaugurated Brazilian government is uncertain, but these have already had a negative impact on the general perception of the Brazilian economy and the securities of Brazilian companies and have affected, and may continue to adversely affect, the Nuvini Group’s business, financial condition and operating results. The Nuvini Group cannot predict whether the current scenario will result in further political and economic instability, or if new allegations against current and/or former government officials and/or executives of private companies will arise in the future or will result in investigations.

 

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A failure by the Brazilian government to implement necessary reforms may result in diminished confidence in the Brazilian government’s budgetary condition and fiscal stance, which could result in downgrades of Brazil’s sovereign foreign credit rating by credit rating agencies, negatively impact Brazil’s economy, lead to further depreciation of the Brazilian real and an increase in inflation and interest rates, adversely affecting the Nuvini Group’s business, financial condition and results of operations.

Any of the above factors may create additional political uncertainty, which could harm the Brazilian economy and, consequently, Nuvini Group’s business and the value of its investments in Brazil, and could adversely affect the Nuvini Group’s financial condition, results of operations and the price of New Nuvini Ordinary Shares.

Developments and the perceptions of risks in other countries, including other emerging markets, the United States and Europe, may harm the Brazilian economy and the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

The market for securities offered by companies such as the Nuvini Group is influenced by economic and market conditions in Brazil and emerging markets, as well as the United States, Europe and other countries. To the extent the conditions of the global markets or economy deteriorate, the Nuvini Group’s business may be adversely affected. The weakness in the global economy has been marked by, among other adverse factors, lower levels of consumer and corporate confidence, decreased business investment and consumer spending, increased unemployment, reduced income and asset values in many areas, reduction of China’s growth rate, currency volatility and limited availability of credit and access to capital. Developments or economic conditions in other emerging countries have at times significantly affected the availability of credit to companies with significant operations in Brazil and resulted in considerable outflows of funds from Brazil, decreasing the amount of foreign investments in Brazil, impacting overall growth expectations for the Brazilian economy.

Crises and political instability in other emerging market countries, the United States, Europe or other countries, including increased international trade tensions and protectionist policies, could decrease investor demand for securities offered by companies with significant operations in Brazil, such as New Nuvini Ordinary Shares. These developments, as well as potential crises and forms of political instability arising therefrom or any other as of yet unforeseen development, may harm the Nuvini Group’s business and the price of New Nuvini Ordinary Shares.

Additionally, on November 7, 2020, Joseph Biden won the presidential election in the United States and assumed office as the 46th President of the United States on January 20, 2021. The U.S. president has considerable influence in both the United States and globally, which may materially and adversely affect the global economy and political stability. The Nuvini Group cannot ensure that the Biden administration will adopt policies designed to promote macroeconomic stability, fiscal discipline, as well as domestic and foreign investment, which may materially and adversely impact the trading price of securities of Brazilian issuers, including New Nuvini Ordinary Shares. These developments, as well as potential crises and forms of political instability arising therefrom or any other as of yet unforeseen development, may adversely affect the United States and global economies and capital markets, which may, in turn, materially adversely affect the trading price of New Nuvini Ordinary Shares.

Inflation and certain government measures to curb inflation may adversely affect the Brazilian economy and capital markets, and as a result, harm the Nuvini Group’s business and the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

In the past, high rates of inflation have adversely affected the economy and capital markets of Brazil and the ability of the Brazilian government to create conditions that stimulate or maintain economic growth. Moreover, governmental measures to curb inflation and speculation about possible governmental measures have contributed to the negative economic impact of inflation and have created general economic uncertainty and heightened volatility in the capital markets. As part of these measures, governments have at times maintained a restrictive monetary policy and high interest rates that has limited the availability of credit and economic growth.

 

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Inflation as measured by the Broad National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo, or “IPCA”), which is published by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística, or “IBGE”), was 5.8%, 10.1% and 1.5% as of December 31, 2022, 2021, and 2020, respectively. Inflation measured by the General Market Prices Index (Índice Geral de Preços-Mercado, or “IGP-M”) was 5.5%, 17.8% and 23.1% as of December 31, 2022, 2021, and 2020, respectively. As of February 28, 2023, the IPCA and the IGP-M were 5.6% and 1.9%, respectively, on an accumulated basis. Brazil may experience high levels of inflation in the future and inflationary pressures may lead to the Brazilian government intervening in the economy and introducing policies that could harm the Nuvini Group’s business and the trading price of New Nuvini Ordinary Shares. In the past, the Brazilian government’s interventions included the maintenance of a restrictive monetary policy with high interest rates that restricted credit availability and reduced economic growth, causing volatility in interest rates. For example, as of December 31, 2019, the SELIC rate was 4.50%. On August 8, 2020, the SELIC rate was set at 2.0%, increasing to 4.25% in June 2021 and further increasing to 6.25% in September 2021, and in October 2021, it was set at 7.75% due to concerns with inflationary pressure. On December 8, 2021, the SELIC rate was further increased to 9.25%. On February 2, 2022, the SELIC rate was further increased to 10.75%. On March 16, 2022, the SELIC rate was further increased to 11.75%. On May 4, 2022, the SELIC rate was further increased to 12.75%. On June 15, 2022, the SELIC rate was further increased to 13.25%. On August 3, 2022, the SELIC rate was further increased to 13.75%. Conversely, more lenient government and Central Bank policies and interest rate decreases have triggered and may continue to trigger increases in inflation, and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect the Nuvini Group and increase its indebtedness.

Although inflation rates in Brazil have been relatively low in the recent past, the Nuvini Group cannot assure you that this trend will continue. The measures taken by the Brazilian government to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and retarding economic growth. Inflation, measures to combat inflation and public speculation about possible additional actions have also contributed materially to economic uncertainty in Brazil and to heightened volatility in its securities markets. Periods of higher inflation may slow the growth rate of the Brazilian economy and lead to reduced demand for the Nuvini Acquired Companies’ data solutions and services. Inflation is also likely to increase some of Nuvini’s costs and expenses, which the Nuvini Group may not be able to fully pass on to clients and could adversely affect the Nuvini Group’s operating margins and operating income. In addition, inflation affects Nuvini S.A.’s financial liquidity and financial capital resources primarily by exposing Nuvini S.A. to the variations in Nuvini S.A.’s floating-rate loans. As of December 31, 2022, approximately 97.5% of Nuvini S.A.’s loans and borrowings were subject to floating interest rates, particularly the CDI rate. Rising interest rates may also impact the costs of Nuvini S.A.’s fundraising and indebtedness, increasing Nuvini S.A.’s financial expenses. Such an increase could adversely affect Nuvini S.A.’s ability to pay Nuvini S.A.’s obligations to the extent it reduces cash on hand. Mismatches between rates contracted in assets versus liabilities and/or high volatility in interest rates may result in financial losses for Nuvini S.A.

Exchange rate instability may have adverse effects on the Brazilian economy, the Nuvini Group’s businesses and the trading prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

The Brazilian real has been historically volatile and has been devalued frequently, and the Brazilian government has in the past implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system.

There has been persistently high volatility in the foreign exchange market for the Brazilian real in recent years, especially over the period covered by this proxy statement/prospectus, and the real weakened significantly over this period.

 

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As of December 31, 2019, 2020, 2021 and 2022, the real/U.S. dollar exchange rate reported by the Central Bank was R$4.031, R$5.197, R$5.579 and R$5.2171, in each case, per US$1.00. There can be no assurance that the real will not appreciate or further depreciate against the U.S. dollar or other currencies in the future.

A devaluation of the real relative to the U.S. dollar could create inflationary pressures and cause governments to, among other measures, increase interest rates. Any depreciation of the real may generally restrict access to the international capital markets. It would also reduce the U.S. dollar value of the Nuvini Group’s results of operations. Restrictive macroeconomic policies could reduce the stability of the Brazilian economy and harm the Nuvini Group’s results of operations and profitability. In addition, domestic and international reactions to restrictive economic policies could have a negative impact on the Brazilian economy.

These policies and any reactions to them may harm the Nuvini Group by curtailing access to foreign financial markets and prompting further government intervention. A devaluation of the real relative to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary pressures and reduce economic growth. On the other hand, an appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate foreign exchange current accounts. Depending on the circumstances, either devaluation or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth of the Brazilian economy and affect the Nuvini Group’s business, results of operations and profitability.

For additional information on the impact of fluctuations in currency exchange rates on the Nuvini Group’s business, see “—In the event of an expansion of Nuvini’s business to Latin America, the Nuvini Group may be exposed to fluctuations in currency exchange rates, which could negatively affect its results of operations and its ability to invest and hold its cash.”

In line with the Nuvini Group’s future international expansion plans, the changes in the political and economic environments in Brazil and Latin America countries could adversely affect the Nuvini Group.

In conducting the Nuvini Group’s businesses in emerging markets, the Nuvini Group is subject to political, economic, legal, operational and other risks that are inherent to operating in these countries.

The Nuvini Group may encounter the following difficulties, among others, related to the foreign markets in which it currently operates or will operate in the future:

 

   

unforeseen regulatory changes;

 

   

inability to attract personnel and generate business outside of Brazil;

 

   

changes in tax law;

 

   

changes in trade and investment policies and regulations;

 

   

difficulties in registering and protecting trademarks and software;

 

   

nationalization, expropriation, price controls and other restrictive governmental actions;

 

   

adoption of governmental measures that protect, subsidize or otherwise favor competitors native to such foreign markets; and

 

   

cultural and linguistic barriers.

If one or more of these risks materialize, and the Nuvini Group is not able to overcome these difficulties, its business, results of operations and financial condition may be adversely affected.

Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on the Nuvini Group.

The Nuvini Group’s performance is impacted by the overall health and growth of international economies, specifically in Brazil. In Brazil, gross domestic product (“GDP”) growth has fluctuated over the past few years,

 

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with contractions of 3.5% and 3.3% in 2015 and 2016, respectively, followed by growth of 1.3% in 2017 and 1.8% in 2018. In 2019, Brazilian GDP grew by 1.42%, and in 2020 it contracted 43.3%. In2021 it grew by 5.0% and in 2022 Brazilian GDP grew by 2.9%. Growth is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force (particularly in information technology sectors) and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on the Nuvini Group.

Any further downgrading of Brazil’s credit rating could reduce the trading prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

Given the current significance of the Nuvini Group’s Brazilian operations to New Nuvini’s results of operations as a whole, New Nuvini may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign credit ratings, which are based on a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors.

The rating agencies began to review Brazil’s sovereign credit rating in September 2015. Subsequently, the three major rating agencies downgraded Brazil’s investment-grade status:

 

   

Standard & Poor’s initially downgraded Brazil’s credit rating from BBB-negative to BB-positive and subsequently downgraded it again from BB-positive to BB, maintaining its negative outlook, citing a worse credit situation since the first downgrade. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s credit rating from BB to BB-stable, which was reaffirmed on June 2, 2021 and again on June 14, 2022.

 

   

In December 2015, Moody’s placed Brazil’s Baa3’s issue and bond ratings under review for downgrade and subsequently downgraded the issue and bond ratings to below investment grade, at Ba2 with a negative outlook, citing the prospect of a further deterioration in Brazil’s debt indicators, taking into account the low growth environment and the challenging political scenario. On May 25, 2021, Moody’s maintained Brazil’s credit rating at Ba2-stable, which was reaffirmed on April 22, 2022.

 

   

Fitch downgraded Brazil’s sovereign credit rating to BB-positive with a negative outlook, citing the rapid expansion of the country’s budget deficit and the worse-than-expected recession. In February 2018, Fitch downgraded Brazil’s sovereign credit rating again to BB-negative, citing, among other reasons, fiscal deficits, the increasing burden of public debt and an inability to implement reforms that would structurally improve Brazil’s public finances. On May 27, 2021, Fitch reaffirmed Brazil’s credit rating at BB-negative. On December 20, 2022, Fitch improved Brazil’s sovereign credit rating to BB-stable.

Brazil’s sovereign credit rating is currently rated below investment grade by the three main credit rating agencies. Consequently, the prices of securities offered by companies with significant operations in Brazil have been negatively affected. A prolongation or worsening of the current Brazilian recession and continued political uncertainty, among other factors, could lead to further ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, cause the trading prices of New Nuvini Ordinary Shares and New Nuvini Warrants to decline.

Additionally, a downgrade of the sovereign credit rating of Brazil may affect New Nuvini’s own credit rating, hindering its ability to secure loans at competitive rates compared to its competitors, which may impact New Nuvini’s ability to grow its business and, consequently, affect the prices of New Nuvini Ordinary Shares and New Nuvini Warrants.

 

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In the event of an expansion of Nuvini’s business to Latin America, the Nuvini Group may be exposed to fluctuations in currency exchange rates, which could negatively affect its results of operations and its ability to invest and hold its cash.

Nuvini Group’s functional currency is the Brazilian real. If the Nuvini Group expands its business to Latin American countries, part of its future revenues and costs would be denominated in other currencies, including U.S. dollars, hence the Nuvini Group’s exposure to the effects of fluctuations in currency exchange rates may grow significantly. Various events and circumstances, including political and macroeconomic events beyond the Nuvini Group’s control or impossible or difficult to foresee, could have a significant impact on the foreign exchange environment, as evidenced by the dramatic volatility of the Brazilian real against the U.S. dollar in recent years (for additional information, see “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Certain Risks—Exchange Rate Risk”).

In addition, the Nuvini Group may have U.S. dollar-denominated and/or Euro-denominated loans in the future. To mitigate the Nuvini Group’s exchange rate exposure in relation to these possible loans, the Nuvini Group may enter into derivative financial transactions with financial institutions to hedge against the fluctuation of the Euro/real and U.S. dollar/real exchange rates and link the Nuvini Group’s principal and interest to a fixed rate or the Brazilian interbank deposit certificate (Certificado de Depósito Interbancário). The use of hedging instruments may introduce additional risks if the Nuvini Group is unable to structure effective hedges with such instruments.

Risks Related to Legal Matters and Regulations

Internet regulation in Brazil is recent and still limited and several legal issues related to the Internet are uncertain.

In 2014, Brazil enacted the Brazilian Civil Rights Framework for the Internet (so called Marco Civil da Internet), which is a law setting forth principles, guarantees, rights and duties for the use of the Internet in Brazil, including provisions about internet service provider liability, internet user privacy and internet neutrality. In May 2016, further regulations were passed in connection with the referred law. The administrative penalties imposed by the Brazilian Civil Rights Framework for the Internet include notification, fines (up to 10% of the revenues of the relevant entity’s economic group in Brazil in the preceding fiscal year) and suspension or prohibition from engaging in data processing activities. The Brazilian Civil Rights Framework for the Internet also determines joint and several liability between foreign parent companies and the local Brazilian subsidiary for the payment of fines that may be imposed for breach of its provisions. Administrative penalties may be applied cumulatively. Daily fines may be imposed in judicial proceedings, as a way to compel compliance with a Brazilian court order. If for any reason a company fails to comply with the court order, the fine can reach significant amounts. The Nuvini Group may be subject to liability under these laws and regulations should it fails to adequately comply with the Brazilian Civil Rights Framework for the Internet.

The Nuvini Group’s clients may be subject to new and evolving privacy and data protection-related laws and regulations that impose obligations in connection with the collection, storage, use, processing, disclosure, protection, transmission, retention and disposal of personal, sensitive, regulated or confidential data.

The privacy and security of personal, sensitive, regulated or confidential data is a major focus in the Nuvini Acquired Companies’ industry and the Nuvini Acquired Companies and the Nuvini Acquired Companies’ clients that use the Nuvini Acquired Companies’ data solutions and services are subject to federal, state, local and foreign privacy and data protection-related laws and regulations that impose obligations in connection with the collection, storage, use, processing, disclosure, protection, transmission, retention and disposal of personal, sensitive, regulated or confidential data. Laws and regulations governing data privacy, data protection and information security are constantly evolving and there has been an increasing focus on privacy and data protection issues with the potential to affect the Nuvini Group’s business. The nature of the Nuvini Acquired Companies’ businesses exposes the Nuvini Group to risks related to possible shortcomings in data protection and

 

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information security laws and regulations. Any perceived or actual unauthorized disclosure of personally identifiable information, whether through breach of the Nuvini Acquired Companies’ network by an unauthorized party, employee theft, misuse or error or otherwise, including the data protection of the Nuvini Acquired Companies’ clients, the end-consumers of the Nuvini Acquired Companies’ clients and employees or third parties, could harm the Nuvini Acquired Companies’ reputations, impair the Nuvini Acquired Companies’ ability to attract and retain their clients, or subject the Nuvini Group to claims or litigation arising from damages suffered by individuals.

