S-1 1 tm2117216d2_s1.htm FORM S-1

 

As filed with the Securities and Exchange Commission on December 10, 2021

Registration No. 333-

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1

 

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 

JJ OPPORTUNITY CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   6770   86-3001086
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 

JJ Opportunity Corp.

1 Broadway, 14th Floor

Cambridge, MA 02142

Tel: (978) 295-1858

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Junhui (Jerome) Zhang

Chief Executive Officer

1 Broadway, 14th Floor

Cambridge, MA 02142

Tel: (978) 295-1858

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Arila E. Zhou, Esq.
Hunter Taubman Fischer & Li LLC
800 Third Avenue, Suite 2800
New York, NY  10022
Tel: (212) 530-2232
Mitchell S. Nussbaum, Esq.
David J. Levine, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Tel: (212) 407-4000

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ¨

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x Smaller reporting company x
    Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities

to be Registered

  Amount
to be
Registered
   Proposed
Maximum
Offering
Price Per
Security
   Proposed
Maximum
Aggregate
Offering
Price(1)
   Amount of
Registration
Fee
 

Units, each consisting of one Class 

A common stock, $0.0001 par

value and one Right to acquire

one-tenth of one share of Class A

common stock(2)

   5,750,000   $10.00   $57,500,000.00   $5,330.25 

Shares of Class A common stock

included as part of the Units(3)

   5,750,000             (4)
Rights included as part of the Units   5,750,000             (4)

Common stock underlying Rights

included as part of Units(2)

   575,000   $10.00   $5,750,000.00   $533.03 
Representative Shares   25,000   $10.00   $250,000.00   $23.18 
Total            $63,500,000.00   $5,886.46 

 

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

 

(2) Includes (i) Units, (ii) Class A common stock and Rights underlying such Units and (iii) Class A common stock underlying the Rights included in such Units which may be issued upon exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any.

 

(3) Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

 

(4) No fee pursuant to Rule 457(g).

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED DECEMBER 10, 2021

 

$50,000,000
JJ OPPORTUNITY CORP.
5,000,000 UNITS

 

JJ Opportunity Corp. is a Delaware company incorporated as a blank check company for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Our efforts to identify a prospective target business will not be limited to a particular industry, although the Company intends to focus its search for a target business on companies within technology-enabled financial sectors, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America.

 

This is an initial public offering of our securities. Each unit that we are offering has a price of $10.00 and consists of one share of our Class A common stock and one right to receive one-tenth (1/10) of one share of our Class A common stock upon the consummation of an initial business combination, as described in more detail in this prospectus. Each ten rights entitle the holder thereof to receive one share of Class A common stock at the closing of a business combination. We will not issue fractional shares. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination.

 

We have granted Maxim Group LLC, the representative of the underwriters (“Maxim” or the “Representative”), a 45-day option to purchase up to 750,000 units (over and above the 5,000,000 units referred to above) solely to cover over-allotments, if any.

 

If we are unable to complete a business combination within 15 months from the date that this registration statement is declared effective by the Securities and Exchange Commission (the “SEC”) (or up to 24 months, if we extend the time to complete a business combination as described in this prospectus), we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay for taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein.

 

One of our sponsors, UNIFUTURE TECHNOLOGY LLC, has committed to purchase from us an aggregate of 278,696 units (or 301,196 units if the over-allotment option is exercised in full), or “private units,” at $10.00 per unit (for a total purchase price of $2,786,960, or $3,011,960 if the over-allotment option is exercised in full). These purchases will take place on a private placement basis simultaneously with the consummation of this offering and exercise of the over-allotment option, if any. These private units are identical to the units sold in this offering, subject to certain limited exceptions as further described herein. All of the proceeds we receive from these purchases will be placed in the trust account described below.

 

Our founders, including our sponsors, our officers and directors, and/or their designees, collectively own 1,437,500 shares of Class B common stock (up to 187,500 shares are subject to forfeiture depending on the extent to which the underwriter’s over-allotment option is exercised). The holders of Class B common stock have the exclusive right to elect all of our directors prior to our initial business combination. The Class B common stock will automatically convert into Class A common stock at the closing of our initial business combination on a one-for-one basis, subject to adjustment as provided herein.

 

There is presently no public market for our units, shares of Class A common stock or rights. We intend to apply to have our units listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “JJOCU” on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on Nasdaq. The shares of Class A common stock and rights comprising the units will begin separate trading on the 52nd day after the effective date of this prospectus unless Maxim determines that an earlier date is acceptable, subject to our filing a Current Report on Form 8-K with the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the shares of Class A common stock and rights will be traded on Nasdaq under the symbols “JJOC” and “JJOCR,” respectively. We cannot assure you that our securities will continue to be listed on Nasdaq after this offering.

 

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and have elected to comply with certain reduced public company reporting requirements.

 

There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. Because certain members of our management team have substantial network in China, we may pursue a business combination with a company doing business in China, which may have legal and operational risks associated with. The governing PRC laws and regulations are sometimes vague and uncertain, and therefore, the vagueness and uncertainties may result in a material change in the post-combined company’s operations, cause the value of our securities after we complete our business combination to significantly decline or be worthless, or substantially limit or completely hinder the post-combined company’s ability to offer or continue to offer securities to investors. For instance, due to PRC legal restrictions on foreign ownership in certain sectors or other matters, such as telecommunication and internet, many China-based operating companies elect to list on an U.S. exchange through an offshore shell company in foreign jurisdiction which then enter into contractual arrangements with its China-based operating company. Such company is known as variable interest entity, or “VIE.” The offshore shell company, although owns the equity ownership of its subsidiary operating in China, does not own any equity ownership of its VIE(s). Instead the shell company controls and receives the economic benefits of its VIE’s business operations through those contractual arrangements. The Chinese regulatory authorities could disallow the VIE structure, which could reduce the number of the prospective target PRC operating entities available to us, or result in a material change in the post-combined company’s operations or cause the value of our shares after we complete our business combination to significantly decline or be worthless. Additionally, the PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. However, since these statements and regulatory actions are new or have not been officially implemented, it is highly uncertain how soon Chinese legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our capability to acquire or merge with a company with major operations in China, and post-combined company’s ability to conduct its business, accept foreign investments or list on an U.S. exchange.

 

 

 

 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 27 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

           Proceeds, 
       Underwriting   before 
   Price to   Discounts and   Expenses, to 
   Public   Commissions(1)   us 
Per Unit  $10.00   $0.50 (2)  $9.50 
Total  $50,000,000   $2,500,000   $47,500,000 

 

(1) For further information relating to the underwriters’ compensation, please refer to the section entitled “Underwriting” on page 124 of this prospectus.

 

(2) Includes up to $1,500,000, or $0.30 per unit, equal to 3% of the gross proceeds of this offering (or $1,725,000 if the underwriters’ over-allotment option is exercised in full) payable to the underwriters as deferred underwriting discounts and commissions from the funds to be placed in the trust account described in this prospectus. The deferred underwriting discounts and commissions will be released to the underwriters upon consummation of an initial business combination, as described in this prospectus. If the business combination is not consummated, such deferred underwriting discounts and commissions will be forfeited by the underwriters. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions. In addition, we have agreed to issue 25,000 shares of Class A common stock to the Representative, or “representative shares” upon the closing of this Offering.

 

Upon consummation of the offering, $10.10 per unit sold to the public in this offering (whether or not the over-allotment option has been exercised in full or part) will be deposited into a United States-based trust account with Continental Stock Transfer & Trust Company, LLC, acting as trustee. Such amount includes $1,500,000, or $0.30 per unit (or $1,725,000 if the underwriters’ over-allotment option is exercised in full), payable to the underwriters as deferred underwriting discounts and commissions. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business combination and our liquidation upon our failure to consummate a business combination within the required time period.

 

We are offering the units for sale on a firm-commitment basis. Maxim, acting as sole book-running manager and representative of the underwriters, expects to deliver our securities to investors in the offering on or about __________, 2022.

 

Sole Book-Running Manager

Maxim Group LLC

_______________, 2021

 

 

 

 

 

JJ OPPORTUNITY CORP. 

TABLE OF CONTENTS

 

   Page 
PROSPECTUS SUMMARY   1 
SUMMARY FINANCIAL DATA   26 
RISK FACTORS   27 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   60 
USE OF PROCEEDS   61 
DIVIDEND POLICY   64 
DILUTION   64 
CAPITALIZATION   67 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   68 
PROPOSED BUSINESS   72 
MANAGEMENT   94 
PRINCIPAL STOCKHOLDERS   102 
CERTAIN TRANSACTIONS AND RELATED PARTY TRANSACTIONS   105 
DESCRIPTION OF SECURITIES   108 
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS   117 
UNDERWRITING   124 
LEGAL MATTERS   132 
EXPERTS   132 
WHERE YOU CAN FIND ADDITIONAL INFORMATION   132 
INDEX TO FINANCIAL STATEMENTS   F-1 

 

PROSPECTUS SUMMARY

 

This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing.

 

Unless otherwise stated in this prospectus or the context otherwise requires, references to:

 

  “we,” “us” or “our company” refers to JJ Opportunity Corp.;
     
  “common stock” are to our Class A common stock and our Class B common stock, collectively, par value $0.0001 per share;
     
  “Effective Date” refers to the date this registration statement for the offering therein is declared effective by the SEC;
     
  “DGCL” is to the Delaware General Corporation Law;
     
  “founders” refer to our sponsors and any other holders of our insider shares prior to this offering (or their permitted transferees);
     
  “initial stockholders” refer to our founders and Maxim; and/or their designees;
     
  “insider shares” refer to shares of our Class B common stock initially purchased by our sponsors for an aggregate price of $25,000 in a private placement prior to this offering, and the shares of our Class A common stock issued upon the conversion thereof as provided herein;
     
  “management” or our “management team” refer to our officers and directors;
     
  “private rights” refer to the rights sold as part of private units;
     
  “private units” refer to the units we are selling privately to one of our sponsors, UNIFUTURE TECHNOLOGY LLC, upon consummation of this offering;
     
  “public shares” refer to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market);
     
  “public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares;
     
  “public units” refer to units being sold in this offering, each unit consisting of one public share and one public right;

 

  “representative shares” refer to 25,000 shares of Class A common stock to Maxim (and/or its designees) as a part of representative’s compensation simultaneously with the closing of this offering;
     
  “sponsors” refer to JJ Sponsor Group LLC, a Delaware limited liability company, which, through a certain manager operating agreement, is managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer and UNIFUTURE TECHNOLOGY LLC, a Delaware limited liability company, which is managed by Mr. Shangyong Zhang, our Chief Financial Officer;
     
  “units” refer to public units and private units;
     
  “US Dollars” and “$” refer to the legal currency of the United States; and

 

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. The information in this prospectus assumes that the underwriters will not exercise their over-allotment option.

 

1

 

General

 

We are a blank check company formed as a Delaware corporation on March 26, 2021 as a business company limited by shares (meaning that our public stockholders have no liability, as stockholders of our company, for the liabilities of our company over and above the amount paid for their shares). We were formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” Our efforts to identify a prospective target business will not be limited to a particular industry, although we currently intend to focus our search for a target business on companies within technology-enabled financial sectors, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target business.

 

Our Sponsors and Management Team

 

Our sponsors include JJ Sponsor Group LLC, or “JJ Sponsor”, a Delaware limited liability company, managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer and UNIFUTURE TECHNOLOGY LLC, or “UNIFUTURE”, a Delaware limited liability company, solely owned and managed by Mr. Shangyong Zhang, our Chief Financial Officer.

 

JJ Sponsor is held by Tibet Ninth Eternity Venture Capital Management Co., Ltd., or “Ninth Eternity Ventures”, with a 10% membership interest and Ninth Eternity Deep Tech Group, or “Deep Tech Group”, with a 90% membership interest.

 

Founded by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer, along with its partner, Kunwu Jiuding Investment Holdings Co., Ltd. (“JD Capital”), a 49% equity interest holder, Ninth Eternity Ventures employs a flexible investment strategy comprised of buy-out/control-oriented, growth capital and restructuring investments, driven by China’s pivotal role as the largest emerging economy in the global market. JD Capital is a leading China-based alternative investment management and financial services firm listed on the Shanghai Stock Exchange (600053.SH.), and one of the largest private equity firms in China. JD Capital boasts professional investment teams who have successfully closed transactions in more than 20 subsectors and managed private equity funds totaling RMB52.3 billion (approximately $8.05 billion) as of December 31, 2020. By operating systematically and seizing systematic investment opportunities, JD Capital has invested $5.16 billion in mature enterprises and start-ups across the world, primarily in the China market. JD Capital has invested in a portfolio of 365 underlying companies, out of which JD Capital has exited from 189 portfolio companies and generated returns for investors with an internal rate of return of 26.9% (assuming that the net present value of all cash flows is equal to zero in a discounted cash flow analysis). Among all the portfolio companies, there are 64 listed on domestic and foreign exchanges and 58 portfolio companies traded on over-the-counter markets.

 

Founded in 2019 by Mr. Junhui (Jerome) Zhang, Deep Tech Group has a vision to grow into a holding company of diversified assets including businesses in the technology and financial services sectors. It currently holds equity interests in the technology, broker-dealer, asset management and sponsor sectors. Deep Tech Group wholly owns Ninth Eternity Asset Management LLC (SEC# 802-118187/CRD# 306985), an SEC registered exempt reporting adviser, and Ninth Eternity Securities LLC, a licensed broker dealer by the Financial Industry Regulatory Authority, or “FINRA”, (SEC# 8-70514/FINRA: CRD# 307492). Deep Tech Group also wholly owns Ninth Eternity Capital HK Limited, licensed by the Securities and Futures Commission of Hong Kong, or the “SFC”, (CE# BPU494), which engages in, among other things, investment research, securities underwriting and placement, discretionary account services, distribution of funds, securities margin financing, stock borrowing and lending, and securities brokerage services.

 

We believe that the extensive platform and resources of our sponsors and their affiliates, especially JD Capital, present broad opportunities to identify high growth target businesses and bring them to the U.S. capital markets. In the near term, we plan to take advantage of our affiliation with our sponsors and their affiliates, and we believe that these relationships will expand the business opportunities in local and international markets that are available to us.

 

2

 

In addition to the support by our sponsors, we will seek to capitalize on the comprehensive experience and contacts of our executive officers in consummating an initial business combination. Our management team, comprised of our executive officers and directors, brings a wealth of experience in identifying, negotiating with and conducting due diligence on potential candidates for acquisition.

 

Mr. Junhui (Jerome) Zhang, Chief Executive Officer and Chairman. Mr. Zhang has been executive officer and director for two entities affiliated or associated with JD Capital, including Ninth Eternity Ventures and JZ Securities Co., Ltd. JD Capital is a leading China-based alternative investment management and financial services firm listed on Shanghai Stock Exchange (600053.SH.). Since February 2018, Mr. Zhang has served as the chief executive officer and chief investment officer at Ninth Eternity Ventures, a member of one of our sponsors, JJ Sponsor. Since May 2019, Mr. Zhang has been the founding chairman of Deep Tech Group, another member of JJ Sponsor. Deep Tech Group is a holding company intended to hold equity stakes across a number of operating entities in the technology and financial services industry. From September 2015 to June 2018, Mr. Zhang held various senior positions at JZ Securities Co., Ltd., a firm licensed by the China Securities Regulatory Commission, or “CSRC”, which is associated with JD Capital and engages in investment banking, brokerage, asset management, fixed income, and other broker dealer businesses. From August 2010 to September 2015, Mr. Zhang served as deputy head of the institutional business division, over-the-counter market division, and private banking division of Guosen Securities Co., Ltd., a CSRC regulated securities firm owned by the Shenzhen Government. Since July 2019, Mr. Zhang has served as the non-executive director of Ninth Eternity Capital HK Ltd. (CE #BPU494), an SFC regulated broker dealer firm. Mr. Zhang also has served as both the chief executive officer and director at Beijing Ninth Eternity Venture Capital Management Co., Ltd. since June 2018, a private equity investment company and Shenzhen Ninth Eternity Network Technology Co., Ltd. since August 2019, which engages in the development of global capital market trading system on mobile applications and computers. Mr. Zhang received an MBA degree from Peking University and his Bachelor’s degree in Accounting from Beijing Wuzi University.

 

Mr. Shangyong Zhang, Chief Financial Officer and Director. Mr. Zhang currently serves as the chief executive officer and director of China Communication Media Group (TPEX: 6404) (“CCMG”), a company listed on the Taiwan Stock Exchange, developing and marketing software on smartphones (since September 2013). He currently serves as the director of three subsidiaries of CCMG: (i) Rich Best (HK) Investment Limited, which provides, among other things, consulting services for management, market planning and information technology (since November 2016); (ii) Cosmopolitan Technology Ltd., engaging in Internet advertising promotion and Internet product operation (since December 2014); and (iii) Top1mobi Technology Co., Ltd., a company providing Internet advertising promotion and product operation services (since August 2014). He has served as the chief executive officer of another three subsidiaries of CCMG: (iv) Guangzhou Hui You Quan Jia Administration Consultant Co., Ltd., which provides, among other things, consulting service of management, market planning and information technology (since February 2017); (v) Shanghai Xingfan Software Development Co., Ltd. (since 2014) and Shenzhen Huiyou Jiatong Technology Co., Ltd. (since 2014), both of which engage in software development, computer and software sales and import and export of goods and technology. Mr. Zhang also served as chief executive officer of several companies in the technology and software industries for the past 6 years including (a) Beijing Zhihui Tianxia Internet Technology Ltd. (August 2014 to September 2020), a researcher and developer of computer software, communication technology, and network technology and products; (b) Shanghai Baowo information Technology Co., Ltd. (June 2014 to March 2021), engaged in providing technology services, and sales of computer, computer hardware, software and auxiliary equipment; (c) Shanghai Pimin Internet Technology Co., Ltd. (June 2014 to February 2021), engaged in providing technology services and sales of computer, computer hardware and software; and (d) Zhengzhou Xinweichuang Information Technology CO., Ltd. (June 2014 to January 2021), a company focusing on computer software development, computer system services, and technology consulting. Mr. Zhang received his Bachelor’s degree in Packaging Engineering from Nanchang University in China in 2004.

 

Mr. Hamish Allan Raw, Chief Operating Officer. Mr. Raw has served as the chief technology officer of Ninth Eternity Deep Tech Group since February 2021. He has significant experiences in trading technology and derivatives capital market risk management. From August 2016 to February 2021, Mr. Raw was self-employed, focusing on designing and coding for trading games and writing books on options. From 2008 to 2009, Mr. Raw served as the head of the options trading department at Saxon Financials, a sizable multi-asset trading house. In 2008, Harriman House published his book “Binary Options: Fixed Odds Financial Bets.” From 2003 to 2004, he traded options locally on the Chicago Board of Trade. From 1998 to 2003, Mr. Raw founded FFastFill plc (LON: FFA), a provider of direct market access trading technologies. From 1985 to 1999, Mr. Raw was an independent options market maker at the London International Financial Futures Exchange (LIFFE). From 1979 to 1981, he served as Gilts trader on the London Stock Exchange floor for W. Greenwell, a main brokerage house on the LSE. Mr. Raw received his bachelor’s degree in economics from University of Essex in 1976 and an MBA degree with concentration in finance from City University Business School (now Bayes Business School) in 1985.

 

Mr. Bernardino Paganuzzi, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Paganuzzi has more than thirty-year experience in law practice. Mr. Paganuzzi has practiced as a lawyer at the London office of Kennedys Law LLP (“Kennedys Law”) since October 1995 and became a partner of Kennedys Law in 1997. He has built his practice in all issues flowing from insolvency. Additionally, Mr. Paganuzzi’s practice covers banking litigation, commercial litigation and fraud. He has significant experience in fraud-related matters, including applying for freezing injunctions; tracing claims and breach of trust. Mr. Paganuzzi served as the division head at Kennedys Law for 10 years and was on the Strategy/Management Boards for Kennedys Law globally for 10 years. Mr. Paganuzzi is a member of the editorial board of R3 Recovery Magazine, a magazine for professionals working within insolvency and business recovery in the UK. Mr. Paganuzzi is qualified to practice in law in England and Wales. He completed his Law Society Finals at Guildford College of Law in1986 and received his bachelor’s degree in law from University of Central England in Birmingham in 1985.

 

Mr. Thomas Keith Todd, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Todd has 40 years of experiences in global technology business including not only publicly listed and large multi-nationals but start-up businesses. Since April 2018, Mr. Todd has served as the chief executive officer and executive chairman of the board of directors at KRM22 plc (LON: KRM), a technology and software investment company, with a particular focus on risk management in capital markets. From September 2002 to March 2017, Mr. Todd served as the executive chairman of FFastFill plc (LON:FFA), a provider of SaaS to the global derivatives community, which was acquired by Ion Group in 2013. From April 2013 to March 2017, Mr. Todd served as the executive chairman of Agency Trading at Ion Group, a global technology software company providing automation software solutions for electronic trading. He is currently non-executive chairman of Blighter Surveillance, a private radar business. From 2005 to 2017, Mr. Todd was the non-executive chairman of Amino Technologies plc (LON:AFRNA), a provider of digital TV entertainment and cloud solutions to network operators. He also served as the non-executive chairman of UK Broadband Stakeholder Group (a UK Government advisory board) from January 2001 to January 2004 and Easynet plc, a broadband network company from March 2002 to January 2006. He was the chief executive officer of ICL plc, a global IT company from January 1995 to July 2000 and served as the chief financial officer of ICL plc from July 1987 to January 1995. In 2004, Mr. Todd was awarded the Commander of the Order of the British Empire by the Queen of England for his services to the UK Telecommunication’s industry and having a prominent role at national level. From July 1975 to June 1987, Mr. Todd held several financial positions within the Marconi Company Limited, a defense contractor, including the position of the group chief financial officer from January 1986 to June 1987. Mr. Todd is a fellow of the Chartered Institute of Management Accountants, or FCMA.

 

Mr. David Rich, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Rich has over 20 years of experience managing prominent business portfolios, optimizing operations and cultivating cohesive teams as well as data analysis. Mr. Rich has managed a number of multimillion dollar portfolios at various hedge funds and investment companies including Amida Special Opportunity Investments LLC, a private lending and investment company in New York since September, 2013, Amida Capital Management, a relative value hedge fund in New York from January 2007 to December 2015, Marathon Asset Management, a hedge fund in New York from April 2001 to March 2005 and Tribeca Investments (Citigroup) in New York from April 1999 to April 2001. From August 1997 to April 1999, Mr. Rich served as a credit portfolio manager of General Electric Capital Corporation in Stamford, Connecticut. From September 1993 to July 1995, Mr. Rich served as a credit analyst of Valley National Bank in Wayne, New Jersey. Mr. Rich received his bachelor’s degree in Economics from Tufts University in 1991 and an MBA degree from Columbia University in 1997.

 

Michael Pascutti, Ph.D., Independent Director Nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Dr. Pascutti has more than 20 years of portfolio management experience in credit, equity and derivatives. Since 2015, Dr. Pascutti has been a visiting lecturer at Yale University teaching courses in finance. From January 2011 to January 2015, he was the former CEO/CIO of Eagle River Asset Management (“Eagle River”) investing in corporate actions such as mergers and through credit securities. Prior to Eagle River, Dr. Pascutti was a founding partner and Head of Relative Value at Sandelman Partners from February 2005 to March 2009, where he managed a team of investment professionals and was responsible for the firm's multibillion relative value portfolio as well as its overall size, leverage, credit, risk exposures, and strategies including distressed, merger arbitrage and event-driven equity, convertible arbitrage and capital structure arbitrage strategies. During his stay as Managing Director in Credit and Head of US Convertible at Citadel Investment Group from March 2000 to February 2005, Dr. Pascutti headed the firm's multibillion convertible bond portfolio and ran the multi-strategy credit and equity portfolio. In addition, Dr. Pascutti was a director and senior portfolio manager at Tribeca Investment Group from March 1998 to March 2000, and Portfolio Manager at CS First Boston from June 1995 to March 1998. Dr. Pascutti earned his bachelor’s degree in Economics at the Massachusetts Institute of Technology in 1991 and his Ph.D. in Economics from Harvard University in 1996. While at Harvard University, he was a teaching fellow for courses in Corporate Finance, Statistics, Money and Banking and Quantitative Finance.

 

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Notwithstanding the foregoing, our officers and directors are not required to commit their full time to our affairs and will allocate their time to other businesses, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). As more fully discussed in “Management — Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity, subject to his or her fiduciary duties under the DGCL, prior to presenting such business combination opportunity to us. Most of our officers and directors currently have certain pre-existing fiduciary duties or contractual obligations.

 

In addition, past performance by our management team or our sponsors and their affiliates is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. Furthermore, the members of the management team may not remain with us subsequent to the consummation of a business combination.

 

Competitive Advantages

 

Experienced Management Team with Proven Track Record

 

Our management team has a proven track record of successfully executing investment strategies, growing and managing businesses and generating attractive returns for investors and is equipped with compounded knowledge, expertise and experience in technology and financial services sectors as well as cross-border transactions.

 

Together with our management team, we believe we have a broad network of contacts and corporate relationships that makes us efficient at:

 

  Sourcing and evaluating businesses. Mr. Junhui (Jerome) Zhang, our CEO and Chairman has been involved in merger and acquisition transactions and direct investments in the financial services, fintech, technology, media, and telecom (“TMT”), culture and healthcare sectors during his career at JD Capital and Guosen Securities, respectively. Mr. Shangyong Zhang, our CFO, is a consecutive entrepreneur with over 20 years of experience in technology. In addition, our independent director nominees have broad networks which should enhance our access to potential deals and transactions globally. Mr. Thomas Keith Todd has 40 years of experiences in global technology business including not only publicly listed and large multi-nationals but start-up businesses. Mr. Bernardino Paganuzzi has more than 30 years of experience in legal practice covering insolvency, banking litigation, commercial litigation and fraud.  Mr. David Rich has over 20 years of experience managing prominent business portfolios, optimizing operations and cultivating cohesive teams as well as data analysis. Dr. Michael Pascutti has more than 20 years of portfolio management experience in credit, equity and derivatives. Our management team collectively has developed an extensive network of relationships over the course of their careers, ranging from owners of private and public companies, private equity funds, investment bankers, attorneys, accountants and business brokers to executives of government-owned entities and public officials. We believe that this network will allow us to generate a substantial number of attractive risk-adjusted acquisition opportunities.

 

  Negotiating and executing a transaction in a timely and professional manner. Our management team has been instrumental, working closely with companies, in implementing major business transformations and helping to create value through the public markets. Mr. Junhui (Jerome) Zhang, our CEO has been engaged in management and investment of financial companies for over ten years, participated in a number of investments and transactions and accumulated extensive experiences in managing and executing merger and acquisitions, initial public offerings, capital raising and leveraged buyouts including a leveraged buyout of Ageas Asia Holdings Limited, in 2015 by Tongchuangjiuding Investment Management Group Co., Ltd., also known as JD Group (NEEQ: 430719. OC) at HKD10.7 billion (approximately $1.37 billion), which was sold to New World Development Company Limited (HKEX: 0017) in December 2018 at HKD 21.5 billion (approximately $2.76 billion), generating multiple returns for investors.

 

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Status as a Publicly Listed Company

 

We believe our structure will make us an attractive business combination partner to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional initial public offering. We believe that target businesses will favor this alternative, which we believe is a more expeditious and cost effective method, while offering greater certainty of execution than the traditional initial public offering. During an initial public offering, there are typically expenses incurred in marketing, which would be costlier than a business combination with us. Furthermore, once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could delay or prevent the offering from occurring. Once public, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management staff.

