Item
1. Business
Introduction
We
are a recently organized blank check company formed pursuant to the laws of the Republic of the Marshall Islands for the purpose
of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization, exchangeable
share transaction or other similar business transaction with one or more operating businesses or assets. We have focused our efforts
on seeking and completing an initial business combination with a company that has an enterprise value of between $250 million
and $500 million, although a target entity with a smaller or larger enterprise value may be considered. While our efforts in identifying
a prospective target business for our initial business combination will not be limited to a particular industry or geographic
region, we are initially focusing our search on identifying a prospective target business in the international energy logistics
industry.
We
have assembled a group of directors, including independent directors, who provide public company governance, executive leadership,
operations oversight, private equity investment management and capital markets experience. Our Board members have extensive experience,
having served as directors, CEO’s or CFO’s, or in other executive and advisory capacities for publicly-listed and
privately-owned companies. Our directors have experience with acquisitions, divestitures and corporate strategy and implementation,
which we believe will continue to be of significant benefit to us as we evaluate potential acquisition or merger candidates as
well as following the completion of our initial business combination.
We
believe that the international energy logistics industry presents attractive opportunities for consolidation and growth and a
favorable area in which to attempt to consummate a business combination. Our executive officers and directors have an aggregate
of over 80 years of experience in the energy logistics industry, as managers, principals or directors of major worldwide maritime
companies, where they have sourced, negotiated and structured transactions in these industries. We intend to leverage the industry
experience of our executive officers, including their contacts and relationships, by focusing our efforts on identifying a prospective
target business in the international energy logistics industry. While the amount of time our executive officers will devote in
any time period will vary based on whether a target business has been selected for the initial business combination and the stage
of the initial business combination process the company is in, we expect Messrs. Tsirigakis and Syllantavos to devote, in the
aggregate, an average of approximately 20 hours per week to our business.
Messrs.
Tsirigakis and Syllantavos, our co-Chief Executive Officers, were founders, officers and directors of two blank check companies
that consummated business combinations, Nautilus Marine and Star Maritime. Nautilus Marine conducted an initial public offering
in June 2011, consummated a business combination in February 2013, was taken private as Nautilus Offshore Services Inc. in October
2013, and in November 2015 was acquired by DryShips, Inc. (Nasdaq:DRYS). Star Maritime conducted an initial public offering in
June 2005, consummated a business combination in November 2007, and trades on the Nasdaq Stock Market as Star Bulk Carriers Corp.
(Nasdaq:SBLK). Messrs. Tsirigakis and Syllantavos played the leading role throughout the business combination transactions for
Nautilus Marine and for Star Maritime, including identifying suitable acquisition candidates including the ultimate targets, and
the consummation of such acquisitions. With respect to the above transactions, past performance by Messrs. Tsirigakis and Syllantavos,
or any other member of our management team, is not a guarantee that we will be able to locate a suitable candidate for our initial
business combination or of success with respect to any business combination we may consummate.
Management
and Board Expertise
Our
executive officers and directors have extensive experience in the logistics side of the energy industry as managers, principals
or directors of companies involved in ocean transportation dealing with companies in the related logistics infrastructure areas
of terminal and port facilities. We intend to leverage the industry experience of our executive officers, including their extensive
contacts, relationships and access to acquisition opportunities, by focusing our efforts on identifying a prospective target business
or businesses in the energy logistics industry and negotiating the terms of such transaction.
Subsequent
to the consummation of a business combination, we believe that the strengths of our management team, particularly their extensive
operations experience in the transportation/logistics field, will be valuable with respect to contributing to the ongoing operations
of any business we may acquire.
Significant
Activities Since Inception
On
August 24, 2016, we consummated our initial public offering of 6,500,000 units. Each unit consists of one share of common stock
and one warrant to purchase one share of common stock at an exercise price of $11.50 per share. The units were sold at an offering
price of $10.00 per unit, generating gross proceeds of $65,000,000. On August 24, 2016, simultaneously with the consummation of
such offering, we completed a private placement of an aggregate of 7,650,000 warrants to our sponsor, generating gross proceeds
of $3,825,000.
The
underwriters exercised their over-allotment option in part and, on September 28, 2016, the underwriters purchased 400,610 units,
which were sold at an offering price of $10.00 per unit, generating gross proceeds of $4,006,100. On September 28, 2016, simultaneously
with the sale of such units, we consummated the private sale of an additional 320,488 private placement warrants to our sponsor,
generating gross proceeds of $160,244. In connection with the partial over-allotment exercise, certain of our initial shareholders
forfeited an aggregate of 166,758 founder shares.
A
total of $70,386,222 of the net proceeds from our initial public offering (including the partial exercise of the over-allotment
option) and the private placements was deposited in a trust account established for the benefit of our public shareholders.
Initial
Business Combination
We
will have until August 24, 2017 to consummate our initial business combination. However, if we anticipate that we may not be able
to consummate our initial business combination by such date, we may extend the period of time to consummate a business combination
up to three times, each by an additional three months (no later than May 24, 2018 to complete a business combination). Pursuant
to the terms of our amended and restated articles of incorporation and the trust agreement entered into between us and Continental
Stock Transfer & Trust Company, in order to extend the time available for us to consummate our initial business combination,
our sponsors or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into
the trust account $402,536 ($0.058 per unit), up to an aggregate of $1,207,607, or $0.175 per unit, on or prior to the date of
the applicable deadline, for each three month extension. In the event that we receive notice from our sponsors 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 sponsors 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 sponsors, decide to extend the period of time to consummate our initial business combinations, such
sponsors (or their affiliates or designees) may deposit the entire $402,536 amount. In the event that interest in the trust is
available for withdrawal for working capital purposes and has not been used to pay taxes or other working capital expenses, we
may apply the accrued interest in the trust account or such withdrawn interest to the sponsors’ obligation to loan us money
in connection with an extension, and the amount that our sponsors would be obligated to loan us in connection with such extension
would be reduced by the amount of interest so applied. If we are unable to consummate our initial business combination within
the applicable time period, we will, as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Marshall Islands law to provide for claims of creditors and the requirements of other applicable
law. In such event, the warrants will be worthless.