Law No. 13,709/2018 (Lei Geral de Proteção de Dados Pessoais, or “LGPD”), came into force on September 18, 2020 to regulate the processing of personal data in Brazil. The LGPD applies to individuals or legal entities, either private or governmental entities, that process or collect personal data in Brazil and which processing activities aim at offering or supplying goods or services to data subjects located in Brazil. The LGPD establishes detailed rules for, but not limited to, the collection, use, processing and storage of personal data and affect all economic sectors, including the relationship between clients and suppliers of goods and services, employees and employers and other relationships in which personal data is collected and processed, whether in a digital or physical environment.

Since the entry into force of the LGPD, all processing agents/legal entities are required to adapt their data processing activities to comply with this new set of rules. The Nuvini Group has implemented changes to its policies and procedures designed to ensure compliance with the relevant requirements under the LGPD. Even so, as it is a recent law, the National Data Protection Authority (Autoridade Nacional de Proteção de Dados, or the “ANPD”) as regulatory agency may raise other relevant issues or provide new guidance that will require further action from Nuvini to remain fully compliant.

The penalties for violations of the LGPD include: (i) warnings imposing a deadline for the adoption of corrective measures; (ii) a fine of up to 2% of the Nuvini Group’s revenues, subject to the limit of R$50.0 million per violation; (iii) daily fines; (iv) mandatory disclosure of the violation after it has been investigated and confirmed; (v) the restriction of access to the personal data to which the violation relates up to a six-month period, that can be extended for the same period, until the processing activities are compliant with the regulation, and in case of repeated violation, temporary block and/or deletion of the related personal data and partial or complete prohibition of processing activities; and (vi) temporary or permanent prohibition against conducting activities related to data processing. Any additional privacy laws or regulations enacted or approved in Brazil or in other jurisdictions in which The Nuvini Group operates could seriously harm its business, financial condition or results of operations. Under the LGPD, security breaches that may result in significant risk or damage to personal data must be reported to the ANPD, the data protection regulatory body, within two (2) business days as from the date the affected controller became aware of the incident. The notice to the ANPD must include: (i) a description of the nature of the personal data affected by the breach; (ii) the affected data subjects; (iii) the technical and security measures adopted; (iv) the risks related to the breach; (v) the reasons for any delays in reporting the breach, if applicable; and (vi) the measures adopted to revert or mitigate the effects of the damage caused by the breach. Moreover, the ANPD could establish other obligations related to data protection that are not described above. In addition to the administrative sanctions, due to the noncompliance with the obligations established by the LGPD, the Nuvini Group can be held liable for individual or collective material damages and non-material damages caused to data subjects, including when caused by third parties that serve as processors of personal data on the Nuvini Acquired Companies’ behalf.

In addition to the civil liability, the imposition of the administrative sanctions of the LGPD does not prevent the imposition of administrative sanctions set forth by other laws that address issues related to data privacy and protection, such as Law No. 8,078/1990, or the Brazilian Code of Consumer Defense, and Law No. 12,965/2014, or the Brazilian Civil Rights Framework for the Internet. These administrative sanctions can be applied by other public authorities, such as the Attorney General’s Office and consumer protection agencies. The Nuvini Group can also be held liable civilly for violation of these laws.

Similarly, many foreign countries and governmental bodies, including in countries in which the Nuvini Group currently operate, have laws and regulations concerning the collection, storage, use, processing,

 

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disclosure, protection, transmission, retention and disposal of personal, sensitive, regulated or confidential data. For example, the European Union’s (“EU”) General Data Protection Regulation (EU) 2016/679 (“GDPR”), went into effect in May 2018, and has and will continue to result in significantly greater compliance burdens and costs for companies with clients and operations in the EEA by imposing stringent administrative requirements for controllers and processors of personal data of EEA data subjects, including, for example, data breach notification requirements, limitations on retention of information and rights for data subjects over their personal data. The GDPR also provides that EU member states may make their own further laws and regulations limiting the processing of personal data. Ensuring compliance with the GDPR is an ongoing commitment that involves substantial costs, and despite Nuvini’s efforts, data protection authorities or others(including individual data subjects) may assert that the Nuvini Group’s business practices fail to comply with the GDPR’s requirements. If the Nuvini Group’s operations are found to violate GDPR requirements, the Nuvini Group may incur substantial fines and other penalties, including bans on processing and transferring personal data, have to change the Nuvini Group’s business practices, and face reputational harm, any of which could have an adverse effect on the Nuvini Group’s businesses. In particular, serious breaches of the GDPR can result in administrative fines ranging from €10 million to €20 million or 2.0% or 4.0% of total worldwide annual revenue, whichever is higher. Such penalties are in addition to any civil litigation claims by data controllers, clients and data subjects, which includes the possibility of data subject-led class action claims and injunctions.

In addition, recent legal developments in Europe have created compliance uncertainty regarding transfers of personal data from the EEA to the United States. In July 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-U.S. Privacy Shield Framework, a mechanism for the transfer of personal data from the EEA to the United States, and made clear that reliance on standard contractual clauses for the transfer of personal data outside of the EEA alone may not be sufficient in all circumstances, in which organizations may be required to take supplementary measures. Authorities in Switzerland have also issued guidance calling the Swiss-U.S. Privacy Shield Framework inadequate and raising similar questions about the standard contractual clauses. At present, there are few, if any, viable alternatives to the standard contractual clauses. If the Nuvini Group is unable to implement sufficient safeguards to ensure that the Nuvini Group’s transfers of personal data from the EEA are lawful, the Nuvini Group may face increased exposure to regulatory actions, substantial fines and injunctions against processing personal data from the EEA. Loss of the Nuvini Group’s ability to lawfully transfer personal data out of the EEA to these or any other jurisdictions may cause reluctance or refusal by current or prospective European clients to use the Nuvini Acquired Companies’ data solutions or services, and the Nuvini Group may be required to increase its data processing capabilities in the EEA at significant expense. Additionally, other countries outside of the EEA have passed or are considering passing laws requiring local data residency, which could increase the cost and complexity of delivering the Nuvini Acquired Companies’ services.

Further, the UK’s withdrawal from the EU and ongoing developments in the UK have created uncertainty regarding data protection regulation in the UK. As of January 1, 2021, the Nuvini Group is required to comply with the GDPR as well as the UK General Data Protection Regulation (“UK GDPR”), the implementation of which exposes the Nuvini Group to two parallel data protection regimes in Europe, whereby additional and separate fines under the UK GDPR range from £8.7 million to £17.5 million or 2.0% to 4.0% of total worldwide annual revenue, whichever is higher. However, going forward, there may be increasing scope for divergence in application, interpretation and enforcement of data protection laws as between the UK and the EEA, and the relationship between the UK and the EEA in relation to certain aspects of data protection law remains uncertain. In addition, while the UK data protection regime currently permits data transfers from the UK to the EEA and other third countries covered by a European Commission adequacy decision, and currently includes a framework to permit the continued use of standard contractual clauses and binding corporate rules for personal data transfers from the UK to third countries, this is subject to change in the future, and any such changes could have implications for the Nuvini Group’s transfer of personal data from the UK to the EEA and other third countries.

In the United States, California enacted the California Consumer Privacy Act (“CCPA”), which took effect in January 2020 and limits how the Nuvini Group may collect, use and process personal data of California residents. The CCPA establishes a privacy framework for covered companies such as the Nuvini Group’s by,

 

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among other things, creating an expanded definition of personal information, establishing data privacy rights for California residents and creating a potentially severe statutory damages framework and private rights of action for certain data breaches. Further, in November 2020, California voters approved the California Privacy Rights Act (the “CPRA”), which will amend and expand the CCPA. Effective beginning January 1, 2023, the CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding California residents’ rights with respect to their personal data, and by establishing a regulatory agency dedicated to implementing and enforcing the CCPA and CPRA. The effects of the CCPA and CPRA are potentially far-reaching, and may require the Nuvini Group to modify their data processing practices and policies and incur substantial compliance-related costs and expenses, and it remains unclear how various provisions will be interpreted and enforced. Certain other state laws in the United States, including the recently enacted Virginia Consumer Data Protection Act, impose similar privacy obligations and all 50 states have laws including obligations to provide notification of certain security breaches to affected individuals, state officials and others. The Nuvini Group also may be bound by contractual obligations relating to its collection, use and disclosure of personal, financial and other data.

While the Nuvini Group strives to comply with all applicable privacy, data protection and information security laws and regulations, as well as the Nuvini Group’s contractual obligations, posted privacy policies and applicable industry standards, such laws, regulations, obligations and standards continue to evolve and are becoming increasingly complex, and sometimes conflict among the various jurisdictions and countries in which the Nuvini Group operates, which makes compliance challenging and expensive. For example, the Nuvini Group continues to see jurisdictions imposing data localization laws, which require personal information or certain subcategories of personal information to be stored in the jurisdiction of origin. These regulations may inhibit the Nuvini Group’s ability to expand into those markets or prohibit the Nuvini Acquired Companies from continuing to offer services in those markets without significant additional costs. In addition, any failure or perceived failure by the Nuvini Group, or any third parties with whom the Nuvini Group does business, to comply with laws, regulations, policies, industry standards or contractual or other legal obligations relating to privacy, data protection or information security may result in governmental investigations, inquiries, enforcement actions and prosecutions, private litigation, fines and penalties, adverse publicity or potential loss of business.

The Nuvini Group expects that there will continue to be new proposed laws, rules of self-regulatory bodies, regulations and industry standards concerning privacy, data protection and information security in Brazil and other jurisdictions and it cannot yet determine the impact such future laws, rules, regulations and standards may have on the Nuvini Group’s business. Moreover, existing Brazilian and foreign privacy and data protection-related laws and regulations are evolving and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current or enact new laws and regulations regarding privacy and data protection-related matters. Additionally, the Nuvini Acquired Companies’ clients may be subject to differing privacy laws, rules and legislation, which may mean that they require the Nuvini Group to be bound by varying contractual requirements application to certain other jurisdictions. Because global laws, regulations and industry standards concerning privacy and data security have continued to develop and evolve rapidly, compliance with such new laws or to changes to existing laws may impact the Nuvini Group’s business and practices, require the Nuvini Group to expend significant resources to adapt to these changes or to stop offering the Nuvini Acquired Companies’ data solutions or services in certain countries. These developments could adversely affect the Nuvini Group’s business, results of operations and financial condition.

Changes in tax laws or differing interpretations of tax laws may adversely affect the Nuvini Group’s results of operations.

The Nuvini Group conducts business mainly in Brazil and files tax returns in multiple jurisdictions as a result of the Nuvini Group’s international operations. The Nuvini Group’s consolidated effective income tax rate could be materially adversely affected by several factors, including: changing tax laws, regulations and tax treaties or the interpretation thereof; tax policy initiatives, tax reforms; the practices and understanding of tax authorities in jurisdictions in which the Nuvini Group operates; the resolution of issues arising from tax audits or examinations and any related interest or penalties. Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or paid (in the specific context of withholding tax).

 

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Furthermore, Brazilian governmental authorities at the federal, state and local levels are considering changes in tax laws in order to cover budgetary shortfalls resulting from the recent economic downturn in Brazil, and also to simplify the overall domestic tax system. If these proposals are enacted they may harm the Nuvini Group’s profitability by increasing the Nuvini Group’s tax liabilities and costs with tax compliance, or otherwise affecting the Nuvini Group’s financial condition, results of operations and cash flows.

Tax rules in Brazil, particularly at the local level, can change sometimes at short notice given the dynamics allowed by the tax legislation system based on a combination of voting, sanction and veto powers from the many legislators. Recently, the Brazilian Supreme Court (“STF”) ruled that final favorable decisions held by taxpayers may be rendered void if the higher judicial court subsequently issues a conflicting ruling. This scenario may occur if the tax under analysis is collected on an “ongoing basis”, such as the Corporate Income Taxes that are due yearly. Taxes due under a “one-off” transaction, such as Tax on Inter-Vivos Property Transfers, are not subject to STF’s ruling.

If STF issues a ruling that voids a decision that was favorable to the Nuvini Group, taxes may be levied on the Nuvini Group retroactively, including interest and penalties.

Additionally, the Brazilian tax system is quite complex and requires substantial compliance costs, time and effort from companies operating in Brazil. Despite the fact that the Nuvini Group applies all the proper efforts to manage the Nuvini Group’s tax obligations, the Nuvini Group may not always be timely aware of all such changes that affect the Nuvini Group’s business and the Nuvini Group may therefore fail to pay the applicable taxes or otherwise comply with tax regulations, which may result in additional tax assessments and penalties for the Nuvini Group.

A recent example involves the uncertainty as to the applicable taxes on the licensing and assignment of software rights in Brazil. Certain Brazilian state laws, including laws and decrees enacted by the State of São Paulo, required the payment of taxes on sales (Imposto Sobre Operações Relativas à Circulação de Mercadorias e Serviços de Transporte Interestadual de Intermunicipal e de Comunicações, or “ICMS”) in connection with these transactions, while municipalities also demanded the payment of taxes levied on the provision of services (Imposto sobre Serviço, or “ISS”). In February 2021, the Brazilian Supreme Court, so-called “STF”, decided that only ISS taxes are due on the licensing and assignment of software rights and that the legislation enacted by the State of São Paulo is unconstitutional. Despite the Nuvini Group’s consistent allegation of double taxation and existing case law in the Nuvini Group’s favor, the Nuvini Group may be party to tax claims filed by Brazilian municipalities due to the Nuvini Group’s non-collection of ISS prior to the Brazilian Supreme Court judgment.

At the municipal level, the Brazilian government enacted Supplementary Law No. 157/16, which imposed changes regarding the collection of ISS applied to the rendering of part of the Nuvini Acquired Companies’ services. These changes created new obligations, as ISS will now be due in the municipality in which the acquirer of the Nuvini Acquired Companies’ services is located rather than in the municipality in which the service provider’s facilities are located. This obligation took force in January 2018, but has been delayed by Direct Unconstitutionality Action No. 5835 (“ADI”), filed by taxpayers. The ADI challenges the constitutionality of Supplementary Law No. 157/16 before the Brazilian Supreme Court, arguing that the new legislation would adversely affect companies’ activities due to the increase of costs and bureaucracy related to the ISS payment to several municipalities and the compliance with tax reporting obligations connected therewith. As a result, the Brazilian Supreme Court granted an injunction to suspend the enforcement of Supplementary Law No. 157/16. In June 2020, the ADI was included in the judgment agenda of the Brazilian Supreme Court but, as of the date of this proxy statement/prospectus, a final decision on this matter is currently pending.

Another example is the benefit provided by Brazilian Law No. 11,196/05 (“Lei do Bem”), which currently grants tax benefits to companies that invest in research and development by reducing annual corporate income tax expenses, provided that some requirements are met. The Nuvini Group currently does not meet all the legal minimum requirements under Lei do Bem to take advantage of such tax benefit, but the Nuvini Group expects to

 

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able to rely on this benefit in the future. If the taxes applicable to the Nuvini Group’s business increase or any tax benefits are revoked and the Nuvini Group cannot alter its cost structure to pass the Nuvini Group’s tax increases on to the Nuvini Acquired Companies’ clients, Nuvini Group’s financial condition, results of operations and cash flows could be adversely affected.

Moreover, the Nuvini Group is subject to tax laws and regulations that may be interpreted differently by tax authorities and Nuvini. The application of indirect taxes, such as sales and use tax, value-added tax (“VAT”), provincial taxes, goods and services tax, business tax and gross receipt tax, to businesses such as the Nuvini Group’s is complex and continues to evolve. The Nuvini Group is required to use significant judgment in order to evaluate applicable tax obligations. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to the Nuvini Group’s business. One or more states or municipalities, the federal government or other countries may seek to challenge the taxation or procedures applied to the Nuvini Group’s transactions, which could impose the charge of taxes or additional reporting, record-keeping or indirect tax collection obligations on businesses like the Nuvini Group’s. New taxes could also require the Nuvini Group to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance and audit requirements could have a material adverse effect on the Nuvini Group’s business and financial results.