 

Strong Financial Position and Flexibility

 

With the funds held in our trust account, we can offer a target business a variety of options to facilitate a business combination and fund future expansion and growth of its business. Because we are able to consummate a business combination using the cash proceeds from this offering, our share capital, debt or a combination of the foregoing, we have the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address the needs of the parties. However, if a business combination requires us to use substantially all of our cash to pay for the purchase price, we may need to arrange third party financing to help fund our business combination. Since we have no specific business combination under consideration, we have not taken any steps to secure third party financing.

 

Business Strategy and Acquisition Criteria

 

We intend to identify and seek to consummate a business combination with a business that could benefit from a hands-on partner with extensive financial experience. Even fundamentally sound companies can often under-perform due to underinvestment, temporary periods of dislocation in the markets in which they operate, over-levered capital structures, excessive cost structures, incomplete management teams and/or inappropriate business strategies. Our management team has extensive experience in identifying, structuring and executing acquisitions across various industries to capture arbitrage opportunities and managing assets to optimize a business’s performance. In addition, our team has significant hands-on experience working with private companies, from preparing and executing an initial public offering to being active owners and directors.

 

Although we are not limited to any particular industry, we intend to primarily focus on companies within technology-enabled financial sectors, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America.

 

The focus of our management team is to create stockholder value by leveraging its experience to improve the efficiency of the business while implementing strategies to grow revenue and profits organically and/or through acquisitions. Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we see fit to do so:

 

Strong Management Team.    We will seek to acquire those businesses with seasoned and strong management having a track record of driving growth and profitability; or having proposition of the businesses that may likely be well received by public investors.

 

•  Growth Potential.    We will be looking for businesses that we believe present the potential for revenue and earnings growth through a combination of business, management and resources. We will also consider businesses with potential to generate stable and increasing free cash flow. We may also seek to prudently leverage this cash flow in order to enhance stockholder value.

 

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  Benefit from being a Public Company.    We intend to only acquire a business or businesses that will benefit from being publicly traded and which can effectively utilize access to broader sources of capital and a public profile that are associated with being a publicly traded company.

 

  Technology-Enabled Growth Companies.    We intend to look for companies that operate in markets and industry verticals in technology-enabled sectors that are growing due to new trends in consumer behavior with a focus on sectors including, without limitation, fintech, software services, and technology. We intend to focus on companies which use and integrate technology to drive meaningful operational improvements and efficiency gains, or use technology solutions, including innovative business models and/or product offerings, to disrupt existing business models and create new paradigms that have large market potential. We will seek to exclude businesses that are extremely sensitive to geopolitical and regulatory conditions.

 

  Sustainable Competitive Differentiation and Superior Economic Models.    Our target company will have strong competitive moats that, in our view, can provide true differentiation and form the basis of long-term growth and generate strong and stable cash flows over time. We believe such companies can benefit from our team’s experience, extensive network and industry insights to drive growth and enhance revenue and operational efficiencies; and

 

  Within Our Relationship Nexus.    We intend to acquire including but not limited to companies that are within our networks of relationships with founders, operators, investors, and advisors; where we can proprietarily source opportunities for our initial business combination.

 

This list of criteria and guidelines are not intended to be exhaustive. Our management team will evaluate and value potential target company on a case-by-case basis. Any evaluation relating to the merits of a particular initial business combination or acquisition may be based, to the extent relevant, on these general guidelines as well as other considerations, factors, and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination or acquisition with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria and guideline in our stockholder communications, which as discussed in this prospectus would be in the form of proxy solicitation or tender offer materials that we would file with the SEC.

 

Other Acquisition Considerations

 

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsors, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsors, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.

 

Effecting a Business Combination

 

We will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public stockholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial stockholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. The decision as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. If we so choose and we are legally permitted to do so, we will have the flexibility to avoid a stockholder vote and allow our stockholders to sell their shares pursuant to the tender offer rules of the SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the issued and outstanding shares of common stock voted are voted in favor of the business combination.

 

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We will have until 15 months from Effective Date to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial business combination within 15 months from the Effective Date, we may, but are not obligated to, extend the period of time to consummate a business combination three times by an additional three months each time (for a total of up to 24 months to complete a business combination). Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement to be entered into between us and Continental Stock Transfer & Trust Company, LLC on the date of this prospectus, in order to extend the time available for us to consummate our initial business combination, our insiders or their affiliates or designees, upon at least five days advance notice prior to the applicable deadline, must deposit into the trust account for each three months extension, $500,000, or $575,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per unit in either case), up to an aggregate of $1,500,000 or $1,725,000 if the underwriters’ over-allotment option is exercised in full, on or prior to the date of the applicable deadline. The insiders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of our initial business combination, or, at the lender’s discretion, converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. In the event that we receive notice from our insiders five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our insiders and their affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination. To the extent that some, but not all, of our insiders, decide to extend the period of time to consummate our initial business combination, such insiders (or their affiliates or designees) may deposit the entire amount required. If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account, including a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes, and then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public stockholders. In the event of our liquidation and subsequent dissolution, the public rights will expire and will be worthless.

 

If we are unable to consummate our initial business combination within this time period, we will liquidate the trust account and distribute the proceeds held therein to our public stockholders and dissolve. If we are forced to liquidate, we anticipate that we would distribute to our public stockholders the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public stockholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation.

 

Pursuant to the Nasdaq listing rules, our initial business combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the trust account (excluding any 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 such business combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Our board of directors will have broad discretion in choosing the standard used to establish the fair market value of any prospective target business. The target business or businesses that we acquire may have a collective fair market value substantially in excess of 80% of the trust account balance. We will not be required to comply with the 80% fair market value requirement if we are delisted from NASDAQ.

 

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We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our stockholders from a financial point of view unless the target is affiliated with our officers, directors, initial stockholders or their affiliates.

 

We currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test.

 

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Emerging Growth Company Status and Other Information

 

We are an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.

 

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.

 

Risks Related to Our Possible Business Combination in China

 

There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. Because certain members of our management team have vast network in China, we may conduct our search in China and pursue a business combination with a company doing business in China. Due to the PRC laws prohibitions on direct foreign investments in certain sectors such as telecommunication and internet, we may effectuate a business combination with a target company having contractual arrangements, which is also known as the “VIE Agreements”, with a China-based operating company, which is also known as a variable interest entity, or “VIE”. Such transaction would result in us becoming solely a holding company and our investors may never directly hold equity interests in the China-based operating company.

 

VIE Agreements normally include: Exclusive Technical Consulting and Service Agreement, Equity Interest Pledge Agreement, Exclusive Equity Interests Purchase Agreement, and Powers of Attorney. They collectively are designed to provide us with the power, rights, and obligations equivalent in all material respects to those it would possess as the principal equity holder of a VIE, including absolute control rights and the rights to the assets, property, and revenue of VIE. However, we or our stockholder do not directly hold equity interests in the VIEs after the business combination under the VIE structure, and therefore, such corporate structure is subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation on foreign ownership of internet technology companies, regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. VIE structure is also subject to the risks of uncertainty about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in the post-combined company’s operation and may cause the value of our securities of post-combination entity depreciate significantly or become worthless.

 

VIE structure may be less effective than direct ownership and the company may incur substantial costs to enforce the terms of the arrangements. Since we and our stockholders do not directly own equity interest in VIE and the shareholders of VIE still own the shares of VIE after the business combination, the VIE structure has its inherent risks that may affect your investment, including less effectiveness and certainties than direct ownership and potential substantial costs to enforce the terms of the VIE Agreements. The shareholders of VIE may not act in the best interests of the post-combined company or may not perform their obligations under the VIE Agreement. If VIE or the shareholder of the VIE breach their contractual obligations under the VIE Agreements, the post-combined company may have difficulty in enforcing any rights it may have under the VIE Agreements with the VIE, its founders and owners, in PRC because all of the VIE Agreements are governed by the PRC laws and provide for the resolution of disputes through arbitration in the PRC. Furthermore, VIE Agreements may not be enforceable in China if PRC government authorities or courts take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In addition, there is uncertainty as to whether the courts in the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In the event that we are unable to enforce the VIE Agreements, the post-combined company may not be able to exert effective control over the VIE, and its ability to conduct our business may be materially and adversely affected.

 

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Although the PRC authorities do not require permission to entry of VIE Agreements, recently the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021, pursuant to which the PRC government will strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings of Chinese companies. The Opinions and any related implementing rules to be enacted may subject VIE structure to compliance requirement in the future. Given the current regulatory environment in the PRC, uncertainty of different interpretation and enforcement of the rules and regulations in the PRC may be adverse to our business combination with a China-based operating company or the post-combined company, which may take place quickly with little advance notice. See “Risk Factors— Risks Associated with Acquiring and Operating a Business Outside of the United States or in China” for more details.

 

Furthermore, the securities of the post-combined company may be prohibited to trade on a national exchange under the Holding Foreign Companies Accountable Act if the United States Public Company Accounting Oversight Board (“PCAOB”) is unable to inspect the auditor for three consecutive years beginning in 2021. Our auditor is currently subject to PCAOB inspections, and PCAOB is able to inspect our auditor. In order to minimize such risk, we expressly exclude any target company whose financial statements have been audited by an accounting firm that PCAOB is unable to inspect for three consecutive years beginning in 2021.

 

The governing PRC laws and regulations are sometimes vague and uncertain, and therefore, the vagueness and uncertainties may result in a material change in the post-combined company’s operations, cause the value of our shares after we complete our business combination to significantly decline or be worthless, or substantially limit or completely hinder the post-combined company’s ability to offer or continue to offer securities to investors. For instance, the PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. However, since these statements and regulatory actions are new or have not been officially implemented, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our capability to acquire or merge with a company with major operations in China, and post-combined company’s ability to conduct its business, accept foreign investments, or list on an U.S. exchange.

 

Permission Required from the PRC Authorities for this Offering

 

As a Delaware company with no operations in China and our two sponsors are also Delaware limited liability companies, there are no PRC laws and regulations (including the CSRC, Cyberspace Administration of China, or the CAC, or any other government entity) in force explicitly requiring that we obtain permission from PRC authorities for this offering or to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction or any regulatory objection to this offering from any relevant PRC authorities. However, we cannot guarantee you whether a permission is required from the PRC authorities in the course of our business combination if we acquire or merge with a company with major operations in China. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings of Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject our business combination with a China based operating company to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to our business combination with a China-based operating company or the post-combined company, which may take place quickly with little advance notice.

 

Transfers of Cash to and from Our Post-Combination Organization If We Acquire a Company Based in China

 

If we complete a business combination with a company operating in China, the PRC government may impose controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our post-combination entity’s profits, if any. If subsidiaries of our post-combination organization in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to the public holding company. Under the VIE structure, current PRC regulations permit a VIE to pay dividends to its holding company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, a VIE’s subsidiaries and VIE are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

 

Current PRC regulations permit VIE’s indirect PRC subsidiaries to pay dividends to an overseas subsidiary, for example a subsidiary located in Hong Kong, only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the VIE’s subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies the reserve funds are not distributable as cash dividends except in the event of liquidation.

 

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Furthermore, if we complete a business combination with a company in China via VIE Agreements and we are unable to receive all of the revenues from our operations through the current VIE Agreements, we may be unable to pay dividends on our ordinary shares. Cash dividends, if any, on our Class A ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes after the business combination, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%. In order for us to pay dividends to our shareholders, we will rely on payments from the entities either directly controlled by us or indirectly controlled by us via VIE Agreements. Under the VIE structure, a holding company will highly rely on the VIE Agreements between it and the VIE to distribute earnings and settle amounts owed under the VIE agreements, while we cannot guarantee the PRC government will allow such arrangement.

 

Private Placements

 

On May 3, 2021, the Company issued 2,300,000 shares of Class B common stock to JJ Sponsor and 575,000 shares of Class B common stock to UNIFUTURE, respectively. On September 23, 2021, JJ Sponsor surrendered 1,150,000 shares of Class B common stock without any consideration and UNIFUTURE surrendered 287,500 shares of Class B common stock without any consideration. As a result, JJ Sponsor acquired 1,150,000 shares of Class B common stock and UNIFUTURE acquired 287,500 shares of Class B common stock, together for an aggregate of 1,437,500 shares of Class B common stock, which we refer to throughout this prospectus as the “insider shares,” for an aggregate purchase price of $25,000, or approximately $0.017 per share. In addition, UNIFUTURE has committed to transfer to each of four independent director nominees and/or their designees 10,000 founder shares upon the effectiveness of the prospectus and additional 5,000 founder shares upon the consummation of the initial business combination, at the original prices. The insider shares held by our founders include up to 150,000 and 37,500 shares of Class B common stock, respectively, or an aggregate of up to 187,500 shares of Class B common stock subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that our founders will collectively own 20.0% of our issued and outstanding shares after this offering (excluding the sale of the private units and assuming our founders do not purchase units in this offering).

 

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In addition, we have committed to Maxim 25,000 shares of Class A common stock at the closing of this offering. We refer to our founders and Maxim throughout this prospectus as the “initial stockholders”. None of our initial stockholders has indicated any intention to purchase units in this offering.

 

The insider shares and representative shares are identical to the shares of Class A common stock, or the “public shares”, included in the units being sold in this offering. However, our initial stockholders have agreed, pursuant to written letter agreements with us, (A) to vote their insider shares and representative shares (as well as any public shares acquired in or after this offering) in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of incorporation that would stop our public stockholders from converting or selling their shares to us in connection with a business combination or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination within 15 months (or up to 24 months, if we extend the time to complete a business combination as described in this prospectus) from the Effective Date unless we provide dissenting public stockholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any insider shares and representative shares (as well as any other shares acquired in or after this offering) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-initial business combination activity and (D) that the insider shares and the representative shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, our founders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares, the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our Class A common stock equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. The representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days beginning on the date of the commencement of sales in this offering pursuant to FINRA Rule 5110(e)(1). Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days beginning on the date of commencement of sales of this offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days beginning on the date of commencement of sales of this offering, except to any underwriter and selected dealer participating in the offering and their officers, partners, registered persons or affiliates. The Representative has further agreed not transfer, assign or sell any of the representative shares until the completion of our initial business combination [subject to certain exceptions].

 

In addition, UNIFUTURE, one of our sponsors, has committed to purchase from us an aggregate of 278,696 private units at $10.00 per private unit (for a total purchase price of $2,786,960). These purchases will take place on a private placement basis simultaneously with the consummation of this offering and the exercise of the over-allotment option by the underwriters. All of the proceeds we receive from these purchases will be placed in a trust account in the United States maintained by Continental Stock Transfer & Trust Company, LLC, as trustee.

 

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The private units are identical to the units sold in this offering, subject to certain exceptions. Furthermore, UNIFUTURE, one of our sponsors, has agreed (A) to vote the shares of Class A common stock underlying the private units, or “private shares,” in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of incorporation that would stop our public stockholders from converting or selling their shares of Class A common stock to us in connection with a business combination or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination within 15 months from the Effective Date (or up to 24 months from the Effective Date if we extend the period of time to consummate a business combination, as described in more detail in this prospectus) unless we provide dissenting public stockholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any private shares for cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-initial business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. UNIFUTURE has also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination.

 

If public units or public shares are purchased by any of our directors, officers or initial stockholders, they will be entitled to funds from the trust account to the same extent as any public stockholder upon our liquidation but will not have redemption rights related thereto.

 

Corporate Information

 

Our principal executive office is located at 1 Broadway, 14th Floor, Cambridge, MA 02142, and our telephone number is (978) 295-1858.

 

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The Offering

 

In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled “Risk Factors” beginning on page 27 of this prospectus.

 

Securities offered   5,000,000 units, at $10.00 per unit, each unit consisting of one share of Class A common stock and one right. Every ten rights entitles the holder to receive one share of Class A common stock upon consummation of our initial business combination.
     
Listing of our securities
and proposed symbols
  We anticipate the units, the Class A common stock and rights, once they begin separate trading, will be listed on Nasdaq under the symbols “JJOCU,” “JJOC,” and “JJOCR,” respectively.
     
    Each of Class A common stock and rights may trade separately on the 52nd day after the date of this prospectus unless Maxim determines that an earlier date is acceptable (based upon, among other things, its assessment of the relative strengths of the securities markets and small capitalization and blank check companies in general, and the trading pattern of, and demand for, our securities in particular). In no event will Maxim allow separate trading of Class A common stock and rights until we file an audited balance sheet reflecting our receipt of the gross proceeds of this offering.
     
    Once our Class A common stock and rights commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into separately trading common stock and rights.
     
    We will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise of the over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if Maxim has allowed separate trading of the common stock and rights prior to the 52nd day after the date of this prospectus.
     
Common stock:    
Number issued and outstanding before this offering and the private placement   1,437,500 shares of Class B common stock(1)
     
Number to be issued and outstanding after this offering and sale of private units  

5,303,696 shares of Class A common stock and 1,250,000 shares of Class B common stock (2)(3)

 

 

 

(1) This number includes an aggregate of up to 187,500 shares of Class B common stock held by our founders that are subject to forfeiture if the over-allotment option is not exercised by the underwriters in full.

 

(2) Assumes the over-allotment option has not been exercised and an aggregate of 187,500 shares of Class B common stock held by our founders have been forfeited. If the over-allotment option is exercised in full, there will be a total of 6,076,196 shares of Class A common stock and 1,437,500 shares of Class B common stock issued and outstanding.

 

(3) The shares of Class A common stock includes (i) 5,000,000 shares of Class A common stock included in the public units; (ii) 278,696 shares of Class A common stock included in the private units; and (iii) the 25,000 shares of Class A common stock to be issued to the Representative and/or its designees, which we refer to as “representative shares” throughout this prospectus.

 

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Rights:    
Number issued and outstanding before this offering and the private placement   0 rights
     
Number to be issued and outstanding after this offering and sale of private units   5,278,696 rights(4)

 

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Terms of Rights   Except in cases where we are not the surviving company in a business combination, each holder of a right will automatically receive one-tenth (1/10) of one share Class A common stock upon consummation of our initial business combination. In the event we will not be the surviving company upon completion of our initial business combination, upon notification, each registered holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the business combination. We will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the DGCL. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination. If we are unable to complete an initial business combination within the required time period and we redeem the public shares for the funds held in the trust account, holders of rights will not receive any of such funds for their rights and the rights will expire worthless.
     
Insider shares   On May 3, 2021, JJ Sponsor, one of our sponsors, acquired 2,300,000 shares of Class B common stock for an aggregate purchase price of $20,000. On May 3, 2021, UNIFUTURE, one of our sponsors, acquired 575,000 shares of Class B common stock for an aggregate purchase price of $5,000. On September 23, 2021, JJ Sponsor surrendered 1,150,000 shares of Class B common stock without any consideration and UNIFUTURE surrendered 287,500 shares of Class B common stock without any consideration. As a result, JJ Sponsor acquired 1,150,000 shares of Class B common stock and UNIFUTURE acquired 287,500 shares of Class B common stock.  In addition UNIFUTURE has committed to transfer to each four independent director nominee and/or their designees 10,000 founder shares upon the effectiveness of the prospectus and additional 5,000 founder shares upon the consummation of the initial business combination, at the original prices. Prior to the initial investment in the company of $25,000 by our sponsors, the company had no assets, tangible or intangible. The number of insider shares issued was determined based on the expectation that such insider shares would represent approximately 20% of the outstanding shares upon completion of this offering (assuming they do not purchase units in this offering and excluding the private shares and the representative shares). Neither our sponsors nor any of our officers or directors have expressed an intention to purchase any units in this offering. Up to 187,500 insider shares will be subject to forfeiture by our sponsors depending on the extent to which the underwriters’ over-allotment option is exercised so that our founders will maintain ownership of 20% of our common stock after this offering (assuming they do not purchase units in this offering and excluding the private shares and the representative shares).

 

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    The insider shares are identical to the public shares, except that:
     
    insider shares are shares of Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial business combination, or at any time prior thereto at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein;
       
    the insider shares are subject to certain transfer restrictions, as described in more detail below;
       
    our sponsors, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to their insider shares, private shares and public shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their insider shares, private shares and public shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their insider shares if we fail to complete our initial business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame;
       
   

pursuant to the letter agreement, our sponsors, officers and directors have agreed to vote any insider shares and private shares held by them and any public shares purchased during or after this offering (including in open market and privately negotiated transactions) in favor of our initial business combination. If we submit our initial business combination to our public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. As a result, in addition to our initial stockholders’ shares, we would need only 1,723,153, or 34.29%, of the 5,025,000 public shares and representative shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination in order to have our initial business combination approved) or 84,729, or 1.69% of 5,025,000 public shares and representative shares sold in this offering to be voted in favor of a transaction (assuming only a quorum is present at such meeting held to vote on our initial business combination and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination) (assuming the over-allotment option is not exercised); and

     
    ● the insider shares and private shares are entitled to registration rights. 

 

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Representative shares  

We will issue 25,000 representative shares to Maxim (and/or its designees) as part of representative compensation. The representative shares are identical to the public shares except that Maxim has agreed not to transfer, assign or sell any such representative shares until the completion of our initial business combination. In addition, Maxim has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of our initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to such shares if we fail to complete our initial business combination within 15 months (or up to 24 months if we extend the period of time to consummate a business combination, as described in more detail in this prospectus) from the Effective Date.

 

The representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days beginning on the date of the commencement of sales in this offering of which this prospectus forms a part pursuant to FINRA Rule 5110 (e)(1). Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days beginning on the date of commencement of sales of this offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days beginning on the date of commencement of sales of this offering except to any underwriter and selected dealer participating in the offering and their officers, partners, registered persons or affiliates.

     
Offering proceeds to be
held in trust
 

$50,000,000 of the net proceeds of this offering (or $57,500,000 if the over-allotment option is exercised in full), plus $500,000 we will receive from the sale of the private units (or $575,000    if the over-allotment option is exercised in full), net of estimated offering expenses and proceeds not held in trust account, for an aggregate of $50,500,000 (or an aggregate of $58,075,000 if the over-allotment option is exercised in full), or $10.10 per unit sold to the public in this offering (regardless of whether or not the over-allotment option is exercised in full or part) will be placed in a trust account in the United States, maintained by Continental Stock Transfer & Trust Company, LLC, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. Such amount includes $1,500,000, (or $1,725,000 if the underwriters’ over-allotment option is exercised in full), payable to the underwriters as deferred underwriting discounts and commissions. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct $50,000,000 (or $57,500,000 if the over-allotment option is exercised in full) to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The remaining $500,000 of net proceeds of this offering will not be held in the trust account.

     
    Except as set forth below, the proceeds held in the trust account will not be released until the earlier of: (1) the completion of our initial business combination within the required time period and (2) our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period. Therefore, unless and until our initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement in connection with our initial business combination.

 

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  (4) Assumes the over-allotment option has not been exercised. Includes 5,000,000 rights included in the public units and 278,696 rights included in the private units. If the over-allotment option is exercised in full, there will be a total of 6,051,196 rights, including 5,750,000 rights included in the public units and 301,196 rights included in the private units.

 

   

Notwithstanding the foregoing, there will be released to us from the trust account any interest earned on the funds in the trust account that we need to pay our income tax or other tax obligations. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (estimated to initially be $500,000); provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust account are insufficient, our founders, officers and directors or their affiliates may,  but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 220,000 shares of Class A common stock which includes 20,000 shares of Class A common stock issuable underlying rights). If we do not complete a business combination, the loans would be repaid out of funds not held in the trust account, and only to the extent available.

     
Limited payments to
insiders
  Prior to the consummation of a business combination, there will be no fees, reimbursements or other cash payments paid to our founders, officers, directors or their affiliates prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction that it is) other than:
     
    ● repayment at the closing of this offering of an aggregate of approximately $500,000 of loans made by our sponsor, JJ Sponsor;
     
    ● payment of $10,000 per month to JJ Sponsor, for use of office, utilities, personnel and related services, subject to deferral as described herein;
     
    ● repayment at the closing of our initial business combination of loans which may be made by our founders, officers, directors or any of its or their affiliates to finance transaction costs in connection with an initial business combination, the terms of which have not been determined; and
     
    ● reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible business targets and business combinations.
     
    There is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account, such expenses would not be reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made to any initial stockholder or member of our management team, or their respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and approval.

 

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Stockholder approval of, or tender offer in connection with, initial business combination   In connection with any proposed initial business combination, we will either (1) seek stockholder approval of such initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide our public stockholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, our initial stockholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account. If we determine to engage in a tender offer, such tender offer will be structured so that each public stockholder may tender any or all of his, her or its public shares rather than some pro rata portion of his, her or its shares. If enough stockholders tender their shares so that we are unable to satisfy any applicable closing condition set forth in the definitive agreement related to our initial business combination, or we are unable to maintain net tangible assets of at least $5,000,001, we will not consummate such initial business combination. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us based on a variety of factors such as the timing of the transaction, or whether the terms of the transaction would otherwise require us to seek stockholder approval. If we so choose and we are legally permitted to do so, we will have the flexibility to avoid a stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the issued and outstanding shares of common stock voted are voted in favor of the business combination.
     
    We have determined not to consummate any business combination unless we have net tangible assets of at least $5,000,001 upon such consummation in order to avoid being subject to Rule 419 promulgated under the Securities Act. The $5,000,001 net tangible asset value would be determined once a target business is located and we can assess all of the assets and liabilities of the combined company.
     
    However, if we seek to consummate a business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such business combination, the net tangible asset requirement may limit our ability to consummate such a business combination and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all.

 

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Our initial stockholders, officers and directors, have agreed (i) to vote their insider shares, private shares, representative shares and any public shares purchased in or after this offering in favor of any proposed business combination and (ii) not to convert any shares (including the insider shares) in connection with a stockholder vote to approve, or sell their shares to us in any tender offer in connection with, a proposed initial business combination. As a result, if we sought stockholder approval of a proposed transaction we could need as little as 1,723,153, or 34.29%, of 5,025,000 public shares and representative shares sold in this offering to be voted in favor of the transaction (assuming all outstanding shares are voted and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination), or 84,729, or 1.69%, of 5,025,000 public shares and representative shares sold in this offering to be voted in favor of a transaction (assuming only a quorum is present at such meeting held to vote on our initial business combination and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination) in order to have such transaction approved (assuming the over-allotment option is not exercised and the founders do not purchase any units in this offering or units or shares in the after-market). None of our officers, directors, founders or their affiliates has indicated any intention to purchase public units in this offering or any public units or public shares in the open market or in private transactions (other than the private units). However, if a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our officers, directors, founders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. There is no limit on the number of shares that may be purchased by the insiders. Any purchases would be made in compliance with federal securities laws, including the fact that all material information will be made public prior to such purchase, and no purchases would be made if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.

     
Conversion rights   In connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he, she or it is voting for or against such proposed business combination, to demand that we convert his, her or its public shares into a pro rata share of the trust account upon consummation of the business combination.

 

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    Whether we elect to effectuate our initial business combination via stockholder vote or tender offer, we may require public stockholders wishing to exercise conversion rights, whether they are a record holder or hold their shares in “street name,” to either tender the certificates they are seeking to convert to our transfer agent or to deliver the shares they are seeking to convert to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit / Withdrawal At Custodian) System, at the holder’s option, at any time at or prior to the vote on the business combination. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the broker whether or not to pass this cost on to the converting holder. The foregoing is different from the procedures used by traditional blank check companies. In order to perfect conversion rights in connection with their business combinations, many traditional blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise its conversion rights. After the business combination was approved, the company would contact such stockholder to arrange for it to deliver its certificate to verify ownership. As a result, the stockholder then had an “option window” after the consummation of the business combination during which it could monitor the price of the company’s stock in the market. If the price rose above the conversion price, it could sell its shares in the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become an “option” right surviving past the consummation of the business combination until the converting holder delivered its certificate. The requirement for physical or electronic delivery prior to the closing of the stockholder meeting ensures that a holder’s election to convert is irrevocable once the business combination is completed.
     