NASDAQ
rules provide that our initial business combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable
on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If
our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an
opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA,
or a qualified independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed
on NASDAQ, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if
our securities are not listed on NASDAQ at the time of our initial business combination.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or shareholders 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 shareholders prior to
the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes
of the 80% requirement. If the business combination involves more than one target business, the 80%requirement will be based on
the aggregate value of all of the target businesses. If our securities are not listed on NASDAQ, we would not be required to satisfy
the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the
time of our initial business combination.
We
have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses or asset(s),
although we have initially focused our search in the energy logistics industry. The determination of whether a target company
or assets is attractive for acquisition is based on our analysis of a variety of factors, including whether such acquisition would
be in the best interests of our security holders, the purchase price, the terms of the sale, our perceived quality of the assets,
the financial status or prospects of the company and the likelihood that the transaction will close. We may decide to enter into
our initial business combination with a target business that does not meet certain of these factors or guidelines.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other
things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial
and other information which will be made available to us.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm which is a member of FINRA or a qualified independent accounting firm that our initial business combination is fair to our
company from a financial point of view.
Members
of our management team own common stock and warrants, and, accordingly, may have a conflict of interest in determining whether
a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to another entity pursuant to which such officer or director is required to present a business combination opportunity to such
entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable
for an entity to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or
contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity
rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers
will materially affect our ability to complete our business combination. Our amended and restated articles of incorporation 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 we are
legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Our
executive officers and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of,
or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding
our initial business combination or we have failed to complete our initial business combination by August 24, 2017 (or by May
24, 2018 if we extend the period of time to consummate a business combination).
Our
executive offices are located at 90 Kifissias Avenue, Maroussi 15125, Athens, Greece and our telephone number is +30 210 876-4858.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will find this process a more certain and cost effective method to becoming a public company than the typical initial public offering.
In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts
that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, 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,
which could prevent the offering from occurring. Once public, we believe the target business would then have greater access to
capital and an additional means of providing management incentives consistent with shareholders’ interests. It can offer
further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented
employees.
While
we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential
target businesses may view our status as a blank check company, without an operating history, and the uncertainty relating to
our ability to obtain stockholder approval of our proposed initial business combination and retain sufficient funds in our trust
account in connection therewith, negatively.
We
are currently a “foreign private issuer” as defined in Rule 405, but are voluntarily choosing to register and report
using domestic forms. We are required to determine our status as a FPI for the 2017 fiscal year as of the last day of our second
quarter, or May 31, 2017. On such date, if we no longer qualify as a “foreign private issuer” (as set forth in Rule
3b-4 of the Exchange Act), we will then become subject to the U.S. domestic issuer rules as of the first day of our 2018 fiscal
year, or December 1, 2017. As a result, should we determine on May 31, 2017 that we are no longer a “foreign private issuer,”
after November 30, 2017 we will be subject to the U.S. domestic issuer rules and we will have the option of conducting redemptions
like other blank check companies in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the
tender offer rules. We expect that we will no longer qualify as a “foreign private issuer” as of May 31, 2017.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering,
(b) in which we have total annual gross revenue of at least $1.0 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 May
31
st
(the end of our second fiscal quarter), and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt during the prior three-year period.
Financial
Position
With
funds available for a business combination initially in the amount of $68,661,069 assuming no redemptions and after payment of
$1,725,153 of deferred underwriting fees, we offer a target business a variety of options such as creating a liquidity event for
its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing
its debt ratio. Because we are able to complete our business combination using our cash, debt or equity securities, or a combination
of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration
to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing
and there can be no assurance it will be available to us.
The
Energy Logistics Industry
We
were formed to acquire, through a merger, capital stock exchange, asset acquisition or other similar business combination, one
or more businesses in the international energy logistics industry which we consider as businesses that support the process of
moving energy, in the form of crude oil, natural and liquefied petroleum gas and distilled and specialized products (such as petrochemicals),
from production to final consumption throughout the world. To date, our efforts have been limited to organizational activities.
We
believe that the international energy logistics industry performs indispensable functions in the supply chain of getting energy
from producers to final consumers by moving, storing, distributing petrochemicals or processed petrochemical products. We believe
that the needs for energy in today’s global economy are expanding and present opportunities for consolidation and growth
in the energy logistics industry. Before the marketplace can consume energy, it must be produced, transported, stored, processed
or distilled, transported again and then ultimately distributed. This comprises the largest portion of what is known as the energy
midstream industry which processes, stores, markets and transports commodities such as crude oil, distilled products and petrochemicals,
natural gas, and natural gas liquids. The midstream provides the vital link between the far-flung crude petroleum producing areas
and the population centers where most consumers are located. Additionally, each of these links within the energy chain, particularly
terminalling and transportation, is typically fragmented, which our management believes represents a favorable opportunity to
consummate a business combination with target companies within the three identified sectors listed below. They include businesses
that are part of the following sub-segments of the energy logistics industry:
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Energy Transportation: transportation of crude oil,
gas or refined products by ocean going tanker and gas vessels;
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Terminalling (Storage): terminalling facilities, on
land or at sea, that are used to accumulate, store and distribute various forms of energy and/or petrochemical products; and
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Pipelines: transportation of crude oil, gas or refined
products by pipeline between production areas, refining facilities and storage/distribution terminals.
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We
cannot assure you that we will be able to locate a target business meeting the criteria described above in these segments or that
we will be able to engage in a business combination with a target business on favorable terms.
Maritime
Energy Transportation
The
transportation of crude oil, gas or refined products by ocean going tanker vessels is an important link in the energy chain. Energy
must be transported from producing areas to refineries and then onto locations where consumers reside.
The
world oil tanker fleet is divided into two primary categories, crude oil and product/chemical tankers. As indicated below, crude
oil tankers carry only crude oil and are very large ocean going vessels, whereas product tankers carry only refined products and
are smaller ocean going vessels than crude oil tankers and chemical tankers carry refined products and chemicals. Tanker charterers
of wet cargo will typically charter the appropriate sized tanker based on the length of journey, cargo size and port and canal
restrictions. Crude oil tankers are typically larger than product tankers. The four major tanker categories with reference to
size are:
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Very Large Crude Carriers, or VLCCs. Tanker vessels
that are used to transport crude oil with cargo capacity typically between 200,000 and 320,000 dead weight tons, or dwt, that
are more than 300 meters in length. VLCCs are highly automated and their advanced computer systems allow for a minimal crew. The
majority of the world’s crude oil is transported via VLCCs.