The Brazilian federal government also recently announced and presented to Congress (i) the Bill of Law No. 3,887/2020, focused on several changes on the taxes currently levied on revenues; and (ii) the Bill of Law No. 2,337/2021, the so called “second phase” of the envisaged Brazilian Tax Reform Plan, focused on income taxation, which includes several topics such as the taxation of dividends (by the WHT at a 15% rate), adjustments in corporate taxation basis and rates of Brazilian entities, changes in the taxation of income and gains in connection with investments in the Brazilian capital markets, such as financial assets and investment funds, among others. While such legislation has not been enacted, and it is not possible to determine at this time, what changes to tax laws and regulations will come into effect (if any), any such change may have an adverse effect on Nuvini’s results and operations.

All holders are urged to carefully review the discussions under “Material Tax Considerations—U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Holding New Nuvini Ordinary Shares and New Nuvini Warrants after completion of the Merger” and “Risk Factors—Risks Related to U.S. Federal Income Taxation—The “inversion” rules could be applied in a manner that would result in New Nuvini being treated as a U.S. corporation for U.S. federal income tax purposes” for additional circumstances in which differing interpretations of tax laws and regulations may adversely affect the results of operations of New Nuvini and its Subsidiaries.

The Nuvini Group’s businesses, financial condition and results of operations may be adversely affected by the various conflicting and/or onerous legal and regulatory requirements imposed on the Nuvini Group where it operates. In addition, the Nuvini Group may be subject to various legal proceedings which could adversely affect the Nuvini Group’s businesses, financial condition or results of operations.

Since the Nuvini Group plans to expand operations and the Nuvini Acquired Companies plan to provide services to clients in several jurisdictions, the Nuvini Group is and will be subject to numerous, and sometimes conflicting, legal requirements on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, anti-bribery, whistle blowing, internal and disclosure control obligations, data protection and privacy and labor relations and work visa policies. The Nuvini Group’s failure to comply with these regulations in the conduct of the Nuvini Group’s business could result in fines, penalties, criminal sanctions against the Nuvini Group or its officers, disgorgement of profits, prohibitions on doing business and adverse impact on the Nuvini Group’s reputation. The Nuvini Group’s failure to comply with these regulations in connection with the performance of the Nuvini Group’s obligations to its clients could also result in liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on the Nuvini Acquired Companies’ ability to process information and allegations by their clients that the Nuvini Acquired

 

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Companies have not performed their contractual obligations. Due to the varying degree of development of the legal systems of the countries in which the Nuvini Acquired Companies operate, local laws might be insufficient to defend the Nuvini Group or the Nuvini Acquired Companies and preserve their rights.

In particular, the Nuvini Group is also subject to risks relating to compliance with a variety of Brazilian national and local laws including multiple tax regimes, labor laws, employee health safety and wages and benefits laws. For example, the Nuvini Group currently does not comply with the legal minimum hiring quota for persons with disabilities in Brazil. Law 8,213 of 1991 provides that companies with more than 100 employees are required to fill 2% to 5% of their job positions with disabled employees; and/or employees who have passed through a medical rehabilitation. Therefore, the Nuvini Group may be subject to administrative penalties from the relevant labor authorities, as well as to further remedies that may be imposed by the Brazilian Labor prosecution officer. The administrative penalties issued by the Ministry of Economy may vary from R$2,656.61 to R$265,659.51 per person with disability that was not hired to fill out the quota. In the event of any investigation, the labor authority may (a) propose to the Nuvini Group the execution of a Commitment Agreement (Termo de Ajustamento de Conduta), which could provide for additional obligations and penalties (normally, fixed per person not hired to fill out the quota, which, in general, may vary from R$500 to R$2,000); and/or (b) file a public civil action seeking the payment of damages and enforcement of the Nuvini Group’s compliance with the legal quota requirements, subject to additional penalties.

In addition, the Nuvini Group is and may, from time to time, become subject to legal proceedings and claims, such as claims brought by the Nuvini Group’s clients in connection with commercial disputes, employment claims made by the Nuvini Group’s current or former employees, intellectual property claims, tax claims or securities class actions or other claims related to any volatility in the trading price of New Nuvini Ordinary Shares. The Nuvini Group may also, from time to time, be subject to litigation resulting from claims against it by third parties, including claims of breach of non-compete and confidentiality provisions of the Nuvini Group’s employees’ former employment agreements with such third parties. Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm the Nuvini Group’s business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to the Nuvini Group (including premium increases or the imposition of large deductible or co-insurance requirements). A claim brought against the Nuvini Group that is uninsured or underinsured could result in unanticipated costs, potentially harming the Nuvini Group’s business, financial position and results of operations. If the Nuvini Group is unsuccessful in the Nuvini Group’s defense in these legal proceedings, the Nuvini Group may be forced to pay damages or fines, enter into consent decrees or change the Nuvini Group’s business practices, any of which could adversely affect Nuvini Group’s business, financial condition or results of operations.

As the Nuvini Group expands into new industries and regions, the Nuvini Group will likely need to comply with new requirements to compete effectively. The uncertainty and changes in the requirements of multiple jurisdictions may increase the cost of compliance, delay or reduce demand for the Nuvini Acquired Companies’ data solutions and services, restrict the Nuvini Acquired Companies’ ability to offer data solutions and services in certain locations, impact the Nuvini Acquired Companies’ clients’ ability to deploy the Nuvini Acquired Companies’ data solutions or services in certain jurisdictions, or subject the Nuvini Group to sanctions by regulators, including national data protection regulators, all of which could harm the Nuvini Group’s business, financial condition and results of operations. Additionally, although the Nuvini Group endeavors to have the Nuvini Acquired Companies’ data solutions and services comply with applicable laws and regulations, these and other obligations may be modified, they may be interpreted and applied in an inconsistent manner from one jurisdiction to another, and they may conflict with one another, other regulatory requirements, contractual commitments or the Nuvini Group’s internal practices. The Nuvini Acquired Companies’ failure to comply with applicable regulatory requirements could have a material adverse effect on the Nuvini Group’s business, financial condition, results of operations and prospects.

 

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The Nuvini Group may face restrictions and penalties under the Brazilian Consumer Protection Code in the future.

Brazil has a series of strict consumer protection statutes, collectively known as the Consumer Protection Code (Código de Defesa do Consumidor), that are intended to safeguard consumer interests and that apply to all companies in Brazil that supply products or services to Brazilian consumers (either individuals or legal entities). These consumer protection provisions include protection against misleading and deceptive advertising, protection against coercive or unfair business practices and protection in the formation and interpretation of contracts, usually in the form of civil liabilities and administrative penalties for violations. These penalties are often levied by the Brazilian Consumer Protection Agencies (Fundação de Proteção e Defesa do Consumidor, or “PROCONs”), which oversee consumer issues on a district-by-district basis. Companies that operate across Brazil may face penalties from multiple PROCONs, as well as the National Secretariat for Consumers (Secretaria Nacional do Consumidor, or “SENACON”). Companies may settle claims made by consumers via PROCONs by paying compensation for violations directly to consumers and through a mechanism that allows them to adjust their conduct, called a conduct adjustment agreement (Termo de Ajustamento de Conduta, or “TAC”). Brazilian Public Prosecutor Offices may also commence investigations related to consumer rights violations and this TAC mechanism is also available for them. Companies that violate TACs face potential automatic fines. Brazilian Public Prosecutor Offices may also file public civil actions against companies in violation of consumer rights, seeking strict observation to the consumer protection law provisions and compensation for the damages consumers may have suffered. To the extent consumers file such claims against the Nuvini Group or New Nuvini in the future, the Nuvini Group or New Nuvini may face reduced revenue due to refunds and fines for non-compliance that could negatively impact the Nuvini Group or New Nuvini’s results of operations.

The Nuvini Group is subject to anti-corruption, anti-bribery, anti-money laundering economic sanctions laws and regulations, trade compliance and similar laws, and non-compliance with such laws can subject the Nuvini Group to criminal or civil liability and harm the Nuvini Group’s business, financial condition and results of operations.

The Nuvini Group operates in jurisdictions that have a high risk of corruption. The Nuvini Group must comply with anti-corruption and anti-bribery laws and regulations imposed by governments with jurisdiction over its operations, which may include the Brazilian Federal Law No. 12,846/2013 (the “Brazilian Anti-Corruption Law”), the Brazilian Federal Law No. 9,613/1998, as amended (the “Brazilian Anti-Money Laundering Law”), the Brazilian Federal Law No. 8,429/1992, as amended (the “Brazilian Administrative Improbity Law”) and the United States Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), among others. Where they apply, the Brazilian Anti-Corruption Law and the FCPA prohibit the Nuvini Group and its directors, officers, employees, intermediaries, agents and other third parties acting on its behalf from corruptly authorizing, promising, offering or providing, directly or indirectly, undue advantages, improper or prohibited payments or anything else of value, to government officials and other persons related to government officials to obtain or retain business or gain some other business or any undue advantage, and impose liability against companies who engage in bribery of government officials, either directly or through intermediaries.

The Nuvini Group must also conduct its business in compliance with applicable economic and trade sanctions and export control laws and regulations, such as those administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, and other relevant authorities. Such laws and regulations prohibit or restrict certain operations, investment decisions, and sales activities, including dealings with certain countries or territories, and with certain governments and designated persons. The Nuvini Group’s operations expose us to the risk of violating, or being accused of violating, these laws and regulations. In addition, our employees, representatives, or other third parties acting on our behalf may engage in conduct for which the Nuvini Group might be held responsible.

 

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While the Nuvini Group has policies and procedures to address compliance with such laws, there is a risk that the Nuvini Group’s directors, officers, employees, intermediaries, agents and other third parties acting on its behalf will take actions, or be accused of taking action, in violation of the Nuvini Group’s policies and applicable law, for which the Nuvini Group may be ultimately held responsible. In recent years, authorities across various jurisdictions, including Brazil and the United States, have increasingly focused on enforcing anti-corruption laws and economic sanctions and trade compliance laws. As the Nuvini Group expands internationally, the Nuvini Group’s risks under these laws may increase.

Detecting, investigating and resolving actual or alleged violations of anti-corruption laws, anti-bribery, anti-money laundering or economic sanctions and trade compliance laws can require a significant diversion of time, resources and attention from senior management. In addition, non-compliance with anti-corruption, anti-bribery, anti-money laundering laws or economic sanctions and trade compliance laws could subject the Nuvini Group to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions, suspension or debarment from contracting with certain persons, forfeiture of significant assets, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas are served or investigations are launched, or governmental or other sanctions are imposed, or if the Nuvini Group does not prevail in any possible civil or criminal proceeding, the Nuvini Group’s businesses, financial condition and results of operations could be harmed.

Moreover, regulators may increase enforcement of these obligations, which may require the Nuvini Group to adjust Nuvini Group’s compliance and anti-money laundering programs, including the procedures the Nuvini Acquired Companies use to verify the identity of Nuvini Acquired Companies’ clients and to monitor Nuvini Acquired Companies’ transactions and transactions made through Nuvini Acquired Companies’ proprietary data platforms. Regulators regularly reexamine the transaction volume thresholds at which the Nuvini Acquired Companies must obtain and keep applicable records, verify identities of clients and report any change in such thresholds to the applicable regulatory authorities, which could result in increased costs in order to comply with these legal and regulatory requirements. Costs associated with fines or enforcement actions, changes in compliance requirements or limitations on Nuvini Group’s ability to grow could harm Nuvini Group’s businesses, and any new requirements or changes to existing requirements could impose significant costs, result in delays to planned data solutions and services improvements, make it more difficult for new clients to join Nuvini Group’s network and reduce the attractiveness of Nuvini Group’s data solutions and services.

The Nuvini Group may be held liable for the labor, tax social security and other obligations of third parties.

The Nuvini Group outsources certain ancillary activities that support its businesses, including recruiters to attract talent and maintenance personnel. The Nuvini Group does not provide benefits to these outsourced workers. According to Brazilian legislation, if the Nuvini Group’s outsourced service providers fail to comply with their obligations under labor, social security, tax and/or environmental laws, the Nuvini Group may be held jointly and severally or secondarily liable for any non-compliance, resulting in fines or other penalties, which may adversely affect the Nuvini Group. In addition, if it is judicially determined that these outsourced workers effectively served in the capacity of employees despite being considered outsourced workers by the Nuvini Acquired Companies, the Nuvini Group can be liable for payment of unpaid benefits and social security. The Nuvini Group may also be liable for bodily injury or death at the Nuvini Group’s offices and Nuvini’s data laboratory of the employees of third parties who provide services to the Nuvini Group, which may adversely affect the Nuvini Group’s reputation as well as the Nuvini Group’s business. Moreover, any environmental damage and/or damage to third parties caused by service providers when undergoing work engaged by the Nuvini Group may expose the Nuvini Group to joint and several liability or secondary for redress and/or damages for harm caused.

 

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Financial, Tax and Accounting-Related Risks

Fixed-price contracts may affect the Nuvini Group’s profits.

Some of the Nuvini Acquired Companies’ contracts are structured on a fixed-price basis, which can lead to various risks, including:

 

   

The failure to accurately estimate the resources and time required for an engagement;

 

   

The failure to effectively manage the Nuvini Acquired Companies’ clients’ expectations regarding the scope of services delivered for a fixed fee; and

 

   

The failure to timely and satisfactorily complete fixed-price engagements within budget.

If the Nuvini Acquired Companies do not adequately assess and manage these and other risks, the Nuvini Group may be subject to cost overruns and penalties, which may harm the Nuvini Group’s financial performance.

Increases in investment in research and development could decrease overall margins.

An important element of the Nuvini Group’s corporate strategy is to continue to dedicate a significant amount of resources to research and development and related product and service opportunities both through internal investments and the acquisition of intellectual property from companies that Nuvini S.A. has acquired. The Nuvini Group believes that it must continue to dedicate a significant amount of resources to research and development efforts to maintain the Nuvini Group’s competitive position, and research and development expenses could adversely affect its operating margins.

Nuvini S.A. has identified material weaknesses in its internal control over financial reporting and information technology general controls and, as a result, restated its previous period’s financial statements. If Nuvini S.A. fails to remediate such material weaknesses (and any other ones) or establish and maintain effective internal controls over financial reporting, Nuvini S.A. may be unable to accurately report its results of operations, meet its reporting obligations and/or prevent fraud.

Nuvini S.A. has been a private company with limited accounting resources and processes necessary to address Nuvini S.A.’s internal control over financial reporting and procedures. Nuvini S.A.’s management has not yet completed an assessment of the effectiveness of Nuvini S.A.’s internal controls over financial reporting and Nuvini S.A.’s independent registered public accounting firm has not conducted an audit of Nuvini S.A.’s internal control over financial reporting. In connection with the audit of Nuvini S.A.’s consolidated financial statements for the year ended December 31, 2022 and December 31, 2021, a number of material weaknesses in Nuvini S.A.’s internal control over financial reporting as of December 31, 2022 and December 31, 2021 were identified and, as a result, the December 31, 2021 financial statements were restated. A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual consolidated financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified relate to:

 

   

inability to implement a system of internal control over financial reporting considering the following components: (i) implementing a structure and establishing standards and processes to provide a basis for carrying out internal control activities across the organization; (ii) a risk assessment process for identifying and assessing risks for the achievement of financial reporting objectives; (iii) formal structure and controls related to “segregation of duties” around the critical elements of our financial reporting processes, including revenue recognition, impairment testing, financial instruments and significant or unusual transactions (among others); and (iv) monitoring process and oversight on;

 

   

insufficient accounting resources and processes necessary to comply with IFRS and SEC reporting requirements, specifically:(i) ineffective design, implementation and operation of controls within the

 

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financial reporting process relating to preparation and review of the financial statements, including the technical application of IFRS and SEC reporting; (ii) ineffective design, implementation and operation of controls within the financial reporting process, including the lack of sufficient accounting policies and procedures for the maintenance of accurate accounting records, and especially those related to the accounting for complex transactions; (iii) lack of sufficient knowledge, experience and training of finance and accounting personnel with respect to accounting and financial reporting requirements; and (iv) inadequate governance structure, including the lack of appropriate oversight of accounting and financial reporting matters; and

 

   

Ineffective information technology (“IT”) general controls for information systems that are relevant to the preparation of the consolidated financial statements, including (i) insufficient policies and procedures over granting, reviewing, and revoking client access to IT applications and IT databases, and over change management; and (ii) governance and structure to manage and control access to in-scope application systems and changes to programs.