    Pursuant to our amended and restated certificate of incorporation, we are required to give a minimum of only ten days’ notice for each general meeting. As a result, if we require public stockholders who wish to convert their public shares into the right to receive a pro rata portion of the funds in the trust account to comply with the foregoing delivery requirements, holders may not have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors may not be able to exercise their conversion rights and may be forced to retain our securities when they otherwise would not want to.
     
    If we require public stockholders who wish to convert their public shares to comply with specific delivery requirements for conversion described above and such proposed business combination is not consummated, we will promptly return such certificates to the tendering public stockholders.
     
    Please see the risk factors titled “In connection with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish to convert their public shares to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights” and “If we require public stockholders who wish to convert their public shares to comply with the delivery requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.”
     
    Once the shares are converted by the holder, and effectively redeemed by us under the DGCL, the transfer agent will then update our stockholder list to reflect all conversions.

 

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Liquidation if no
business combination
  Our amended and restated certificate of incorporation provides that we will have only 15 months (or up to 24 months if extended) from the Effective Date of this prospectus to complete our initial business combination. If we are unable to complete our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our rights, which will expire worthless if we fail to complete our business combination within the 15-month time period (or up to 24-month time period if our time to complete a business combination is extended as described herein).
     
   

Our initial stockholders have waived their rights to liquidating distributions from the trust account with respect to any insider shares or private shares or representative shares held by them if we fail to complete our initial business combination within 15 months (or up to 24 months if extended) from the effective date of this prospectus. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted time period.

 

The underwriters have agreed to waive their rights to their deferred underwriting commissions held in the trust account in the event we do not complete our initial business combination and subsequently liquidate and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares.

 

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Indemnity   Our sponsors, JJ Sponsor and UNIFUTURE, have agreed that they will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.10 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.10 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsors to reserve for such indemnification obligations, nor have we independently verified whether our sponsors have sufficient funds to satisfy their indemnity obligations and believe that our sponsors’ only assets are securities of our company. Therefore, we cannot assure you that our sponsors would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
     
Conflicts of Interest  

Although we do not believe any conflict currently exists between us and our founders, directors, officers or their affiliates, they may compete with us for acquisition opportunities. If any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity, subject to his or her fiduciary duties under the DGCL, prior to presenting such business combination opportunity to us. Most of our officers and directors currently have certain pre-existing fiduciary duties or contractual obligations

 

Our officers may become an officer or director of any other special purpose acquisition company with a class of securities registered under the Exchange Act, even before we enter into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 15 months (or up to 24 months if extended) after the Effective Date of this prospectus. For more details, see “Management—Conflicts of Interest.”

 

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RISK FACTORS SUMMARY

 

We are a blank check company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision on whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see “Proposed Business — Comparison to offerings of blank check companies subject to Rule 419.” Since we may initiate a business combination with target company operating in China, you may be subject to additional risk factors. Please see “Risks Associated with Acquiring and Operating a Business Outside of the United States and in China” for more information. You should carefully consider these and the other risks set forth in the section entitled “Risk Factors” beginning on page 27 of this prospectus.

 

Such risks include, but are not limited to:

 

Risks Associated with Our Business

 

If we are unable to consummate a business combination, our public stockholders may be forced to wait more than 15 months (or up to 24 months if we have extended the period of time as described in this prospectus) from the Effective Date before receiving liquidation distributions.

 

We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination.

 

Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.

 

We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services.

 

Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination even though a majority of our public stockholders do not support such a combination.

 

Our founders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote, potentially in a manner that you do not support.

 

Our founders paid an aggregate of $25,000, or approximately $0.01 per share, for the insider shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.

 

The nominal purchase price paid by our sponsors for the founder shares may result in significant dilution to the implied value of your public shares prior to or upon the consummation of our initial business combination.

 

Risks Associated with Acquiring and Operating a Business Outside of the United States or in China

 

Because of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively impacted.

 

Many countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.

 

If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

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If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S.

 

If we effect our initial business combination with a business located in the People’s Republic of China, the laws applicable to such business will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

Uncertainties with respect to the PRC legal system could adversely affect us.

 

Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to operate profitably in the PRC.

 

The Chinese government may exert substantial interventions and influences over the manner in which our post-combination entity must conduct its business activities that we cannot expect when we enter into a definitive agreement with a target company with major operation in China. If the Chinese government establish some new policies, regulations, rules, or laws in the industries where our post-combination entity is in, our post-combination entity may be subject to material change in its operations and the value of our Class A common stock.

 

Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. Additional compliance procedures may be required in connection with this offering and our business combination process, and, if required, we cannot predict whether we will be able to obtain such approval. As a result, we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless

 

In light of recent events indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, companies with more than one million users’ personal information in China, especially some internet and technology companies, may not be willing to list on a U.S. exchange or enter into a definitive business combination agreement with us. Further, we may also avoid a business combination with a company with more than one million users’ personal information in China due to the limited timeline for us to complete a business combination.

 

Exchange controls that exist in the PRC may restrict or prevent us from using the proceeds of this offering to acquire a target company in PRC and limit our ability to utilize our cash flow effectively following our initial business combination.

 

SUMMARY FINANCIAL DATA

 

The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data are presented.

 

   

As of

September 30, 2021

   

As of

May 6, 2021

 
    Actual     As Adjusted(1)     Actual  
Balance Sheet Data:                        
Working capital (deficit) (2)   $ (165,415 )   $ 509,054     $ (30,971 )
Total assets (3)   $ 240,120     $ 51,009,054     $ 245,095  
Total liabilities (4)   $ 231,066     $ 1,500,000     $ 221,066  
Value of common stock subject to possible conversion/tender (5)   $ -     $ 43,261,941     $ -  
Stockholders’ equity   $ 9,054     $ 6,247,113     $ 24,029  

 

(1)  Includes the $2,786,960 we will receive from the sale of the private units.

 

(2) The “as adjusted” working capital (deficit) amount includes $500,000 of cash held outside the trust account plus $9,054 of actual stockholders’ equity at September 30, 2021.

 

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(3) The “as adjusted” total assets amount includes $50,500,000 of cash held in trust from the proceeds of this offering and the sale of the private placement units, plus $500,000 of cash held outside the trust account, plus $9,054 of actual stockholders’ equity at September 30, 2021.

 

(4) The “as adjusted” total liabilities amount represents up to $1,500,000 of deferred underwriting discounts and commissions that would be payable in the event that the maximum number of stockholders redeemed their shares. The actual liabilities of $231,066 at September 30, 2021 represents $231,066 of a related party loan from JJ Sponsor, one of our sponsors that is managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer, which will be repaid using the proceeds received from the offering on the date the offering is consummated. The $1,500,000 of deferred underwriting discounts and commissions is not due until an initial business combination is consummated, for which we have until 15 months from the Effective Date to consummate (or 24 months if our time to complete a business combination is extended as described herein).

 

(5) The “as adjusted” calculation equals the “as adjusted” total assets of $51,009,054, less the “as adjusted” total liabilities of $1,500,000, less the “as adjusted” stockholders’ equity of $6,247,113. The amount represents net proceeds allocated to the public common stock less the allocated transaction costs related to this offering. The shares of common stock offered to the public contain redemption rights that make them redeemable by our public stockholders. Accordingly, they are classified within temporary equity in accordance with the guidance provided in ASC 480-10-S99-3A and will be subsequently accredited at redemption value.

 

The “as adjusted” information gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid.

 

We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the issued and outstanding shares of common stock voted are voted in favor of the business combination.

 

RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material risks related to the offering, together with the other information contained in this prospectus, before making a decision to invest in our units. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.

 

Risks Associated with Our Business

 

We are a blank check company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.

 

We are a blank check company with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public offering of our securities. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of a business combination.

 

Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”

 

As of September 30, 2021 and May 6, 2021, we had $65,651 and $190,095 in cash, respectively, and a working capital deficit of $165,415 and $30,971, respectively. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate our initial business combination may not be successful. The report of our independent registered public accountants on our financial statements includes an explanatory paragraph stating that our ability to continue as a going concern is dependent on the consummation of this offering. The financial statements do not include any adjustments that might result from our inability to consummate this offering or our ability to continue as a going concern. Moreover, there is no assurance that we will consummate our initial business combination. These factors raise substantial doubt about our ability to continue as a going concern.

 

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If we are unable to consummate a business combination, our public stockholders may be forced to wait more than 15 months (or up to 24 months if we have extended the period of time as described in this prospectus) from the Effective Date before receiving liquidation distributions.

 

We have 15 months from the Effective Date in which to complete a business combination (or 24 months if we have extended the period of time as described in this prospectus). We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full time period will public stockholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment, you may be forced to sell your securities potentially at a loss.

 

The requirement that we complete an initial business combination within a specific period of time may give potential target businesses leverage over us in negotiating our initial business combination and may limit the amount of time we have to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to consummate our initial business combination on terms that would produce value for our stockholders.

 

We have 15 months from the Effective Date to complete an initial business combination (or 24 months if we have extended the period of time as described in this prospectus). Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time limits referenced above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.

 

You will not be entitled to protections normally afforded to investors of blank check companies.

 

Since the net proceeds of this offering are intended to be used to complete a business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws. However, since we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities, restrict the use of interest earned on the funds held in the trust account and require us to complete a business combination within 21 months from the closing of the offering. Because we are not subject to Rule 419, our units will be immediately tradable, we will be entitled to withdraw amounts from the funds held in the trust account prior to the completion of a business combination and we may have more time to complete an initial business combination.

 

We may issue additional shares of common or preferred stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership.

 

Our amended and restated certificate of incorporation currently authorize the issuance of 62,000,000 shares of common stock, 55,000,000 shares of Class A common stock, 5,000,000 shares of Class B common stock, and 2,000,000 shares of preferred stock. Although we have no commitment as of the date of this offering, we may issue a substantial number of additional common or preferred stocks, or a combination of common stock and preferred stock, to complete a business combination. The issuance of additional shares of common stock or preferred stock:

 

  may significantly reduce the equity interest of investors in this offering;

 

  may subordinate the rights of holders of common stock if we issue preferred stocks with rights senior to those afforded to our common stock;

 

  may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and

 

  may adversely affect prevailing market prices for our common stock.

 

Similarly, if we issue debt securities, it could result in:

 

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  default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;

 

  acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

  our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

 

  our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
     
  our inability to pay dividends on our common stock;
     
  using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
     
  limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
     
  increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
     
  limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

 

We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination.

 

Since we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash (or purchase in any tender offer) a significant number of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after a business combination.

 

If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders may be less than $10.10.

 

Our placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public stockholders. If we liquidate the trust account before the completion of a business combination, our sponsors, JJ Sponsor, which is managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer and UNIFUTURE, solely owned and managed by Mr. Shangyong Zhang, our Chief Financial Officer, have agreed that they will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However, they may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than $10.10, plus interest, due to such claims.

 

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Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.

 

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 15 months (or up to 24 months if extended) from the effective date of this prospectus may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 18th month from the closing of this offering in the event we do not complete our business combination and, therefore, we do not intend to comply with the foregoing procedures.

 

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 15 months (or up to 24 months if extended) from the effective date of this prospectus is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.

 

Holders of rights will not have redemption rights if we are unable to complete an initial business combination within the required time period.

 

If we are unable to complete an initial business combination within the required time period and we redeem and distribute the funds held in the trust account, the rights will expire and holders will not receive any of such proceeds with respect to the rights.

 

We have no obligation to net cash settle the rights.

 

In no event will we have any obligation to net cash settle the rights. If the issuance of the shares upon conversion of the rights is not so registered or qualified or exempt from registration or qualification, the holder of such right shall not be entitled to the conversion of such right and such right may have no value and expire worthless.

 

Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.

 

While we intend to focus our search for target businesses on specific locations and industries as described in this prospectus, we are not limited to those locations and may consummate a business combination with a company in any location or industry we choose. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination with a company in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business.

 

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The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any deferred underwriting discounts and commissions and taxes payable on interest earned and less any interest earned thereon that is released to us) at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with.

 

Pursuant to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the trust account and less any interest earned thereon that is released to us for our taxes) at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number of companies with which we may complete a business combination. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account.

 

If Nasdaq delists our securities from trading on its exchange after this offering, we would not be required to satisfy the fair market value requirement described above and could complete a business combination with a target business having a fair market value substantially below 80% of the balance in the trust account.

 

We may face additional and distinctive risks if we acquire a financial technology business.

 

Business combinations with financial technology businesses may involve special considerations and risks. If we complete our initial business combination with a financial technology business, we will be subject to the following risks, any of which could be detrimental to us and the business we acquire:

 

  If the company or business we acquire provides products or services which relate to the facilitation of financial transactions, such as funds or securities settlement system, and such product or service fails or is compromised, we may be subject to claims from both the firms to whom we provide our products and services and the clients they serve;

 

  If we are unable to keep pace with evolving technology and changes in the financial services industry, our revenues and future prospects may decline;

 

  Our ability to provide financial technology products and services to customers may be reduced or eliminated by regulatory changes;

 

  Any business or company we acquire could be vulnerable to cyberattack or theft of individual identities or personal data;

 

  Difficulties with any products or services we provide could damage our reputation and business;

 

  A failure to comply with privacy regulations could adversely affect relations with customers and have a negative impact on business;

 

  We may not be able to protect our intellectual property and we may be subject to infringement claims; and

 

  We and any business or company we acquire may not be able to adapt to the complex and evolving regulatory environment for financial technology services in China.

 

Any of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses will not be limited to financial technology businesses. Accordingly, if we acquire a target business in another industry, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry in which we operate or target business which we acquire, none of which can be presently ascertained.

 

Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.

 

Our ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.

 

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The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following a business combination, it is likely that some or all of the management of the target business will remain in place or be hired after consummation of the business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.

 

Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.

 

While we intend to focus our search for target businesses within the locations and industries as described in this prospectus, we may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure you that our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding a business combination. If we become aware of a potential business combination outside of the geographic location or industry where our officers and directors have the most experience, our management may retain consultants and advisors with experience in such industries to assist in the evaluation of such business combination and in our determination of whether or not to proceed with such a business combination. However, our management is not required to engage consultants or advisors in any situation. If they do not engage any consultants or advisors to assist them in the evaluation of a particular target business or business combination, our management may not properly analyze the risks attendant with such target business or business combination. Even if our management does engage consultants or advisors to assist in the evaluation of a particular target business or business combination, we cannot assure you that such consultants or advisors will properly analyze the risks attendant with such target business or business combination. As a result, we may enter into a business combination that is not in our stockholders’ best interests.

 

Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.

 

Our key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment or consulting agreements or other arrangements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.

 

Our officers and directors will allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination.

 

Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. We cannot assure you these conflicts will be resolved in our favor.

 

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Our officers and directors have pre-existing fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

 

Our officers and directors have pre-existing fiduciary and contractual obligations to other companies, including other companies that are engaged in business activities similar to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business combination. As a result, a potential target business may be presented by our management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. For a more detailed description of the pre-existing fiduciary and contractual obligations of our management team, and the potential conflicts of interest that such obligations may present, see the section titled “Management — Conflicts of Interest.”

 

Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.

 

Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.

 

Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities in the future to which they owe certain fiduciary or contractual duties, including our founders’ affiliates. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one that we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.

 

For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see the sections of this prospectus entitled “Management — Officers, Directors and Director Nominees,” “Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”

 

Our officers’ and directors’ personal and financial interests may influence their motivation in determining whether a particular target business is appropriate for a business combination.

 

Our officers and directors have waived their right to convert (or sell to us in any tender offer) their insider shares or any other common stock acquired in this offering or thereafter (although none of these insiders have indicated any intention to purchase units in this offering or thereafter), or to receive distributions with respect to their insider shares upon our liquidation if we are unable to consummate our initial business combination. UNIFUTURE, one of our sponsors, has also waived its right to convert (or sell to us in any tender offer) its private shares or any other common stock acquired in this offering or thereafter (although it has not indicated any intention to purchase units in this offering or thereafter), or to receive distributions with respect to their private shares upon our liquidation if we are unable to consummate our initial business combination. Accordingly, these securities will be worthless if we do not consummate our initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of DGCL and we might have a claim against such individuals. However, we might not ultimately be successful in any claim we may make against them for such reason.

 

Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially and adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets, as well as protectionist legislation in our target markets.

 

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The outbreak of COVID-19 has resulted in a widespread health crisis that has and may continue to adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we may consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. In addition, countries or supranational organizations in our target markets may develop and implement legislation that makes it more difficult or impossible for entities outside such countries or target markets to acquire or otherwise invest in companies or businesses deemed essential or otherwise vital. The extent to which COVID-19 impacts our search for and ability to consummate a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, and result in protectionist sentiments and legislation in our target markets, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially and adversely affected. In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events.

 

Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.

 

Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

 

Our amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

 

Nasdaq may delist our securities from trading on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

We anticipate that our securities will be listed on the NASDAQ Capital Market, a national securities exchange, upon consummation of this offering. Although, after giving effect to this offering, we meet on a pro forma basis the minimum initial listing standards of Nasdaq, which generally only requires that we meet certain requirements relating to stockholders’ equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will continue to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination, it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time.

 

If Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

 

  a limited availability of market quotations for our securities;

 

  reduced liquidity with respect to our securities;

 

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  a determination that our common stock is “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

 

  a limited amount of news and analyst coverage for our company; and

 

  a decreased ability to issue additional securities or obtain additional financing in the future.

 

We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services.

 

We may only be able to complete one business combination with the proceeds of this offering. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:

 

  solely dependent upon the performance of a single business, or

 

  dependent upon the development or market acceptance of a single or limited number of products, processes or services.

 

This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination.

 

Alternatively, if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

 

The ability of our public stockholders to exercise their conversion rights or sell their public shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our capital structure.

 

If our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise conversion rights or seek to sell their public shares to us in a tender offer, we may either need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business transaction. In the event that the business combination involves the issuance of our common stock as consideration, we may be required to issue a higher percentage of our common stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.

 

We may be unable to consummate a business combination if a target business requires that we have cash in excess of the minimum amount we are required to have at closing and public stockholders may have to remain stockholders of our company and wait until our liquidation to receive a pro rata share of the trust account or attempt to sell their shares in the open market.

 

A potential target may make it a closing condition to our business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. If the number of our stockholders electing to exercise their conversion rights or sell their shares to us in a tender offer has the effect of reducing the amount of money available to us to consummate a business combination below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public stockholders may have to remain stockholders of our company and wait the full 15 (or 24) months in order to be able to receive a pro rata portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust account for their shares.

 

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Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination even though a majority of our public stockholders do not support such a combination.

 

We intend to hold a stockholder vote before we consummate our initial business combination. However, if a stockholder vote is not required, for business or legal reasons, we may conduct conversions via a tender offer and not offer our stockholders the opportunity to vote on a proposed business combination. Accordingly, we may consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination.

 

In connection with any meeting held to approve an initial business combination, we will offer each public stockholder the option to vote in favor of a proposed business combination and still seek conversion of his, her or its public shares, which may make it more likely that we will consummate a business combination.

 

In connection with any meeting held to approve an initial business combination, we will offer each public stockholder the right to have his, her or its public shares converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such stockholder votes for or against such proposed business combination. Furthermore, we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the issued and outstanding shares voted are voted in favor of the business combination. Accordingly, public stockholders owning shares of Class A common stock sold in this offering may exercise their conversion rights and we could still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business combination. This is different than other similarly structured blank check companies where stockholders are offered the right to convert their shares only when they vote against a proposed business combination. This is also different than other similarly structured blank check companies where there is a specific number of shares sold in the offering which must not exercise conversion rights for the company to complete a business combination. The lack of such a threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.

 

Because of our limited resources and structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.

 

We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of a business combination may delay or prevent the consummation of a transaction, a risk a target business may not be willing to accept. Additionally, our outstanding rights, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination.

 

Our initial stockholders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote, potentially in a manner that you do not support.

 

Upon consummation of our offering and the private placement, our initial stockholders will collectively own approximately 23.33% of our issued and outstanding shares of common stock (assuming they do not purchase any units in this offering). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our certificate of incorporation. None of our officers, directors, initial stockholders or their affiliates has indicated any intention to purchase units in this offering or any units or common stock from persons in the open market or in private transactions (other than the private units and the representative shares). However, if our initial stockholders purchase any units in this offering or if our officers, directors, initial stockholders or their affiliates determine in the future to make such purchases in the open market or in private transactions, to the extent permitted by law, in order to assist us in consummating our initial business combination, this would increase their control. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our common stock. In connection with any vote for a proposed business combination, all of our initial stockholders, as well as all of our officers and directors, have agreed to vote the common stock owned by them immediately before this offering as well as any common stock acquired in this offering or in the aftermarket in favor of such proposed business combination.

 

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We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.

 

In accordance with NASDAQ corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on NASDAQ. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.

 

Our founders paid an aggregate of $25,000, or approximately $0.02 per share, for the insider shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.

 

The difference between the public offering price per share and the pro forma net tangible book value per share after this offering constitutes the dilution to the investors in this offering. Our founders acquired their insider shares at a nominal price, significantly contributing to this dilution. Upon consummation of this offering, you and the other new investors will incur an immediate and substantial dilution of approximately 67.00% or $6.09 per share (the difference between the public offering price per share (including the common stock issuable upon conversion of rights) and the pro forma net tangible book value per share of $3.00 per share). This is because investors in this offering will be contributing approximately 94.68% of the total amount paid to us for our outstanding securities after this offering but will only own approximately 77.67% of our outstanding securities (including the common stock underlying the rights). Accordingly, the per-share purchase price you will be paying substantially exceeds our per share net tangible book value.

 

The nominal purchase price paid by our sponsors for the founder shares may result in significant dilution to the implied value of your public shares prior to or upon the consummation of our initial business combination.

 

We are offering our units at an offering price of $10.00 per unit and the amount in our trust account is initially anticipated to be $10.10 per public share, implying an initial value of $10.10 per public share. However, prior to this offering, our sponsors paid a nominal aggregate purchase price of $25,000 for 2,875,000 shares of Class B common stock, or the founder shares, at approximately $0.0087 per share and surrendered 1,437,500 shares of Class B common stock without any consideration. As a result, the value of your public shares may be significantly diluted when founder shares are convertible into shares of our Class A common stock on a one-for-one basis at the discretion of the holders any time after the issuance or automatically upon the closing of our initial business combination, subject to certain anti-dilution exceptions. For example, the following table shows the dilutive effect of the founder shares on the implied value of the public shares upon fully conversion of the founder shares at the discretion of the holders or the consummation of our initial business combination assuming that our equity value at that time is $50,500,000, which is the amount we would have for our initial business combination in the trust account assuming the underwriters’ over-allotment option is not exercised, no interest is earned on the funds held in the trust account, and no public shares are redeemed in connection with our initial business combination, and without taking into account any other potential impacts on our valuation at such time, such as the trading price of our public shares, the business combination transaction costs (including payment of $1,500,000 of deferred underwriting commissions), any equity issued or cash paid to the target’s sellers or other third parties, or the target’s business itself, including its assets, liabilities and management and prospects. At such valuation, each of our share of Class A common stock would have an implied value of $7.71 per share upon the conversion of all of our founder shares, which is a 23.7% decrease as compared to the initial implied value per public share of $10.10.

 
Public shares     5,000,000  
Private and representative shares     303,696  
Founder shares     1,250,000  
Total shares     6,553,696  
Total funds in trust available for initial business combination   $ 50,500,000  
Initial implied value per public share   $ 10.10  
Implied value per share upon the conversion of founder shares   $ 7.71  

 

The value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of our shares of Class A common stock at such time is substantially less than $10.00 per share.

 

Upon the closing of this offering, our sponsors will have invested in us an aggregate of $2,811,960, comprised of the $25,000 purchase price for the founder shares and the $2,786,960 purchase price for the private shares. Assuming a trading price of $10.00 per share upon consummation of our initial business combination, the 1,250,000 founder shares and 278,696 private shares would have an aggregate implied value of $15,286,960. Even if the trading price of our common stock was as low as $1.84 per share, the value of the founder shares and private shares would be equal to the sponsor’s initial investment in us. As a result, our sponsors are likely to be able to make a substantial profit on its investment in us at a time when our public shares have lost significant value. Accordingly, our management team, which owns interests in our sponsors, may be more willing to pursue a business combination with a riskier or less-established target business than would be the case if our sponsors had paid the same per share price for the founder shares as our public shareholders paid for their public shares.

 

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Our outstanding rights may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.

 

We will be issuing public rights that will result in the issuance of up to 575,000 shares of Class A common stock at the consummation of our initial business combination, as part of the units offered by this prospectus, and private rights that will result in the issuance of an additional 30,119 shares of Class A common stock at the consummation of our initial business combination. The potential for the issuance of a substantial number of additional shares upon conversion of the rights could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when converted, will increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the common stock underlying rights could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these rights are converted, you may experience dilution to your holdings.

 

If our stockholders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of our Class A common stock and the existence of these rights may make it more difficult to effect a business combination.

 

Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our founders and their permitted transferees can demand that we register their insider shares and private units, after those shares convert to our Class A common stock at the closing of our initial business combination. In addition, holders of our private units and their permitted transferees can demand that we register the private units and/or the underlying securities, and holders of units that may be issued upon conversion of working capital loans may demand that we register such units and/or underlying securities. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the common stock and private units owned by our founders or holders of our working capital units or their respective permitted transferees are registered.

 

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.

 

A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States treasuries, we believe that we will not be considered to be an investment company pursuant to the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940.

 

If we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including:

 

  restrictions on the nature of our investments; and

 

  restrictions on the issuance of securities.

 

In addition, we may have imposed upon us certain burdensome requirements, including:

 

  registration as an investment company;

 

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  adoption of a specific form of corporate structure; and

 

  reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.

 

Compliance with these additional regulatory burdens would require additional expense that we have not provided for.

 

We may not seek an opinion from an unaffiliated third party as to the fair market value of the target business we acquire.

 

We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in excess of at least 80% of the balance of the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the trust account) unless our board of directors cannot make such determination on its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our stockholders from a financial point of view unless the target is affiliated with our officers, directors, founders or their affiliates. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, whose collective experience in business evaluations for blank check companies like ours is not significant. Furthermore, our directors may have a conflict of interest in analyzing the transaction due to their personal and financial interests.

 

We may acquire a target business that is affiliated with our officers, directors, founders or their affiliates.

 

While we do not currently intend to pursue an initial business combination with a company that is affiliated with our officers, directors, founders or their affiliates, we are not prohibited from pursuing such a transaction, nor are we prohibited from consummating a business combination where any of our officers, directors, founders or their affiliates acquire a minority interest in the target business alongside our acquisition, provided in each case we obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our stockholders from a financial point of view. These affiliations could cause our officers or directors to have a conflict of interest in analyzing such transactions due to their personal and financial interests.

 

The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities for an operating company in a particular industry.

 

Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the rights were negotiated between us and the representative of the underwriters. In determining the size of this offering, management held customary organizational meetings with the underwriters with respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the Class A common stock and rights underlying the units, include:

 

  the history and prospects of companies whose principal business is the acquisition of other companies;

 

  prior offerings of those companies;

 

  our prospects for acquiring an operating business at attractive values;

 

  a review of debt-to-equity ratios in leveraged transactions;

 

  our capital structure;

 

  the per share amount of net proceeds being placed in the trust account;

 

  an assessment of our management and their experience in identifying operating companies;

 

  general conditions of the securities markets at the time of the offering; and

 

  other factors as were deemed relevant.