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Suezmax. Tanker vessels with cargo capacity typically
between 120,000 and 200,000 dwt. These vessels are used in some of the fastest growing oil producing regions of the world, including
the Caspian Sea and West Africa. Suezmax tankers are the largest ships able to transit the Suez Canal with a full payload and
are capable of both long and short haul voyages.
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Aframax. Tanker vessels with cargo capacity typically
between 80,000 and 120,000 dwt. These tankers carry crude oil and serve various trade routes from short to medium distances mainly
in the North Sea, the Mediterranean and Venezuela. These vessels are able to enter a larger number of ports throughout the world
as compared to the larger crude oil tankers.
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Product. Tanker vessels with cargo capacity typically
less than 60,000 dwt. Product tankers are capable of carrying refined petroleum products, such as fuel oils, gasoline and jet
fuel, as well as various edible oils, such as vegetable and palm oil.
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Chemical. Specialized tanker vessels with cargo
capacity typically ranging from 5,000 to 40,000 dwt. The cargo tanks of these vessels are either coated with specialized coatings
such as phenolic epoxy or zinc-based paints, or made from stainless steel. The coating or cargo tank material largely determines
what types of cargo a particular tank can carry, with stainless steel tanks being the most resistant to aggressive cargoes such
as sulfuric and phosphoric acid.
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The
world gas tanker fleet is divided into two primary categories, liquid petroleum gas (LPG) vessels and liquefied natural gas (LNG)
vessels. We will focus on the LPG vessels which are divided into the following four major LPG vessel categories with reference
to size:
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Very Large Gas Carriers, or VLGCs. The VLGC vessels
primarily navigate the long routes from the countries in the Middle East region to Asia and from West Africa to the USA and Europe.
The VLGCs primarily carry butane and propane and have a capacity of at least 60,000 m3.
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Large Gas Carriers, or LGCs. The LGC vessels have
a capacity of between 40,000 and 59,999 m3. The principal routes for LGC vessels are from the Black Sea to the USA and from West
Africa to the USA. Most of the LGC fleet is employed for transporting ammonia.
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Medium Gas Carriers, or MGCs. The MGC vessels have
a capacity of at least 20,000 m3 and less than 40,000 m3. The MGCs primarily navigate intra-European routes and in the Gulf of
Mexico, but also operate from the Arabian Gulf to Asia.
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Small Gas Carriers, or SGCs. The SGC vessels have
a capacity of more than 5,000 m3 and less than 20,000 m3. SGCs primarily operate on short distances and often carry olefins.
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Terminalling
(Storage)
Petroleum
terminals are land or sea based facilities that receive, store and re-deliver bulk quantities of crude oil, gasoline and other
light petroleum products via pipelines, sea vessels or trucks. These facilities, which are used to store energy before or after
it is refined and distributed to consumers, are a vital link in the energy chain. We believe there are several areas in the world
where opportunities to locate and identify potential target businesses in terminalling exist. The acquisition of terminals either
close to production or consumption areas creates economies of scale, minimizes transportation costs and enables more efficient
distribution of energy to end users. These factors present attractive opportunities for consolidation and growth in the following:
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areas of great shipping traffic such as Gibraltar, Fujairah
and Singapore, where the demand for bunkering (supplying another vessel with fuel) has increased over the years and we believe
will continue to increase in the future;
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areas with numerous small product streams that are accumulated
for shipment, such as the Black Sea, the Baltic Sea, the Arctic and the Caribbean; and
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areas with poor distribution infrastructure and storage
capacities, including a majority of the world’s emerging and developing markets where the demand for energy has left these
markets behind other industrial regions, such as South America, India and China.
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Pipelines
Industries
in the Pipeline Transportation subsector use transmission pipelines to transport crude oil, natural gas and refined petroleum
products. Pipelines move crude oil from oil fields on land and offshore to refineries where it is turned into fuels and other
products, then from the refineries to terminals where fuels are trucked to retail outlets. Pipelines operate 24 hours a day, seven
days a week. They connect producing areas to refineries and chemical plants while delivering the products consumers and businesses
need, where they need them, when they need them.
Pipelines
are identified based on the products transported (i.e., pipeline transportation of crude oil, natural gas, refined petroleum products,
and other products). According to pipeline operators, in the United States alone, there were 199,243 miles of liquids pipeline
in operation with 66,649 miles devoted to crude oil, 61,681 miles transporting refined petroleum products (gasoline, diesel, jet
fuel, etc.) and 65,595 miles delivering gas liquids (propane, ethane, butane, etc.).
Pipelines
are among the safest, most cost-effective and efficient was to deliver energy liquids and, because most are buried, they are largely
unseen. A barrel of crude oil or petroleum products reaches its destination safely over 99.999% of the time. Delivering crude
oil by pipeline can cost on a per barrel basis as little as half of other modes of transportation. Lower costs applied to the
billions of barrels of crude oil and petroleum products flowing across pipelines makes them the most efficient means of energy
transportation. It is these inherent safety, cost and efficiency characteristics of pipelines that provide an ongoing opportunity
for pipeline growth in the continuous quest to connect supply areas to demand locations.
Government,
Environmental and Other Regulations
Government
regulations and laws will significantly affect the ownership and operation of energy related onshore facilities or vessels. If
we consummate our initial business combination within the international energy logistics industry we may become subject to international
conventions, national, state and local laws and regulations in force in the countries in which any of the onshore facilities,
assets or vessels we acquire may operate or be located or registered and compliance with such laws, regulations and other requirements
may entail significant expense.
We
believe that the heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers
have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout
the industry. Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards.
Effecting
our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate
our initial business combination using cash from the proceeds of our initial public offering and the private placement of the
private placement warrants, our capital stock, debt or a combination of these as the consideration to be paid in our initial business
combination. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our business combination or used for redemptions of purchases of
our common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including
for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
There
is no current basis for investors to evaluate the possible merits or risks of the target business with which we may ultimately
complete our initial business combination. Although our management will assess the risks inherent in a particular target business
with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business
may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce
the chances that those risks will adversely impact a target business.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would complete such
financing only simultaneously with the completion of our business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business
combination would disclose the terms of the financing and, only if required by law, we would seek shareholder approval of such
financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business
combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising
any additional funds through the sale of securities or otherwise.