Each of the material weaknesses described above could result in a misstatement of one or more account balances or disclosures in our future annual consolidated financial statements that would not be prevented or detected on a timely basis.

In addition, Nuvini S.A.’s financial statements as of and for the year ended December 31, 2021 were previously restated to correct misstatements in (i) measurement and recognition of deferred and contingent consideration transferred in business combinations; which impacted liabilities for deferred and contingent considerations on acquisitions, as well as goodwill associated with these business combinations; (ii) recognition of deferred taxes associated with assets acquired and liabilities assumed in business combinations; (iii) purchase price allocations for the subsidiary OnClick, and associated depreciation and amortization of the acquired assets; (iv) measurement and recognition of a derivative liability associated with the exposure premium negotiated in connection with Nuvini S.A.’s Debenture Agreement; (v) recognition of share-based compensation expense; (vi) reclassification of intangible asset amortization expense; (vii) measurement and classification of subscription rights; and (viii) classification and presentation of the statement of cash flows.

Nuvini S.A.is in the process of taking necessary actions to design and implement formal accounting policies, procedures and controls, as well establishing a control matrix required to remediate these material weaknesses. It also includes designing Nuvini S.A.’s financial control environment, including the establishment of controls to account for and disclose complex transactions. Additionally, upon Closing of the Business Combination, Nuvini S.A. plans to hire Scott Klossner as Chief Financial Officer, along with other accounting and finance personnel with public company reporting and public market experience. In particular, the scope of work and responsibilities of this internal controls team will include ensuring that the proper systems and processes are put in place by evaluating, together with the Chief Executive Officer, the effectiveness of the design and operation of Nuvini S.A.’s standards, systems, controls and procedures across the Nuvini Acquired Companies and Nuvini S.A. The internal controls team will be tasked with architecting, implementing and monitoring reporting and controls requirements across the Nuvini Group. This team will be responsible for assessing and remedying reporting controls and processes; creating standardized processes with respect to segregation of duties, accounting standards, impairment testing, contract review for accounting and risk assessment; creating a continuous monitoring of Nuvini S.A. practices for compliance, constant improvement and consistency; and coordinating with the Nuvini Acquired Companies in standards, hiring and training of reporting personnel. With respect to SEC reporting, Nuvini S.A. intends to invest adequate resources in the creation of an SEC reporting unit with extensive public company experience. This SEC reporting unit will report directly to the Chief Financial Officer and will have extensive public company experience including, but not limited to, SEC reporting and control implementation. Nuvini S.A. plans to begin hiring for this SEC reporting unit following the Closing of the Business Combination.

With regard to its information technology controls, Nuvini S.A. plans to hire a centralized information technology team, including a Chief Security Officer, to assist with implementation of consistent reporting systems, security and compliance, across the Nuvini Group, in order to improve the quality of information stored and

 

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facilitate interface with New Nuvini Shareholders and management through the implementation of an equity management platform with the support of third parties. This information technology team will be tasked with ensuring all relevant data is protected and being utilized in compliance with all necessary standards both internationally and within Brazil, establishing governance and structure to manage and control access to in-scope application systems and changes to programs and to get the entire Nuvini Group on the same reporting platform, among other things. Additionally, Nuvini S.A. is working on rolling out its current Oracle system to all Nuvini Acquired Companies to ensure consistency on both accuracy and timeliness of information.

Nuvini S.A. expects to incur approximately $1.0 million on the foregoing remediation efforts and fully remediate the material weaknesses within two fiscal quarters after Closing. Scott Klossner will lead such remediation efforts after the Business Combination is approved and his position as CFO becomes effective. However, Nuvini S.A. cannot assure you that it would have sufficient funds to defray the costs of the remediation efforts or that Nuvini S.A.’s efforts will be effective or prevent any future material weakness in Nuvini S.A.’s internal control over financial reporting.

Following the Business Combination, New Nuvini will be a public company in the United States subject to the Sarbanes-Oxley Act. For more information, see “New Nuvini may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it after the Business Combination is consummated.”

During the course of remediating these material weaknesses and satisfying the requirements of Section 404 of the Sarbanes-Oxley Act, Nuvini S.A. or New Nuvini may identify additional material weaknesses and other deficiencies in its internal control over financial reporting and there can be no assurance that any additional material weaknesses or restatement of financial results will not arise in the future due to a failure to implement and maintain adequate controls over financial reporting. In addition, if New Nuvini fails to maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, New Nuvini may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. If New Nuvini fails to maintain an effective internal control over financial reporting, New Nuvini could suffer material misstatements in Nuvini S.A.’s financial statements, fail to meet New Nuvini’s reporting obligations or fail to prevent fraud, which would likely cause investors to lose confidence in New Nuvini’s reported financial information. This could, in turn, limit New Nuvini’s access to capital markets and harm its results of operations and lead to a decline in the trading price of New Nuvini Ordinary Shares. New Nuvini may be unable to timely complete its evaluation testing and any required remediation.

In addition, these new obligations will also require substantial attention from New Nuvini’s senior management and could divert their attention away from the day-to-day management of New Nuvini. These cost increases and the diversion of management’s attention could materially and adversely affect New Nuvini’s businesses, financial condition and operating results.

Because Nuvini S.A. recognizes revenue from the Nuvini Group’s proprietary SaaS businesses over the monthly term of each contract, downturns or upturns in new sales and renewals will not be immediately reflected in Nuvini S.A.’s results of operations.

Since Nuvini S.A.’s establishment, all of its revenues have derived from the Nuvini Group’s proprietary SaaS businesses. The Nuvini Acquired Companies’ client contracts typically have a monthly term and Nuvini S.A. recognizes revenue from the Nuvini Group’s proprietary SaaS businesses ratably over the term of each contract. As a result, part of the revenue Nuvini S.A. reports in each quarter is derived from the recognition of deferred revenue relating to contracts entered into during previous quarters. Consequently, a future decline in new or renewed contracts, or a reduction in expansion rates, in any single quarter could have only a small impact on Nuvini S.A.’s revenue results during that quarter or subsequent period. Such a decline or deceleration, however, will negatively affect Nuvini S.A.’s revenue or revenue growth rates in future quarters and, in the aggregate, may cause a material adverse effect on the Nuvini Group’s businesses, financial condition and results of operations.

 

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The Nuvini Group expects fluctuations in its results of operations, making it difficult to project future results, and if Nuvini fails to meet the expectations of securities analysts or investors with respect to the Nuvini Group’s results of operations, the market prices of New Nuvini Ordinary Shares and New Nuvini Warrants could decline.

The Nuvini Group’s results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of the Nuvini Group’s control. As a result, the Nuvini Group’s past results may not be indicative of the Nuvini Group’s future performance. In addition to the other risks described herein, factors that may affect the Nuvini Group’s results of operations include the following:

 

   

fluctuations in demand for or pricing of the Nuvini Acquired Companies’ solutions;

 

   

the Nuvini Acquired Companies’ ability to attract new clients;

 

   

the Nuvini Acquired Companies’ ability to retain existing clients;

 

   

client expansion rates;

 

   

seasonality;

 

   

investments in new features and functionality;

 

   

fluctuations in client consumption resulting from New Nuvini’s introduction of new features or capabilities to the Nuvini Acquired Companies’ systems that may impact client consumption;

 

   

the timing of the Nuvini Acquired Companies’ clients’ purchases;

 

   

the speed with which clients are able to migrate data onto the Nuvini Acquired Companies’ proprietary data platforms after purchasing capacity;

 

   

fluctuations or delays in purchasing decisions in anticipation of new solutions or enhancements by New Nuvini or its competitors;

 

   

changes in clients’ budgets, the timing of their budget cycles and purchasing decisions;

 

   

the Nuvini Group’s ability to control costs, including its operating expenses;

 

   

the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses;

 

   

the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges;

 

   

the amount and timing of costs associated with recruiting, training and integrating new employees and retaining and motivating existing employees;

 

   

the effects and timing of acquisitions;

 

   

general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which the Nuvini Acquired Companies’ clients and partners participate;

 

   

fluctuations in currency exchange rates and changes in the proportion of the Nuvini Group’s revenue and expenses denominated in foreign currencies;

 

   

health epidemics or pandemics, such as the COVID-19 pandemic;

 

   

the failure of financial institutions, such as the inadequate liquidity position and insolvency of Silicon Valley Bank, or SVB, and the subsequent appointment of the Federal Deposit Insurance Corporation as receiver;

 

   

the impact or timing of the Nuvini Group’s adoption of new accounting pronouncements;

 

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changes in regulatory or legal environments that may cause the Nuvini Group to incur, among other things, expenses associated with compliance;

 

   

the overall tax rate for the Nuvini Group’s business, which may be affected by the mix of income the Nuvini Group earns in Brazil and in jurisdictions with different tax rates, the effects of stock-based compensation and the effects of changes in the Nuvini Group’s business;

 

   

the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period;

 

   

fluctuations in the market values of the Nuvini Group’s portfolio and in interest rates;

 

   

changes in the competitive dynamics of the Nuvini Acquired Companies’ markets, including consolidation among competitors or clients; and

 

   

significant security breaches of, technical difficulties with or interruptions to, the delivery and use of the Nuvini Group’s solutions.

Any of these and other factors, or the cumulative effect of some of these factors, may cause the Nuvini Group’s results of operations to vary significantly. If the Nuvini Group’s quarterly results of operations fall below the expectations of investors and securities analysts who follow the Nuvini Group’s stock, the price of the New Nuvini Ordinary Shares could decline substantially, and the Nuvini Group could face costly lawsuits, including securities class actions.

Nuvini S.A.’s payment obligations under Nuvini S.A.’s indebtedness may limit the funds available to the Nuvini Group and may restrict the Nuvini Group’s flexibility in operating its businesses.

Nuvini S.A. has increasing fixed financial costs in connection with its indebtedness and has incurred an increasing amount of debt in recent years to support Nuvini S.A.’s acquisitions. As of December 31, 2021, Nuvini S.A. had an aggregate principal amount of R$8.3 million of total outstanding loans and financing and R$10.9 million in cash and cash equivalents. As of December 31, 2022, Nuvini S.A. had an aggregate principal amount of R$7.3 million of total outstanding loans, financing and loans from investors and R$8.0 million in cash and cash equivalents.

Overall, a large portion of the indebtedness is comprised of deferred and contingent consideration due as a result of Nuvini S.A.’s acquisitions, of which the value of certain contingent consideration payments is driven by the future performance of the respective acquired company. As of December 31, 2021 and 2022, the total deferred and contingent consideration on acquisitions outstanding was R$291.3 million and R$235.0 million, respectively.

As of December 31, 2021, the total loans and financing includes (i) Debentures issued on May 14, 2021 in the amount of R$61.0 million, accruing interest at a rate per year equal to CDI plus 10.6%, (ii) loans and financing in the amount of R$5.2 million accruing interest at a rate per year equal to CDI plus 5.80%, (iii) loans and financing totaling R$3.1 million accruing interest at a weighted average rate of 13.53%, (iv) loans with Pierre Schurmann, CEO, with a remaining balance of R$9.0 million and (v) a loan agreement with Aury Ronan Francisco, former Chief Financial Officer, in the amount of R$700 thousand outstanding.

As of December 31, 2022, the total loans and financing includes (i) Debentures issued on May 14, 2021 in the amount of R$61.0 million, accruing interest at a rate per year equal to CDI plus 10.6%, (ii) loans and financing totaling R$1.8 million accruing interest at a weighted average rate of 11%, (iii) loans from investors totaling R$4.8 million of principal balance with interest at a rate per year equal to CDI plus 10.0% with a 15% premium on the principal loan amount, payable in New Nuvini Ordinary Shares upon Closing, (iv) a loan agreement with Pierre Schurmann with a remaining balance of R$3.2 million with interest calculated as CDI plus 10% per year, and (v) a loan agreement with Aury Ronan Francisco with a remaining balance of R$700 thousand of principal balance with interest calculated as CDI plus 3% per year. Refer below for additional details on these related party transactions.

 

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The 2021 loans from Pierre Schurmann were granted in two installments on August 23, 2021 in the amount of R$6.0 million and on August 31, 2021 in the amount of R$3.0 million, both installments payable within six months. Interest on the outstanding loan is calculated using a fixed rate of 8% per annum. From January 27, 2022 and March 28, 2022, Nuvini S.A. entered into four additional loan agreements with Pierre Schurmann. The first and second loan agreements were entered into on January 27, 2022 in the principal amount of R$500 thousand and R$300 thousand respectively, each carrying an interest rate of 100% of CDI plus 3% per annum. The third loan agreement was entered into on February 1, 2022, with a principal amount of R$1.2 million, carrying an interest rate equal to 100% of CDI plus 3% per annum. The fourth loan agreement was entered into on March 29, 2022, with a principal amount of R$1.2 million, carrying an interest rate equal to 100% of CDI plus 3% per annum. On April 28, 2022, Nuvini S.A. and Pierre Schurmann entered into a first consolidated amendment applicable to all the Related Party Loan Agreements in order to (i) condition the payment of the Related Party Loan Agreements to the achievement of a gross debt indicator/pro forma EBITDA less or equal to 3.5x for three consecutive semesters by Nuvini S.A., in connection with the Exposure Premium, as per deliberated in a general meeting of the debenture holders; and (ii) equalize the interest rates of all Related Party Loan Agreements in 100% of the CDI plus 8% per annum.

In December 2022, all amounts payable under these loans, amounting to R$16.8 million were converted into subscription rights. For more information related to the subscription rights, see “Note 17Equity” of Nuvini S.A.’s consolidated financial statements included elsewhere in this proxy statement/prospectus. On December 15, 2022, Nuvini S.A. entered into a loan agreement with Schurmann, in the principal amount of R$3.2 million with an interest rate of 10% per annum and 100% of CDI, with a 16 month maturity. Pursuant to the terms of this agreement, Schurmann is also entitled to a premium in the equivalent of 15% of the principal loan amount, payable in shares of New Nuvini Ordinary Shares upon Closing. On September 3, 2021, Nuvini S.A. and Francisco entered into a loan agreement in the amount of R$3.7 million. On September 29, 2021, the Group paid R$3,000 of the principal amount, with the remaining R$700 thousand outstanding and payable within six months. Interest on the outstanding loan is calculated using a fixed rate of 3% per annum. Per the terms of the agreement, once the balance is paid, the Company will also include a penalty of 2% of the total value of the loan. On February 13, 2023, Nuvini S.A. entered into a loan agreement with Schurmann, with a principal amount of R$3,300, carrying an interest rate equal to 100% of CDI plus 10% per annum. The purpose of the loan agreement was to provide Nuvini S.A. with working capital to fund its operations.

Nuvini S.A. also entered into a separate agreement that provides for the payment of additional amounts to Debenture Holders outstanding in the event of certain liquidity events, as defined, or the early redemption of the debentures by Nuvini S.A. in whole or in part prior to maturity the “Exposure Premium.” The Exposure Premium due to Debenture Holders under a qualifying liquidity event, determined pursuant to the terms of the Debenture Agreement, is calculated as 5% of the total equity value of all the shares of Nuvini S.A. on the date of the liquidity event, applied pro-rata based on the total Debentures initially acquired by the Debenture Holders in proportion to every 250,000 Debentures authorized for issuance. As only 58,000 of 250,000 Debentures were issued to the Debenture Holders, the total exposure is 1.16% of total equity value of all the shares of Nuvini S.A. on the date of liquidity event, limited to the applicable percentage cap of the value of the Debentures outstanding. This agreement represents a free-standing derivative accounted for as a financial liability based on its fair value. As of December 31, 2021, the fair value of the Exposure Premium was R$745 thousand and the fair value adjustment recorded in the provision for Debentures as a non-current liability with the change in fair value of the derivative recorded in profit or loss. As of December 31, 2022, the fair value of the Exposure Premium is R$841 thousand.