 

However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results to compare them to.

 

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There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

  

There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.

 

Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.

 

The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include target historical and/or pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.

 

Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls with our Annual Report on Form 10-K for the year during which we are no longer exempted from such requirement and may require us to have such system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. A target business may also not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.

 

We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

 

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

 

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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

 

Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

 

An investment in this offering may involve adverse U.S. federal income tax consequences.

 

An investment in this offering may involve adverse U.S. federal income tax consequences. For instance, there is a risk that an investor’s entitlement to receive payments in excess of the investor’s initial tax basis in our common stock upon exercise of the investor’s conversion right or upon our liquidation of the trust account will result in constructive income to the investor, which could affect the timing and character of income recognition and result in U.S. federal income tax liability to the investor without the investor’s receipt of cash from us. Furthermore, because there are no authorities that directly address instruments similar to the units we are issuing in this offering, the allocation an investor makes with respect to the purchase price of the unit between the common stock and rights included in the units could be challenged by the IRS or the courts. See the section titled “Taxation - United States Federal Income Taxation” for a summary of the material U.S. federal income tax consequences of an investment in our securities. Prospective investors are urged to consult their own tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities.

 

We have also not sought a ruling from the Internal Revenue Service, or IRS, as to any U.S. federal income tax consequences described in this prospectus. The IRS may disagree with the descriptions of U.S. federal income tax consequences described herein, and its determination may be upheld by a court. Any such determination could subject an investor or our company to adverse U.S. federal income tax consequences that would be different than those described in this prospectus. Accordingly, each prospective investor is urged to consult a tax advisor with respect to the specific tax consequences of the acquisition, ownership and disposition of our securities, including the applicability and effect of state, local, or foreign tax laws, as well as U.S. federal tax laws.

 

If our management following a business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws which could lead to various regulatory issues.

 

Following a business combination, our management will likely resign from their positions as officers of the company and the management of the target business at the time of the business combination will remain in place. We cannot assure you that management of the target business will be familiar with United States securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.

 

If restrictions on repatriation of earnings from the target business’ home jurisdiction to foreign entities are instituted, our business following a business combination may be materially negatively affected.

 

It is possible that following an initial business combination, the home jurisdiction of the target business may have restrictions on repatriations of earnings or additional restrictions may be imposed in the future. If they were, it could have a material adverse effect on our operations.

 

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Risks Associated with Acquiring and Operating a Business Outside of the United States or in China

 

We may effect a business combination with a company located outside of the United States and if we do, we would be subject to a variety of additional risks that may negatively impact our business operations and financial results.

 

If we consummate a business combination with a target business located outside of the United States, we would be subject to any special considerations or risks associated with companies operating in the target business’ governing jurisdiction, including any of the following:

 

  rules and regulations or currency redemption or corporate withholding taxes on individuals;

 

  tariffs and trade barriers;

 

  regulations related to customs and import/export matters;

 

  longer payment cycles than in the United States;

 

  inflation;

 

  economic policies and market conditions;

 

  unexpected changes in regulatory requirements;

 

  challenges in managing and staffing international operations;

 

  tax issues, such as tax law changes and variations in tax laws as compared to the United States;

 

  currency fluctuations;

 

  challenges in collecting accounts receivable;

 

  cultural and language differences;

 

  protection of intellectual property; and

 

  employment regulations.

 

We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.

 

Because of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively impacted.

 

Managing a business, operations, personnel or assets in another country is challenging and costly. Any management that we may have (whether based abroad or in the U.S.) may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labor practices. Even with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border business operations, personnel and assets can be significant (and much higher than in a purely domestic business) and may negatively impact our financial and operational performance.

 

If social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments occur in a country in which we may operate after we effect our initial business combination, it may result in a negative impact on our business.

 

Political events in another country may significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, and policy changes or enactments could negatively impact our business in a particular country.

 

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Many countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.

 

Our ability to seek and enforce legal protections, including with respect to intellectual property and other property rights, or to defend ourselves with regard to legal actions taken against us in a given country, may be difficult or impossible, which could adversely impact our operations, assets or financial condition.

 

Rules and regulations in many countries are often ambiguous or open to differing interpretation by responsible individuals and agencies at the municipal, state, regional and federal levels. The attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent.

 

Delay with respect to the enforcement of particular rules and regulations, including those relating to customs, tax, environmental and labor, could cause serious disruption to operations abroad and negatively impact our results.

 

If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.

 

If relations between the United States and foreign governments deteriorate, it could cause potential target businesses or their goods and services to become less attractive.

 

The relationship between the United States and foreign governments could be subject to sudden fluctuation and periodic tension. For instance, the United States may announce its intention to impose quotas on certain imports. Such import quotas may adversely affect political relations between the two countries and result in retaliatory countermeasures by the foreign government in industries that may affect our ultimate target business. Changes in political conditions in foreign countries and changes in the state of U.S. relations with such countries are difficult to predict and could adversely affect our operations or cause potential target businesses or their goods and services to become less attractive. Because we are not limited to any specific industry, there is no basis for investors in this offering to evaluate the possible extent of any impact on our ultimate operations if relations are strained between the United States and a foreign country in which we acquire a target business or move our principal manufacturing or service operations.

 

If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S.

 

If you are a U.S. holder of our common stock, you will be taxed on the U.S. dollar value of your dividends, if any, at the time you receive them, even if you actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot rate of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.

 

If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.

 

Following our initial business combination, certain members of our management team will likely resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues, which may adversely affect our operations.

 

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After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country in which we operate.

 

The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. The economy in China differs from the economies of most developed countries in many respects. Such economic growth has been uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our initial business combination, the ability of that target business to become profitable.

 

Currency policies may cause a target business’ ability to succeed in the international markets to be diminished.

 

In the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.

 

Many of the economies in Asia are experiencing substantial inflationary pressures which may prompt the governments to take action to control the growth of the economy and inflation that could lead to a significant decrease in our profitability following our initial business combination.

 

There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. In the event that our target business is in Asia, while many of the economies in Asia have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures. As governments take steps to address the current inflationary pressures, there may be significant changes in the availability of bank credits, interest rates, limitations on loans, restrictions on currency conversions and foreign investment. There also may be imposition of price controls. If prices for the products of our ultimate target business rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on our profitability. If these or other similar restrictions are imposed by a government to influence the economy, it may lead to a slowing of economic growth. Because we are not limited to any specific industry, the ultimate industry that we operate in may be affected more severely by such a slowing of economic growth.

 

Many industries in Asia are subject to government regulations that limit or prohibit foreign investments in such industries, which may limit the potential number of acquisition candidates.

 

Governments in many Asian countries have imposed regulations that limit foreign investors’ equity ownership or prohibit foreign investments altogether in companies that operate in certain industries. As a result, the number of potential acquisition candidates available to us may be limited or our ability to grow and sustain the business, which we ultimately acquire will be limited.

 

If a country in Asia enacts regulations in industry segments that forbid or restrict foreign investment, our ability to consummate our initial business combination could be severely impaired.

 

Many of the rules and regulations that companies face concerning foreign ownership are not explicitly communicated. If new laws or regulations forbid or limit foreign investment in industries in which we want to complete our initial business combination, they could severely impair our candidate pool of potential target businesses. Additionally, if the relevant central and local authorities find us or the target business with which we ultimately complete our initial business combination to be in violation of any existing or future laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:

 

  levying fines;

 

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  revoking our business and other licenses;

 

  requiring that we restructure our ownership or operations; and

 

  requiring that we discontinue any portion or all of our business.

 

Any of the above could have an adverse effect on our company post-business combination and could materially reduce the value of your investment.

 

Corporate governance standards in Asia may not be as strict or developed as in the United States and such weakness may hide issues and operational practices that are detrimental to a target business.

 

General corporate governance standards in some countries are weak in that they do not prevent business practices that cause unfavorable related party transactions, over-leveraging, improper accounting, family company interconnectivity and poor management. Local laws often do not go far enough to prevent improper business practices. Therefore, stockholders may not be treated impartially and equally as a result of poor management practices, asset shifting, conglomerate structures that result in preferential treatment to some parts of the overall company, and cronyism. The lack of transparency and ambiguity in the regulatory process also may result in inadequate credit evaluation and weakness that may precipitate or encourage financial crisis. In our evaluation of a business combination we will have to evaluate the corporate governance of a target and the business environment, and in accordance with United States laws for reporting companies take steps to implement practices that will cause compliance with all applicable rules and accounting practices. Notwithstanding these intended efforts, there may be endemic practices and local laws that could add risk to an investment we ultimately make and that result in an adverse effect on our operations and financial results.

 

If we effect our initial business combination with a business located in the in the People’s Republic of China, the laws applicable to such business will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

If we effect our initial business combination with a business located in the People’s Republic of China (“PRC”), the laws of the country in which such business operates will govern almost all of the material agreements relating to its operations, including any contractual arrangements through which we acquire control of target business as described above. We cannot assure you that we or the target business will be able to enforce any of its material agreements or that remedies will be available in this jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. In addition, the judiciary in the PRC is relatively inexperienced compared to others in enforcing corporate and commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. In addition, to the extent that our target business’s material agreements are with governmental agencies in the PRC, we may not be able to enforce or obtain a remedy from such agencies due to sovereign immunity, in which the government is deemed to be immune from civil lawsuit or criminal prosecution. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.

 

If we effect our initial business combination with a business located in the PRC, we may be subject to certain risks associated with acquiring and operating businesses in the PRC.

 

We may be subject to certain risks associated with acquiring and operating business in the PRC in our search for a business combination and operation of any target business with which we ultimately consummate a business combination.

 

First, certain rules and regulations concerning mergers and acquisitions by foreign investors in the PRC may make merger and acquisition activities by foreign investors more complex and time consuming, including, among others:

 

  the requirement that the Ministry of Commerce of the PRC (the “MOFCOM”) be notified in certain circumstances in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise or any concentration of undertaking if certain thresholds are triggered;

 

  the authority of certain government agencies to have scrutiny over the economics of an acquisition transaction and requirement for consideration in a transaction to be paid within stated time limits; and

 

  the requirement for mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns to be subject to strict review by the MOFCOM.

 

Complying with these and other requirements could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local counterparts, may delay or inhibit our ability to complete such transactions, which could affect our ability to acquire PRC-based businesses. A business combination we propose may not be able to be completed if the terms of the transaction do not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted.

 

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In addition, the PRC currently prohibits and/or restricts foreign ownership in certain “important industries,” including telecommunications, food production and heavy equipment. There are uncertainties under certain regulations whether obtaining a majority interest through contractual arrangements will comply with regulations prohibiting or restricting foreign ownership in certain industries. There is no assurance that the PRC government will not apply restrictions in other industries. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries” that may affect the national economic security or those having “famous brand names” or “well-established brand names.” Subject to the review and approval requirements of the relevant agencies and the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted local parties. If we choose to effect a business combination that employs the use of these types of control arrangements, these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership due to limited implementation guidance provided with respect to such regulations. If the government of the PRC finds that the agreements we entered into to acquire control of a target business through contractual arrangements with one or more operating businesses do not comply with local governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to significant penalties or be forced to relinquish our interests in those operations.

 

If we effect our initial business combination with a business located in the PRC, a substantial portion of our operations may be conducted in the PRC, and a significant portion of our net revenues maybe derived from customers where the contracting entity is located in the PRC. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may undertake may be subject, to a significant extent, to economic, political and governmental and legal developments, laws and regulations in the PRC. For instance, all or most of our material agreements may be governed by PRC law and we may have difficulty in enforcing our legal rights because the system of laws and the enforcement of existing laws in PRC may not be as certain in implementation and interpretation as in the United States. In addition, contractual arrangements we enter into with potential future subsidiaries and affiliated entities or acquisitions of offshore entities that conduct operations through affiliates in the PRC may be subject to a high level of scrutiny by the relevant PRC tax authorities. We may also be subject to restrictions on dividend payments after we consummate a business combination and if we rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our other obligations.

 

Uncertainties with respect to the PRC legal system could adversely affect us.

 

If our initial business combination target is a PRC company with operations in China, it will be governed by PRC laws and regulations. PRC companies and variable interests entities are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.

 

Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

 

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 

Any loans to PRC subsidiaries are subject to PRC regulations. For example, loans by us to subsidiaries in China, which are foreign invested entities (“FIEs”), to finance their activities cannot exceed statutory limits and must be registered with SAFE. On March 30, 2015, SAFE promulgated Hui Fa [2015] No.19, a notice regulating the conversion by a foreign-invested company of foreign currency into RMB. The foreign exchange capital, for which the monetary contribution has been confirmed by the foreign exchange authorities (or for which the monetary contribution has been registered for account entry) in the capital account of a foreign-invested enterprise may be settled at a bank as required by the enterprise’s actual management needs. Foreign-invested enterprises with investment as their main business (including foreign-oriented companies, foreign-invested venture capital enterprises and foreign-invested equity investment enterprises) are allowed to, under the premise of authenticity and compliance of their domestic investment projects, carry out based on their actual investment scales direct settlement of foreign exchange capital or transfer the RMB funds in the foreign exchange settlement account for pending payment to the invested enterprises’ accounts.

 

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On May 10, 2013, SAFE released Circular 21, which came into effect on May 13, 2013. According to Circular 21, SAFE has simplified the foreign exchange administration procedures with respect to the registration, account openings and conversions, settlements of FDI-related foreign exchange, as well as fund remittances.

 

Circular 21 may significantly limit our ability to convert, transfer and use the net proceeds from this offering and any offering of additional equity securities in China, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

 

We may also decide to finance the VIE’s subsidiaries by means of capital contributions. These capital contributions must be approved by MOFCOM or its local counterpart, which usually takes no more than 30 working days to complete. We may not be able to obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to the VIE’s subsidiaries. If we fail to receive such approvals, we will not be able to capitalize our PRC operations, which could adversely affect our liquidity and our ability to fund and expand our business.

 

Contractual arrangements we enter into with potential future subsidiaries and affiliated entities or acquisitions of offshore entities that conduct operations through affiliates in the PRC may be subject to a high level of scrutiny by the relevant tax authorities.

 

Under the laws of the PRC, arrangements and transactions among related parties may be subject to audit or challenge by the relevant tax authorities. If any of the transactions we enter into with potential future subsidiaries and affiliated entities are found not to be on an arm’s-length basis, or to result in an unreasonable reduction in tax under local law, the relevant tax authorities may have the authority to disallow any tax savings, adjust the profits and losses of such potential future local entities and assess late payment interest and penalties. A finding by the relevant tax authorities that we are ineligible for any such tax savings, or that any of our possible future affiliated entities are not eligible for tax exemptions, would substantially increase our possible future taxes and thus reduce our net income and the value of a shareholder’s investment. In addition, in the event that in connection with an acquisition of an offshore entity that conducted its operations through affiliates in the PRC, the sellers of such entities failed to pay any taxes required under local law, the relevant tax authorities could require us to withhold and pay the tax, together with late-payment interest and penalties. The occurrence of any of the foregoing could have a negative impact on our operating results and financial condition.

 

If the government of the PRC finds that the agreements we entered into to acquire control of a target business through contractual arrangements with one or more operating businesses, or VIE Agreements, do not comply with local governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to significant penalties or be forced to relinquish our interests in those operations or we could be unbale to assert our contractual control rights over the assets of the post-combination target company, which could cause the value of our securities depreciate significantly or become worthless.

 

The PRC currently prohibits and/or restricts foreign ownership in certain “important industries,” including telecommunications, food production and heavy equipment. There are uncertainties under certain regulations whether obtaining a majority interest through contractual arrangements will comply with regulations prohibiting or restricting foreign ownership in certain industries. For example, the PRC may apply restrictions in other industries in the future. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries” that may affect the national economic security or those having “famous brand names” or “well-established brand names.”

 

If we or any of our potential future target businesses are found to be in violation of any existing or future local laws or regulations (for example, if we are deemed to be holding equity interests in certain of our affiliated entities in which direct foreign ownership is prohibited), the relevant regulatory authorities might have the discretion to:

 

revoke the business and operating licenses of the potential future target business;

 

confiscate relevant income and impose fines and other penalties;

 

discontinue or restrict the operations of the potential future target business;

 

require us or the potential future target business to restructure the relevant ownership structure or operations;

 

restrict or prohibit our use of the proceeds of this offering to finance our businesses and operations in the relevant jurisdiction; or

 

impose conditions or requirements with which we or the potential future target business may not be able to comply.

 

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If we acquire control of a target business through contractual arrangements with one or more operating businesses in the PRC, such contracts may not be as effective in providing operational control as direct ownership of such business and may be difficult to enforce.

 

We will only acquire a business or businesses that, upon the consummation of our initial business combination, will be our majority-owned subsidiaries and will be neither investment companies nor companies excluded from the definition of an investment company by Section 3(c)(1) or 3(c)(7) of the Investment Company Act. However, the PRC has restricted or limited foreign ownership of certain kinds of assets and companies operating in certain industries. The industry groups that are restricted are wide-ranging, including, for example, certain aspects of telecommunications, food production, and heavy equipment manufacturers. In addition, there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries” that may affect the national economic security or having “famous brand names” or “well-established brand names.” Subject to the review and approval requirements of the relevant agencies for acquisitions of assets and companies in the relevant jurisdictions and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted local parties. To the extent that such agreements are employed, they may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of a company which may provide exceptions to the merger and acquisition regulations mentioned above since these types of arrangements typically do not involve a change of equity ownership in the operating company. The agreements would be designed to provide our company with the economic benefits of, and control over, the subject assets or equity interests similar to the rights of full ownership, while leaving the technical ownership in the hands of local parties who would be our nominees and, therefore, may exempt the transaction from certain regulations, including the application process required thereunder.

 

However, since there has been limited implementation guidance provided with respect to such regulations, the relevant government agency might apply them to a business combination effected through contractual arrangements. If such an agency determines or interprets that such an application should have been made or that our potential future target businesses are otherwise in violation of local laws or regulations, consequences may include confiscating relevant income and levying fines and other penalties, revoking business and other licenses, requiring restructure of ownership or operations, requiring discontinuation or restriction of the operations of any portion or all of the acquired business, restricting or prohibiting our use of the proceeds of this offering to finance our businesses and operations and imposing conditions or requirements with which we or potential future target businesses may not be able to comply, and we could be unable to assert our contractual control rights over the assets of the post-combination target company, which could cause the value of our securities depreciate significantly or become worthless. These agreements likely also would provide for increased ownership or full ownership and control by us when and if permitted under local laws and regulations. If we choose to effect a business combination that employs the use of these types of control arrangements, we may have difficulty in enforcing our rights. Therefore, these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership. For example, if the target business or any other entity fails to perform its obligations under these contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal remedies under local law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be sufficient to offset the cost of enforcement and may adversely affect the benefits we expect to receive from the business combination.

 

In addition, if any VIE or all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect the post-combined company’s business, financial condition and results of operations. If any of the VIE undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate the post-combined company’s business, which could materially and adversely affect the post-combined company’s business and its ability to generate revenues.

 

There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may ultimately take a view that is contrary to the accepted industry practices with respect to the VIE Agreements. In addition, it is uncertain whether any new PRC laws or regulations relating to the VIE structures will be adopted or if adopted, what they would provide. PRC government authorities may deem that foreign ownership is directly or indirectly involved in the VIE’s shareholding structure. If our potential corporate structure and contractual arrangements are deemed by the Ministry of Industry and Information Technology, or MIIT, or the Ministry of Commerce, or MOFCOM, or other regulators having competent authority to be illegal, either in whole or in part, the post-combined company may lose control of the consolidate VIE and have to modify such structure to comply with regulatory requirements. However, there can be no assurance that we can achieve this without material disruption to the PRC target company’s business. Furthermore, if the post-combined company or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including, without limitation:

 

·revoking the business license and/or operating licenses of the post-combined company or the VIE;

 

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·discontinuing or placing restrictions or onerous conditions on our operations through any transactions under the VIE agreements;

 

·imposing fines, confiscating the income from the post-combined company, the VIE or its subsidiaries, or imposing other requirements with which the post-combined company or the VIE may not be able to comply;

 

·placing restrictions on our right to collect revenues;

 

·requiring the post-combined company to restructure its ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect the post-combined company’s ability to consolidate, derive economic interests from, or exert effective control over the VIE; or

 

·taking other regulatory or enforcement actions against the post-combined company that could be harmful to the post-combined company business.

 

The imposition of any of these penalties will result in a material and adverse effect on our potential ability to conduct the business. In addition, it is unclear what impact the PRC government actions will have on the post-combined company and on the post-combined company’s ability to consolidate the financial results of the VIE in its consolidated financial statements, if the PRC government authorities were to find our potential corporate structure and contractual arrangements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes the post-combined company to lose the right to direct the activities of the VIE or the right to receive substantially all the economic benefits and residual returns from the VIE and the post-combined company is not able to restructure the ownership structure and operations in a timely and satisfactory manner, the post-combined company will no longer be able to consolidate the financial results of the VIE in its consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on the post-combined company in this event, it will have a material adverse effect on the our financial condition, results of operations and our securities shares may decline in value or be worthless.

 

PRC regulations relating to offshore investment activities by PRC residents may limit our ability to inject capital in our Chinese subsidiaries and Chinese subsidiaries’ ability to change their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC laws.

 

In July 2014, The State Administration of Foreign Exchange of the PRC, or SAFE, promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

 

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change, including, among other things, any major change of a PRC resident shareholder, name or term of operation of the SPVs, or any increase or reduction of the SPVs’ registered capital, share transfer or swap, merger or division. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE or its branches. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

 

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We cannot provide assurance that our shareholders that are PRC residents comply with all of the requirements under SAFE Circular 37 or other related rules. Failure or inability of our PRC resident shareholders to comply with the registration procedures set forth in these regulations may subject us to fines and legal sanctions, restrict our cross-border investment activities, limit the ability of our wholly foreign-owned subsidiary in China to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us, and we may also be prohibited from injecting additional capital into the subsidiary. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

 

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

 

Though we expressly exclude any target whose financial statements are audited by an accounting firm that is not subject to PCAOB inspection, we cannot assure you that certain existing or future U.S. laws and regulations may restrict or eliminate our ability to complete a business combination with certain companies, particularly those target companies in China.

 

The Public Company Accounting Oversight Board, or PCAOB is currently unable to conduct inspections on accounting firms in the PRC without the approval of the Chinese government authorities. The auditor and its audit work in the PRC may not be inspected fully by the PCAOB. Inspections of other auditors conducted by the PCAOB outside China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections of audit work undertaken in China prevents the PCAOB from regularly evaluating the PRC auditor’s audits and its quality control procedures.

 

Further, future developments in U.S. laws may restrict our ability or willingness to complete certain business combinations with companies. For instance, the recently enacted Holding Foreign Companies Accountable Act (the “HFCAA”) would restrict our ability to consummate a business combination with a target business unless that business met certain standards of the PCAOB and would require delisting of a company from U.S. national securities exchanges if the PCAOB is unable to inspect its public accounting firm for three consecutive years. The HFCAA also requires public companies to disclose, among other things, whether they are owned or controlled by a foreign government, specifically, those based in China. As a result, we expressly exclude any target if PCAOB is not able to inspect its auditor for three consecutive years from 2021 and thus, we may not be able to consummate a business combination with a favored target business due to these laws.

 

Additionally, other developments in U.S. laws and regulatory environment, including but not limited to executive orders such as Executive Order (E.O.) 13959, “Addressing the Threat from Securities Investments That Finance Communist Chinese Military Companies,” may further restrict our ability to complete a business combination with certain China-based businesses.

 

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As a result of merger and acquisition regulations implemented on September 8, 2006 (amended on June 22, 2009) relating to acquisitions of assets and equity interests of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject to economic scrutiny by the PRC government authorities such that we may not be able to complete a transaction. Even if we obtain such approvals, we cannot guarantee you that we can complete a business combination within 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date.

 

On September 8, 2006, the Ministry of Commerce, together with several other government agencies, promulgated the Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Regulations”, including its amendment on June 22, 2009), which implemented a comprehensive set of regulations governing the approval process by which a Chinese company may participate in an acquisition of its assets or its equity interests and by which a Chinese company may obtain public trading of its securities on a securities exchange outside the PRC. Although there was a complex series of regulations in place prior to September 8, 2006 for approval of Chinese enterprises that were administered by a combination of provincial and centralized agencies, the M&A Regulations have largely centralized and expanded the approval process to the Ministry of Commerce, the State Administration of Industry and Commerce (SAIC), the SAFE or its branch offices, the State Asset Supervision and Administration Commission (SASAC), and the CSRC. Depending on the structure of the transaction, these M&A Regulations will require the Chinese parties to make a series of applications and supplemental applications to one or more of the aforementioned agencies, some of which must be made within strict time limits and depending on approvals from one or the other of the aforementioned agencies. The application process has been supplemented to require the presentation of economic data concerning a transaction, including appraisals of the business to be acquired and evaluations of the acquirer which will permit the government to assess the economics of a transaction in addition to the compliance with legal requirements. Since we are a company incorporated in Delaware, we cannot guarantee you that we can obtain such approvals for our business combination with a company with operation in China. If obtained, approvals will have expiration dates by which a transaction must be completed. Also, completed transactions must be reported to the Ministry of Commerce and some of the other agencies within a short period after closing or be subject to an unwinding of the transaction. Therefore, acquisitions in China may not be able to be completed because the terms of the transaction may not satisfy aspects of the approval process and may not be completed, even if approved, if they are not consummated within the time permitted by the approvals granted. Further, since our business combination period is 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date, and the approval process may take a period longer than we expect before we enter into a definitive agreement with a target company, we may be unable to complete a business combination within 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date.

 

Compliance with the PRC Antitrust law may limit our ability to effect our initial business combination.

 

The PRC Antitrust Law became effective on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust Commission and other antitrust authorities under the State Council. The PRC Antitrust Law regulates (1) monopoly agreements, including decisions or actions in concert that preclude or impede competition, entered into by business operators; (2) abuse of dominant market position by business operators; and (3) concentration of business operators that may have the effect of precluding or impeding competition. To implement the Antitrust Law, in 2008, the State Council formulated the regulations that require filing of concentration of business operators, pursuant to which concentration of business operators refers to (1) merger with other business operators; (2) gaining control over other business operators through acquisition of equity interest or assets of other business operators; and (3) gaining control over other business operators through exerting influence on other business operators through contracts or other means. In 2009, the Ministry of Commerce, to which the Antitrust Commission is affiliated, promulgated the Measures for Filing of Concentration of Business Operators (amended by the Guidelines for Filing of Concentration of Business Operators in 2014), which set forth the criteria of concentration and the requirement of miscellaneous documents for the purpose of filing. The business combination we contemplate may be considered the concentration of business operators, and to the extent required by the Antitrust Law and the criteria established by the State Council, we must file with the antitrust authority under the PRC State Council prior to conducting the contemplated business combination. If the antitrust authority decides not to further investigate whether the contemplated business combination has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt of relevant materials, we may proceed to consummate the contemplated business combination. If antitrust authority decides to prohibit the contemplated business combination after further investigation, we must terminate such business combination and would then be forced to either attempt to complete a new business combination or we would be required to return any amounts which were held in the trust account to our stockholders. When we evaluate a potential business combination, we will consider the need to comply with the Antitrust Law and other relevant regulations which may limit our ability to effect an acquisition or may result in our modifying or not pursuing a particular transaction. Since our business combination period is 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date, and the approval process may take a period longer than we expect before we enter into a definitive agreement with a target company, we may be unable to complete a business combination within 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date.