Origination
and Sourcing of Target Business Opportunities
We
believe our management team’s extensive target sourcing and transaction experience, including in connection with two previous
blank check companies, along with relationships with intermediaries and companies, provides us with a substantial number of potential
business combination targets. Over the course of their careers, the members of our board and management team have developed a
broad network of contacts and corporate relationships around the world. This network has been developed over the course of an
aggregate of over 30 years, in the case of our co-Chief Executive Officers.
We
expect that the management team’s network of existing contacts and relationships will continue to deliver a flow of potential
platform and add-on acquisition opportunities which are proprietary or where a limited group of established, credentialed buyers
have been invited to participate in the sale process. Our officers and directors, as well as their affiliates, 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. In addition, we receive a number of proprietary
deal flow opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships
of our officers and directors
In
addition, target business candidates are brought to our attention from various unaffiliated sources, including investment market
participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These
sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many
of these sources will have read this Report and know what types of businesses we are targeting.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive
officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor, executive
officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with
our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm which is a member of FINRA or a qualified 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.
If
any of our executive officers 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. All of our executive officers
currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. Our
amended and restated certificate of incorporation provides 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 we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue.
Selection
of a target business and structuring of our initial business combination
NASDAQ
rules provide that our initial business combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable
on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. The
fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally
accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is
not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from
independent investment banking firm that is a member of FINRA or a qualified independent accounting firm with respect to the satisfaction
of such criteria. If our securities are not listed on NASDAQ, we would not be required to satisfy the 80% requirement. However,
we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination.
Subject to this requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses, although we are not permitted to effectuate our initial business combination with another blank check company
or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that is owned or acquired by the post-transaction
company is what will be valued for purposes of the 80% requirement. There is no basis for investors to evaluate the possible merits
or risks of any target business with which we may ultimately complete our business combination.
To
the extent we effect our business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we conduct a thorough due diligence review which will encompasses, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial
and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of business diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our business combination with only a single entity,
our lack of diversification may:
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subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our
initial business combination, and
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cause us to depend on the marketing and sale of a single
product or limited number of products or services.
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Limited
ability to evaluate the target’s management team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our business combination with that business, our assessment of the target business’s management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with
any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business
combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that the additional managers will have the
requisite skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
may not have the ability to approve our initial business combination
For
so long as we are deemed to be a foreign private issuer, we will conduct redemptions in accordance with the SEC’s tender
offer rules. However, if we are not a foreign private issuer, we will seek shareholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek shareholder approval for business or other legal reasons. Presented in the table
below is a graphic explanation of the types of initial business combinations we may consider and whether shareholder approval
is currently required under Marshall Islands law for each such transaction.
Type of Transaction
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Whether Shareholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
NASDAQ’s listing rules, shareholder approval would be required for our initial business combination (unless we are deemed
to be a foreign private issuer at such time) if, for example:
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we issue common stock that will be equal to or in excess
of 20% of the number of shares of our common stock then outstanding;
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any of our directors, officers or substantial shareholders
(as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly
or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock
could result in an increase in outstanding shares of common stock or voting power of 5% or more; or
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the issuance or potential issuance of common stock will
result in our undergoing a change of control.
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Permitted
purchases of our securities
In
the event we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares
in privately negotiated transactions or in the open market either prior to or following the completion of our 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 shareholder, although still the record holder of our shares is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy which requires insiders
to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public
information and (ii) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our
insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but
not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases
pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required
to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining shareholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may
not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our 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
sponsor, officers, directors and/or their affiliates anticipate that they may identify the shareholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the shareholders contacting us directly
or by our receipt of redemption requests submitted by shareholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling shareholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers, directors,
advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the
other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the
Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers,
directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act.
Redemption
rights for public shareholders upon completion of our initial business combination
We
will provide our public shareholders with the opportunity to redeem all or a portion of their shares of 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
(which interest shall be net of taxes payable and working capital released to us) 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
$10.20 per public share (subject to increase of up to an additional $0.175 per unit in the event that our sponsors elect to extend
the period of time to consummate a business combination, as described in more detail in this Report). The per-share amount we
will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we
will pay to the underwriters. Our initial shareholders have entered into letter agreements with us, pursuant to which they have
agreed to waive their redemption rights with respect to their founder shares and any public shares they may hold in connection
with the completion of our business combination.
Manner
of Conducting Redemptions
We
will provide our public shareholders with the opportunity to redeem all or a portion of their shares of common stock upon the
completion of our initial business combination either (i) in connection with a shareholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under
the law or stock exchange listing requirement, or whether we will be deemed to be a foreign private issuer (in which case we would
be required to conduct a tender offer under SEC rules rather than seeking shareholder approval). Asset acquisitions and stock
purchases would not typically require shareholder approval while direct mergers with our company where we do not survive and any
transactions where we issue more than 20% of our outstanding common stock (unless we are deemed to be a foreign private issuer
at such time) or seek to amend our amended and restated articles of incorporation would require shareholder approval.
If
a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will,
pursuant to our amended and restated articles of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation
14E of the Exchange Act, which regulate issuer tender offers, and
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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 of the Exchange Act, which regulates the solicitation
of proxies.
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Upon
the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our 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 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 shareholders not
tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on
the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon the consummation of our business combination (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and
not complete the initial business combination.
For
so long as we are deemed to be a foreign private issuer, we will conduct redemptions in accordance with the SEC’s tender
offer rules.
If,
however, shareholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
shareholder approval for business or other legal reasons, we will, pursuant to our amended and restated articles of incorporation:
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conduct the redemptions in conjunction with a proxy
solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to
the tender offer rules, and
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file proxy materials with the SEC.
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In
the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek shareholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. In such case, our initial shareholders have agreed to vote
their founder shares and any public shares purchased during or after our initial public offering in favor of our initial business
combination. As a result, we would need only 2,356,452, or 36.25%, of the 6,900,610 public shares outstanding to be voted in favor
of our initial business combination in order to have such transaction approved (assuming the over-allotment option is not exercised).
Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed
transaction. In addition, our initial shareholders have entered into letter agreements with us, pursuant to which they have agreed
to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a
business combination.
Our
amended and restated articles of incorporation provide that in no event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon the consummation of our business combination (so that we are not
subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher
net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example,
the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be
transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other
conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we
would be required to pay for all shares of 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 common stock submitted for redemption
will be returned to the holders thereof.
Limitation
on redemption upon completion of our initial business combination if we seek shareholder approval
Notwithstanding
the foregoing, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, our amended and restated articles of incorporation provide that
a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to Excess Shares. We believe this restriction will discourage shareholders from accumulating large blocks
of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
business combination as a means to force us or our 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 shareholder holding more than an aggregate of 26%
of the public shares 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 shareholders’ ability to redeem no more than 26% of the public shares, we believe we will limit the ability
of a small group of shareholders 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, we would not be restricting our shareholders’ ability to vote all of their shares
(including Excess Shares) for or against our business combination.
Tendering
stock certificates in connection with a tender offer or redemption rights
We
may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents or proxy materials 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 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 shareholders to satisfy such delivery requirements.
Accordingly, a public shareholder would have from the time we send out our tender offer materials until the close of the tender
offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable,
to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is
advisable for shareholders 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 $35.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the shareholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such shareholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the shareholder 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 shareholders were aware they needed to commit before the shareholder 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 shareholder 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 shareholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until August 24, 2017 (or by May 24, 2018 if we extend the period of time to consummate a business combination, as described
in more detail in this Report).
Ability
to Extend Time to Complete Business Combination
If
we anticipate that we may not be able to consummate our initial business combination by August 24, 2017, we may extend the period
of time to consummate a business combination up to three times, each by an additional three months (no later than May 24, 2018).
Pursuant to the terms of our amended and restated articles of incorporation and the trust agreement entered into between us and
Continental Stock Transfer & Trust Company, in order to extend the time available for us to consummate our initial business
combination, our sponsors or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must
deposit into the trust account $402,536 ($0.058 per unit), up to an aggregate of $1,207,607, or $0.175 per unit, on or prior
to the date of the applicable deadline, for each three month extension. In the event that we receive notice from our sponsors
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 sponsors 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 sponsors, decide to extend the period of time to consummate our initial business combinations,
such sponsors (or their affiliates or designees) may deposit the entire $402,536 amount. In the event that interest in the trust
is available for withdrawal for working capital purposes and has not been used to pay taxes or other working capital expenses,
we may apply the accrued interest in the trust account or such withdrawn interest to the sponsors’ obligation to loan us
money in connection with an extension, and the amount that our sponsors would be obligated to loan us in connection with such
extension would be reduced by the amount of interest so applied.
Redemption
of public shares and liquidation if no initial business combination
Our
executive officers and directors have agreed that we will have only until August 24, 2017 (or by May 24, 2018 if we extend the
period of time to consummate a business combination, as described in more detail in this Report), to complete our initial business
combination. If we are unable to complete our initial business combination within the applicable 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 (less up to $50,000 of interest to pay dissolution expenses (which interest shall be net
of taxes payable and working capital released to us) divided by the number of then outstanding public shares, which redemption
will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Marshall Islands law to provide for claims of creditors and the requirements of other applicable law. There
will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail
to complete our business combination within the applicable time period.
Our
initial shareholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination
by August 24, 2017 (or by May 24, 2018 if we extend the period of time to consummate a business combination, as described in more
detail in this Report). However, if our initial shareholders acquire public shares, 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 applicable
time period.
Our
executive officers and directors have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment
to our amended and restated articles of incorporation that would affect the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination by August 24, 2017 (or by May 24, 2018 if we extend
the period of time to consummate a business combination, as described in more detail in this Report), unless we provide our public
shareholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall
be net of taxes payable and working capital released to us) divided by the number of then outstanding public shares. However,
we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the
consummation of our business combination (so that we are not subject to the SEC’s “penny stock” rules). Prior
to acquiring any securities from our initial shareholders, permitted transferees must enter into a written agreement with us agreeing
to be bound by the same restriction.
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 $491,000 of proceeds held outside the trust account (as of November
30, 2016), 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 and not released to us to fund working capital expenses, 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.
If
we were to expend all of the net proceeds of our initial public offering, other than the proceeds deposited in the trust account,
and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders
upon our dissolution would be approximately $10.20 (or such higher amount then held in trust). The proceeds deposited in the trust
account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our
public shareholders. We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially
less than $10.20 (or such higher amount then held in trust). These claims must be paid or provided for before we make any distribution
of our remaining assets to our shareholders. 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 seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the
benefit of our public shareholders, 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. In order to protect the amounts held in the trust account, Messrs.
Tsirigakis and Syllantavos have agreed that they will be jointly liable to us if and to the extent any claims by a vendor for
services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (i) $10.20 per public share (or such higher amount then held
in trust) 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 other than due to the failure to obtain such waiver, in each case net
of the amount of interest which may be withdrawn to pay taxes or working capital expenses, except as to any claims by a third
party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
In the event that an executed waiver is deemed to be unenforceable against a third party, then Messrs. Tsirigakis and Syllantavos
will not be responsible to the extent of any liability for such third-party claims. We cannot assure you, however, that Messrs.
Tsirigakis and Syllantavos would be able to satisfy those obligations. None of our other officers will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.20 per public share (or such higher amount then held
in trust) 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 other than due to the failure to obtain such waiver, in each case net
of the amount of interest which may be withdrawn to pay taxes or working capital expenses, and Messrs. Tsirigakis and Syllantavos
assert that they are unable to satisfy their indemnification obligations or that they have no indemnification obligations related
to a particular claim, our independent directors would determine whether to take legal action against Messrs. Tsirigakis and Syllantavos
to enforce their indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against Messrs. Tsirigakis and Syllantavos to enforce their indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially
less than $10.20 per share (or such higher amount then held in trust).