Nuvini S.A. may be required to use a portion of its cash flows from operations to pay interest and principal on Nuvini S.A.’s indebtedness. Such payments will reduce the funds available to the Nuvini Group for working capital, capital expenditures and other corporate purposes and limit Nuvini S.A.’s ability to obtain additional financing (or to obtain such financing on acceptable terms) for working capital, capital expenditures, expansion plans and other investments, which may in turn limit the Nuvini Group’s ability to implement its business strategy, heighten its vulnerability to downturns in the Nuvini Group’s businesses, its industry or in the general economy, limit the Nuvini Group’s flexibility in planning for, or reacting to, changes in its businesses and the industry and prevent the Nuvini Group from taking advantage of business opportunities as they arise. A high

 

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level of leverage may also have significant negative effects on the Nuvini Group’s future operations by increasing the possibility of an event of default under the financial and operating covenants contained in Nuvini S.A.’s debt instruments.

In addition, Nuvini S.A. is exposed to interest rate risk related to some of Nuvini S.A.’s indebtedness. For additional information, see “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Loans and Financing and Debentures.

If the Nuvini Group is unable to generate sufficient cash flow from operations to service Nuvini S.A.’s debt, Nuvini S.A. may be required to refinance all or a portion of Nuvini S.A.’s existing debt or obtain additional financing. The Nuvini Group cannot assure you that any such refinancing would be possible or that any additional financing could be obtained. Nuvini S.A.’s inability to obtain such refinancing or financing may have a material adverse effect on the Nuvini Group’s businesses, financial condition, ratings and results of operations.

Nuvini S.A.’s existing loan agreements contain restrictive covenants, exposure premiums and events of default that impose significant operating and financial restrictions on Nuvini S.A., and Nuvini S.A. is currently not in compliance with certain financial covenants included in Nuvini S.A.’s loan agreements.

Under the terms of the Debenture Agreement, Nuvini S.A. is subject to restrictive and affirmative covenants including restrictions on Nuvini S.A.’s change of control, the change of Nuvini S.A.’s ownership structure and corporate reorganization, limitations on certain consolidations, mergers and sales of assets, restrictions on the payment of dividends and financial covenants. Some of these financial covenants comprise (i) Gross Debt/EBITDA Pro Forma indicator, less than or equal to (a) 4.0x (four times), being the calculation based on the fiscal year ending December 31, 2021; (b) 3.5x (three times) to be verified based on the annual and consolidated financial statements of the consolidated financial statements of Nuvini S.A., as calculated on the fiscal year ended December 31, 2022; and (c) 3.0x (three times) to be verified based on the annual and consolidated financial statements of Nuvini S.A., with the first determination based on the fiscal year ending December 31, 2023 onwards; (ii) Pro Forma EBITDA Margin in relation to Net Revenue equal to or greater than 20% (twenty percent); and (iii) Debt Service Coverage Ratio (“DSCI”) greater than or equal to 4.0x (four times) until the expiration date, given that the DSCI is the sum of “cash and cash equivalents” and “cash flow from operational activities.” Further, due to the Debenture Holder’s risk related to Nuvini S.A.’s Debentures, in addition to the fixed payments described above, Nuvini S.A. is also required to pay an Exposure Premium to the Debenture Holder, in proportion to the amount of Debentures initially acquired during the Debenture First Issue, upon the occurrence of a liquidity event or early redemption of the Debentures. Liquidity events are defined as the sale, exchange or alteration of the capital structure of Nuvini S.A. such as reorganization or the public sale of shares equivalent to at least 10% of the total capital stock of Nuvini S.A.

On December 31, 2021, Nuvini S.A. did not demonstrate the ability to meet any of the three covenants established and kept the balance of Debentures in current liabilities, however, Nuvini S.A. requested from the Debenture Holders a waiver valid for the next 12 months, which was granted and formalized in a Debenture Holders general meeting (“DHGM”) dated March 30, 2022, prior to the issuance Nuvini S.A.’s consolidated financial statements for the year ended December 31, 2021 included elsewhere in this proxy statement/prospectus. At the same DHGM, the Debenture Holders agreed to change the covenant of Gross Debt / Pro Forma EBITDA Pro Forma to 7.2x, the covenant of EBITDA Margin Pro Forma in relation to net revenue to equal or higher than 7.1% and maintain the ICSD covenant at 4.0x for the fiscal year of 2022. On December 31, 2022, Nuvini S.A. did not meet the Debt Service Coverage Index for the 2022 fiscal year and requested an additional waiver for the 2022 fiscal year that was approved and granted at a DHGM dated February 9, 2023. On May 8, 2023, the debenture holders granted the Company’s request to extend the scheduled amortization date of the debentures to August 14, 2023.

If Nuvini S.A. fails to comply with the covenants under any of Nuvini S.A.’s indebtedness in the future or otherwise receive waivers, Nuvini S.A. may be in default under the documents governing such indebtedness, which may entitle the lenders thereunder to accelerate their debt obligations. A default under any of Nuvini

 

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S.A.’s indebtedness could result in cross-defaults under Nuvini S.A.’s other indebtedness, which in turn could result in the acceleration of Nuvini S.A.’s other indebtedness that would have an adverse effect on Nuvini S.A.’s cash flows and liquidity. For a description of certain terms of Nuvini S.A.’s material financings, including Nuvini S.A.’s financial covenants, see “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Loans and Financing and Debenture.”

In the future, in order to avoid defaulting on Nuvini S.A.’s indebtedness, Nuvini S.A. may be required to take actions such as reducing or delaying capital expenditures, reducing or eliminating dividends or share repurchases, selling assets, restructuring or refinancing all or part of Nuvini S.A.’s existing debt or seeking additional equity capital, any of which may not be available on terms that are favorable to the Nuvini Group or to Nuvini’s shareholders, if at all. Complying with the covenants in Nuvini S.A.’s many financing agreements may cause it to take actions that make it more difficult to execute the Nuvini Group’s business strategy successfully and the Nuvini Group may face competition from companies not subject to such restrictions. As a result of acquisitions, Nuvini S.A. records the fair value of earn outs, which are categorized as level 3 financial liabilities. For more information, see “—Nuvini S.A.’s payment obligations under Nuvini S.A.’s indebtedness may limit the funds available to the Nuvini Group and may restrict the Nuvini Group’s flexibility in operating its businesses.”

We have not complied, and may not in the future, be able to comply with the financial covenants contained in our Debenture Agreement, which have resulted, and may result, in events of default and may in the future result in additional events of default.

Under the terms of Nuvini S.A.’s Debenture Agreement, it is required to comply with is subject to restrictive and affirmative covenants, including restrictions on Nuvini S.A.’s change of control, the change of Nuvini S.A.’s ownership structure and corporate reorganization, limitations on certain consolidations, mergers and sales of assets, restrictions on the payment of dividends and financial covenants. Our ability to meet these ratios and covenants can be affected by events beyond our control. We have not always met these ratios and covenants in the past and have had to obtain waivers and consents from Debenture Holders to adjust the ratios and covenants so that we could remain in compliance. See “Nuvini S.A. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments—Loan Covenant Waiver” for further information.

We may not meet these ratios and covenants in the future. A failure by us to comply with the ratios or covenants contained in our Debenture Agreement, could result in an event of default, which could adversely affect our ability to respond to changes in our business and manage our operations. Upon the occurrence of an event of default under the terms of our Debenture Agreement, including the occurrence of a material adverse change, the Debenture Holders could elect to declare any amounts outstanding to be due and payable and exercise other remedies.

There are risks for which the Nuvini Group’s insurance policies may not adequately cover or for which the Nuvini Group has no insurance coverage. Insufficient insurance coverage or the materialization of such uninsured risks could adversely affect the Nuvini Group.

Nuvini Group’s insurance policies may not adequately cover all risks to which the Nuvini Group is exposed, and the Nuvini Group is subject to risks for which it is uninsured, such as breaches of the security of its systems by hackers, war, acts of God, including hurricanes and other force majeure events. In addition, the Nuvini Group cannot guarantee that it will be able to maintain its insurance policies in the future or that the Nuvini Group will be able to renew them at reasonable prices or on acceptable terms, which may adversely affect the Nuvini Group’s business. The occurrence of a significant loss that is not insured or compensable, or that is only partially insured or compensable, may require Nuvini to commit significant cash resources to cover such losses, which may have an adverse effect on the Nuvini Group’s business and results of operations.

 

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Agreements by Nuvini Acquired Companies agree to indemnify clients and other third parties may exposes the Nuvini Group to substantial potential liability.

The Nuvini Acquired Companies’ contracts with clients, investors and other third parties may include indemnification provisions under which the Nuvini Acquired Companies agree to defend and indemnify them against claims and losses arising from alleged infringement, misappropriation or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons or other liabilities arising from the Nuvini Acquired Companies’ data solutions or services or such contracts. Although the Nuvini Group attempts to limit the Nuvini Group’s indemnity obligations, the Nuvini Group may not be successful in doing so, and an event triggering the Nuvini Group’s indemnity obligations could give rise to multiple claims involving multiple clients or other third parties. There is no assurance that the Nuvini Group’s applicable insurance coverage, if any, would cover, in whole or in part, any such indemnity obligations. The Nuvini Group may be liable for up to the full amount of the indemnified claims, which could result in substantial liability or material disruption to the Nuvini Group’s businesses or could negatively impact the Nuvini Acquired Companies’ relationships with clients or other third parties, reduce demand for the Nuvini Acquired Companies’ data solutions and services, and adversely affect Nuvini Group’s business, financial condition and results of operations.

Unfavorable conditions in the Nuvini Group’s industry or the global economy could limit the Nuvini Group’s ability to grow the Nuvini Group’s businesses and negatively affect Nuvini’s results of operations.

Nuvini’s results of operations may vary based on the impact of changes in the Nuvini Group’s industries or the global economy on the Nuvini Group or the Nuvini Acquired Companies’ clients and potential clients. Negative conditions in the general economy both in Brazil and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market volatility and disruptions (including, for example, SVB entering receivership), international trade relations, pandemic (such as the COVID-19 pandemic), political turmoil, natural catastrophes, warfare and terrorist attacks, could cause a decrease in business investments, including spending on data solutions, and negatively affect the growth of the Nuvini Group’s businesses. Competitors, many of whom are larger and have greater financial resources than the Nuvini Group does, may respond to challenging market conditions by lowering prices in an attempt to attract the Nuvini Group’s clients. The Nuvini Group cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.

Risks for New Nuvini’s Stockholders Related to the Business Combination

The holders of Mercato Class A Common Stock, other than the Sponsor and its affiliates, who elect to have their shares redeemed may nevertheless keep their Mercato Warrants, which will result in additional dilution to non-redeeming stockholders upon the exercise of such warrants.

The redemption of shares by holders of Mercato Class A Common Stock does not require that such holders also redeem Mercato Warrants they hold. As a result, such holders may retain the option value embedded in such Mercato Warrants once assumed as New Nuvini Warrants even if they do not retain the risk of holding New Nuvini Ordinary Shares. Exercises of such New Nuvini Warrants will result in dilution to shareholders of New Nuvini even though New Nuvini did not receive the benefit of the Trust Account funds associated with the corresponding Mercato Class A Common Stock. Assuming, as discussed under “Unaudited Pro Forma Condensed Combined Financial Information—Basis of Pro Forma Presentation,” that 1,803,651 shares of Mercato Class A Common Stock are redeemed for their pro rata share of the cash in the Trust Account (assuming the maximum amount that can be redeemed while also satisfying the Minimum Cash Condition), the Mercato Warrants held by such persons whose shares were redeemed (assuming the holder of each such share also held one-half of a Public Warrant) would have had an aggregate market value of approximately $87,838 based on the closing price of the Public Warrants of $0.0974 on Nasdaq on as of the Record Date.

 

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In the event that a significant number of shares of Mercato Class A Common Stock are redeemed, Mercato Common Stock (or New Nuvini Ordinary Shares following the Business Combination) may become less liquid.

Mercato has experienced high redemptions of Mercato Class A Common Stock in the past. On February 3, 2023, in connection with the extension meeting, Public Stockholders elected to redeem 18,699,637 shares of Mercato Class A Common Stock (or approximately 81% of the Public Shares at that time). As of the Record Date, there were 4,300,363 shares of Mercato Class A Common Stock outstanding and approximately $45,903,619.26 in the Trust Account. If a significant number of remaining outstanding shares of Mercato Class A Common Stock are redeemed in connection with the Business Combination and the Business Combination is consummated, New Nuvini will receive lesser proceeds from the Business Combination. Additionally, the redemption of shares of Mercato Class A Common Stock in connection with the Business Combination will adversely affect the trading volume of New Nuvini Ordinary Shares following the Business Combination, which may impair your ability to sell your New Nuvini Ordinary Shares and may also impair New Nuvini’s ability to raise additional capital on favorable terms after the Business Combination. In the event New Nuvini obtains lesser proceeds from the Business Combination, it may be required to raise additional capital following the Business Combination to fund its operations and business plan, even if under unfavorable terms or prices. If New Nuvini raises additional capital in the form of sales of New Nuvini Ordinary Shares, the sale and issuance of such New Nuvini Ordinary Shares, or even the perception that these sales might occur, could put significant downward pressure on the price of New Nuvini Ordinary Shares and cause the market price of New Nuvini Ordinary Shares to decline. This could impair New Nuvini’s ability to raise additional capital through a future sale of, or pay for acquisitions using, New Nuvini’s equity securities. Any future issuance by New Nuvini of equity securities would also dilute the interests of holders of New Nuvini Ordinary Shares. See “—Future issuances by New Nuvini of any equity securities may dilute the interests of Mercato stockholders and decrease the trading price of New Nuvini Ordinary Shares”.

Risks for Mercato’s Stockholders Related to Mercato, the Business Combination and the Mercato Stockholder Redemption

Mercato will require Public Stockholders who wish to redeem their Mercato Class A Common Stock in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

Mercato will require Public Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to the Transfer Agent prior to the expiration date set forth in the tender offer documents mailed to such holders, or in the event Mercato distributes proxy materials, up to two business days prior to the vote on the proposal to approve the Business Combination, or to deliver their shares to the Transfer Agent electronically using DTC’s Deposit/Withdrawal At Custodian System (“DWAC System”), at the holder’s option. In order to obtain a physical stock certificate, a shareholder’s broker and/or clearing broker, DTC and the Transfer Agent will need to act to facilitate this request. It is Mercato’s understanding that stockholders should generally allot at least one week to obtain physical certificates from the Transfer Agent. However, because Mercato does not have any control over this process or over the brokers or DTC, it may take significantly longer than one week to obtain a physical stock certificate. While Mercato has been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Under the Mercato Bylaws, Mercato is required to provide at least five days advance notice of any shareholder meeting, which would be the minimum amount of time a Mercato stockholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than Mercato anticipates for Mercato stockholders to deliver their shares, Mercato stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their Public Shares. In the event that a Mercato stockholder fails to comply with the various procedures that must be complied with in order to validly tender or redeem Public Shares, its shares may not be redeemed.

Additionally, despite Mercato’s compliance with the proxy rules, Mercato stockholders may not become aware of the opportunity to redeem their Public Shares.

 

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If a Public Stockholder fails to receive notice of Mercato’s offer to redeem its Mercato Class A Common Stock in connection with the Business Combination, or fails to comply with the procedures for tendering its shares of Mercato Class A Common Stock, such shares may not be redeemed.

Mercato will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with the initial business combination. Despite Mercato’s compliance with these rules, if a Public Stockholder fails to receive Mercato’s tender offer or proxy materials, as applicable, such Public Stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that Mercato will furnish to holders of Public Shares in connection with the initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem Public Shares. For example, Mercato may require Public Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to the Transfer Agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the Business Combination in the event Mercato distributes proxy materials, or to deliver their Public Shares to the Transfer Agent electronically. In the event that a Public Stockholder fails to comply with these or any other procedures, its Public Shares may not be redeemed.