 

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Exchange controls that exist in the PRC may restrict or prevent us from using the proceeds of this offering to acquire a target company in PRC and limit our ability to utilize our cash flow effectively following our initial business combination.

 

SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, or Circular 59, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses, or Circular 45. According to Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in the PRC in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and Circular 16 could result in administrative penalties.

 

As such, Circular 19 and Circular 16 may significantly limit our ability to transfer the proceeds of this offering to a PRC target company and the use of such proceeds by the PRC target company.

 

In addition, following our initial business combination with a PRC target company, we will be subject to the PRC’s rules and regulations on currency conversion. In the PRC, the SAFE regulates the conversion of the Renminbi into foreign currencies. Currently, FIEs are required to apply to the SAFE for “Foreign Exchange Registration Certificates for FIEs.” Following our initial business combination, we will likely be an FIE as a result of our ownership structure. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including a “basic account” and “capital account.” Currency conversion within the scope of the “basic account,” such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account,” including capital items such as direct investment, loans and securities, still require approval of the SAFE.

 

We cannot assure you the PRC regulatory authorities will not impose further restrictions on the convertibility of the Renminbi. Any future restrictions on currency exchanges may limit our ability to use the proceeds of this offering in an initial business combination with a PRC target company and the use our cash flow for the distribution of dividends to our stockholders or to fund operations we may have outside of the PRC.

 

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Our initial business combination may be subject to national security review by the PRC government and we may have to spend additional resources and incur additional time delays to complete any such business combination or be prevented from pursuing certain investment opportunities.

 

On February 3, 2011, the PRC government issued a Notice Concerning the Establishment of Security Review Procedure on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or Security Review Regulations, which became effective on March 5, 2011. The Security Review Regulations cover acquisitions by foreign investors of a broad range of PRC enterprises if such acquisitions could result in de facto control by foreign investors and the enterprises are relating to military, national defense, important agriculture products, important energy and natural resources, important infrastructures, important transportation services, key technologies and important equipment manufacturing. The scope of the review includes whether the acquisition will impact the national security, economic and social stability, and the research and development capabilities on key national security related technologies. Foreign investors should submit a security review application to the Department of Commerce for its initial review for contemplated acquisition. If the acquisition is considered to be within the scope of the Security Review Regulations, the Department of Commerce will transfer the application to a joint security review committee within five business days for further review. The joint security review committee, consisting of members from various PRC government agencies, will conduct a general review and seek comments from relevant government agencies. The joint security review committee may initiate a further special review and request the termination or restructuring of the contemplated acquisition if it determines that the acquisition will result in significant national security issue.

 

The Security Review Regulations will potentially subject a large number of mergers and acquisitions transactions by foreign investors in China to an additional layer of regulatory review. Currently, there is significant uncertainty as to the implication of the Security Review Regulations. Neither the Department of Commerce nor other PRC government agencies have issued any detailed rules for the implementation of the Security Review Regulations. If, for example, our potential initial business combination is with a target company operating in the PRC in any of the sensitive sectors identified above, the transaction will be subject to the Security Review Regulations, and we may have to spend additional resources and incur additional time delays to complete any such acquisition. There is no guarantee that we can receive such approval in a timely manner, and we may also be prevented from pursuing certain investment opportunities if the PRC government considers that the potential investments will result in a significant national security issue. If obtained, since our business combination period is 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date, and the approval process may take a period longer than we expect before we enter into a definitive agreement with a target company, we may be unable to complete a business combination within 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date.

 

Our initial business combination may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection and we may have to spend additional resources and incur additional time delays to complete any such business combination or be prevented from pursuing certain investment opportunities.

 

Our initial business combination may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

 

Pursuant to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it should be subject to cybersecurity review by the CAC. Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear.

 

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Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective) on July 10, 2021, which requires operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the CAC. As these opinions and the draft measurers were recently issued, official guidance and interpretation of these two remain unclear in several respects at this time.

 

If, for example, our potential initial business combination is with a target business operating in the PRC and if the enacted version of the draft measures mandates clearance of cybersecurity review and other specific actions to be completed by the target business, we may face uncertainties as to whether such clearance can be timely obtained, or at all, and incur additional time delays to complete any such acquisition. Cybersecurity review could also result in negative publicity with respect to our initial business combination and diversion of our managerial and financial resources. There is no guarantee that we can receive such approval in a timely manner, and we may also be prevented from pursuing certain investment opportunities if the PRC government considers that the potential investments will result in a significant national security issue. If obtained, since our business combination period is 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date, and the approval process may take a period longer than we expect before we enter into a definitive agreement with a target company, we may be unable to complete a business combination within 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date.

 

In light of recent events indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, companies with more than one million users’ personal information in China, especially some internet and technology companies, may not be willing to list on a U.S. exchange or enter into a definitive business combination agreement with us. Further, we may also avoid a business combination with a company with more than one million users’ personal information in China due to the limited timeline for us to complete a business combination.

 

Companies in China are subject to various risks and costs associated with the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. This data is wide ranging and relates to our investors, employees, contractors and other counterparties and third parties. If we decide to initiate a business combination with a company in China, our compliance obligations include those relating to the relevant PRC laws in this regard. These PRC laws apply not only to third-party transactions, but also to transfers of information between a holding company and its subsidiaries. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

 

Pursuant to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it should be subject to cybersecurity review by the CAC. Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear. On July 10, 2021, the CAC publicly issued the Measures for Cybersecurity Censorship (Revised Draft for Comments) aiming to, upon its enactment, replace the existing Measures for Cybersecurity Censorship. The draft measures extend the scope of cybersecurity reviews to data processing operators engaging in data processing activities that affect or may affect national security, including listing in a foreign country. The draft measures require a company holding more than one million personal information to submit its IPO materials prepared for submission for cybersecurity review before listing on a foreign exchange.

 

It is unclear whether the draft measures will apply to a company planning to list on a U.S. exchange by business combination with a special purpose acquisition corporation like us. If cybersecurity review applies to our business combination with a company holding more than one million personal information in China, we cannot guarantee that we will receive such approval in a timely manner. Further, due to limited business combination period that we have, we may avoid searching for a target and completing an initial business combination that will be subject to Chinese cybersecurity review. Therefore, we may avoid searching for a company with one million personal information in China or a company operating critical information infrastructure in China.

 

Furthermore, if we were found to be in violation of applicable laws and regulations in China during such review, we could be subject to administrative penalties, such as warnings, fines, or service suspension. Therefore, cybersecurity review could materially and adversely affect our business, financial condition, and results of operations.

 

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In addition, the PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and takes effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. After the Data Security Law takes effect, if our post-combination entity’s data processing activities were found to be not in compliance with this law, our post-combination entity could be ordered to make corrections, and under certain serious circumstances, such as severe data divulgence, we and post-combination entity could be subject to penalties, including the revocation of our business licenses or other permits. As a result, we and post-combination entity may be required to suspend our relevant businesses, shut down our website, take down our operating applications, or face other penalties, which may materially and adversely affect our business, financial condition, and results of operations.

 

The Chinese government may exert substantial interventions and influences over the manner in which our post-combination entity must conduct its business activities that we cannot expect when we enter into a definitive agreement with a target company with major operation in China. If the Chinese government establish some new policies, regulations, rules, or laws in the industries where our post-combination entity is in, our post-combination entity may be subject to material change in its operations and the value of our securities.

 

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our post-combination entity’s ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

 

For example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company’s app be removed from smartphone app stores. On July 24, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.

 

As such, the post-combination entity’s business segments may be subject to various government and regulatory interference in the provinces in which they operate. The post-combination entity could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. We and our post-combination entity may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

 

Furthermore, it is uncertain when and whether the we and our post-combination entity will be required to obtain permission from the PRC government to list on U.S. exchanges or enter into VIE Agreements in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we are currently not required to obtain permission from any of the PRC federal or local government and have not received any denial to list on the U.S. exchange or to enter into VIE Agreements, our post-combination operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

 

PRC laws and regulations governing our post-combination entity’s business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably.

 

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our post-combination entity’s business.

 

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules involves uncertainties.

 

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In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

 

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

 

From time to time, our post-combination entity may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection our post-combination entity enjoys than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we and our post-combination entity may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our post-combination entity’s ability to continue its operations.

 

Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to operate profitably in the PRC.

 

Our post-combination entity may conduct most of our operations and most of our revenue is generated in the PRC. Accordingly, economic, political and legal developments in the PRC will significantly affect our post-combination entity’s business, financial condition, results of operations and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant effects on economic conditions in the PRC and the ability of businesses to operate profitably. Our post-combination entity’s ability to operate profitably in the PRC may be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation, particularly those dealing with the Internet, including censorship and other restriction on material which can be transmitted over the Internet, security, intellectual property, money laundering, taxation and other laws that affect our post-combination entity’s ability to operate its business.

 

CSRC and other Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. Additional compliance procedures may be required in connection with this offering and our business combination process, and, if required, we cannot predict whether we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

 

On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our future business combination with a company with major operation in China. Therefore, CSRC and other Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. Additional compliance procedures may be required in connection with this offering and our business combination process, and, if required, we cannot predict whether we will be able to obtain such approval. As a result, both you and us face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

 

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In the event we successfully consummated business combination with a target business with primary operation in PRC, we will be subject to restrictions on dividend payments following consummation of our initial business combination.

 

After we consummate our initial business combination, we may rely on dividends and other distributions from our operating company to provide us with cash flow and to meet our other obligations. Current regulations in China would permit our operating company in China to pay dividends to us only out of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our operating company in China will be required to set aside at least 10% (up to an aggregate amount equal to half of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash dividends. In addition, if our operating company in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.

 

If we make equity compensation grants to persons who are PRC citizens, they may be required to register with the SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt equity compensation plans for our directors and employees and other parties under PRC laws.

 

On April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of shares options. For any plans which are so covered and are adopted by a non-PRC listed company, such as our company, after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming.

 

Upon consummation of business combination with a target business with primary operations in PRC, we may adopt an equity incentive plan and make shares option grants under the plan to our officers, directors and employees, whom may be PRC citizens and be required to register with SAFE. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected.

 

Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

 

The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became effective in February 2015.

 

Under Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject to PRC corporate income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

 

In February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC corporate income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

 

We face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

 

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The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. Although we currently have no plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC corporate income tax law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698 and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

 

China’s economic, political and social conditions, as well as changes in any government policies, laws and regulations, could have a material adverse effect on our business or business combination.

 

If we effect our initial business combination with a business located in the PRC, a substantial portion of our operations may be conducted in China, and a significant portion of our net revenues may be derived from customers where the contracting entity is located in China. Accordingly, our business, financial condition, results of operations, prospects and any potential business combination and certain transactions we may undertake may be subject, to a significant extent, to economic, political and legal developments in China. For example, as a result of recent proposed changes in the cybersecurity regulations in China that would require certain Chinese technology firms to undergo a cybersecurity review before being allowed to list on foreign exchanges, this may have the effect of further narrowing the list of potential businesses in China’s consumer, technology and mobility sectors that we intend to focus on for our business combination or the ability of the combined entity to list in the United States.

 

China’s economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth in the past two to three decades, growth has been uneven, both geographically and among various sectors of the economy. Demand for target services and products depends, in large part, on economic conditions in China. Any slowdown in China’s economic growth may cause our potential customers to delay or cancel their plans to purchase our services and products, which in turn could reduce our net revenues.

 

Although China’s economy has been transitioning from a planned economy to a more market oriented economy since the late 1970s, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth through allocating resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations could adversely affect the economy in China and could have a material adverse effect on our business.

 

The PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce new measures that will have a negative effect on us. China’s social and political conditions may change and become unstable. Any sudden changes to China’s political system or the occurrence of widespread social unrest could have a material adverse effect on our business and results of operations.

 

Governmental control of currency conversion may affect the value of your investment.

 

If we complete a business combination with a company operating in China, the PRC government may impose controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our post-combination entity’s profits, if any. If subsidiaries of our post-combination organization in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. Under the VIE structure, current PRC regulations permit a VIE to pay dividends to its holding company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.

 

Furthermore, if we complete a business combination with a company in China via VIE Agreements and we are unable to receive all of the revenues from our operations through the current VIE Agreements, we may be unable to pay dividends on our common stock. Cash dividends, if any, on our Class A common stock will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes after the business combination, any dividends we pay to our overseas stockholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%. In order for us to pay dividends to our stockholders, we will rely on payments made from our post-combination subsidiaries, either directly controlled by us or indirectly controlled by us via VIE Agreements. Under the VIE structure, a holding company will highly rely on the VIE Agreements between it and the VIE to distribute earnings and settle amounts owed under the VIE agreements, while we cannot guarantee the PRC governments will allow such arrangement.

 

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If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, this offering and our reputation and could result in a loss of your investment in our ordinary shares, especially if such matter cannot be addressed and resolved favorably.

 

Recently, U.S. public companies that have substantially all of their operations in China, have been subjected to intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us if we target a PRC company with respect to the initial business combination. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the company. This situation may be a major distraction to our management. If such allegations are not proven to be groundless, we will be severely hampered and your investment in our securities could be rendered worthless.

 

The approval of the CSRC is not required in connection with this offering, and, if required, we cannot predict whether we will be able to obtain such approval.

 

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the CSRC, prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.

 

We believe the CSRC’s approval is not required for the listing and trading of our securities on Nasdaq in the context of this offering, given that we are a Delaware company incorporated as a blank check company for the purpose of effecting our initial business combination or our business combination.

 

However, we cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as we do. If it is determined that CSRC approval is required for this offering, we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for this offering. These sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from this offering into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiary, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our securities. Furthermore, the CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the securities that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the securities we are offering, you would be doing so at the risk that the settlement and delivery may not occur.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The statements contained in this prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions 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 prospectus may include, for example, statements about our:

 

  ability to identify or complete an initial business combination;

 

  limited operating history;

 

  success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

 

  potential ability to obtain additional financing to complete a business combination;

 

  pool of prospective target businesses;

 

  the ability of our officers and directors to generate potential investment opportunities;

 

  potential change in control if we acquire one or more target businesses for shares;

 

  our public securities’ potential liquidity and trading;

 

  regulatory or operational risks associated with acquiring a target business;

 

  use of proceeds not held in the trust account;

 

  financial performance following this offering; or

 

  listing or delisting of our securities from Nasdaq or the ability to have our securities listed on Nasdaq following our initial business combination.

 

The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our 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, those factors described under the heading “Risk Factors.” 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.

 

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USE OF PROCEEDS

 

We estimate that the net proceeds of this offering, in addition to the funds we will receive from the sale of the private units (all of which will be deposited into the trust account), will be as set forth in the following table:

 

    Without
Over-
Allotment
Option
    Over-
Allotment
Option
Exercised
 
Gross proceeds                
From offering   $ 50,000,000     $ 57,500,000  
From private placement     2,786,960       3,011,960  
Total gross proceeds   $ 52,786,960     $ 60,511,960  
                 
Offering expenses(1)                
Non-contingent underwriting discount (2.0% of gross proceeds from offering, which excludes the deferred underwriting discounts and commissions of up to 3.0% of gross proceeds from offering)   $ 1,000,000 (2)   $ 1,150,000 (2)
Legal fees and expenses     230,000       230,000  
Nasdaq listing fee     50,000       50,000  
SEC registration fee     5,887       5,887  
FINRA filing fee     10,025       10,025  
Printing and engraving expenses     40,000       40,000  
Accounting fees and expenses     40,000       40,000  
Director and Officer liability insurance premiums     240,000       240,000  
Miscellaneous expenses     171,048       171,048  
Total offering expenses (not including deferred underwriting discounts and commissions )   $ 1,786,960     $ 1,936,960  
                 
Net proceeds of the offering and private placement                
Held in trust   $ 50,500,000 (3)   $ 58,075,000 (3)
Not held in trust     500,000       500,000  
Total net proceeds (including deferred underwriting discounts and commissions)    $ 51,000,000     $ 58,575,000  
                 
The following table shows the use of the approximately $500,000 of net proceeds not held in trust.(4)(5)                
Legal, accounting, due diligence, travel and other expenses related to any business combination   $ 100,000       20.00 %
Legal and accounting fees related to regulatory reporting obligations     75,000       15.00 %
Payment for office space, administration and support services ($10,000 per month for up to 15 months), subject to deferral as described herein     150,000       30.00 %
NASDAQ continued listing fees     58,000       11.60 %
Other miscellaneous expenses     117,000       23.40 %
Total   $ 500,000       100.0 %

 

(1) A portion of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees, have been paid from the funds we borrowed from JJ Sponsor, one of our sponsors, managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer. These funds will be repaid out of the proceeds of this offering available to us. If we determine not to proceed with the offering, such amounts would not be repaid.

 

(2) No discounts or commissions will be paid with respect to the purchase of the private units.

 

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(3) The funds held in the trust account may, but need not, be used to pay our expenses relating to completing our initial business combination, including deferred underwriting discounts and commissions payable to Maxim in an amount of up to 3.0% of the total gross proceeds raised in the offering described below.

 

(4) In the event that the over-allotment option is exercised in full, we will have only $500,000 outside the trust account to fund working capital for miscellaneous expenses.

 

(5) These expenses are estimates only and do not include interest which may be available to us from the trust account. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of such business combination. In the event we identify an initial business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses.

 

UNIFUTURE, one of our sponsors, has agreed to purchase an aggregate of 278,696 private units at a price of $10.00 per private unit (for a total purchase price of $2,786,960) in a private placement that will occur simultaneously with the closing of this offering. All of the proceeds we receive from these purchases will be placed in the trust account described below.

 

The rules of NASDAQ provide that at least 90% of the gross proceeds from this offering and the sale of the private units be deposited in a trust account. Of the net proceeds of this offering and the sale of the private units, including $50,500,000, or $58,075,000 if the over-allotment option is exercised in full, will be placed in a U.S.-based trust account in the United States, maintained by Continental Stock Transfer & Trust Company, LLC as trustee. Pursuant to the investment management trust agreement that will govern the investment of such funds, the trustee, upon our written instructions, will direct Continental Stock Transfer & Trust Company, LLC to invest the funds as set forth in such written instructions and to custody the funds while invested and until otherwise instructed in accordance with the investment management trust agreement. The funds held in trust will be invested only in United States government treasury bills, bonds or notes having a maturity of 185 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States government treasuries, so that we are not deemed to be an investment company under the Investment Company Act. We estimate that the interest earned on the trust account will be approximately $25,250 per year, assuming an interest rate of 0.05% per year; however, we can provide no assurance regarding this amount. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income tax or other tax obligations, the proceeds will not be released from the trust account until the earlier of the completion of a business combination or our liquidation. The proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we complete a business combination to the extent not used to pay converting stockholders. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business.

 

The payment to JJ Sponsor, one of our sponsors, of a monthly fee of $10,000 is for general and administrative services including office space, utilities and personnel. However, pursuant to the terms of such agreement, we may delay payment of such monthly fee upon a determination by our audit committee that we lack sufficient funds held outside the trust to pay actual or anticipated expenses in connection with our initial business combination. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of our initial business combination. This arrangement is being agreed to by JJ Sponsor for our benefit. We believe that the fee charged by JJ Sponsor is at least as favorable as we could have obtained from an unaffiliated person. This arrangement will terminate upon completion of our initial business combination or the distribution of the trust account to our public stockholders. Other than the $10,000 per month fee, no compensation of any kind (including finder’s, consulting or other similar fees) will be paid to any of our existing officers, directors, stockholders, or any of their affiliates, prior to, or for any services they render in order to effectuate, the consummation of the business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. Since the role of present management after a business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after a business combination.

 

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Regardless of whether the over-allotment option is exercised in full, the net proceeds from this offering available to us out of trust for our working capital requirements in searching for a business combination will be approximately $500,000. We intend to use the excess working capital available for miscellaneous expenses such as paying expenses for legal, accounting, due diligence, travel and other fees, related to a business combination, legal and accounting fees related to our regulatory reporting obligations, administrative fees for office space, utilities and personnel, NASDAQ continued listing fees, other miscellaneous fees, as well as for reimbursement of any out-of-pocket expenses incurred by our founders, officers and directors in connection with activities on our behalf as described above. We will also be entitled to have interest earned on the funds held in the trust account released to us to pay any tax obligations that we may owe.

 

The allocation of the net proceeds available to us outside of the trust account, along with the interest earned on the funds held in the trust account available to us, represents our best estimate of the intended uses of these funds. In the event that our assumptions prove to be inaccurate, we may reallocate some of such proceeds within the above described categories. If our estimate of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available from the trust account is insufficient as a result of the current low interest rate environment, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. In this event, we could seek such additional capital through loans or additional investments from members of our management team, but such members of our management team are not under any obligation to advance funds to, or invest in, us.

 

We will likely use a substantial portion of the net proceeds of this offering, including the funds held in the trust account, to acquire a target business, to pay holders who wish to convert or sell their shares to us for a portion of the funds held in the trust account and to pay our expenses relating thereto. If the payment of our liabilities, including the deferred underwriting discounts and commissions payable to Maxim in an amount up to 3.0% of the total gross proceeds raised in the offering, were to reduce the amount available to us in trust necessary to pay all holders who wish to convert or sell their shares to us for a portion of the funds held in the trust account, we would not be able to consummate such transaction. To the extent that our share capital is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account which are not used to consummate a business combination, to pay holders who wish to convert their shares into a portion of the funds held in the trust account or pay our expenses relating thereto will be disbursed to the combined company and will, along with any other net proceeds not expended, be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products.

 

To the extent we are unable to consummate a business combination, we will pay the costs of liquidating our trust account from our remaining assets outside of the trust account. If such funds are insufficient, our sponsors have agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than $50,000) and has agreed not to seek repayment of such expenses.

 

As of the date hereof, JJ Sponsor, one of our sponsors, has loaned to us an aggregate of $231,066 to be used to pay formation and a portion of the expenses of this offering. The loan is payable without interest on the date on which we consummate our initial public offering. If we determine not to proceed with the offering, such amounts would not be repaid.

 

In order to meet our working capital needs following the consummation of this offering until completion of an initial business combination, our founders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 220,000 shares of Class A common stock which includes 20,000 shares of Class A common stock issuable upon conversion of rights). If we do not complete our initial business combination, the loans would be repaid out of funds not held in the trust account, and only to the extent available. These notes would be in addition to any notes we issued in exchange for the funds necessary to extend our life.

 

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A public stockholder will be entitled to receive funds from the trust account (including interest earned on his, her or its portion of the trust account to the extent not previously released to us to pay our tax obligations) only in the event of (i) our liquidation if we have not completed a business combination within the required time period or (ii) if that public stockholder converts such public shares or sells them to us in a tender offer in each case in connection with a business combination which we consummate or in connection with an amendment to our amended and restated certificate of incorporation prior to the consummation of an initial business combination. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account.

 

DIVIDEND POLICY

 

We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share capitalizations in the foreseeable future, except if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain our founders’ ownership at 20% of our issued and outstanding shares of our common stock (assuming they do not purchase units in this offering and excluding the private shares and the representative shares) upon the consummation of this offering. Further, if we incur any indebtedness, in connection with our business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

 

DILUTION

 

The difference between the public offering price per share of our Class A common stock, , and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of Class A common stock which may be redeemed for cash), by the number of issued and outstanding share of our Class A common stock.

 

At September 30, 2021, our net tangible book value was a deficit of $165,415 or approximately $(0.12) per share of common stock. For purposes of the dilution calculation, in order to present the maximum estimated dilution as a result of this offering, we have assumed (i) the issuance of 0.10 of a share of Class A common stock for each right outstanding, as such issuance will occur upon a business combination without the payment of additional consideration and (ii) the number of shares of Class A common stock included in the units offered hereby will be deemed to be 5,500,000 (consisting of 5,000,000 shares of Class A common stock included in the units we are offering by this prospectus and 500,000 shares of Class A common stock for the outstanding rights), and the price per share in this offering will be deemed to be $9.09. After giving effect to the sale of 5,500,000 shares of Class A common stock included in the units we are offering by this prospectus, the deduction of underwriting discounts and estimated expenses of this offering, the sale of 306,565 shares of Class A common stock (consisting of 278,696 shares of Class A common stock included in the private units and 27,869 shares of our Class A common stock for the outstanding rights) included in the private units, our pro forma net tangible book value on September 30, 2021 would have been $6,247,112 or $3.00 per share (or $6,977,988 or $2.95 per share if the underwriters’ option to purchase additional units is exercised in full), representing an immediate increase in net tangible book value of $3.12 per share (or $3.07 per share if the underwriters’ option to purchase additional units is exercised in full) to the founders and an immediate dilution of 67.00% or $6.09 per share (or 67.55% or $6.14 per share if the underwriters’ option to purchase additional units is exercised in full) to new investors not exercising their redemption/tender rights. For purposes of presentation, our pro forma net tangible book value after this offering is $6,247,112 (or $6,977,988 if the underwriters’ option to purchase additional units is exercised in full), less than it otherwise would have been because if we effect a business combination, the ability of public stockholders to exercise redemption rights or sell their shares to us in any tender offer may result in the redemption or tender of up to 5,000,000 shares sold in this offering.

  

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The following table illustrates the dilution to the new investors on a per-share basis:

 

  

Without

Over-

Allotment

   With
Over-
Allotment
 
Public offering price(1)  $9.09   $9.09 
Net tangible book value before this offering   (0.12)   (0.12)
Increase attributable to new investors and private sales   3.12    3.07 
Pro forma net tangible book value after this offering   3.00    2.95 
Dilution to public stockholders  $6.09   $6.14 
Percentage of dilution to new investors   67.00%   67.55%

 

(1)

$9.09 public offering price per share was derived from the one share of our Class A common stock at $10.00 per share and one right to receive one-tenth (1/10) of one share of our Class A common stock upon the consummation of an initial business combination.

 

The following table sets forth information with respect to our initial stockholders and the new investors:

 

    Shares Purchased     Total Consideration     Average
Price
 
    Number     Percentage     Amount     Percentage     Per Share  
Insider shares(1)     1,250,000       17.65 %   $ 25,000       0.05 %   $ 0.02  
Shares underlying private unit(2)     306,565       4.33 %   $ 2,786,960       5.28 %   $ 9.09  
Representative shares(3)     25,000       0.35 %     -       0.00 %     -  
New investors(4)     5,500,000       77.67 %   $ 50,000,000       94.67 %   $ 9.09  
      7,081,565       100.00 %   $ 52,811,960       100.00 %        

 

(1) Assumes the over-allotment option has not been exercised and an aggregate of 187,500 shares of Class B common stock held by our founders have been forfeited as a result thereof.

 

(2) Includes the issuance of an additional 27,869 shares of Class A common stock underlying the rights contained in the private unit holders.

 

(3) Represents the issuance of 25,000 representative shares.

 

(4) Includes the issuance of an additional 500,000 shares of Class A common stock underlying the rights contained in the new investors.

 

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The pro forma net tangible book value after the offering is calculated as follows:

 

  

Without

Over-

Allotment

   With
Over-
Allotment
 
Numerator          
Net tangible book value before this offering  $(165,415)  $(165,415)
Offering costs paid in advance  $174,469   $174,469 
Net proceeds from this offering and private placement of private units  $51,000,000   $58,575,000 
Less: Deferred underwriting discounts and commissions (1)  $(1,500,000)  $(1,725,000)
Less: Proceeds held in trust subject to redemption/tender  $(43,261,941)  $(49,881,066)
   $6,247,112   $6,977,988 
Denominator:          
Class B common stock issued and outstanding prior to this offering   1,437,500    1,437,500 
Class B common stock forfeited if over-allotment is not exercised   (187,500)   - 
Class A common stock included in the units offered in this offering   5,000,000    5,750,000 
Class A common stock underlying the rights to be included in the public units   500,000    575,000 
Class A common stock included in the private units   278,696    301,196 
Class A common stock underlying the rights to be included in the private units   27,869    30,119 
Class A common stock issued to representative and/or its designees as a part of the compensation   25,000    25,000 
Less: Shares subject to redemption/tender   (5,000,000)   (5,750,000)
    2,081,565    2,368,815 

 

(1) Deferred underwriting discounts and commission of 3.0%.