We
will seek to reduce the possibility that Messrs. Tsirigakis and Syllantavos 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. Messrs. Tsirigakis and Syllantavos will also not be liable as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. We will have access
to up to approximately $491,000 from the proceeds of our initial public offering (as of November 30, 2016) with which to pay any
such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no
more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the reserve for claims
and liabilities is insufficient, shareholders who received funds from our trust account could be liable for claims made by creditors.
Under
the BCA, shareholders 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 shareholders upon the redemption
of our public shares in the event we do not complete our initial business combination by August 24, 2017 (or by May 24, 2018 if
we extend the period of time to consummate a business combination, as described in more detail in this Report), may be considered
a liquidation distribution under Marshall Islands law. If a corporation complies with certain procedures set forth in Section
105 of the BCA intended to ensure that it makes reasonable provision for all claims against it, including a period of between
six months and three years (which may be extended under certain circumstances) during which third party claims can be brought
against the corporation before any liquidating distributions are made to shareholders, any liability of shareholders with respect
to a liquidating distribution is limited to the lesser of such shareholder’s pro rata share of the claim or the amount distributed
to the shareholder, and any liability of the shareholder 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 May 24, 2018 in the event we do not complete
our business combination and, therefore, we do not intend to comply with those procedures.
Furthermore,
if the pro rata portion of our trust account distributed to our public shareholders upon the redemption of our public shares in
the event we do not complete our business combination by August 24, 2017 (or by May 24, 2018 if we extend the period of time to
consummate a business combination, as described in more detail in this Report), is not considered a liquidation distribution under
Marshall Islands law and such redemption distribution is deemed to be unlawful, then pursuant to Section 100 of the BCA, the statute
of limitations for claims of creditors could then be three years (which may be extended under certain circumstances) after the
unlawful redemption distribution. If we are unable to complete our business combination by August 24, 2017 (or by May 24, 2018
if we extend the period of time to consummate a business combination, as described in more detail in this Report), 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 (net of the amount of interest which may be withdrawn to pay taxes or working capital
expenses and 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 shareholders’ rights as shareholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Marshall Islands 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 May 24, 2018, and,
therefore, we do not intend to comply with those procedures. As such, our shareholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our shareholders may extend well beyond the
third anniversary of such date.
Because
we will not be complying with Section 106 of the BCA with respect to giving published notice to third party claimants or creditors,
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 three years (which may be extended under certain circumstances) 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. 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.
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 shareholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.20 per share (or such higher amount then held in trust) to our
public shareholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover all amounts received by our shareholders. Furthermore, our board may be viewed as having breached its fiduciary
duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages,
by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims
will not be brought against us for these reasons.
Our
public shareholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not complete our business combination by August 24, 2017 (or by May 24, 2018 if we extend the period of time to
consummate a business combination, as described in more detail in this Report), (ii) in connection with a shareholder vote to
amend our amended and restated articles of incorporation 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 by August 24, 2017 (or by May 24, 2018 if we extend the
period of time to consummate a business combination, as described in more detail in this Report), or (iii) if they redeem their
respective shares for cash upon the completion of the initial business combination. In no other circumstances will a shareholder
have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with
our initial business combination, a shareholder’s voting in connection with the business combination alone will not result
in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must
have also exercised its redemption rights described above.
Amended
and Restated Articles of Incorporation
Our
amended and restated articles of incorporation contain certain requirements and restrictions that apply to us until the consummation
of our initial business combination. If we seek to amend any provisions of our amended and restated articles of incorporation
relating to shareholders’ rights or pre-business combination activity, we will provide public shareholders with the opportunity
to redeem their public shares in connection with any such vote. Our initial shareholders have agreed to waive any redemption rights
with respect to their founder shares and public shares in connection with the completion of our initial business combination.
Specifically, our amended and restated articles of incorporation provide, among other things, that:
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prior to the consummation of our initial business combination,
we shall either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which
shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall
be net of taxes payable and working capital released to us) or (2) provide our shareholders with the opportunity to tender their
shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata
share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable
and working capital released to us) in each case subject to the limitations described herein;
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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 shareholder approval,
a majority of the outstanding shares of common stock voted are voted in favor of the business combination;
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if our initial business combination is not consummated
by August 24, 2017 (or by May 24, 2018 if we extend the period of time to consummate a business combination, as described in more
detail in this Report), then our existence will terminate and we will distribute all amounts in the trust account; and
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prior to our initial business combination, we may not
issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or
(ii) vote on any initial business combination.
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These
provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek shareholder approval
in connection with our initial business combination, our amended and restated articles of incorporation provide that we may consummate
our initial business combination only if approved by a majority of the shares of common stock voted by our shareholders at a duly
held shareholders meeting.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we encounter intense competition from other
entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. 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 shareholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have two executive officers. Members of our management team are not obligated to devote any specific number of hours
to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our
initial business combination. The amount of time that Messrs. Tsirigakis and Syllantavos or any other members of our management
devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the current stage of the business combination process, but we expect that they will devote approximately 20 hours a week on
average to our affairs.
Periodic
Reporting and Financial Information
We
registered our units, common stock and warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our
annual reports contain financial statements audited and reported on by our independent registered public auditors.
We
will provide shareholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to shareholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with GAAP, however, they may alternatively be prepared in accordance
with International Financial Reporting Standards (IFRS). We cannot assure you that any particular target business identified by
us as a potential acquisition candidate will have financial statements prepared in accordance with either GAAP or IFRS or that
the potential target business will be able to prepare its financial statements in accordance with either GAAP or IFRS. To the
extent that this requirement cannot be met, we may not be able to acquire the proposed target business. While this may limit the
pool of potential acquisition candidates, we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending November 30, 2017 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal
control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We are an “emerging growth company,” as defined in
Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a non-binding advisory vote on executive compensation and 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 our initial public offering, (b)
in which we have total annual gross revenue of at least $1.0 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 May
31
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, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year
period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Item
1a. Risk Factors
You
should carefully consider all of the following risk factors and all the other information contained in this Report, including
the financial statements. If any of the following risks occur, our business, financial condition or results of operations may
be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose all
or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform
your own investigation with respect to us and our business.
We
are a recently formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective.
We
are a recently formed company with no operating results. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We may be unable to complete our business combination. If we fail to complete our business combination, we will never
generate any operating revenues.
Our
public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even if a majority of our public shareholders do not support such a combination.