Mercato does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Mercato to complete the Business Combination even if a substantial majority of Mercato stockholders do not agree.

The Mercato Certificate of Incorporation does not provide a specified maximum redemption threshold, except that Mercato will only redeem its Public Shares so long as (after such redemption) Mercato’s net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of its initial business combination (so that Mercato does not then become 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 the Business Combination. As a result, Mercato may be able to complete the Business Combination even if a substantial majority of Public Stockholders do not agree with the Business Combination and have redeemed their shares. In the event the aggregate cash consideration Mercato would be required to pay for all Mercato Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Business Combination exceed the aggregate amount of cash available to Mercato, Mercato will not complete the Business Combination or redeem any shares, all Mercato Class A Common Stock submitted for redemption will be returned to the holders thereof, and Mercato instead may search for an alternate business combination.

If a stockholder or a “group” of stockholders are deemed to hold in excess of 15% of the Mercato Class A Common Stock, such stockholder or group will lose the ability to redeem all such shares in excess of 15% of the Mercato Class A Common Stock.

The Mercato Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Mercato IPO (the “Excess Shares”) without Mercato’s prior written consent. However, the Mercato Certificate of Incorporation does not restrict Mercato stockholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination. The inability of a Mercato stockholder to redeem the Excess Shares will reduce its influence over Mercato’s ability to complete the Business Combination and such stockholder could suffer a material loss on its investment in Mercato if it sells such Excess Shares in open market transactions. Additionally, a Mercato stockholder will not receive redemption distributions with respect to the Excess Shares if Mercato completes the Business Combination. And as a result, such Mercato stockholder will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell its Public Shares in open market transactions, potentially at a loss.

 

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The Sponsor, Mercato’s directors, officers, advisors or their affiliates may enter into certain transactions, including purchasing Public Shares or Public Warrants from the public, which may influence the outcome of the Business Combination and reduce the public “float” of the Mercato Class A Common Stock.

The Sponsor, Mercato’s directors, officers, advisors or their affiliates may purchase Public Shares or Public Warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the Closing, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such Mercato stockholder, although still the record holder of Mercato’s shares is no longer the beneficial owner thereof and therefore agrees not to exercise his, her or its redemption rights. In the event that the Sponsor, Mercato’s directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Additionally, at any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), the Sponsor, Mercato’s directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire Public Shares, vote their Public Shares in favor of the Business Combination or not redeem their Public Shares. The purpose of any such transaction could be to (a) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, or (b) reduce the number of Mercato Warrants outstanding or to vote such Mercato Warrants on any matters submitted to the Mercato Warrant holders for approval in connection with the Business Combination, where it appears that such requirement would otherwise not be met. This may result in the Closing that may not otherwise have been possible.

In addition, if such purchases are made, the public “float” of Mercato Class A Common Stock or Mercato Warrants and the number of beneficial holders of Mercato’s securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of Mercato’s securities on a national securities exchange.

Additionally, in the event the Sponsor, Mercato’s directors, officers, advisors or their affiliates were to purchase Public Shares or Public Warrants in privately negotiated transactions from Public Stockholders, such purchases would be structured in compliance with the requirements of Rule 14e-5 under the Exchange Act including, in pertinent part, through adherence to the following:

 

   

This proxy statement/prospectus discloses the possibility the Sponsor, Mercato’s directors, officers, advisors or their affiliates may purchase Public Shares or Public Warrants from Public Stockholders outside the redemption process, along with the purpose of such purchases;

 

   

If the Sponsor, Mercato’s directors, officers, advisors or their affiliates were to purchase Public Shares or Public Warrants from Public Stockholders, they would do so at a price no higher than the price offered through Mercato’s redemption process;

 

   

This proxy statement/prospectus includes a representation that any of Mercato securities purchased by the Sponsor, Mercato’s directors, officers, advisors or their affiliates would not be voted in favor of approving the Business Combination;

 

   

The Sponsor, Mercato’s directors, officers, advisors or their affiliates would not possess any redemption rights with respect to Mercato’s securities or, if they do acquire and possess redemption rights, they would waive such rights; and

 

   

Mercato would disclose in a Current Report on Form 8-K, before the special meeting, the following material items:

 

   

the amount of Mercato securities purchased outside of the redemption offer by the Sponsor, Mercato’s directors, officers, advisors or their affiliates, along with the purchase price;

 

   

the purpose of the purchases by the Sponsor, Mercato’s directors, officers, advisors or their affiliates;

 

   

the impact, if any, of the purchases by the Sponsor, Mercato’s directors, officers, advisors or their affiliates on the likelihood that the Business Combination Proposal will be approved;

 

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the identities of Mercato security holders who sold to the Sponsor, Mercato’s directors, officers, advisors or their affiliates (if not purchased on the open market) or the nature of Mercato’s security holders (e.g.,5% security holders) who sold to the Sponsor, Mercato’s directors, officers, advisors or their affiliates; and

 

   

the number of Mercato Public Shares and Mercato Public Warrants for which Mercato has received redemption requests pursuant to the redemption offer.

If third parties bring claims against Mercato, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.15 per share.

Mercato’s placing of funds in the Trust Account may not protect those funds from third-party claims against Mercato. Although Mercato has sought to have all vendors, service providers, prospective target businesses and other entities with which it does business execute agreements with Mercato waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of Public Stockholders, 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 an advantage with respect to a claim against Mercato’s 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, Mercato’s 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 Mercato than any alternative.

Examples of possible instances where Mercato 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 from, any negotiations, contracts or agreements with Mercato and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public Shares, if Mercato has not completed its initial business combination within the Extension Period, or upon the exercise of a redemption right in connection with its initial business combination, Mercato will be required to provide for payment of claims of creditors that were not waived that may be brought against Mercato within the 10 years following redemption. Accordingly, the per share redemption amount received by Public Stockholders could be less than the $10.15 per share initially held in the Trust Account, due to claims of such creditors.

The Sponsor has agreed that it will be liable to Mercato if and to the extent any claims by a third party (except for Mercato’s independent registered public accounting firm) for services rendered or products sold to Mercato, or by a prospective target business with which Mercato has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.15 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 funds in the Trust Account, in each case net of the amount of interest which may be withdrawn to pay taxes. This liability will not apply with respect 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 Mercato’s indemnity of the Mercato IPO underwriters 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, then the Sponsor will not be responsible to the extent of any liability for such third-party claims. Mercato has not independently verified whether the Sponsor, which is a newly formed entity, has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of Mercato. Mercato has not asked the Sponsor to reserve for such indemnification obligations. Therefore, Mercato cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully

 

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made against the Trust Account, the funds available for Mercato’s initial business combination and redemptions could be reduced to less than $10.15 per Public Share. In such event, Mercato may not be able to complete its initial business combination, and its stockholders would receive such lesser amount per Public Share in connection with any redemption of their Public Shares. None of Mercato’s officers will indemnify Mercato for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Public Stockholders will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate their investment, therefore, Public Stockholders may be forced to sell their Mercato Class A Common Stock or Mercato Warrants, potentially at a loss.

Public Stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (a) the consummation of Mercato’s initial business combination, and then only in connection with those Mercato Class A Common Stock that such Public Stockholder elected to redeem, subject to the limitations described herein, (b) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend the Mercato Certificate of Incorporation (i) to modify the substance or timing of Mercato’s obligation to allow redemption in connection with its initial business combination or to redeem 100% of the Public Shares if Mercato does not complete its initial business combination within the Extension Period or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (c) the redemption of the Public Shares if Mercato has not completed its initial business combination within the Extension Period, subject to applicable law and as further described herein. In addition, if Mercato has not completed an initial business combination within the Extension Period for any reason, compliance with the DGCL may require that Mercato submit a plan of dissolution to its then-existing stockholders for approval prior to the distribution of the proceeds held in the Trust Account. In that case, Public Stockholders may be forced to wait beyond the end of such period before they receive funds from the Trust Account. In no other circumstances will a Mercato stockholder have any right or interest of any kind to the funds in the Trust Account. Holders of Mercato Warrants will not have any right to the proceeds held in the Trust Account with respect to the Mercato Warrants. Accordingly, to liquidate their investment, Public Stockholders may be forced to sell their Public Shares or Public Warrants, potentially at a loss.

Mercato’s independent directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Public Stockholders.

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.15 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 amount of interest which may be withdrawn to pay taxes, and the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, Mercato’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While Mercato currently expects that its independent directors would take legal action on Mercato’s behalf against the Sponsor to enforce its indemnification obligations to Mercato, it is possible that Mercato’s independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If Mercato’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to Public Stockholders may be reduced below the $10.15 per share initially held in the Trust Account.

Mercato stockholders may be held liable for claims by third parties against Mercato to the extent of distributions received by them upon redemption of their Public Shares.

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which the distribution was made, Mercato was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Mercato stockholders. Furthermore, Mercato’s directors may be viewed as having breached their fiduciary duties under the DGCL to Mercato or Mercato’s creditors or may have acted in bad faith, and thereby exposing themselves and Mercato to claims, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors. Mercato cannot assure you that claims will not be brought against Mercato for these reasons.

If, after Mercato distributes the proceeds in the Trust Account to Public Stockholders, Mercato files a bankruptcy petition or an involuntary bankruptcy petition is filed against Mercato that is not dismissed, a bankruptcy court may seek to recover such proceeds, and members of the Mercato Board may be viewed as having breached their fiduciary duties to creditors, thereby exposing the members of the Mercato Board and Mercato to claims of punitive damages.

If, after Mercato distributes the proceeds in the Trust Account to Public Stockholders, Mercato files a bankruptcy petition or an involuntary bankruptcy petition is filed against Mercato that is not dismissed, any distributions received by Mercato stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by Mercato stockholders. In addition, the Mercato Board may be viewed as having breached its fiduciary duty to Mercato’s creditors and/or having acted in bad faith, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and Mercato to claims of punitive damages. If, before distributing the proceeds in the Trust Account to Public Stockholders, Mercato files a bankruptcy petition or an involuntary bankruptcy petition is filed against Mercato that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Mercato stockholders and the per-share amount that would otherwise be received by Mercato stockholders in connection with Mercato’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to Public Stockholders, Mercato files a bankruptcy petition or an involuntary bankruptcy petition is filed against it that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Mercato stockholders and the per share amount that would otherwise be received by Mercato stockholders in connection with Mercato’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to Public Stockholders, Mercato files a bankruptcy petition or an involuntary bankruptcy petition is filed against Mercato that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Mercato’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Mercato stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by Mercato stockholders in connection with Mercato’s liquidation may be reduced.

If Mercato is deemed to be an investment company under the Investment Company Act, Mercato may be required to institute burdensome compliance requirements and Mercato’s activities may be restricted, which may make it difficult for Mercato to complete the Business Combination.

On March 30, 2022, the SEC issued proposed rules relating to certain activities of SPACs (the “SPAC Rule Proposals”), relating to, among other things, circumstances in which SPACs could potentially be subject to the Investment Company Act and the regulations thereunder. The SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria, including a limited time period to announce and complete its initial business combination. Specifically, to comply with the safe harbor, the SPAC Rule Proposals would require a company to file a Current Report on Form 8-K announcing that it has entered into an agreement with a target company for an initial business combination no later than 18 months after the effective date of its registration statement for its IPO (the “IPO Registration Statement”). Mercato would then be required to

 

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complete its initial business combination no later than 24 months after the effective date of the IPO Registration Statement.

Because the SPAC Rule Proposals have not yet been adopted, there is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, including a company that has not entered into a definitive agreement within 18 months after the effective date of the IPO Registration Statement or that may not complete its initial business combination within 24 months after such date. While Mercato has entered into a definitive initial business combination agreement within 18 months after the effective date of its IPO Registration Statement, Mercato may not complete its initial business combination within 24 months of such date. As a result, it is possible that a claim could be made that Mercato has been operating as an unregistered investment company.

If Mercato is deemed to be an investment company under the Investment Company Act, its activities would be severely restricted. In addition, Mercato would be subject to burdensome compliance requirements. Mercato does not believe that its principal activities will subject it to regulation as an investment company under the Investment Company Act. However, if Mercato is deemed to be an investment company and subjected to comply with, and be regulated under, the Investment Company Act, Mercato would be subject to additional regulatory burdens and expenses for which Mercato has not allotted funds. As a result, unless Mercato is able to modify its activities so that Mercato would not be deemed an investment company, Mercato would expect to abandon its efforts to complete an initial business combination and, instead, liquidate.

To mitigate the risk that Mercato might be deemed to be an investment company for purposes of the Investment Company Act, Mercato may, at any time, instruct the Trustee to liquidate the securities held in the Trust Account and instead to hold the funds in the Trust Account in cash until the earlier of the consummation of the Business Combination or Mercato’s liquidation. As a result, following the liquidation of securities in the Trust Account, Mercato would likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar amount Public Stockholders would receive upon any redemption or liquidation of Mercato.

Since the Mercato IPO, the funds in the Trust Account have been held only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. However, to mitigate the risk of Mercato being deemed to be an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act, Mercato may, at any time, on or prior to the 24-month anniversary of the effective date of the IPO Registration Statement, instruct the Trustee with respect to the Trust Account to liquidate the U.S. government treasury obligations or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash until the earlier of consummation of an initial business combination or liquidation of Mercato. Following such liquidation of the securities held in the Trust Account, Mercato would likely receive minimal interest, if any, on the funds held in the Trust Account. However, interest previously earned on the funds held in the Trust Account still may be released to Mercato to pay its taxes, if any, and certain other expenses as permitted. As a result, any decision to liquidate the securities held in the Trust Account and thereafter to hold all funds in the Trust Account in cash would reduce the dollar amount Public Stockholders would receive upon any redemption or liquidation of Mercato.

In addition, even prior to the 24-month anniversary of the effective date of the IPO Registration Statement, Mercato may be deemed to be an investment company. The longer that the funds in the Trust Account are held in short-term U.S. government treasury obligations or in money market funds invested exclusively in such securities, even prior to the 24-month anniversary, the greater the risk that Mercato may be considered an unregistered investment company, in which case Mercato may be required to liquidate. Accordingly, Mercato may determine, in its discretion, to liquidate the securities held in the Trust Account at any time, even prior to the 24-month anniversary, and instead hold all funds in the Trust Account in cash, which would further reduce the dollar amount Public Stockholders would receive upon any redemption or liquidation of Mercato.

 

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Mercato Warrants are accounted for as liabilities (and the New Nuvini Warrants may be accounted for as liabilities following the Business Combination) and the changes in value of Mercato Warrants (or the New Nuvini Warrants following the Business Combination) could have a material effect on Mercato’s or New Nuvini’s financial results.

On April 12, 2021, the Staff of the SEC issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). In light of the SEC Statement, Mercato reevaluated the accounting treatment of the Mercato Warrants, and pursuant to the guidance in ASC 815, Derivatives and Hedging (“ASC 815”), determined the Mercato Warrants should be classified as derivative liabilities measured at fair value on Mercato’s balance sheet, with any changes in fair value to be reported each period in earnings on Mercato’s statement of operations. Following the Closing, New Nuvini Warrants will remain classified as a liability in accordance with IFRS and will continue to be recognized at fair value, with subsequent changes in fair value recognized in profit or loss, in accordance with IFRS. As a result of the recurring fair value measurement, Mercato’s financial statements may fluctuate quarterly, based on factors, which are outside of Mercato’s control. Due to the recurring fair value measurement, Mercato expects that it will recognize non-cash gains or losses on the Mercato Warrants each reporting period and that the amount of such gains or losses could be material.

Mercato has identified material weaknesses in its internal control over financial reporting as of June 30, 2023, relating to the ineffective design and maintenance of control around the accounting for certain complex equity instruments issued by Mercato. If Mercato is unable to maintain an effective system of internal control over financial reporting, Mercato may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Mercato and materially and adversely affect Mercato’s business and results of operations.