 

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CAPITALIZATION

 

The following table sets forth our capitalization at September 30, 2021 and as adjusted to give effect to the sale of our units and the private units and the application of the estimated net proceeds derived from the sale of such securities.

 

   As at September 30, 2021 
   Actual   As Adjusted(1) 
Promissory note to related party(2)  $231,066   $- 
Deferred underwriting discounts and commission payable   -    1,500,000 
Class A common stock, $0.0001 par value, 5,000,000 shares are subject to possible redemption   -    43,261,941(4)
Preferred stock, $0.0001 par value, 2,000,000 shares authorized; none issued and outstanding, actual and as adjusted   -    - 
Class A common stock, $0.0001 par value; 55,000,000 shares authorized; 303,696 shares issued and outstanding (excludes up 5,000,000 shares subject to redemption)   -    31 
Class B common stock, $0.0001 par value; 5,000,000 shares authorized; 1,437,500 and 1,250,000 shares issued and outstanding, actual and as adjusted, respectively (3)   144    125 
Additional paid-in capital   24,856    6,262,903 
Accumulated deficit   (15,946)   (15,946)
Total stockholders’ equity   9,054    6,247,113 
Total capitalization  $240,120   $51,009,054(5)

 

(1) Includes the $2,786,960 we will receive from the sale of the private units.

 

(2) As of September 30, 2021, JJ Sponsor, one of our sponsors, has loaned to us an aggregate of $231,066 to be used to pay formation and a portion of the expenses of this offering. The loan is payable without interest on the date on which we consummate our initial public offering.

 

(3) Assumes the over-allotment option has not been exercised and an aggregate of 187,500 shares of Class B common stock held by our founders have been forfeited as a result thereof.

 

(4) Represents net proceeds allocated to the public common stock less the allocated transaction costs related to this offering using the relative fair value method. The shares of Class A common stock offered to the public contain redemption rights that make them redeemable by our public stockholders. Accordingly, they are classified within temporary equity in accordance with the guidance provided in ASC 480-10-S99-3A at carrying value and subsequent changes in the redemption value will be accreted over 15 months from the closing of this offering to our anticipated time frame to consummate an initial business combination using the effective interest method.

 

(5) Derived by adding deferred underwriting discounts and commission payable, total stockholders’ equity and the value of common stock subject to possible redemption.  Total capitalization would be $58,584,054 if assuming the over-allotment option has been exercised in full, which is derived by deferred underwriting discounts and commission payable of $1,725,000, shares subject to possible redemption values of $49,881,066 and total stockholders’ equity of $6,977,988.

 

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

 

We are a blank check company incorporated as a Delaware corporation to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not be limited to a particular industry, although the Company intends to focus our search for a target business on companies within technology-enabled financial sectors, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. We intend to utilize cash derived from the proceeds of this offering, our securities, debt or a combination of cash, securities and debt, in effecting a business combination. The issuance of additional shares of common stock or preferred stock:

 

  may significantly reduce the equity interest of our stockholders;

 

  may subordinate the rights of holders of common stock if we issue preferred stock with rights senior to those afforded to our common stock;

 

  will likely cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating losses carried forward, if any, and most likely will also result in the resignation or removal of our present officers and directors;
     
  may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and

 

  may adversely affect prevailing market prices for our securities.

 

Similarly, if we issue debt securities, it could result in:

 

  default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations;

 

  acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that require the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;

 

  our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

  our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding;

 

  our inability to pay dividends on our Class A common stock;
     
  using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
     
  limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
     
  Increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

 

  limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt

 

Liquidity and Capital Resources

 

As indicated in the accompanying financial statements, as of September 30, 2020 and May 6, 2021, we had $65,651 and $190,095, respectively, of cash and a working capital deficit of $165,415 and $30,971, respectively. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this uncertainty through this offering are discussed above. Our plans to raise capital or to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

 

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Our liquidity needs have been satisfied to date through the receipt of $25,000 from the sale of the insider shares and a loan from one of our sponsors, JJ Sponsor in an aggregate amount of $231,066 that is more fully described below. We estimate that the net proceeds from (1) the sale of the units in this offering, after deducting offering expenses of approximately $1,786,960 (or $1,936,960 if the over-allotment option is exercised in full), including underwriting commissions of $1,000,000 (or $1,150,000 if the over-allotment option is exercised in full) and (2) the sale of the private units for a purchase price of $2,786,960, will be $51,000,000 (or $58,575,000 if the over-allotment option is exercised in full) (including the deferred underwriting discounts and commissions). Of this amount, $50,500,000 (or $58,075,000 if the over-allotment option is exercised in full) will be held in the trust account. The remaining $500,000 will not be held in the trust account. We intend to use substantially all of the net proceeds of this offering, including the funds held in the trust account, to acquire a target business or businesses and to pay our expenses relating thereto, including deferred underwriting discounts and commissions payable to Maxim in an amount up to 3.0% of the total gross proceeds raised in the offering upon consummation of our initial business combination. To the extent that our share capital is used in whole or in part as consideration to affect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.

 

Over the next 15 months (or up to 24 months if we extend the time to complete the initial business combination) from the Effective Date (assuming a business combination is not consummated prior thereto), we will be using the funds held outside of the trust account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination. Out of the funds available outside the trust account, we anticipate that we will incur approximately:

 

  $100,000 of expenses for the legal, accounting, due diligence and other third-party expenses in connection with a business combination;

 

  $75,000 of expenses for the legal and accounting fee related to our regulatory reporting obligations;

 

  $150,000 for the payment of the administrative fee to JJ Sponsor (of $10,000 per month for up to 15 months), subject to deferral as described herein; and

 

  $58,000 of expenses for the Nasdaq continued listing fees  

 

  $117,000 for the general working capital that will be used for miscellaneous expenses.

 

If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the trust account is less than we expect as a result of the current interest rate environment, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

 

Critical Accounting Policies – “Deferred Offering Costs”

 

Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the proposed public offering and that will be charged to stockholders’ equity upon the completion of the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.

 

Related Party Transactions

 

As of September 30, 2021 and May 6, 2021, JJ Sponsor, one of our sponsors, loaned to us an aggregate of $231,066 and $221,066, respectively, on a non-interest bearing basis for payment of offering expenses on our behalf. The loans will be repaid out of the proceeds of this offering not being placed in the trust account.

 

We are obligated, commencing on the date of this prospectus, to pay JJ Sponsor, which is managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer, a monthly fee of $10,000 for general and administrative services. However, pursuant to the terms of such agreement, we may delay payment of such monthly fee upon a determination by our audit committee that we lack sufficient funds held outside the trust to pay actual or anticipated expenses in connection with our initial business combination. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of our initial business combination.

 

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UNIFUTURE, one of our sponsors, has committed to purchase from us an aggregate of 278,696 private units (or up to 301,196 private units if the over-allotment option is exercised in full) at $10.00 per private unit, for a total purchase price of $2,786,960 (or up to $3,011,960 if the over-allotment option is exercised in full) which will be purchased in a private placement to occur simultaneously with the closing of this offering.

 

If needed to finance transaction costs in connection with searching for a target business or consummating an intended initial business combination, our founders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 220,000 shares of Class A common stock which includes 20,000 shares of Class A common stock issuable upon conversion of rights). We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with Accounting Standards Codification (“ASC”) 718 — Compensation — Stock Compensation.

 

Controls and Procedures

 

We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2022. As of the date of this prospectus, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:

 

  staffing for financial, accounting and external reporting areas, including segregation of duties;

 

  reconciliation of accounts;

 

  proper recording of expenses and liabilities in the period to which they relate;

 

  evidence of internal review and approval of accounting transactions;

 

  documentation of processes, assumptions and conclusions underlying significant estimates; and

 

  documentation of accounting policies and procedures.

 

Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.

 

Once our management’s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when, or if, required by Section 404. The independent auditors may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.

 

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Quantitative and Qualitative Disclosures about Market Risk

 

The net proceeds of this offering, including amounts in the trust account, will be invested in United States government treasury bills, bonds or notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

 

As of the date of this prospectus, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.

 

JOBS Act

 

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.

 

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act,(iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements(auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.

 

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PROPOSED BUSINESS

 

Introduction

 

We are a newly incorporated blank check company incorporated as a Delaware corporation. Our stockholders have no additional liability for the company’s liabilities over and above the amount paid for their shares. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. Our efforts to identify a prospective target business will not be limited to a particular industry, although the Company intends to focus our search for a target business on companies within technology-enabled financial sectors, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America.

 

We do not have any specific business combination under consideration or contemplation, and we have not, nor has anyone on our behalf, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction.

 

Background and Competitive Advantages

 

Our Sponsors and Management Team

 

Our sponsors include JJ Sponsor, a Delaware limited liability company, managed by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer and UNIFUTURE, a Delaware limited liability company, solely owned and managed by Mr. Shangyong Zhang, our Chief Financial Officer.

 

JJ Sponsor is held by Ninth Eternity Ventures, with a 10% membership interest, and Deep Tech Group, with a 90% membership interest.

 

Founded by Mr. Junhui (Jerome) Zhang, our Chief Executive Officer, along with its partner, JD Capital, a 49% equity interest holder, Ninth Eternity Ventures employs a flexible investment strategy comprised of buy-out/control-oriented, growth capital and restructuring investments, driven by China’s pivotal role as the largest emerging economy in the global market. JD Capital is a leading China-based alternative investment management and financial services firm listed on the Shanghai Stock Exchange (600053.SH.), and one of the largest private equity firms in China. JD Capital boasts professional investment teams who have successfully closed transactions in more than 20 subsectors and managed private equity funds totaling RMB 52.3 billion (approximately $8.05 billion) as of December 31, 2020.  By operating systematically and seizing systematic investment opportunities, JD Capital has invested $5.16 billion in mature enterprises and start-ups across the world, primarily in the China market. JD Capital has invested in a portfolio of 365 underlying companies, out of which JD Capital has exited from 189 portfolio companies and generated returns for investors with an internal rate of return of 26.9% (assuming that the net present value of all cash flows is equal to zero in a discounted cash flow analysis). Among all the portfolio companies, there are 64 listed on domestic and foreign exchanges and 58 portfolio companies traded on over-the-counter markets.

 

Founded in 2019 by Mr. Junhui (Jerome) Zhang, Deep Tech Group has a vision to grow into a holding company of diversified assets including businesses in the technology and financial services sectors. It currently holds equity interests in the technology, broker-dealer, asset management and sponsor sectors. Deep Tech Group wholly owns Ninth Eternity Asset Management LLC (SEC# 802-118187/CRD# 306985), an SEC registered exempt reporting adviser, and Ninth Eternity Securities LLC, a licensed broker dealer by FINRA, (SEC# 8-70514/FINRA: CRD #307492). Deep Tech Group also wholly owns Ninth Eternity Capital HK Limited, licensed by the SFC, (CE# BPU494), which engages in, among other things, investment research, securities underwriting and placement, discretionary account services, distribution of funds, securities margin financing, stock borrowing and lending, and securities brokerage services.

 

We believe that the extensive platform and resources of our sponsors and their affiliates, especially JD Capital, present broad opportunities to identify high growth target businesses and bring them to the U.S. capital markets. In the near term, we plan to take advantage of our affiliation with our sponsors and their affiliates, and we believe that these relationships will expand the business opportunities in local and international markets that are available to us.

 

In addition to the support by our sponsors, we will seek to capitalize on the comprehensive experience and contacts of our executive officers in consummating an initial business combination. Our management team, comprised of our executive officers and directors, brings a wealth of experience in identifying, negotiating with and conducting due diligence on potential candidates for acquisition.

 

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Mr. Junhui (Jerome) Zhang, Chief Executive Officer and Chairman. Mr. Zhang has been executive officer and director for two entities affiliated or associated with JD Capital, including Ninth Eternity Ventures and JZ Securities Co., Ltd. JD Capital is a leading China-based alternative investment management and financial services firm listed on Shanghai Stock Exchange (600053.SH.). Since February 2018, Mr. Zhang has served as the chief executive officer and chief investment officer at Ninth Eternity Ventures, a member of one of our sponsors, JJ Sponsor. Since May 2019, Mr. Zhang has been the founding chairman of Deep Tech Group, another member of JJ Sponsor. Deep Tech Group is a holding company intended to hold equity stakes across a number of operating entities in the technology and financial services industry. From September 2015 to June 2018, Mr. Zhang held various senior positions at JZ Securities Co., Ltd., a firm licensed by the CSRC, which is associated with JD Capital and engages in investment banking, brokerage, asset management, fixed income, and other broker dealer businesses. From August 2010 to September 2015, Mr. Zhang served as deputy head of the institutional business division, over-the-counter market division, and private banking division of Guosen Securities Co., Ltd., a CSRC regulated securities firm owned by the Shenzhen Government. Since July 2019, Mr. Zhang has served as the non-executive director of Ninth Eternity Capital HK Ltd. (CE #BPU494), an SFC regulated broker dealer firm. Mr. Zhang also has served as both the chief executive officer and director at Beijing Ninth Eternity Venture Capital Management Co., Ltd. since June 2018, a private equity investment company and Shenzhen Ninth Eternity Network Technology Co., Ltd. since August 2019, which engages in the development of global capital market trading system on mobile applications and computers. Mr. Zhang received an MBA degree from Peking University and his Bachelor’s degree in Accounting from Beijing Wuzi University.

 

Mr. Shangyong Zhang, Chief Financial Officer and Director. Mr. Zhang currently serves as the chief executive officer and director of China Communication Media Group (TPEX: 6404) (“CCMG”), a company listed on the Taiwan Stock Exchange, developing and marketing software on smartphones (since September 2013). He currently serves as the director of three subsidiaries of CCMG: (i) Rich Best (HK) Investment Limited, which provides, among other things, consulting services for management, market planning and information technology (since November 2016); (ii) Cosmopolitan Technology Ltd., engaging in Internet advertising promotion and Internet product operation (since December 2014); and (iii) Top1mobi Technology Co., Ltd., a company providing Internet advertising promotion and product operation services (since August 2014). He has served as the chief executive officer of another three subsidiaries of CCMG: (iv) Guangzhou Hui You Quan Jia Administration Consultant Co., Ltd., which provides, among other things, consulting service of management, market planning and information technology (since February 2017); (v) Shanghai Xingfan Software Development Co., Ltd. (since 2014) and Shenzhen Huiyou Jiatong Technology Co., Ltd. (since 2014), both of which engage in software development, computer and software sales and import and export of goods and technology. Mr. Zhang also served as chief executive officer of several companies in the technology and software industries for the past 6 years including (a) Beijing Zhihui Tianxia Internet Technology Ltd. (August 2014 to September 2020), a researcher and developer of computer software, communication technology, and network technology and products; (b) Shanghai Baowo information Technology Co., Ltd. (June 2014 to March 2021), engaged in providing technology services, and sales of computer, computer hardware, software and auxiliary equipment; (c) Shanghai Pimin Internet Technology Co., Ltd. (June 2014 to February 2021), engaged in providing technology services and sales of computer, computer hardware and software; and (d) Zhengzhou Xinweichuang Information Technology Co., Ltd. (June 2014 to January 2021), a company focusing on computer software development, computer system services, and technology consulting. Mr. Zhang received his Bachelor’s degree in Packaging Engineering from Nanchang University in China in 2004.

 

Mr. Hamish Allan Raw, Chief Operating Officer. Mr. Raw has served as the chief technology officer of Ninth Eternity Deep Tech Group since February 2021. He has significant experiences in trading technology and derivatives capital market risk management. From August 2016 to February 2021, Mr. Raw was self-employed, focusing on designing and coding for trading games and writing books on options. From 2008 to 2009, Mr. Raw served as the head of the options trading department at Saxon Financials, a sizable multi-asset trading house. In 2008, Harriman House published his book “Binary Options: Fixed Odds Financial Bets.” From 2003 to 2004, he traded options locally on the Chicago Board of Trade. From 1998 to 2003, Mr. Raw founded FFastFill plc (LON: FFA), a provider of direct market access trading technologies. From 1985 to 1999, Mr. Raw was an independent options market maker at the London International Financial Futures Exchange (LIFFE). From 1979 to 1981, he served as Gilts trader on the London Stock Exchange floor for W. Greenwell, a main brokerage house on the LSE. Mr. Raw received his bachelor’s degree in economics from University of Essex in 1976 and an MBA degree with concentration in finance from City University Business School (now Bayes Business School) in 1985.

 

Mr. Bernardino Paganuzzi, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Paganuzzi has more than thirty-year experience in law practice. Mr. Paganuzzi has practiced as a lawyer at the London office of Kennedys Law since October 1995 and became a partner of Kennedys Law in 1997. He has built his practice in all issues flowing from insolvency. Additionally, Mr. Paganuzzi’s practice covers banking litigation, commercial litigation and fraud. He has significant experience in fraud-related matters, including applying for freezing injunctions; tracing claims and breach of trust. Mr. Paganuzzi served as the division head at Kennedys Law for 10 years and was on the Strategy/Management Board for Kennedys Law globally for 10 years, respectively. Mr. Paganuzzi is a member of the editorial board of R3 Recovery Magazine, a magazine for professionals working within insolvency and business recovery in the UK. Mr. Paganuzzi is qualified to practice in law in England and Wales. He completed his Law Society Finals at Guildford College of Law in1986 and received his bachelor’s degree in law from University of Central England in Birmingham in 1985.

 

Mr. Thomas Keith Todd, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Todd has 40 years of experiences in global technology business including not only publicly listed and large multi-nationals but start-up businesses. Since April 2018, Mr. Todd has served as the chief executive officer and executive chairman of the board of directors at KRM22 plc (LON: KRM), a technology and software investment company, with a particular focus on risk management in capital markets. From September 2002 to March 2017, Mr. Todd served as the executive chairman of FFastFill plc (LON:FFA), a provider of SaaS to the global derivatives community, which was acquired by Ion Group in 2013. From April 2013 to March 2017, Mr. Todd served as the executive chairman of Agency Trading at Ion Group, a global technology software company providing automation software solutions for electronic trading. He is currently non-executive chairman of Blighter Surveillance, a private radar business. From 2005 to 2017, Mr. Todd was the non-executive chairman of Amino Technologies plc (LON:AFRNA), a provider of digital TV entertainment and cloud solutions to network operators. He also served as the non-executive chairman of UK Broadband Stakeholder Group (a UK Government advisory board) from January 2001 to January 2004 and Easynet plc, a broadband network company from March 2002 to January 2006. He was the chief executive officer of ICL plc, a global IT company from January 1995 to July 2000 and served as the chief financial officer of ICL plc from July 1987 to January 1995. In 2004, Mr. Todd was awarded the CBE (Commander of the Order of the British Empire) by the Queen of England for his services to the UK Telecommunication’s industry and having a prominent role at national level. From July 1975 to June 1987, Mr. Todd held several financial positions within the Marconi Company Limited, a defense contractor, including from January 1986 to June 1987 the position of the group chief financial officer. Mr. Todd is a fellow of the Chartered Institute of Management Accountants, or FCMA.

 

Mr. David Rich, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Rich has over 20 years of experience managing prominent business portfolios, optimizing operations and cultivating cohesive teams as well as data analysis. Mr. Rich has managed a number of multimillion dollar portfolios at various hedge funds and investment companies including Amida Special Opportunity Investments LLC, a private lending and investment company in New York (since September, 2013), Amida Capital Management, a relative value hedge fund in New York from January 2007 to December 2015, Marathon Asset Management, a hedge fund in New York from April 2001 to March 2005 and Tribeca Investments (Citigroup) in New York from April 1999 to April 2001. From August 1997 to April 1999, Mr. Rich served as a credit portfolio manager of General Electric Capital Corporation in Stamford, Connecticut. From September 1993 to July 1995, Mr. Rich served as a credit analyst of Valley National Bank in Wayne, New Jersey. Mr. Rich received his bachelor’s degree in Economics from Tufts University in 1991 and an MBA degree from Columbia University in 1997.

 

Michael Pascutti, Ph.D., Independent Director Nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Dr. Pascutti has more than 20 years of portfolio management experience in credit, equity and derivatives. Since 2015, Dr. Pascutti has been a visiting lecturer at Yale University teaching courses in finance. From January 2011 to January 2015, he was the former CEO/CIO of Eagle River investing in corporate actions such as mergers and through credit securities. Prior to Eagle River, Dr. Pascutti was a founding partner and Head of Relative Value at Sandelman Partners from February 2005 to March 2009, where he managed a team of investment professionals and was responsible for the firm's multibillion relative value portfolio as well as its overall size, leverage, credit, risk exposures, and strategies including distressed, merger arbitrage and event-driven equity, convertible arbitrage and capital structure arbitrage strategies. During his stay as Managing Director in Credit and Head of US Convertible at Citadel Investment Group from March 2000 to February 2005, Dr. Pascutti headed the firm's multibillion convertible bond portfolio and ran the multi-strategy credit and equity portfolio. In addition, Dr. Pascutti was a director and senior portfolio manager at Tribeca Investment Group from March 1998 to March 2000, and Portfolio Manager at CS First Boston from June 1995 to March 1998. Dr. Pascutti earned his bachelor’s degree in Economics at the Massachusetts Institute of Technology in 1991 and his Ph.D. in Economics from Harvard University in 1996. While at Harvard University, he was a teaching fellow for courses in Corporate Finance, Statistics, Money and Banking and Quantitative Finance.

 

With a management team with experience in merger and acquisitions for blank check companies and experience in business development, we believe we can source attractive deals and find good investment opportunities from private and public sources to create value for stockholders. See the section titled “Management” for complete information on the experience of our officers and directors.

 

Competitive Advantages

 

Experienced Management Team with Proven Track Record

 

Our management team has a proven track record of successfully executing investment strategies, growing and managing businesses and generating attractive returns for investors and is equipped with compounded knowledge, expertise and experience in technology and financial services sectors as well as cross-border transactions.

 

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Together with our management team, we believe we have a broad network of contacts and corporate relationships that makes us efficient at:

 

  Sourcing and evaluating businesses. Mr. Junhui (Jerome) Zhang, our CEO and Chairman has been involved in merger and acquisition transactions and direct investments in the financial services, fintech, technology, media, and telecom (“TMT”), culture and healthcare sectors during his career at JD Capital and Guosen Securities, respectively. Mr. Shangyong Zhang, our CFO, is a consecutive entrepreneur with over 20 years of experience in technology. In addition, our independent director nominees have broad networks which should enhance our access to potential deals and transactions globally. Mr. Thomas Keith Todd has 40 years of experiences in global technology business including not only publicly listed and large multi-nationals but start-up businesses. Mr. Bernardino Paganuzzi has more than 30 years of experience in legal practice covering insolvency, banking litigation, commercial litigation and fraud.  Mr. David Rich has over 20 years of experience managing prominent business portfolios, optimizing operations and cultivating cohesive teams as well as data analysis. Dr. Michael Pascutti has more than 20 years of portfolio management experience in credit, equity and derivatives. Our management team collectively has developed an extensive network of relationships over the course of their careers, ranging from owners of private and public companies, private equity funds, investment bankers, attorneys, accountants and business brokers to executives of government-owned entities and public officials. We believe that this network will allow us to generate a substantial number of attractive risk-adjusted acquisition opportunities. and

 

 

Negotiating and executing a transaction in a timely and professional manner. Our management team has been instrumental, working closely with companies, in implementing major business transformations and helping to create value through the public markets. Mr. Junhui (Jerome) Zhang, our CEO, has been engaged in management and investment of financial companies for over ten years, participated in a number of investments and transactions and accumulated extensive experience in managing and executing mergers and acquisitions, initial public offerings, capital raising transactions and leveraged buyouts, including a leveraged buyout of Ageas Asia Holdings Limited, in 2015 by Tongchuangjiuding Investment Management Group Co., Ltd., also known as JD Group (NEEQ: 430719. OC) for HKD10.7 billion (approximately $1.37 billion), which was sold to New World Development Company Limited (HKEX: 0017) in December 2018 for HKD 21.5 billion (approximately $2.76 billion), generating multiple returns for investors.

 

Status as a Publicly Listed Company

 

We believe our structure will make us an attractive business combination partner to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional initial public offering. We believe that target businesses will favor this alternative, which we believe is a more expeditious and cost effective method, while offering greater certainty of execution than the traditional initial public offering. During an initial public offering, there are typically expenses incurred in marketing, which would be costlier than a business combination with us. Furthermore, once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could delay or prevent the offering from occurring. Once public, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management staff.

 

Strong Financial Position and Flexibility

 

With the funds held in our trust account, we can offer a target business a variety of options to facilitate a business combination and fund future expansion and growth of its business. Because we are able to consummate a business combination using the cash proceeds from this offering, our share capital, debt or a combination of the foregoing, we have the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address the needs of the parties. However, if a business combination requires us to use substantially all of our cash to pay for the purchase price, we may need to arrange third party financing to help fund our business combination. Since we have no specific business combination under consideration, we have not taken any steps to secure third party financing.

 

Business Strategy and Acquisition Criteria

 

Our acquisition strategy will seek to capitalize on M&A and operational expertise and relationships of both our management team and our board of directors, to identify attractive businesses that have capacity to grow rapidly by utilizing a public vehicle. Although we are not limited to any particular industry, we intend to primarily focus on companies operating in a technology-enabled financial industry, including but not limited to, fintech, software services, and technology. There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America.

 

The focus of our management team is to create stockholder value by leveraging its experience to improve the efficiency of the business while implementing strategies to grow revenue and profits organically and/or through acquisitions. Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.

 

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While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we see fit to do so:

 

Strong Management Team.    We will seek to acquire those businesses with seasoned and strong management having a track record of driving growth and profitability; or having proposition of the businesses that may likely be well received by public investors.

 

Growth Potential.    We will be looking for businesses that we believe present the potential for revenue and earnings growth through a combination of business, management and resources. We will also consider businesses with potential to generate stable and increasing free cash flow. We may also seek to prudently leverage this cash flow in order to enhance stockholder value.

 

Benefit from being a Public Company.    We intend to only acquire a business or businesses that will benefit from being publicly traded and which can effectively utilize access to broader sources of capital and a public profile that are associated with being a publicly traded company.

 

Technology-Enabled Growth Companies.    We intend to look for companies that operate in markets and industry verticals in technology-enabled sectors that are growing due to new trends in consumer behavior with a focus on sectors including, without limitation, fintech, software services, and technology. We intend to focus on companies which use and integrate technology to drive meaningful operational improvements and efficiency gains, or use technology solutions, including innovative business models and/or product offerings, to disrupt existing business models and create new paradigms that have large market potential. We will seek to exclude businesses that are extremely sensitive to geopolitical and regulatory conditions.

 

Sustainable Competitive Differentiation and Superior Economic Models.    Our target company will have strong competitive moats that, in our view, can provide true differentiation and form the basis of long-term growth and generate strong and stable cash flows over time. We believe such companies can benefit from our team’s experience, extensive network and industry insights to drive growth and enhance revenue and operational efficiencies; and

 

Within Our Relationship Nexus.    We intend to acquire including but not limited to companies that are within our networks of relationships with founders, operators, investors, and advisors; where we can proprietarily source opportunities for our initial business combination.