We
may not hold a shareholder vote to approve our initial business combination unless the business combination would require shareholder
approval under the laws of the Republic of Marshall Islands or NASDAQ rules or if we decide to hold a shareholder vote for business
or other reasons. For instance, NASDAQ rules currently allow us to engage in a tender offer in lieu of a shareholder meeting but
would still require us to obtain shareholder approval if we were not a foreign private issuer and were seeking to issue more than
20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring
a business combination that required us to issue more than 20% of our outstanding shares and we were not a foreign private issuer,
we would seek shareholder approval of such business combination. However, except as required by law or NASDAQ rules, the decision
as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares
to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing
of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval, or whether
we will be deemed to be a foreign private issuer (in which case we would be required to conduct a tender offer under SEC rules
rather than seeking shareholder approval). Accordingly, we may consummate our initial business combination even if holders of
a majority of the outstanding shares of our common stock do not approve of the business combination we consummate.
If we seek shareholder approval of our initial business
combination, after approval of our board, our initial shareholders have agreed to vote in favor of such initial business combination,
regardless of how our public shareholders vote.
Unlike
other blank check companies in which the initial shareholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public shareholders in connection with an initial business combination, after approval of our board,
our initial shareholders have agreed to vote their founder shares, as well as any public shares purchased during or after our
initial public offering, in favor of our initial business combination. Our initial shareholders own 22.2% of our outstanding shares
of common stock as of the date hereof. As a result, we would need only 2,356,452 or 36.25% of the 6,900,610 public shares to be
voted in favor of our initial business combination in order to have such transaction approved. Accordingly, if we seek shareholder
approval of our initial business combination, it is more likely that the necessary shareholder approval will be received than
would be the case if our initial shareholders agreed to vote their founder shares in accordance with the majority of the votes
cast by our public shareholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
At
the time of your investment in us, you may not be provided with an opportunity to evaluate the specific merits or risks of one
or more target businesses. Since our board of directors may complete a business combination without seeking shareholder approval
(unless shareholder approval is required by law or stock exchange listing requirement, or we decide to obtain shareholder approval
for business or other legal reasons), public shareholders may not have the right or opportunity to vote on the business combination,
unless we seek such shareholder vote. Accordingly, your only opportunity to affect the investment decision regarding a potential
business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20
business days) set forth in our tender offer documents mailed to our public shareholders in which we describe our initial business
combination.
The
ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon the consummation of our business combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 upon the consummation of our business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The
ability of our shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the trust
account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion
of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number
of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater
portion of the cash in the trust account or arrange for third party financing. Third party financing may not be available to us.
Furthermore, raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness
at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination
available to us or optimize our capital structure.
If
our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate
the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however,
at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you
may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we
liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination
on terms that would produce value for our shareholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination by August 24, 2017 (or by May 24, 2018 if we fully extend the period of time to consummate a
business combination). Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing
that if we do not complete our initial business combination with that particular target business, we may be unable to complete
our initial business combination with any target business. This risk will increase as we get closer to the time frame described
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.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate.
Our
executive officers and directors have agreed that we must complete our initial business combination by August 24, 2017 (or by
May 24, 2018 if we fully extend the period of time to consummate a business combination). We may not be able to find a suitable
target business and complete our initial business combination by such date. If we have not completed 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 (which interest shall be net of taxes payable
and working capital released to us, and 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 shareholders’ rights as shareholders
(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Marshall Islands law to provide for claims of creditors
and the requirements of other applicable law.
Our
sponsors may decide not to extend the term we have to consummate our initial business combination, in which case we would cease
all operations except for the purpose of winding up and we would redeem our public shares and liquidate, and the warrants will
be worthless.
We
will have until August 24, 2017 to consummate our initial business combination. However, if we anticipate that we may not be able
to consummate our initial business combination by such date, we may extend the period of time to consummate a business combination
up to three times, each by an additional three months (for a total of up to 21 months, or by May 24, 2018, to complete a business
combination). In order to extend the time available for us to consummate our initial business combination, our sponsors or their
affiliates or designees must deposit into the trust account $402,536 ($0.058 per unit), up to an aggregate of $1,207,607, or $0.175
per unit, prior to the applicable deadline for each three month extension. Any such payments would be made in the form of a loan.
The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. Consequently, such
loans might not be made on the terms described herein. The letter agreement with our initial shareholders contains a provision
pursuant to which our sponsors have agreed to waive their right to be repaid for such loans out of the funds held in the trust
account (except from any interest that we are permitted to withdraw as described herein) in the event that we do not consummate
a business combination. However, we may repay such loans from funds held outside of the trust account from interest permitted
to be withdrawn. In the event that interest in the trust is available for withdrawal for working capital purposes and has not
been used to pay taxes or other working capital expenses, we may apply the accrued interest in the trust account or such withdrawn
interest to the sponsors’ obligation to loan us money in connection with an extension, and the amount that our sponsors
would be obligated to loan us in connection with such extension would be reduced by the amount of interest so applied. Our sponsors
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. If we are unable to consummate our initial business combination within the applicable time period, we will,
as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion
of the funds held in the trust account and as promptly as reasonably possible following such redemption, subject to the approval
of our remaining shareholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under
Marshall Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the warrants
will be worthless.
If
we seek shareholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their
affiliates may elect to purchase shares from public shareholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our common stock.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase
shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such
shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not
to exercise its redemption rights. In the event that our sponsor, directors, executive officers, advisors or their affiliates
purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption
rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such
purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder
approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our common stock and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of our securities
on a national securities exchange.
If
a public shareholder fails to receive notice of our offer to redeem our public shares in connection with our business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a public shareholder fails to receive our tender offer or proxy materials,
as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
In the event that a public shareholder fails to comply with these procedures, its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of our common stock that such shareholder properly
elected to redeem, subject to the limitations described herein, and (ii) the redemption of our public shares if we are unable
to complete an initial business combination by August 24, 2017 (or by May 24, 2018 if we fully extend the period of time to consummate
a business combination), subject to applicable law and as further described herein. In addition, if our plan to redeem our public
shares if we are unable to complete an initial business combination by August 24, 2017 (or by May 24, 2018 if we fully extend
the period of time to consummate a business combination) is not completed for any reason, compliance with Marshall Islands law
may require that we submit a plan of dissolution to our then-existing shareholders for approval prior to the distribution of the
proceeds held in our trust account. In that case, public shareholders may be forced to wait beyond August 24, 2017 (or May 24,
2018 if we fully extend the period of time to consummate a business combination) before they receive funds from our trust account.