Mercato conducted an evaluation of the effectiveness of its disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, Mercato concluded that its disclosure controls and procedures were not effective as of June 30, 2023 because of a material weakness in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Mercato’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, Mercato’s management concluded that Mercato’s control around the accounting for certain complex equity instruments issued by Mercato was not effectively designed or maintained. Additionally, this material weakness could result in a misstatement of the carrying value of complex financial instruments and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As a result, Mercato’s management performed additional analysis as deemed necessary to ensure that its financial statements were prepared in accordance with GAAP. Accordingly, Mercato’s management believes that its financial statements present fairly, in all material respects, Mercato’s financial position, result of operations and cash flows as of March 31, 2023. Mercato’s management understands that the accounting standards applicable to Mercato’s financial statements are complex and has since its inception benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Mercato’s management intends to continue to further consult with such professionals in connection with accounting matters.

Effective internal controls are necessary for Mercato to provide reliable financial reports and prevent fraud. To respond to the material weakness Mercato identified, Mercato has performed additional accounting and financial analyses and other post-Mercato IPO closing procedures, including consulting with subject matter experts related to the accounting for certain complex equity instruments issued by Mercato. Mercato’s management has spent, and will continue to spend, a substantial amount of effort and resources for the remediation and improvement of Mercato’s internal control over financial reporting. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

 

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If Mercato identifies any new material weaknesses in the future, any such newly identified material weakness could limit Mercato’s ability to prevent or detect a misstatement of Mercato’s accounts or disclosures that could result in a material misstatement of Mercato’s annual or interim financial statements. In such case, Mercato may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in Mercato’s financial reporting and Mercato’s stock price may decline as a result. Mercato cannot assure you that the measures it has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.

Mercato, and New Nuvini following consummation of the Business Combination, may face litigation and other risks as a result of the material weaknesses in Mercato’s internal control over financial reporting.

As part of Mercato’s quarterly evaluation of the effectiveness of Mercato’s disclosure controls and procedures, Mercato identified a material weakness in its internal controls over financial reporting.

As a result of such material weaknesses, Mercato’s control around the accounting for certain complex equity instruments issued by Mercato and other matters raised or that may in the future be raised by the SEC, Mercato and New Nuvini may potentially face litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weakness in Mercato’s internal control over financial reporting and the preparation of Mercato’s financial statements. As of the date of this proxy statement/prospectus, Mercato has no knowledge of any such litigation or dispute. However, Mercato can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on Mercato’s or New Nuvini’s business, results of operations and financial condition or Mercato’s ability to complete the Business Combination.

Mercato stockholders will not be entitled to appraisal rights in connection with the Business Combination.

Appraisal rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction. Mercato stockholders are not entitled to appraisal rights in connection with the Business Combination.

The Sponsor, Mercato’s officers, directors and independent directors have agreed to vote in favor of the Business Combination, regardless of how Public Stockholders vote.

The Sponsor and Mercato’s officers, directors and independent directors have agreed to vote any Mercato Common Stock held by them in favor of the Business Combination. Mercato expects that the Sponsor, Mercato’s officers, directors and independent directors (and their permitted transferees) will own at least approximately 57% of the outstanding Mercato Common Stock at the time of any such stockholder vote. Accordingly, it is more likely that the necessary stockholder 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 Public Stockholders.

The Mercato Board did not obtain a fairness opinion in determining whether or not to proceed with the Business Combination.

In analyzing the Business Combination, the Mercato Board conducted significant due diligence on the Nuvini Group. For a complete discussion of the factors utilized by the Mercato Board in approving the Business Combination, see the section entitled, “The Business Combination—Mercato Board’s Reasons for Approval.” The Mercato Board believes because of the financial skills and background of its directors, it was qualified to conclude that Business Combination was fair from a financial perspective to its stockholders and that the Nuvini Group’s fair market value was at least 80% of the value of the Trust Account (excluding any taxes payable on interest earned).

 

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Notwithstanding the foregoing, the Mercato Board did not obtain a fairness opinion to assist it in its determination. Accordingly, the Mercato Board may be incorrect in its assessment of the Business Combination.

The Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidate.

The Sponsor has invested in Mercato an aggregate of $12,478,677, comprised of the $25,000 purchase price for 5,750,000 Founder Shares, the $10,050,000 purchase price for the Private Placement Warrants, approximately $1,323,677 in working capital loans to Mercato and $1,080,000 in loans in connection with extending the deadline for Mercato to complete an initial Business Combination. Assuming a trading price of $10.66 per share on Nasdaq as of the Record Date, upon consummation of the Business Combination, the 5,750,000 Founder Shares would have an aggregate implied value of $61,295,000. Even if the trading price of the shares of New Nuvini Ordinary Shares were as low as $1.75 per share, and the Private Placement Warrants were worthless, the value of the Founder Shares would be almost equal to the Sponsor’s initial investment in the Founder Shares and Private Placement Warrants of Mercato. As a result, the Sponsor is likely to be able to make a substantial profit on its investment in Mercato at a time when the Public Shares have lost significant value. On the other hand, if Mercato liquidates without completing a business combination, the Sponsor will likely lose its entire investment in Mercato. Accordingly, the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to Mercato stockholders rather than liquidate.

Since the Sponsor and Mercato’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of Mercato stockholders, a conflict of interest may have existed in determining whether the Business Combination is appropriate as its initial business combination. Such interests include that Sponsor will lose its entire investment in Mercato if an initial business combination is not completed.

When you consider the recommendation of the Mercato Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and Mercato’s directors and officers have interests in such proposal that are different from, or in addition to, those of the holders of Public Shares and Public Warrants generally. These interests include, among other things, the interests listed as follows:

 

   

Prior to the Mercato IPO, the Sponsor purchased 5,750,000 Mercato Class B Common Stock for an aggregate purchase price of $25,000, or approximately $0.004 per share. The Sponsor has transferred an aggregate of 175,000 Founder Shares to its directors, Mercato’s Chief Financial Officer Scott Klossner, and two service providers employed by an entity affiliated with the Sponsor. If Mercato does not consummate a business combination by the Extension Period, it would cease all operations except for the purpose of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the Mercato Board, dissolving and liquidating, subject in each case to its obligations under the DGCL to provide for claims of creditors and the requirements of other applicable law. In such an event, the 5,750,000 shares of Mercato Class B Common Stock collectively owned by the Sponsor and its transferees would be worthless because following the redemption of the Public Shares, Mercato would likely have few, if any, net assets and because the Sponsor and Mercato’s directors and officers have agreed to waive their respective rights to liquidating distributions from the Trust Account in respect of any Mercato Class A Common Stock and Mercato Class B Common Stock held by it or them, as applicable, if Mercato fails to complete a business combination within the Extension Period. Additionally, in such event, the 10,050,000 Private Placement Warrants purchased by the Sponsor simultaneously with the consummation of the Mercato IPO for an aggregate purchase price of $10,050,000 will also expire worthless. The 5,750,000 shares of New Nuvini Ordinary Shares into which the 5,750,000 shares of Mercato Class B Common Stock collectively held by the Initial Stockholders will automatically convert in connection with the Merger,

 

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if unrestricted and freely tradable, would have had an aggregate market value of $61,295,000 based upon the reported closing price of $10.66 per Public Share on Nasdaq as of the Record Date. The 10,050,000 New Nuvini Warrants into which the 10,050,000 Private Placement Warrants held by the Sponsor will automatically convert in connection with the Merger, if unrestricted and freely tradable, would have had an aggregate market value of $978,870 based upon the reported closing price of $0.0974 per public warrant on Nasdaq as of the Record Date.

 

   

If Mercato is unable to complete a business combination within the Extension Period, the aggregate dollar amount of non-reimbursable funds the Sponsor and its affiliates, including Mercato’s directors and officers, have at risk that depends on completion of a business combination is $12,553,677 as of the Record Date, comprised of (a) $25,000 representing the aggregate purchase price paid for the shares of Mercato Class B Common Stock, (b) $10,050,000 representing the aggregate purchase price paid for the Private Placement Warrants, (c) $75,000 of unpaid expenses incurred by the Sponsor and Mercato’s officers and directors and their affiliates in connection with the administrative services agreement, and (d) $2,403,677 representing amounts owed under the promissory instruments between Mercato and the Sponsor.

 

   

As a result of the low initial purchase price (consisting of $25,000 for the 5,750,000 shares of Mercato Class B Common Stock, or approximately $0.004 per share, and $10,050,000 for the Private Placement Warrants), the Sponsor, its affiliates and Mercato’s management team stand to earn a positive rate of return or profit on their investment, even if other stockholders, such as the Public Stockholders, experience a negative rate of return because the post-business combination company subsequently declines in value. Thus, the Sponsor, Mercato’s officers and directors, and their respective affiliates may have more of an economic incentive for Mercato to, rather than liquidate if Mercato fails to complete its initial business combination by the Extension Period, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their shares of Class B Common Stock.

 

   

Greg Warnock and Scott Klossner are expected to be directors of New Nuvini after the consummation of the Business Combination, and Mr. Klossner is expected to be New Nuvini’s Chief Financial Officer after the consummation of the Business Combination. As such, in the future, Greg Warnock may receive fees for his service as a director and Scott Klossner may receive fees for his service as Chief Financial Officer. These fees may consist of cash or stock-based awards, and any other remuneration that the New Nuvini Board determines to pay for such service.

 

   

The Sponsor (including its representatives and affiliates) and Mercato’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to Mercato. The Sponsor and Mercato’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to Mercato completing its initial business combination. Moreover, certain of Mercato’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. Mercato’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to Mercato, and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in Mercato’s favor and such potential business opportunities may be presented to other entities prior to their presentation to Mercato, subject to applicable fiduciary duties under the DGCL. The Mercato Certificate of Incorporation provides that Mercato renounces its interest in any corporate opportunity offered to any director or officer of Mercato unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of Mercato and it is an opportunity that Mercato is legally and contractually permitted to undertake and would otherwise be reasonable for Mercato to pursue.

 

   

Mercato’s existing directors and officers will be eligible for continued indemnification and continued coverage under Mercato’s directors’ and officers’ liability insurance after the Merger and pursuant to the Business Combination Agreement.

 

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In the event that Mercato fails to consummate a business combination within the Extension Period (as potentially extended pursuant to the Mercato Certificate of Incorporation), or upon the exercise of a redemption right in connection with the Business Combination, Mercato will be required to provide for payment of claims of creditors that were not waived that may be brought against Mercato within the ten years following such redemption. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to Mercato if and to the extent any claims by a third party (other than Mercato’s independent registered public accounting firm) for services rendered or products sold to Mercato, or a prospective target business with which Mercato has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per Public Share or (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the underwriters of the Mercato IPO against certain liabilities, including liabilities under the Securities Act.

 

   

Commencing on the effective date of the prospectus filed in connection with the Mercato IPO, Mercato agreed to reimburse its Sponsor for out-of-pocket expenses through the completion of the Business Combination or Mercato’s liquidation.

 

   

The Sponsor, or an affiliate of the Sponsor, has advanced funds to Mercato for working capital purposes, including $1,323,677 as of the Record Date. These outstanding advances have been documented in a promissory instrument, dated July 26, 2022 (the “Working Capital Loan”) issued by Mercato to the Sponsor, pursuant to which Mercato may borrow up to $1,500,000 from the Sponsor (including those amounts which are currently outstanding). In addition, the Sponsor has advanced funds to Mercato for the deposit of funds into the Trust Account to extend the time Mercato has to consummate a business combination pursuant to approval of the extension proposal, including $1,080,000 as of September 6, 2023 (the date on which the Sponsor deposited an additional $135,000 into the Trust Account to extend the period available for Mercato to consummate the Business Combination from September 8, 2023 to October 8, 2023). These outstanding advances have been documented in a promissory instrument, dated February 3, 2023 (the “Extension Loan” and together with the Working Capital Loan, the “Promissory Instruments”). The Promissory Instruments are non-interest bearing, unsecured and due and payable in full on the earlier of the date Mercato consummates its initial business combination and the date that winding up of Mercato is effective. If Mercato does not complete its initial business combination within the Extension Period, it may use a portion of its working capital held outside the Trust Account to repay such advances and any other working capital advances made to Mercato, but no proceeds held in the Trust Account would be used to repay such advances and any other working capital advances made to Mercato, and such related party may not be able to recover the value it has loaned to Mercato and any other working capital advances it may make.

 

   

Mercato’s executive officers and directors, or any of their respective affiliates, including the Sponsor and other entities affiliated with Mercato and the Sponsor, are entitled to reimbursement of any out-of-pocket expenses incurred by them in connection with activities on Mercato’s 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 by such persons in connection with activities on our behalf. However, if Mercato fails to consummate a business combination by the Extension Period, they will not have any claim against the Trust Account for reimbursement. Mercato’s officers and directors, and their affiliates, expect to incur (or guaranty) approximately $                 of transaction expenses. Accordingly, Mercato may not be able to reimburse these expenses if the Business Combination or another business combination, is not completed by such date.

 

   

Pursuant to the Registration Rights Agreement, the Sponsor will have customary registration rights, including shelf registration and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of New Nuvini Ordinary Shares and New Nuvini Warrants held by such parties following the consummation of the Business Combination.

 

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The existence of financial and personal interests of one or more of Mercato’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Mercato and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the Proposals. In addition, Mercato’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Proposal No. 1The Business Combination ProposalInterests of Mercato’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

The personal and financial interests of the Sponsor as well as Mercato’s directors and executive officers may have influenced their motivation in identifying and selecting Nuvini as a business combination target, completing an initial business combination with Nuvini and influencing the operation of the business following the initial business combination. In considering the recommendations of the Mercato Board to vote for the proposals, its stockholders should consider these interests.

The nominal purchase price paid by the Sponsor and its affiliates for the Founder Shares may significantly dilute Public Stockholders in the event Mercato completes the Business Combination. In addition, the value of the Sponsor and its affiliates’ Founder Shares will be significantly greater than the amount the Sponsor and its affiliates paid to purchase such shares in the event Mercato completes the Business Combination, even if the Business Combination causes the trading price of New Nuvini Ordinary Shares to materially decline.

The Sponsor invested an aggregate of $10,075,000 in Mercato, comprised of the $25,000 purchase price for the Founder Shares and the $10,050,000 purchase price for the Private Placement Warrants. The amount held in the Trust Account (net of interest earned on the funds held in the trust account that may be released to Mercato to pay its taxes) was approximately $45,526,464 as of September 1, 2023, implying a value of $10.59 per Public Share.

The following table shows the Public Stockholders’ and the Initial Stockholders’ (including the Sponsor’s) investment per share and how these compare to the implied value of one Ordinary Share of the post-combination company upon the completion of Mercato’s initial business combination. The following table assumes that (i) Mercato’s valuation is approximately $45,526,464 (which is the amount Mercato held in its Trust Account as of September 1, 2023 (net of interest earned on the funds held in the Trust Account that may be released to Mercato to pay its taxes)), (ii) no additional interest is earned on the funds held in the Trust Account, (iii) no Public Shares are redeemed in connection with Mercato’s initial business combination and (iv) all Founder Shares are held by the Initial Stockholders upon completion of Mercato’s initial business combination, and does not take into account other potential impacts on Mercato’s valuation at the time of the initial business combination such as (a) the value of the Mercato Warrants, (b) the trading price of Mercato Class A Common Stock, (c) the initial business combination transaction costs, and (d) the additional $1,080,000 deposited into the Trust Account through September 6, 2023 to allow Mercato to extend the period of time it has to consummate its initial business combination to October 8, 2023. The following table does not reflect the additional $135,000, or $0.045 per Public Share, that may be deposited into the Trust Account, at the Sponsor’s sole discretion, to allow Mercato to extend the period of time it has to consummate its initial business combination by up to two months (by additional one-month extension periods pursuant to the Mercato Certificate of Incorporation), from October 8, 2023 to December 8, 2023.

 

Shares held by Public Stockholders

     4,300,363  

Founder Shares held by the Sponsor

     5,573,000  

Founder Shares held by Mercato’s directors and officers and certain affiliates

     177,000  
  

 

 

 

Total shares of common stock

     10,050,363  

Total funds in trust(1)

   $ 45,903,619.26  

Public Stockholders’ investment per Public Share(2)

   $ 10.00  

Sponsor’s investment per Founder Share(3)

   $ 0.004  

 

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Current and former directors’ investment per Founder Share(4)

   $ 0.004  

Implied value per share of New Nuvini Ordinary Shares immediately following the Closing

   $ 4.53  

 

(1)

Amount held in the Trust Account as of September 1, 2023.