 

This list of criteria and guidelines are not intended to be exhaustive. Our management team will evaluate and value potential target company on a case-by-case basis. Any evaluation relating to the merits of a particular initial business combination or acquisition may be based, to the extent relevant, on these general guidelines as well as other considerations, factors, and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination or acquisition with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria and guideline in our stockholder communications, which as discussed in this prospectus would be in the form of proxy solicitation or tender offer materials that we would file with the SEC.

 

Other Acquisition Considerations

 

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsors, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsors, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.

 

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Effecting a Business Combination

 

General

 

We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived from the proceeds of this offering and the private placement of private units, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering and the private placement of private units are intended to be applied generally toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in this offering are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various U.S. Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.

 

We Have Not Identified a Target Business

 

To date, we have not selected any target business on which to concentrate our search for a business combination. None of our officers, directors, founders and other affiliates have engaged in discussions on our behalf with representatives of other companies regarding the possibility of a potential merger, capital stock exchange, asset acquisition or other similar business combination with us, nor have we, nor any of our agents or affiliates, been approached by any candidates (or representatives of any candidates) with respect to a possible business combination with our company.

 

Subject to the limitations that a target business has a fair market value of at least 80% of the balance in the trust account (excluding any 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 our initial business combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target businesses. Accordingly, there is no basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete a business combination. To the extent we effect a business combination with a company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

 

Sources of Target Businesses

 

We expect to receive a number of proprietary transaction opportunities to originate as a result of the business relationships, direct outreach, and deal sourcing activities of our management team. In addition to the proprietary deal flow, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment banking firms, consultants, accounting firms, private equity groups, large business enterprises, and other market participants. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our founders, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. Some of our officers or directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an acquisition candidate. In no event will our sponsors or any of our existing officers or directors, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee, advisory fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is) although we may consider cash or other compensation to officers or advisors we may hire subsequent to this offering to be paid either prior to or in connection with our initial business combination. We have agreed to reimburse our founders for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.

 

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We are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our founders or advisors or making the acquisition through a joint venture or other form of shared ownership with our officers, directors or advisors. In the event we seek to complete our initial business combination with a business combination target that is affiliated with our founders or advisors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. As more fully discussed in the section of this prospectus entitled “Management — Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us.

 

Fair Market Value of Target Business

 

Pursuant to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding any 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 our initial business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital of a target. In this case, we could acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, assuming that we obtain and maintain a listing for our securities on NASDAQ. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination under consideration, we have not entered into any such fund raising arrangement and have no current intention of doing so. The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.

 

We will not be required to comply with the 80% fair market value requirement if we are delisted from NASDAQ. If Nasdaq delists our securities from trading on its exchange after this offering, we would not be required to satisfy the fair market value requirement described above and could complete a business combination with a target business having a fair market value substantially below 80% of the balance in the trust account.

 

Lack of Business Diversification

 

For an indefinite period of time after the completion of our initial business combination, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which may have the resources to complete business combinations with multiple entities operating in one or several industries, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may:

 

  subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and

 

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  result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services.

 

If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.

 

Limited Ability to Evaluate the Target Business’ Management Team

 

Although we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition, we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management or advisory positions with us following a business combination, it is presently unknown if any of them will devote their full time efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally, our officers and directors may not have significant experience or knowledge relating to the operations of the particular target business. The determination as to whether any members of our board of directors will remain with the combined company will be made at the time of our initial business combination.

 

Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

 

Stockholders May Not Have the Ability to Approve an Initial Business Combination

 

We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.

 

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Type of Transaction   Whether
Stockholder
Approval is
Required
Purchase of assets   No
Purchase of stock of target not involving a merger with the company   No
Merger of target into a subsidiary of the company   No
Merger of the company with a target   Yes

 

Under NASDAQ’s listing rules, stockholder approval would be required for our initial business combination if, for example:

 

  we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our common stock then outstanding;

 

  any of our directors, officers or substantial stockholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or

 

  the issuance or potential issuance of common stock will result in our undergoing a change of control.

 

The decision as to whether we will seek stockholders approval of a proposed business combination in those instances in which stockholder approval is not required by applicable law or stock exchange listing requirements will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to: (i) the timing of the transaction, including in the event we determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company; (ii) the expected cost of holding a stockholder vote; (iii) the risk that the stockholders would fail to approve the proposed business combination; (iv) other time and budget constraints of the company; and (v) additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.

 

Risks Related to Our Possible Business Combination in China

 

There is no restriction in the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North America. Because certain members of our management team have vast network in China, we may conduct our search in China and pursue a business combination with a company doing business in China. Due to the PRC laws prohibitions on direct foreign investments in certain sectors such as telecommunication and internet, we may effectuate a business combination with a target company having contractual arrangements, which is also known as the “VIE Agreements”, with a China-based operating company, which is also known as a variable interest entity, or “VIE”. Such transaction would result in us becoming solely a holding company and our investors may never directly hold equity interests in the China-based operating company.

 

VIE Agreements normally include Exclusive Technical Consulting and Service Agreement, Equity Interest Pledge Agreement, Exclusive Equity Interests Purchase Agreement, and Powers of Attorney. They collectively are designed to provide us with the power, rights, and obligations equivalent in all material respects to those it would possess as the principal equity holder of a VIE, including absolute control rights and the rights to the assets, property, and revenue of VIE. However, we or our shareholders do not directly hold equity interests in the VIEs after the business combination under the VIE structure, and therefore, such corporate structure is subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation on foreign ownership of internet technology companies, regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. VIE structure is also subject to the risks of uncertainty about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our or the post-combined company’s operations and may cause the value of our securities of post-combination entity depreciate significantly or become worthless.

 

VIE structure may be less effective than direct ownership and the company may incur substantial costs to enforce the terms of the arrangements. Since we and our shareholders do not directly own equity interest in VIE and the shareholders of VIE still own the shares of VIE after the business combination, the VIE structure has its inherent risks that may affect your investment, including less effectiveness and certainties than direct ownership and potential substantial costs to enforce the terms of the VIE Agreements. The shareholders of VIE may not act in the best interests of the post-combined company or may not perform their obligations under the VIE Agreement. If VIE or the shareholders of the VIE breach their contractual obligations under the VIE Agreements, the post-combined company may have difficulty in enforcing any rights it may have under the VIE Agreements with the VIE, its founders and owners, in PRC because all of the VIE Agreements are governed by the PRC laws and provide for the resolution of disputes through arbitration in the PRC. Furthermore, VIE Agreements may not be enforceable in China if PRC government authorities or courts take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In the event that we are unable to enforce the VIE Agreements, the post-combined company may not be able to exert effective control over the VIE, and its ability to conduct business may be materially and adversely affected. See “Risk Factors—Risks Associated with Acquiring and Operating a Business Outside of the United States or in China” for more details.

 

Although the PRC authorities do not require permission to entry of VIE Agreements, recently the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021, pursuant to which the PRC government will strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings of Chinese companies. The Opinions and any related implementing rules to be enacted may subject VIE structure to compliance requirement in the future. Given the current regulatory environment in the PRC, uncertainty of different interpretation and enforcement of the rules and regulations in the PRC may be adverse to our business combination with a China-based operating company or the post-combined company, which may take place quickly with little advance notice.

 

Furthermore, the securities of the post-combined company may be prohibited to trade on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect the auditor for three consecutive years beginning in 2021. Our auditor is currently subject to PCAOB inspections, and PCAOB is able to inspect our auditor. In order to minimize such risk, we expressly exclude any target company whose financial statements have been audited by an accounting firm that is not subject to PCAOB inspection.

 

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The governing PRC laws and regulations are sometimes vague and uncertain, and therefore, the vagueness and uncertainties may result in a material change in the post-combined company’s operations, cause the value of our shares after we complete our business combination to significantly decline or be worthless, or substantially limit or completely hinder the post-combined company’s ability to offer or continue to offer securities to investors. For instance, the PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. However, since these statements and regulatory actions are new or have not been officially implemented, it is highly uncertain how soon Chinese legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our capability to acquire or merge with a company with major operations in China, and post-combined company’s ability to conduct its business, accept foreign investments, or list on an U.S. exchange.

 

Permission Required from the PRC Authorities for this Offering

 

As a Delaware company with no operations in China and our two sponsors are also Delaware limited liability companies, there are no PRC laws and regulations (including the CSRC, the CAC, or any other government entity) in force explicitly requiring that we obtain permission from PRC authorities for this offering or to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction or any regulatory objection to this offering from any relevant PRC authorities. However, we cannot guarantee you whether a permission is required from the PRC authorities in the course of our business combination if we acquire or merge with a company with major operations in China. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings of Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject our business combination with a China based operating company to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to our business combination with a China-based operating company or the post-combined company, which may take place quickly with little advance notice.

 

Transfers of Cash to and from Our Post-Combination Organization If We Acquire a Company Based in China

 

If we complete a business combination with a company operating in China, the PRC government may impose controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our post-combination entity’s profits, if any. If subsidiaries of our post-combination organization in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to the public holding company. Under the VIE structure, current PRC regulations permit a VIE to pay dividends to its holding company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, a VIE’s subsidiaries and VIE are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

 

Current PRC regulations permit VIE’s indirect PRC subsidiaries to pay dividends to an overseas subsidiary, for example a subsidiary located in Hong Kong, only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the VIE’s subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies the reserve funds are not distributable as cash dividends except in the event of liquidation.

 

Furthermore, if we complete a business combination with a company in China via VIE Agreements and we are unable to receive all of the revenues from our operations through the current VIE Agreements, we may be unable to pay dividends on our ordinary shares. Cash dividends, if any, on our Class A ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes after the business combination, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%. In order for us to pay dividends to our shareholders, we will rely on payments from the entities either directly controlled by us or indirectly controlled by us via VIE Agreements. Under the VIE structure, a holding company will highly rely on the VIE Agreements between it and the VIE to distribute earnings and settle amounts owed under the VIE agreements, while we cannot guarantee the PRC government will allow such arrangement.

 

Permitted Purchases of our Securities

 

In the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our founders or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.

 

None of the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our common stock is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our founders 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. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.

 

The purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.

 

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In addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

 

Our founders or their affiliates anticipate that they may identify the stockholders with whom our founders, advisors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our founders or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business combination. Our founders or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.

 

Any purchases by our founders or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) of, and Rule 10b-5 under, the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our founders or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) of, or Rule 10b-5 under, the Exchange Act.

 

Ability to Extend Time to Complete Business Combination

 

If we anticipate that we may not be able to consummate our initial business combination within 15 months from the Effective Date, we may, but are not obligated to, extend the period of time to consummate a business combination three times by an additional three months each time (for a total of up to 24 months to complete a business combination). Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement to be entered into between us and Continental Stock Transfer & Trust Company, LLC on the date of this prospectus, in order to extend the time available for us to consummate our initial business combination, our insiders or their affiliates or designees, upon at least five days advance notice prior to the applicable deadline, must deposit into the trust account for each three month extension $500,000, or $575,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per unit in either case), up to an aggregate of $1,500,000, or $1,725,000 if the underwriters’ over-allotment option is exercised in full, on or prior to the date of the applicable deadline. The insiders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of our initial business combination, or, at the lender’s discretion, converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. Our stockholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial business combination. In the event that we receive notice from our insiders five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our insiders and their affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination. To the extent that some, but not all, of our insiders, decide to extend the period of time to consummate our initial business combination, such insiders (or their affiliates or designees) may deposit the entire amount required. Any notes issued pursuant to these loans would be in addition to any notes issued pursuant to working capital loans made to us.

 

Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination

 

We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.10 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by deferred underwriting discounts and commissions we will pay to the underwriters. Our founders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any insider shares, private shares and any public shares held by them in connection with the completion of our business combination.

 

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Manner of Conducting Redemptions

 

We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding and issued shares of common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on NASDAQ, we will be required to comply with such rules.

 

If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

 

  conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and

 

  file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A under the Exchange Act, which regulates the solicitation of proxies.

 

Upon the public announcement of our business combination, we or our founders will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.

 

In the event that we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares which are not purchased by our founders, which number will be based on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.

 

If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

 

  conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and

 

  file proxy materials with the SEC.

 

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In the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.

 

If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our founders will count toward this quorum and have agreed to vote their insider shares, private shares and any public shares purchased during or after this offering in favor of our initial business combination. The representative has agreed to vote its representative shares purchased in this offering in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ shares, we would need 1,723,153, or 34.29%, of 5,025,000 public shares and representative shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination in order to have our initial business combination approved) or 84,729, or 1.69%, of 5,025,000 public shares and representative shares sold in this offering to be voted in favor of a transaction (assuming only a quorum is present at such meeting held to vote on our initial business combination and all shares to be issued to Maxim and/or its designees are issued and outstanding and voted in favor of the business combination) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination.

 

These quorum and voting thresholds, and the voting agreements of our founders and the representative, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether it votes for or against the proposed transaction.

 

Our amended and restated certificate of incorporation will provide that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.

 

Limitation on Redemption upon Completion of Initial Business Combination if we Seek Stockholder Approval

 

Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide 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 seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering, which we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, our amended and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our business combination.

 

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Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights

 

We may require our 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 our 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 we distribute proxy materials, or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.

 

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.

 

The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.

 

Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our business combination.

 

If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.

 

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If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target until 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date.

 

Redemption of Public Shares and Liquidation if no Initial Business Combination

 

Our amended and restated certificate of incorporation provides that we will have only 15 months (or up to 24 months if extended) from the Effective Date of this prospectus to complete our initial business combination. If we are unable to complete our business combination within such 15-month period (or up to a 24-month period if our time to complete a business combination is extended as described herein) from the Effective Date, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our rights, which will expire worthless if we fail to complete our business combination within the 15-month time period (or up to 24-month time period if our time to complete a business combination is extended as described herein).

 

Our founders have waived their rights to liquidating distributions from the trust account with respect to any insider shares and private shares held by them if we fail to complete our initial business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date. However, if our founders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 15-month time period (or up to 24-month time period if our time to complete a business combination is extended as described herein).

 

Our founders have agreed, pursuant to a letter agreement with us (filed as an exhibit to the registration statement of which this prospectus forms a part), that they will not propose any amendment to our amended and restated certificate of incorporation (i) that would modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus, or (ii) with respect to any other material provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number of then outstanding public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above) we would not proceed with the amendment or the related redemption of our public shares.

 

We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $500,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount of up to $50,000 of such accrued interest to pay those costs and expenses.

 

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If we were to expend all of the net proceeds of this offering and the sale of the private units, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.

 

Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest and claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.

 

In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsors, JJ Sponsor and UNIFUTURE, have agreed that they will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then our sponsors will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our sponsors have sufficient funds to satisfy their indemnity obligations and believe that our sponsors’ only assets are securities of our company. We have not asked our sponsors to reserve for such indemnification obligations. Therefore, we cannot assure you that our sponsors would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.10 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

 

In the event that the proceeds in the trust account are reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsors asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsors to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsors to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so 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. We have not asked our sponsors to reserve for such indemnification obligations and we cannot assure you that our sponsors would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.10 per public share.

 

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We will seek to reduce the possibility that our sponsors will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsors will also not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately $500,000 from the proceeds of this offering with which to pay any such potential claims. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that our offering expenses exceed our estimate of $1,786,960, we may fund such excess with funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,786,960, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.

 

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

 

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Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

 

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsors may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsors will not be responsible to the extent of any liability for such third-party claims.

 

If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.10 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

 

Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date, subject to applicable law, (ii) (a) in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we have not consummated an initial business combination within 15 months (or up to 24 months if our time to complete a business combination is extended as described herein) from the Effective Date or (b) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity or (iii) our completion of an initial business combination, and then only in connection with those public shares that such stockholder properly elected to redeem, subject to the limitations described in this prospectus. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above.

 

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Comparison of Redemption or Purchase Prices in Connection with our Initial Business Combination and if We Fail to Complete our Business Combination

 

The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination and if we are unable to complete our business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus.

 

    Redemptions in
Connection with our Initial
Business Combination
  Other Permitted
Purchases of Public
Shares by us or
our Affiliates
  Redemptions if we
fail to Complete an
Initial Business
Combination
Calculation of redemption price   Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.10 per public share), including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitation that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination.   If we seek stockholder approval of our initial business combination, our founders, or their affiliates may purchase shares in privately negotiated transactions or in the open market prior to or following completion of our initial business combination. There is no limit to the prices that our founders or their affiliates may pay in these transactions.   If we are unable to complete our business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount, then on deposit in the trust account (which is initially anticipated to be $10.10 per public share), including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares.
             
    Redemptions in Connection with our Initial Business Combination   Other Permitted Purchases of Public Shares by us or our Affiliates   Redemptions if we fail to Complete an Initial Business Combination

 

Impact to remaining stockholders   The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of deferred underwriting discounts and commissions, working capital and taxes payable released to us.   If the permitted purchases described above are made there would be no impact to our remaining stockholders because the purchase price would not be paid by us.   The redemption of our public shares if we fail to complete our business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions.

 

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Competition

 

In identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.

 

Facilities

 

We maintain our principal executive office at 1 Broadway, 14th Floor, Cambridge, MA 02142. We pay JJ Sponsor, one of our sponsors, for the office space, as part of the $10,000 per month payment we made to it for office space, utility, personnel and related services.

 

Employees

 

We have three executive officers including Mr. Junhui (Jerome) Zhang, the Chief Executive Officer, Mr. Shangyong Zhang, Chief Financial Officer, and Mr. Hamish Allan Raw, the Chief Operating Officer. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected for the business combination and the stage of the business combination process the company is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such target business and negotiating and processing the business combination (and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the consummation of a business combination.

 

Periodic Reporting and Audited Financial Statements

 

We will register our units, Class A common stock and rights under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and reported on by our independent registered public accountants.

 

We will provide stockholders with audited financial statements of the prospective target business as part of any proxy solicitation sent to stockholders to assist them in assessing the target business. In all likelihood, the financial information included in the proxy solicitation materials will need to be prepared in accordance with U.S. GAAP or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. The financial statements may also be required to be prepared in accordance with U.S. GAAP for the Form 8-K announcing the closing of an initial business combination, which would need to be filed within four business days thereafter. We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have the necessary financial information. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business.

 

We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act beginning for the fiscal year ending December 31, 2022. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

 

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We are an emerging growth company as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. We will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or our total revenues exceed $1.07 billion or the market value of our common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

 

Legal Proceedings

 

There is no material litigation, arbitration or governmental proceeding currently pending against us or any of our officers or directors in their capacity as such, and we and our officers and directors have not been subject to any such proceeding in the 12 months preceding the date of this prospectus.

 

Comparison to Offerings of Blank Check Companies Subject to Rule 419

 

The following table compares and contrasts the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering and that the underwriters will not exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to this offering because we will be listed on a national securities exchange, we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact.

 

    Terms of the Offering   Terms Under a Rule 419 Offering
Escrow of offering proceeds   $50,500,000 (or $58,075,000 if the underwriters’ over-allotment option is exercised in full) of the net offering proceeds and proceeds from the sale of the private units will be deposited into a trust account in the United States, maintained by Continental Stock Transfer & Trust Company, LLC, acting as trustee.   $43,987,500 (or $50,602,500 if the underwriters’ over-allotment option is exercised in full) of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.

 

Investment of net proceeds   The $50,500,000 (or $58,075,000 if the underwriters’ over-allotment option is exercised in full) of the net offering proceeds and proceeds from the sale of the private units held in trust will only be invested in United States government treasury bills, bonds or notes with a maturity of 185 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States government treasuries.   Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act of 1940 or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States.
         
Limitation on fair value or net assets of target business   The initial target business that we acquire must have a fair market value equal to at least 80% of the balance in our trust account (excluding any 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 our initial business combination. We will not be required to comply with the 80% fair market value requirement if we are delisted from NASDAQ.   We would be restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent at least 80% of the maximum offering proceeds.

 

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    Terms of the Offering   Terms Under a Rule 419 Offering
Trading of securities issued   The units may commence trading on or promptly after the date of this prospectus. The Class A common stock and rights comprising the units will begin to trade separately on the 52nd day after the date of this prospectus unless Maxim informs us of its decision to allow earlier separate trading (based upon its assessment of the relative strengths of the securities markets and small capitalization and blank check companies in general, and the trading pattern of, and demand for, our securities in particular), subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, an additional Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the over-allotment option.   No trading of the units or the underlying securities would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account.

 

Election to remain an investor  

We will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required by law to hold a stockholder vote. If we are not required by law and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting.

  A prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company, in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective amendment, to decide whether he or she elects to remain a stockholder of the company or require the return of his or her investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account would automatically be returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all of the deposited funds in the escrow account must be returned to all investors and none of the securities will be issued.

 

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    Terms of the Offering   Terms Under a Rule 419 Offering
Business combination deadline   Pursuant to our amended and restated certificate of incorporation, if we do not complete an initial business combination within 15 months (or up to 24 months if we extend the period of time to consummate the business combination as described therein) from the Effective Date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.   If an acquisition has not been consummated within 21 months after the effective date of the initial registration statement, funds held in the trust or escrow account would be returned to investors.
         
Interest earned on the funds in the trust account   There can be released to us, from time to time any interest earned on the funds in the trust account that we may need to pay our tax obligations. The remaining interest earned on the funds in the trust account will not be released until the earlier of the completion of a business combination and our entry into liquidation upon failure to effect a business combination within the allotted time.   All interest earned on the funds in the trust account will be held in trust for the benefit of public stockholders until the earlier of the completion of a business combination and our liquidation upon failure to effect a business combination within the allotted time.

 

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Release of funds   Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering and the sale of the private units that are deposited and held in the trust account will not be released from the trust account until the earliest to occur of: (i) the completion of our initial business combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 15 months (or up to 24 months if extended) from the Effective Date of this prospectus or (b) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption of 100% of our public shares if we are unable to complete a business combination within the required time frame (subject to the requirements of applicable law).   The proceeds held in the escrow account would not be released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time.

 

MANAGEMENT

 

Directors and Executive Officers

 

Our current directors and executive officers, their ages and positions are as follows:

 

Name   Age   Position
Junhui (Jerome) Zhang       38   Chief Executive Officer, Director, and Chairman
Shangyong Zhang   39   Chief Financial Officer, Director
Hamish Allan Raw   67   Chief Operating Officer
Bernardino Paganuzzi   58   Independent Director Nominee
Thomas Keith Todd   68   Independent Director Nominee
David Rich   52   Independent Director Nominee
Michael Pascutti   53   Independent Director Nominee

 

Below is a summary of the business experience of each of our executive officers and directors:

 

Mr. Junhui (Jerome) Zhang, Chief Executive Officer and Chairman. Mr. Zhang has been executive officer and director for two entities affiliated or associated with JD Capital, including Ninth Eternity Ventures and JZ Securities Co., Ltd. JD Capital is a leading China-based alternative investment management and financial services firm listed on Shanghai Stock Exchange (600053.SH.). Since February 2018, Mr. Zhang has served as the chief executive officer and chief investment officer at Ninth Eternity Ventures, a member of one of our sponsors, JJ Sponsor. Since May 2019, Mr. Zhang has been the founding chairman of Deep Tech Group, another member of JJ Sponsor. Deep Tech Group is a holding company intended to hold equity stakes across a number of operating entities in the technology and financial services industry. From September 2015 to June 2018, Mr. Zhang held various senior positions at JZ Securities Co., Ltd., a firm licensed by the CSRC, which is associated with JD Capital and engages in investment banking, brokerage, asset management, fixed income, and other broker dealer businesses. From August 2010 to September 2015, Mr. Zhang served as deputy head of the institutional business division, over-the-counter market division, and private banking division of Guosen Securities Co., Ltd., a CSRC regulated securities firm owned by the Shenzhen Government. Since July 2019, Mr. Zhang has served as the non-executive director of Ninth Eternity Capital HK Ltd. (CE #BPU494), an SFC regulated broker dealer firm. Mr. Zhang also has served as both the chief executive officer and director at Beijing Ninth Eternity Venture Capital Management Co., Ltd. since June 2018, a private equity investment company and Shenzhen Ninth Eternity Network Technology Co., Ltd. since August 2019, which engages in the development of global capital market trading system on mobile applications and computers. Mr. Zhang received an MBA degree from Peking University and his Bachelor’s degree in Accounting from Beijing Wuzi University.

 

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Mr. Shangyong Zhang, Chief Financial Officer and Director. Mr. Zhang currently serves as the chief executive officer and director of China Communication Media Group (TPEX: 6404) (“CCMG”), a company listed on the Taiwan Stock Exchange, developing and marketing software on smartphones (since September 2013). He currently serves as the director of three subsidiaries of CCMG: (i) Rich Best (HK) Investment Limited, which provides, among other things, consulting services for management, market planning and information technology (since November 2016); (ii) Cosmopolitan Technology Ltd., engaging in Internet advertising promotion and Internet product operation (since December 2014); and (iii) Top1mobi Technology Co., Ltd., a company providing Internet advertising promotion and product operation services (since August 2014). He has served as the chief executive officer of another three subsidiaries of CCMG: (iv) Guangzhou Hui You Quan Jia Administration Consultant Co., Ltd., which provides, among other things, consulting service of management, market planning and information technology (since February 2017); (v) Shanghai Xingfan Software Development Co., Ltd. (since 2014) and Shenzhen Huiyou Jiatong Technology Co., Ltd. (since 2014), both of which engage in software development, computer and software sales and import and export of goods and technology. Mr. Zhang also served as chief executive officer of several companies in the technology and software industries for the past 6 years including (a) Beijing Zhihui Tianxia Internet Technology Ltd. (August 2014 to September 2020), a researcher and developer of computer software, communication technology, and network technology and products; (b) Shanghai Baowo information Technology Co., Ltd. (June 2014 to March 2021), engaged in providing technology services, and sales of computer, computer hardware, software and auxiliary equipment; (c) Shanghai Pimin Internet Technology Co., Ltd. (June 2014 to February 2021), engaged in providing technology services and sales of computer, computer hardware and software; and (d) Zhengzhou Xinweichuang Information Technology Co., Ltd. (June 2014 to January 2021), a company focusing on computer software development, computer system services, and technology consulting. Mr. Zhang received his Bachelor’s degree in Packaging Engineering from Nanchang University in China in 2004.

 

Mr. Hamish Allan Raw, Chief Operating Officer. Mr. Raw has served as the chief technology officer of Ninth Eternity Deep Tech Group since February 2021. He has significant experiences in trading technology and derivatives capital market risk management. From August 2016 to February 2021 , Mr. Raw was self-employed, focusing on designing and coding for trading games and writing books on options . From 2008 to 2009, Mr. Raw served as the head of the options trading department at Saxon Financials, a sizable multi-asset trading house. In 2008, Harriman House published his book “Binary Options: Fixed Odds Financial Bets.” From 2003 to 2004, he traded options locally on the Chicago Board of Trade. From 1998 to 2003, Mr. Raw founded FFastFill plc (LON: FFA), a provider of direct market access trading technologies. From 1985 to 1999, Mr. Raw was an independent options market maker at the London International Financial Futures Exchange (LIFFE). From 1979 to 1981, he served as Gilts trader on the London Stock Exchange floor for W.Greenwell, a main brokerage house on the LSE. Mr. Raw received his bachelor’s degree in economics from University of Essex in 1976 and an MBA degree with concentration in finance from City University Business School (now Bayes Business School) in 1985.

 

Mr. Bernardino Paganuzzi, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Paganuzzi has more than thirty-year experience in law practice. Mr. Paganuzzi has practiced as a lawyer at the London office of Kennedys Law since October 1995 and became a partner of Kennedys Law in 1997. He has built his practice in all issues flowing from insolvency. Additionally, Mr. Paganuzzi’s practice covers banking litigation, commercial litigation and fraud. He has significant experience in fraud-related matters, including applying for freezing injunctions; tracing claims and breach of trust. Mr. Paganuzzi served as the division head at Kennedys Law for 10 years and was on the Strategy and Management Boards for Kennedys Law globally for 10 years. Mr. Paganuzzi is a member of the editorial board of R3 Recovery Magazine, a magazine for professionals working within insolvency and business recovery in the UK. Mr. Paganuzzi is qualified to practice in law in England and Wales. He completed his Law Society Finals at Guildford College of Law in 1986 and received his bachelor’s degree in law from University of Central England in Birmingham in 1985.

 

We believe that Mr. Paganuzzi is qualified as a director because of his solid legal background and recognition within insolvency and fraud-related matters.

 

Mr. Thomas Keith Todd, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Todd has 40 years of experiences in global technology business including not only publicly listed and large multi-nationals but start-up businesses. Since April 2018, Mr. Todd has served as the chief executive officer and executive chairman of the board of directors at KRM22 plc (LON: KRM), a technology and software investment company, with a particular focus on risk management in capital markets. From September 2002 to March 2017, Mr. Todd served as the executive chairman of FFastFill plc (LON:FFA), a provider of SaaS to the global derivatives community, which was acquired by Ion Group in 2013. From April 2013 to March 2017, Mr. Todd served as the executive chairman of Agency Trading at Ion Group, a global technology software company providing automation software solutions for electronic trading. He is currently non-executive chairman of Blighter Surveillance, a private radar business. From 2005 to 2017, Mr. Todd was the non-executive chairman of Amino Technologies plc (LON:AFRNA), a provider of digital TV entertainment and cloud solutions to network operators. He also served as the non-executive chairman of UK Broadband Stakeholder Group (a UK Government advisory board) from January 2001 to January 2004 and Easynet plc, a broadband network company from March 2002 to January 2006. He was the chief executive officer of ICL plc, a global IT company from January 1995 to July 2000 and served as the chief financial officer of ICL plc from July 1987 to January 1995. In 2004, Mr. Todd was awarded the Commander of the Order of the British Empire by the Queen of England for his services to the UK Telecommunication’s industry and having a prominent role at national level. From July 1975 to June 1987, Mr. Todd held several financial positions within the Marconi Company Limited, a defense contractor, including the position of the group chief financial officer from January 1986 to June 1987. Mr. Todd is a fellow of the Chartered Institute of Management Accountants, or FCMA.

 

We believe that Mr. Todd is qualified as a director because of his comprehensive experience in technology, accounting, risk management, capital markets and leadership at both private and public companies.

 

Mr. David Rich, independent director nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Mr. Rich has over 20 years of experience managing prominent business portfolios, optimizing operations and cultivating cohesive teams as well as data analysis. Mr. Rich has managed a number of multimillion dollar portfolios at various hedge funds and investment companies including Amida Special Opportunity Investments LLC, a private lending and investment company in New York, since September, 2013, Amida Capital Management, a relative value hedge fund in New York, from January 2007 to December 2015, Marathon Asset Management, a hedge fund in New York, from April 2001 to March 2005 and Tribeca Investments (Citigroup) in New York, from April 1999 to April 2001. From August 1997 to April 1999, Mr. Rich served as a credit portfolio manager of General Electric Capital Corporation in Stamford, Connecticut. From September 1993 to July 1995, Mr. Rich served as a credit analyst of Valley National Bank in Wayne, New Jersey. Mr. Rich received his bachelor’s degree in Economics from Tufts University in 1991 and an MBA degree from Columbia University in 1997.

 

We believe that Mr. Rich is qualified as a director because of his extensive experience in portfolio management and investment as well as data and credit analysis.

 

Michael Pascutti, Ph.D., Independent Director Nominee. He has agreed to join us as an independent director upon the effectiveness of this prospectus. Dr. Pascutti has more than 20 years of portfolio management experience in credit, equity and derivatives. Since 2015, Dr. Pascutti has been a visiting lecturer at Yale University teaching courses in finance. From January 2011 to January 2015, he was the former CEO/CIO of Eagle River Asset Management (“Eagle River”) investing in corporate actions such as mergers and through credit securities. Prior to Eagle River, Dr. Pascutti was a founding partner and Head of Relative Value at Sandelman Partners from February 2005 to March 2009, where he managed a team of investment professionals and was responsible for the firm's multibillion relative value portfolio as well as its overall size, leverage, credit, risk exposures, and strategies including distressed, merger arbitrage and event-driven equity, convertible arbitrage and capital structure arbitrage strategies. During his stay as Managing Director in Credit and Head of US Convertible at Citadel Investment Group from March 2000 to February 2005, Dr. Pascutti headed the firm's multibillion convertible bond portfolio and ran the multi-strategy credit and equity portfolio. In addition, Dr. Pascutti was a director and senior portfolio manager at Tribeca Investment Group from March 1998 to March 2000, and Portfolio Manager at CS First Boston from June 1995 to March 1998. Dr. Pascutti earned his bachelor’s degree in Economics at the Massachusetts Institute of Technology in 1991 and his Ph.D. in Economics from Harvard University in 1996. While at Harvard University, he was a teaching fellow for courses in Corporate Finance, Statistics, Money and Banking and Quantitative Finance.

 

We believe that Dr. Pascutti is qualified as a director because of his distinguished achievements in credit, equity and derivatives and capital markets overall.

 

Executive Officer and Director Compensation

 

None of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date of the Company’s final prospectus through the earlier of consummation of our initial business combination and our liquidation, we will pay JJ Sponsor, which is managed by Mr. Junhui (Jerome) Zhang, the Company’s Chief Executive Officer up to $10,000 per month for providing us with general and administrative services, including office space, utilities, and administrative support. However, this arrangement is solely for our benefit and is not intended to provide our officers or directors compensation in lieu of a salary.

 

Other than the $10,000 per month administrative fee and the repayment of up to $500,000 in loans from JJ Sponsor, no compensation or fees of any kind, including finder’s, consulting fees and other similar fees, will be paid to our founders, members of our management team or their respective affiliates, for services rendered prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is). However, our sponsors, officers, and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination.

 

After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our shareholders in connection with a proposed initial business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K or a periodic report, as required by the SEC. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.

 

Number and Terms of Office of Officers and Directors

 

We intend to have six directors upon the effectiveness of this offering. Our board of directors will be divided into three classes, Class I, Class II, Class III, with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the Class I of directors, consisting of Mr. David Rich and Mr. Bernardino Paganuzzi, will expire at our first annual meeting of stockholders. The term of office of the Class II of directors, consisting of Mr. Thomas Keith Todd and Dr. Michael Pascutti , will expire at our second annual meeting of stockholders. The term of office of the Class III of directors, consisting of Mr. Junhui Zhang and Mr. Shangyong Zhang, will expire at our third annual meeting of stockholders. We may not hold an annual meeting of stockholders until after we consummate our initial business combination.

 

Prior to the completion of our initial business combination, any vacancy on our board of directors may be filled by a nominee chosen by holders of a majority of our founder shares and holders of Class B common stock have the exclusive right to elect or remove any director.

 

Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint officers as it deems appropriate pursuant to our amended and restated certificate of corporation.

 

Director Independence

 

The rules of the Nasdaq require that a majority of our board of directors be independent within one year of our initial public offering. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that each of Messrs. Bernardino Paganuzzi, Thomas Keith Todd, David Rich, and Michael Pascutti is an “independent director” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

 

Any affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of directors will review and approve all affiliated transactions with any interested director abstaining from such review and approval.

 

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Committees of the Board of Directors

 

Upon the effectiveness of this prospectus, our board of directors will have three standing committees: an audit committee, a compensation committee, and a nominating and corporate governance committee. Both our audit committee and our compensation committee will be composed solely of independent directors. Subject to phase-in rules and a limited exception, the rules of NASDAQ and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of NASDAQ require that the compensation committee of a listed company be comprised solely of independent directors. Each committee will operate under a charter that will be approved by our board and will have the composition and responsibilities described below.

 

Audit Committee

 

Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee all of whom must be independent. Effective as of the date of this prospectus, we will establish an audit committee of the board of directors, which will consist of Messers. Rich, Pascutti, and Todd, each of whom is an independent director under Nasdaq’s listing standards. Mr. Rich is the Chairperson of the audit committee. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:

 

  assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors; the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;

 

  pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;

 

  reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;

 

  setting clear policies for audit partner rotation in compliance with applicable laws and regulations;

 

  obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;

 

meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

 

  reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and

 

  reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

 

Financial Experts on Audit Committee

 

The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under Nasdaq listing standards. Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.

 

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In addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that Mr. Rich qualified as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

 

Compensation Committee

 

Effective as of the date of this prospectus, we will establish a compensation committee of the board of directors, which will consist of Messers. Pascutti, Todd and Paganuzzi, each of whom is an independent director under Nasdaq’s listing standards. Mr. Pascutti is the Chairperson of the compensation committee.

 

Under the NASDAQ listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent, subject to certain phase-in provisions. Each such person meets the independent director standard under NASDAQ listing standards applicable to members of the compensation committee.

 

We will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:

 

  reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

 

  reviewing and making recommendations to our board of directors with respect to the compensation, and any incentive compensation and equity based plans that are subject to board approval of all of our other officers;

 

  reviewing on an annual basis our executive compensation policies and plans;

 

  implementing and administering our incentive compensation equity-based remuneration plans;

 

  assisting management in complying with our proxy statement and annual report disclosure requirements;

 

  approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;

 

  if required, producing a report on executive compensation to be included in our annual proxy statement; and

 

  reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

 

Notwithstanding the foregoing, as indicated above, other than reimbursement of expenses, no cash compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.

 

The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by NASDAQ and the SEC.

 

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 Nominating and Corporate Governance Committee

 

Upon the effectiveness of the registration statement, we will establish a nominating and corporate governance committee of the board of directors. The initial members of our nominating and corporate governance committee will be Mr. Todd, Mr. Paganuzzi and Dr. Pascutti, each of whom is an independent director under Nasdaq’s listing standards. Mr. Todd will chair the nominating and corporate governance committee.

 

We will adopt a nominating and corporate governance committee charter, which will detail the purpose and responsibilities of the nominating and corporate governance committee, including:

 

  identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates for nomination for appointment at the annual general meeting or to fill vacancies on the board of directors;

 

  developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;

 

  coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and

 

  reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary

  

The nominating and corporate governance committee considers persons identified by its members, management, stockholders, investment bankers and others to be nominated to serve on our board of directors. The charter will also provide that the nominating and corporate governance committee may, in its sole discretion retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms.

 

We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for directorship, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders. The nominating and corporate governance committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating and corporate governance committee does not distinguish among nominees recommended by stockholders and other persons. Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our board of directors.

 

Compensation Committee Interlocks and Insider Participation

 

None of our officers currently serves, or in the past year has served, as a member of the compensation committee of any entity that has one or more officers serving on our board of directors.

 

Code of Ethics

 

Prior to the consummation of this offering, we will have adopted a Code of Ethics applicable to our directors, officers and employees. We will file a copy of our Code of Ethics and our audit, compensation, and nominating and corporate governance committee charters as exhibits to the registration statement of which this prospectus is a part. You will be able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics and the charters of each committee of our board of directors will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. See the section of this prospectus entitled “Where You Can Find Additional Information.”

 

Conflicts of Interest

 

Potential investors should be aware of the following potential conflicts of interest:

 

  None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.

 

  In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
     
  Our sponsors, officers and directors may also purchase public units or shares during or after this offering, including in the open market or through privately negotiated transactions.  During the offering, if any of them participates in the offering as an anchor investor, it may receive incentives which offer greater economic benefits than those available to public investors in the offering.  In addition, in order to incentivize the participation of certain potential anchor investors, our sponsors may offer or share their economics in certain of our securities with such potential anchor investors, the net effect of which could be to provide greater economic benefit to such potential anchor investors than that provided to other investors in the offering. 

 

  Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company.

 

  The insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully completed and subject to certain other limitations. Additionally, our officers and directors will not receive distributions from the trust account with respect to any of their insider shares if we do not complete a business combination. Furthermore, UNIFUTURE, one of our sponsors, has agreed that the private units will not be sold or transferred by them until after we have completed our initial business combination. In addition, our officers and directors may loan funds to us after this offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. For the foregoing reasons, the personal and financial interests of our directors and executive officers may influence their motivation in identifying and selecting a target business, completing a business combination in a timely manner and securing the release of their shares.

 

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The conflicts described above may not be resolved in our favor.

 

In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:

 

  the corporation could financially undertake the opportunity;

 

  the opportunity is within the corporation’s line of business; and

 

  it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.

 

In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge, skill and experience which that director has.

 

As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the stockholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated certificate of incorporation or alternatively by stockholder approval at general meetings.

 

Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above-mentioned conflicts will be resolved in our favor. Furthermore, most of our officers and directors have pre-existing fiduciary obligations to other businesses of which they are officers or directors. To the extent they identify business opportunities which may be suitable for the entities to which they owe pre-existing fiduciary obligations, our officers and directors will honor those fiduciary obligations. Accordingly, it is possible they may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe pre-existing fiduciary obligations and any successors to such entities have declined to accept such opportunities.

 

In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has contractually agreed, pursuant to a written agreement with us, until the earliest of a business combination, our liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have.

 

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The following table summarizes the other relevant pre-existing fiduciary or contractual obligations of our officers and directors:

 

Name of Individual     Name of Affiliated Company   Entity’s Business   Affiliation
Junhui (Jerome) Zhang   Ninth Eternity Capital HK Limited   Investment Banking and Brokerage   Director
  Tibet Ninth Eternity Venture Capital Management Co., Ltd.   Private equity investment   CEO, Chief Investment Officer, and Director
  Beijing Ninth Eternity Venture Capital Management Co., Ltd.   Private equity investment   CEO, Chief Investment Officer, and Director
  Shenzhen Ninth Eternity Network Technology Co., Ltd.   Technology   Director, CEO
Shangyong Zhang   China Communication Media Group   Software development   CEO
  Cosmopolitan Technology Limited   Internet advertising   Director
  Top1mobi Technology Co., Ltd.   Internet advertising   Director
  Rich Best (HK) Investment Limited   Information technology consulting service; software development   Director
  Guangzhou Hui You Quan Jia Administration Consultant Enterprise Management Consulting Service Co., Ltd   Information technology consulting service; software development   CEO
  Shenzhen Huiyou Jiatong Technology Co., Ltd.   Software development   CEO
  Shanghai Xingfan Software Development Co., Ltd.   Software development   CEO
Hamish Allan Raw   Ninth Eternity Deep Tech Group   Private investment   CTO
Bernardino Paganuzzi   Kennedys Law LLP   Legal practice   Partner
Thomas Keith Todd   KRM22 plc   Technology and software investment   CEO, Chairman
David Rich   Amida Special Opportunity Investments LLC   Private lending and investment   Portofolio manager
Michael Pascutti   N/A        

 

*In addition to the entities set forth above in the list, Mr. Junhui (Jerome) Zhang has invested in various entities and businesses involving private investment. Of some of those entities, because of his investment, he takes the role as a non-executive director, though he does not participate in the daily operation or management of such entities. All those entities are entities holding private investment, none of which is a blank check company looking for target candidate or active in mergers and acquisitions.  As a result, as the date hereof, we consider the risk of potential conflict with respect to those entities and their role in those entities is remote. Notwithstanding the foregoing, there may be possibility that some entities may consider going public through a business combination with a blank check company like us in the future. If we are approached by any of them or considering any of them as our target candidate, we will disclose such potential conflict of interest to our shareholders.

 

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our founders or any affiliate of them, subject to certain approvals and consents. In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.

 

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In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors, have agreed to vote their respective insider shares and private shares in favor of any proposed business combination. In addition, they have agreed to waive their respective rights to participate in any liquidation distribution with respect to those shares of common stock acquired by them prior to this offering. If they purchase shares of common stock in this offering or in the open market, however, they would be entitled to participate in any liquidation distribution in respect of such shares but have agreed not to convert such shares (or sell their shares in any tender offer) in connection with the consummation of our initial business combination or an amendment to our amended and restated certificate of incorporation relating to pre-initial business combination activity.

 

All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.

 

Limitation on Liability and Indemnification of Officers and Directors.

 

Our amended and restated certificate of incorporation will provide that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.

 

We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also will permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.

 

These provisions may discourage stockholders from bringing a lawsuit against our officers and directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.

 

We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

 

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PRINCIPAL STOCKHOLDERS

 

The following table sets forth information regarding the beneficial ownership of the shares of our common stock as of the date of this prospectus and as adjusted to reflect the sale of the shares of our common stock included in the units offered by this prospectus (assuming none of the individuals listed purchase units in this offering), by:

 

  each person known by us to be the beneficial owner of more than 5% of our issued and outstanding shares of common stock;

 

  each of our officers and directors; and

 

  all of our officers and directors as a group.

 

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record of beneficial ownership of any shares of common stock issuable upon conversion of rights as the rights are not convertible within sixty days of the date of this prospectus.

 

On May 21, 2021, JJ Sponsor, one of our sponsors, acquired 2,300,000 shares of Class B common stock for an aggregate purchase price of $20,000. On May 21, 2021, UNIFUTURE, one of our sponsors, acquired 575,000 shares of Class B common stock for an aggregate purchase price of $5,000. On September 23, 2021, JJ Sponsor surrendered 1,150,000 shares of Class B common stock without any consideration and UNIFUTURE surrendered 287,500 shares of Class B common stock without any consideration. As a result, JJ Sponsor acquired 1,150,000 shares of Class B common stock and UNIFUTURE acquired 287,500 shares of Class B common stock. UNIFUTURE has committed to transfer to each four independent director nominee and/or their designees 10,000 founder shares upon the effectiveness of the prospectus and additional 5,000 founder shares upon the consummation of the initial business combination, at the original prices. The following table presents the number of shares and percentage of our common stock owned by our founders before and after this offering. The post-offering numbers and percentages presented assume that the underwriters do not exercise their over-allotment option, that our founders forfeit 187,500 insider shares but purchased 278,696 private units, and that there are 6,553,696 shares of our common stock issued and outstanding after this offering.

 

    Prior to Offering      After Offering(2)  
Name and Address of Beneficial Owner(1)   Amount
and
Nature of
Beneficial
Ownership
    Approximate
Percentage
of
Outstanding
Shares of Common Stock
    Amount and
Nature of
Beneficial
Ownership
    Approximate
Percentage
of
Outstanding
Shares of Common Stock
 
JJ Sponsor (2)     1,150,000       80 %     1,000,000 (6)     15.26  %
UNIFUTURE (3)     287,500       20 %     488,696       7.46  %
Junhui (Jerome) Zhang(2)(4)     1,150,000       80 %     1,000,000  (6)     15.26 %
Shangyong Zhang(3)(5)     287,500       20 %     488,696       7.46 %
Hamish Allan Raw     -       -        -       -  
Bernardino Paganuzzi     -       -       10,000       *  
Michael Pascutti     -       -       10,000       *  
Thomas Keith Todd     -       -       10,000       *  
David Rich     -       -       10,000       *  
All directors and executive officers (7 individuals) as a group     1,437,500       100 %     1,528,696       23.33 %

 

 

* Less than 1%.

 

(1) Unless otherwise indicated, the business address of each of the individuals is c/o JJ Opportunity Corp., 1 Broadway, 14th Floor, Cambridge, MA 02142.

 

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(2)

JJ Sponsor, a Delaware limited liability company, is the record holder of 1,150,000 insider shares reported herein, of which 90% and 10% of its shares is owned by Ninth Eternity Deep Tech Group, a Cayman exempted company incorporated on May 31, 2019, and Ninth Eternity Ventures, a limited liability company incorporated on February 8, 2018 in China, respectively. Through a certain manager operating agreement, the person that has sole voting and investment discretion with respect to the common stock held by one of our sponsors, JJ Sponsor, is Mr. Junhui (Jerome) Zhang, our Chief Executive Officer.

 

(3) UNIFUTURE, a Delaware limited liability company, is the record holder of 287,500 insider shares reported herein. Mr. Shangyong Zhang is the sole member of our sponsor UNIFUTURE, and as such may be deemed to have sole voting and investment discretion with respect to the common stock held by UNIFUTURE, one of our sponsors.

 

Immediately after this offering, our founders will beneficially own approximately 23.33% of the then issued and outstanding shares of our common stock (assuming none of them purchase any units offered by this prospectus). If we increase or decrease the size of the offering, we will effect a stock dividend or a share contribution back to capital, or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our founders at 20% of our issued and outstanding shares of common stock (assuming they do not purchase units in this offering and excluding the private shares and the representative shares) upon the consummation of this offering. Because of this ownership block, our founders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions, including approval of our initial business combination.

 

All of the insider shares issued and outstanding prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company, LLC, as escrow agent, until (1) with respect to 50% of the insider shares, the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a liquidation, merger, share exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares for cash, securities or other property. Up to 187,500 of the insider shares may also be released from escrow earlier than this date for forfeiture and cancellation if the over-allotment option is not exercised in full as described above.

 

During the escrow period, the holders of these shares of common stock will not be able to sell or transfer their securities except (i) for transfers to our officers, directors or their respective affiliates (including for transfers to an entity’s members upon its liquidation), (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities, (vi) by private sales or transfers made in connection with any forward purchase agreements or similar arrangement at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased or (vii) to us for no value for cancellation in connection with the consummation of our initial business combination, in each case (except for clause (vii)) where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate the trust account, none of our founders will receive any portion of the liquidation proceeds with respect to their insider shares.

 

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UNIFUTURE, one of our sponsors has committed to purchase from us an aggregate of 278,696 private units at $10.00 per private unit (for a total purchase price of $2,786,960). These purchases will take place on a private placement basis simultaneously with the consummation of this offering. All of the proceeds we receive from these purchases will be placed in the trust account described below. The private units are identical to the units sold in this offering. Furthermore, our sponsor, UNIFUTURE, has agreed (A) to vote the common stock underlying the private units, or “private shares,” in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated certificate of incorporation that would stop our public stockholders from converting or selling their shares to us in connection with a business combination or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination within 15 months (or up to 24 months if we have extended the period of time as described in this prospectus) from the Effective Date unless we provide dissenting public stockholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any private shares for cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-initial business combination activity and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. The purchasers of the private units have also agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination.

 

In order to meet our working capital needs following the consummation of this offering, our founders, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the notes may be converted upon consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in the holders being issued units to acquire 220,000 shares of Class A common stock which includes 20,000 shares of Class A common stock issuable upon conversion of rights). Our stockholders have approved the issuance of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans will not be repaid.

 

Our sponsors and our executive officers and directors are deemed to be our “promoters,” as that term is defined under the Federal securities laws.

 

Restrictions on Transfers of Insider Shares, Private Units and Representative Shares

 

The insider shares, private units (including working capital units) and any underlying securities are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our founders. Those lock-up provisions provide that such securities are not transferable or salable (i) in the case of the insider shares, 50% of insider shares may not be transferred, assigned or sold until the earlier to occur of: (a) six months after the date of the consummation of our initial business combination, or (b) the date on which the closing price of our Class A common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and the remaining 50% of the insider shares may not be transferred, assigned or sold until six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares for cash, securities or other property, and (ii) in the case of the private units, the units that may be issued upon conversion of working capital loans and the underlying securities, until 30 days after the completion of our initial business combination, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any affiliate of our founders, any members of our founders, or any of their affiliates, officers, directors, direct and indirect equity holders, (b) in the case of an individual, by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation of a business combination at prices no greater than the price at which the securities were originally purchased; (f) in the event of our liquidation prior to the completion of our initial business combination; or (g) by virtue of the laws of Delaware or our founders’ limited liability company agreement upon dissolution of our founders, provided, however, that in the case of clauses (a) through (e), or (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.

 

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We will issue 25,000 representative shares to Maxim (and/or its designees) as part of representative compensation. The representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days beginning on the date of commencement of sales of this offering pursuant to FINRA Rule 5110 (e)(1). Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days beginning on the date of commencement of sales of this offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days beginning on the date of commencement of sales of this offering except to any underwriter and selected dealer participating in the offering and their officers, partners, registered persons or affiliates.

 

Registration Rights

 

The holders of the insider shares, private units, units issuable upon the conversion of certain working capital loans and any underlying securities will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering requiring us to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statements.

 

CERTAIN TRANSACTIONS AND RELATED PARTY TRANSACTIONS

 

On May 3, 2021, JJ Sponsor, one of our sponsors, acquired 2,300,000 shares of Class B common stock for an aggregate purchase price of $20,000. On May 3, 2021, UNIFUTURE, one of our sponsors acquired 575,000 shares of Class B common stock for an aggregate purchase price of $5,000. On September 23, 2021, JJ Sponsor surrendered 1,150,000 shares of Class B common stock without any consideration and UNIFUTURE surrendered 287,500 shares of Class B common stock without any consideration. As a result, JJ Sponsor acquired 1,150,000 shares of Class B common stock and UNIFUTURE acquired 287,500 shares of Class B common stock. In addition UNIFUTURE has committed to transfer to each of four independent director nominees and/or their designees 10,000 founder shares upon the effectiveness of the prospectus and additional 5,000 founder shares upon the consummation of the initial business combination, at the original prices. Prior to the initial investment in the company of $25,000 by our sponsors, the company had no assets, tangible or intangible. The number of insider shares issued was determined based on the expectation that such insider shares would represent approximately 20% of the outstanding shares upon completion of this offering (assuming they do not purchase units in this offering and excluding the private shares and the representative shares). If we increase or decrease the size of the offering, we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our founders at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering (assuming they does not purchase units in this offering and excluding the private shares and the representative shares). Up to 187,500 insider shares are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised. The insider shares (including the Class A common stock issuable upon conversion thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.

 

UNIFUTURE, one of our sponsors, has committed, pursuant to a written agreement, to purchase an aggregate of 278,696 private units (or 301,196 private units if the over-allotment option is exercised in full) for a purchase price of $10.00 per unit in a private placement that will occur simultaneously with the closing of this offering. As such, UNIFUTURE’s interest in this transaction is valued at between $2,786,960 and $3,010,320, depending on the number of private units purchased. Each private unit consists of one share of Class A common stock and one right to receive one-tenth (1/10) of one share of Class A common stock. The private units sold in the private placement including the underlying securities and the working capital units that may be issued upon conversion of working capital loans including underlying securities may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.

 

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In addition, in order to finance transaction costs in connection with an intended initial business combination, our founders or an affiliate of our founders may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $2,000,000 of such loans may be convertible into working capital units at $10.00 per unit at the option of the lender. The working capital units would be identical to the private units sold in the private placement. The terms of such loans by JJ Sponsor, one of our sponsors, or its affiliates, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our founders or an affiliate of our founders as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account, but if we do, we will request such lender to provide a waiver against any and all rights to seek access to funds in our trust account.

 

After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.

 

We will enter into a registration rights agreement with respect to the private units, the working capital units (if any) and their underlying securities and shares of Class A common stock issuable upon the conversion of the insider shares, which is described under the section of this prospectus entitled “Description of Securities — Registration Rights.”

 

Related Party Policy

 

We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy.

 

Prior to the consummation of this offering, we will adopt a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. A form of the code of ethics that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement of which this prospectus is a part.

 

In addition, our audit committee, pursuant to a written charter that we will adopt prior to the consummation of this offering, will be responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. A form of the audit committee charter that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement of which this prospectus is a part. We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

 

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.