(2)

While the Public Stockholders’ investment in Mercato Units represents an investment in both the Public Shares and the Public Warrants, for purposes of this table the full investment amount is ascribed to the Public Shares only.

(3)

Calculated based on the Sponsor’s $25,000 investment in Founder Shares. This does not include the Sponsor’s $10,050,000 investment in the Private Placement Warrants.

While the implied value of $4.53 per share upon completion of Mercato’s initial business combination would represent a dilution to Public Stockholders, this would represent a significant increase in value for the Sponsor relative to the price it paid for each Founder Share. At the Mercato IPO public offering price of $10.00 per share, the 5,750,000 New Nuvini Ordinary Shares that the Initial Stockholders holding Founder Shares would own upon completion of Mercato’s initial business combination would have an aggregate implied value of $57,500,000. As a result, even if the trading price of the New Nuvini Ordinary Shares of the post-combination company significantly declines, the value of the Founder Shares held by the Initial Stockholders will be significantly greater than the amount the Sponsor paid to purchase such shares. In addition, the Sponsor could potentially recoup its entire investment in the Founder Shares and Private Placement Warrants, even if the trading price of the New Nuvini Ordinary Shares of the post-combination company after the initial business combination is as low as $1.75 per share. As a result, the Initial Stockholders holding Founder Shares are likely to earn a substantial profit on their investment in Mercato upon disposition of the New Nuvini Ordinary Shares of the post-combination company even if the trading price of the New Nuvini Ordinary Shares of the post-combination company declines after Mercato completes its initial business combination. The Initial Stockholders holding Founder Shares may therefore be economically incentivized to complete an initial business combination with a riskier, weaker-performing or less-established target business, or on terms less favorable to Public Stockholders, rather than liquidating Mercato. This dilution would increase to the extent that Public Stockholders seek further redemptions from the Trust Account for their Public Shares.

If Mercato’s due diligence investigation of the Nuvini Group was inadequate, then Mercato stockholders (as shareholders of New Nuvini following the Business Combination) could lose some or all of their investment.

Even though Mercato conducted a due diligence investigation of the Nuvini Group, Mercato cannot be sure that this diligence uncovered all material issues that may be present with respect to the Nuvini Group’s businesses, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Mercato’s or the Nuvini Group’s control will not later arise that could adversely affect their respective businesses, financial condition or results of operations.

Risks Related to the Business Combination

Market Prices of New Nuvini Ordinary Shares and New Nuvini Warrants may be volatile.

The market prices of New Nuvini Ordinary Shares and New Nuvini Warrants may be volatile. Sample factors that may significantly impact their volatility include:

 

  (a)

Actual or anticipated fluctuations in New Nuvini’s operating results;

 

  (b)

Announcements of technological innovations, new products or new contracts by New Nuvini or New Nuvini’s competitors;

 

  (c)

Developments with respect to patents, copyrights or other proprietary rights;

 

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  (d)

Conditions and trends in the software and other technology industries;

 

  (e)

Changes in financial estimates by securities analysts;

 

  (f)

General market conditions and other factors.

In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices of technology company stocks and may in the future adversely affect the market prices of New Nuvini’s Ordinary Shares and New Nuvini Warrants. Sometimes, securities class action litigation is filed following periods of volatility in the market price of a particular company’s securities. New Nuvini cannot assure you that similar litigation will not occur in the future with respect to its securities. Such litigation could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect upon New Nuvini’s financial performance.

BofA was to be compensated in part on a deferred basis for services already rendered as underwriter in connection with the Mercato IPO. BofA, gratuitously and without any consideration from Mercato or Nuvini, waived such compensation without any conditions and disclaimed any responsibility for this proxy statement/prospectus.

BofA Securities, Inc. (“BofA”), the underwriter in the Mercato IPO, was to be compensated in part on a deferred basis for services already rendered as underwriter in connection with the Mercato IPO. On August 1, 2022, BofA delivered to Mercato a written waiver indicating that BofA had irrevocably waived, without any conditions, its rights over the outstanding deferred underwriting commissions pursuant to the underwriting agreement in connection with the Mercato IPO.

Prior to BofA’s waiver, Mercato met periodically with BofA to discuss and evaluate potential business combination targets that Mercato has independently identified. However, BofA did not have any role in identifying any potential business combination targets, including Nuvini. BofA and Mercato have not had any relationship after BofA delivered its waiver. BofA’s waiver was delivered prior to any communications between Mercato and Nuvini regarding the Business Combination, and did not specify the reasons for its forfeiture of its fees after doing all of the work to earn such fees. There is no dispute among any of Mercato, Nuvuni or BofA with respect to BofA’s services, or BofA’s waiver notice, or with respect to any disclosure in the Registration Statement of which this proxy statement/prospectus forms a part. BofA was not responsible for the preparation of any disclosure that is included in this proxy statement/prospectus or any materials underlying such disclosure. The services of BofA as underwriter in the Mercato IPO were complete, and BofA is not expected to play a role in the Closing. Accordingly, neither Mercato nor Nuvini believes that BofA’s waiver of fees will impact the consummation of the Business Combination. Nonetheless, it is possible that BofA’s waiver of fees may adversely affect market perception of the Business Combination generally. If market perception of the Business Combination is negatively impacted, an increased number of stockholders may vote against the Business Combination or seek to redeem their Public Shares for cash, which could potentially impact Mercato’s ability to consummate the Business Combination. Accordingly, shareholders should not place any reliance on the fact that BofA was previously involved with any aspect of the transactions described in this proxy statement/prospectus. Because BofA has not been involved in the preparation and review of the registration statement, investors will not have the benefit of their independent review and investigation of the disclosures provided in the proxy statement/prospectus contained in this registration statement.

An active trading market for New Nuvini Ordinary Shares may not be sustained to provide adequate liquidity.

An active trading market may not be sustained for New Nuvini Ordinary Shares. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair New Nuvini’s ability to raise capital by selling New Nuvini Ordinary Shares and may impair New Nuvini’s ability to acquire other companies by using New Nuvini’s Ordinary Shares as consideration.

 

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The market price of New Nuvini Ordinary Shares could be negatively affected by future sales of New Nuvini Ordinary Shares.

Immediately following the Closing, New Nuvini will have 31,072,546 New Nuvini Ordinary Shares outstanding, assuming no further redemptions. Because the Merger is expected to be a taxable transaction for U.S. federal income tax purposes, holders of Mercato Common Stock and Mercato Warrants that participate in the Merger and are subject to U.S. taxation may want to sell their Mercato Common Stock or Mercato Warrants to generate liquidity to pay any associated tax obligations. The Sponsor Support Agreement provides that the holders of Lock-Up Shares may sell an amount of their Lock-Up Shares (not to exceed fifty percent of such Lock-Up Shares) during the period starting on the trading day immediately following the Closing and ending on the final trading day of the calendar year in which the Closing occurs as the holder of such shares determined in good faith will provide such holder with net proceeds to cover any tax liabilities (including estimated tax liabilities) arising in connection with the transactions contemplated by the Business Combination Agreement. Sales by New Nuvini or New Nuvini Shareholders of a substantial number of New Nuvini Ordinary Shares, the issuance of New Nuvini Ordinary Shares as consideration for acquisitions or the perception that these sales might occur, could cause the market price of New Nuvini Ordinary Shares to decline or could impair New Nuvini’s ability to raise capital through a future sale of, or pay for acquisitions using, New Nuvini’s equity securities.

As of December 31, 2022, giving pro forma effect to the Business Combination and the other Transactions at such date, New Nuvini would have had 17,426,227 New Nuvini Ordinary Shares that were subject to share options. Of this amount, after giving pro forma effect to the Business Combination and the other Transactions, rights to New Nuvini Ordinary Shares would have been vested and exercisable as of December 31, 2022.

New Nuvini does not expect to pay any dividends in the foreseeable future.

New Nuvini and the Nuvini Group have never declared or paid any dividends on their respective securities. New Nuvini does not anticipate paying any dividends in the foreseeable future. New Nuvini currently intends to retain future earnings, if any, to finance operations and expand their business.

The New Nuvini Board will have complete discretion as to whether to distribute dividends. The general meeting of New Nuvini may resolve to distribute any part of the profits remaining after reservation. If the New Nuvini Board decides to make a part of the profits available for distribution of dividends, the form, frequency and amount will depend upon New Nuvini’s future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that New Nuvini’s directors may deem relevant. There is no guarantee that the New Nuvini Ordinary Shares will appreciate in value after the Business Combination or that the trading price of the New Nuvini Ordinary Shares will not decline. In addition, Cayman Islands law imposes restrictions on New Nuvini’s ability to declare and pay dividends. Payment of dividends may also be subject to Cayman Islands withholding taxes.

Please see the section titled Price Range of Securities and Dividends” for a description of New Nuvini’s dividend policy.

New Nuvini may redeem outstanding New Nuvini Warrants prior to their exercise at a time that may be disadvantageous to the holder of such warrants, thereby making such New Nuvini Warrants worthless.

New Nuvini will have the ability to redeem unexpired New Nuvini Warrants issued as part of the assumption of Mercato Warrants by New Nuvini in connection with the Business Combination at any time after they become exercisable and prior to their expiration, at a price of $0.01 per New Nuvini Warrant, provided that the last reported sales price of New Nuvini Ordinary Shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date New Nuvini sends the notice of redemption to New Nuvini Warrant holders and provided certain other conditions are met. If New Nuvini calls the New Nuvini Warrants for redemption as described above, New Nuvini management will have

 

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the option to require all holders that wish to exercise New Nuvini Warrants to do so on a “cashless basis.” If and when the New Nuvini Warrants become redeemable by New Nuvini, New Nuvini may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, New Nuvini may redeem the New Nuvini Warrants as set forth above even if the holders are otherwise unable to exercise the New Nuvini Warrants. Redemption of the outstanding New Nuvini Warrants could force you (i) to exercise your New Nuvini Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your New Nuvini Warrants at the then-current market price when you might otherwise wish to hold your New Nuvini Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding New Nuvini Warrants are called for redemption, New Nuvini expects would be substantially less than the market value of your New Nuvini Warrants. None of the Private Placement Warrants will be redeemable by New Nuvini so long as they are held by the Sponsor or its permitted transferees.

In addition, New Nuvini has the ability to redeem outstanding New Nuvini Warrants when the New Nuvini Ordinary Shares are trading at a price starting at $10.00, which is below the exercise price of $11.50, after they become exercisable for $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their New Nuvini Warrants prior to redemption for a number of New Nuvini Ordinary Shares determined based on the redemption date and the fair market value of New Nuvini Ordinary Shares as set forth in “Description of New Nuvini Securities” and provided certain other conditions are met. New Nuvini would redeem the New Nuvini Warrants in this manner when New Nuvini believes it is in New Nuvini’s best interest to update its capital structure to remove the New Nuvini Warrants and pay fair market value to the New Nuvini Warrant holders. If New Nuvini chooses to redeem the New Nuvini Warrants when the New Nuvini Ordinary Shares are trading at a price below the exercise price of the New Nuvini Warrants, this could result in the New Nuvini Warrant holders receiving fewer New Nuvini Ordinary Shares than they would have received if they had chosen to wait to exercise their New Nuvini Warrants for New Nuvini Ordinary Shares if and when the New Nuvini Ordinary Shares trade at a price higher than the exercise price of $11.50. In addition, such redemption may occur at a time when the New Nuvini Warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of the New Nuvini Ordinary Shares had your New Nuvini Warrants remained outstanding. Finally, this redemption feature provides a ceiling to the value of your Mercato Warrants since it locks in the redemption price in the number of New Nuvini Ordinary Shares to be received if New Nuvini chooses to redeem the New Nuvini Warrants for New Nuvini Ordinary Shares.

The Nuvini Group’s financial forecasts, which were presented to the Mercato Board and are included elsewhere in this proxy statement/prospectus relating to the Business Combination, may not prove accurate.

In connection with the Business Combination, Mercato management presented certain forecasted financial information regarding the Nuvini Group to the Mercato Board, which was internally prepared and provided by the Nuvini Group, and adjusted by Mercato management to take into consideration the consummation of the Business Combination (assuming that no shares of Mercato Class A Common Stock are elected to be redeemed by Mercato stockholders in connection with the Business Combination), as well as certain adjustments that were appropriate in their judgment and experience. Mercato and New Nuvini do not as a matter of course make public projections as to future sales, earnings, or other results. This prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of New Nuvini’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of New Nuvini. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this information are cautioned not to place undue reliance on the prospective financial information.

Neither Nuvini’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they

 

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expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

The forecasts were based on numerous variables and assumptions known to the Nuvini Group and Mercato at the time of preparation. Such variables and assumptions are inherently uncertain and many are beyond the control of the Nuvini Group or Mercato. Important factors that may affect actual results and cause the forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to the businesses of the Nuvini Group (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the competitive environment, changes in technology, and general business and economic conditions. Various assumptions underlying the forecasts may prove to not have been, or may no longer be, accurate. The forecasts may not be realized, and actual results may be significantly higher or lower than projected in the forecasts. The forecasts also reflect assumptions as to certain business strategies or plans that are subject to change. As a result, the inclusion of such forecasts in this proxy statement/prospectus should not be relied on as “guidance” or as otherwise predictive of actual future events, and actual results may differ materially from the forecasts.

If securities or industry analysts do not publish research or reports about New Nuvini’s business, or if they issue an adverse or misleading opinion regarding New Nuvini Ordinary Shares, the market price and trading volume of New Nuvini Ordinary Shares could decline.

The trading market for New Nuvini Ordinary Shares will be influenced by the research and reports that industry or securities analysts publish about New Nuvini or New Nuvini’s business. New Nuvini does not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of New Nuvini, the trading price for New Nuvini Ordinary Shares would be negatively impacted. In the event New Nuvini obtains securities or industry analyst coverage, if any of the analysts who cover New Nuvini issue an adverse or misleading opinion regarding New Nuvini, its business model, intellectual property or its stock performance or if New Nuvini’s results of operations fail to meet the expectations of analysts, prices of New Nuvini Ordinary Shares would likely decline. If one or more of these analysts cease coverage of New Nuvini or fail to publish reports on New Nuvini regularly, New Nuvini could lose visibility in the financial markets, which in turn could cause New Nuvini’s Ordinary Shares’ price or trading volume to decline.

Public Stockholders will experience immediate dilution as a consequence of the issuance of New Nuvini Ordinary Shares as consideration in the Business Combination as well as dilution due to future issuances pursuant to equity incentive plans put in place at New Nuvini. Having a minority share position in New Nuvini following the Business Combination may reduce the influence that Mercato’s current stockholders have on the management of New Nuvini.

It is anticipated that, immediately following the Business Combination and related transactions on a fully diluted basis, (1) Public Stockholders will own approximately 12.8% of the outstanding New Nuvini Ordinary Shares, (2) Nuvini Holders (as defined below) will own approximately 70.0% of the outstanding New Nuvini Ordinary Shares, and (3) the holders of Founder Shares will collectively own approximately 17.1% of the outstanding New Nuvini Ordinary Shares. These percentages assume (i) that no Public Stockholders exercise their redemption rights in connection with the Business Combination and (ii) that New Nuvini issues an aggregate of 33,550,363 New Nuvini Ordinary Shares pursuant to the Business Combination.

The Public Stockholders will experience additional dilution to the extent that (1) any Public Warrants are exercised, (2) any of the 10,050,000 Private Placement Warrants held by the Sponsor are exercised or (3) any shares underlying equity awards under the Incentive Plan are issued, pursuant to which                 shares will initially be reserved for issuance. Such issuances could significantly dilute the equity interests of existing holders of Mercato securities and may adversely affect prevailing market prices for New Nuvini securities.

 

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Mercato, New Nuvini or Nuvini may issue shares of capital stock or debt securities to complete the Business Combination, which would reduce the equity interest of other stockholders and could cause a change in control.

Although none of Mercato, New Nuvini or Nuvini have any commitmen