In no other circumstances will a public shareholder have any right or interest of any kind in the trust account. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete
an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000, we are
exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors
will not be afforded the benefits or protections of those rules. Among other things, this means that we will have a longer period
of time to complete our business combination than do companies subject to Rule 419. Moreover, if our initial public offering were
subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless
and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of shareholders are deemed to hold in excess of 26% of our common stock, you will lose
the ability to redeem all such shares in excess of 26% of our common stock.
If
we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated articles of incorporation provide that a public
shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights
with respect to more than an aggregate of 26% of the shares sold in our initial public offering, which we refer to as the “Excess
Shares.” However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess
Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our
ability to complete our business combination and you could suffer a material loss on your investment in us if you sell Excess
Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares
if we complete our business combination. And as a result, you will continue to hold that number of shares exceeding 26% and, in
order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public shareholders
may receive only approximately $10.20 per share (or such higher amount then held in trust), on our redemption, and our warrants
will expire worthless.
We
have encountered, and will continue to encounter, intense competition from other entities having a business objective similar
to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other
entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and
entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions
of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human
and other resources or more local industry knowledge than we do and our financial resources are relatively limited when contrasted
with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with
the net proceeds of our initial public offering and the sale of the private placement warrants, our ability to compete with respect
to the acquisition of certain target businesses that are sizable is limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if we
are obligated to pay cash for the shares of common stock redeemed and, in the event we seek shareholder approval of our business
combination, we make purchases of our common stock, potentially reducing the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.20 per
share (or such higher amount then held in trust) on the liquidation of our trust account and our warrants will expire worthless.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient to allow us to operate until
August 24, 2017 (or by May 24, 2018 if we fully extend the period of time to consummate a business combination), we may be unable
to complete our initial business combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until August 24, 2017 (or until
May 24, 2018 if we fully extend the period of time to consummate a business combination), assuming that our initial business combination
is not completed during that time. We believe that, as of November 30, 2016, the funds available to us outside of the trust account
($491,000), are sufficient to allow us to operate until August 24, 2017 (or until May 24, 2018 if we fully extend the period of
time to consummate a business combination); however, we cannot assure you that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target
business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies
on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do
not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise),
we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If
we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.20 per
share (or such higher amount then held in trust) on the liquidation of our trust account and our warrants will expire worthless.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient, it could limit the amount
available to fund our search for a target business or businesses and complete our initial business combination and we will depend
on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our business combination.
Of
the net proceeds of our initial public offering, only approximately $491,000 as of November 30, 2016 are available to us outside
the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow
funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor,
members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion
of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public shareholders
may only receive approximately $10.20 per share (or such higher amount then held in trust) on our redemption of our public shares,
and our warrants will expire worthless.
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Although these charges may be non-cash items and would not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly,
any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of
their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy
statement relating to the business combination contained an actionable material misstatement or material omission.
Shareholders
may be liable for claims of third party creditors to the extent you receive distributions in a dissolution.
Under
Republic of the Marshall Islands law, shareholders might, in certain circumstances, be held liable for claims by third parties
against a corporation to the extent of distributions received by them in a dissolution. If we complied with the procedures set
forth in Section 106 of the BCA, which are intended to ensure that we make reasonable provision for all claims against us, including
a six month notice period during which any third-party claims can be brought against us before any liquidating distributions are
made to shareholders, any liability of a shareholder with respect to a liquidating distribution should be limited to the lesser
of such shareholder’s pro rata share of the claim or the amount distributed to the shareholder, and any liability of the
shareholder should be barred after the period set forth in such notice. However, it is our intention to make liquidating distributions
to our shareholders as soon as reasonably possible after dissolution. As such, our shareholders could potentially be liable for
any claims to the extent of distributions received by them in a dissolution and any such liability of our shareholders will likely
extend beyond the third anniversary of such dissolution or the settlement of claims, litigation or proceedings begun prior to
or during the three year period. Accordingly, third parties may seek to recover from our shareholders amounts owed to them by
us.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by shareholders may be less than $10.20 per share (or such higher amount then held in trust).
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we seek to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with
us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our
public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented
from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed
time frame, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the three years (which may be extended
under certain circumstances) following redemption. Accordingly, the per-share redemption amount received by public shareholders
could be less than the $10.20 per share initially held in the trust account (or such higher amount then held in trust), due to
claims of such creditors. Messrs. Tsirigakis and Syllantavos have agreed that they will be jointly liable to us if and to the
extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have
discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.20 per public
share (or such higher amount then held in trust) or (ii) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay taxes or working capital expenses, except as to any claims by a third party who executed a waiver
of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event
that an executed waiver is deemed to be unenforceable against a third party, Messrs. Tsirigakis and Syllantavos will not be responsible
to the extent of any liability for such third party claims. We have not independently verified whether Mr. Tsirigakis or Mr. Syllantavos
has sufficient funds to satisfy their indemnity obligations and, therefore, Messrs. Tsirigakis and Syllantavos may not be able
to satisfy those obligations. We have not asked Mr. Tsirigakis or Mr. Syllantavos to reserve for such eventuality. We believe
the likelihood of Messrs. Tsirigakis and Syllantavos having to indemnify the trust account is limited because we will endeavor
to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right,
title, interest or claim of any kind in or to monies held in the trust account.
Our
directors may decide not to enforce the indemnification obligations of Messrs. Tsirigakis and Syllantavos, resulting in a reduction
in the amount of funds in the trust account available for distribution to our public shareholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.20 per share (or such higher amount then
held in trust) or (ii) other than due to the failure to obtain such waiver such lesser amount per share held in the trust account
as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of
the interest which may be withdrawn to pay taxes or working capital expenses, and Messrs. Tsirigakis and Syllantavos assert that
they are unable to satisfy their obligations or that they have no indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action against Messrs. Tsirigakis and Syllantavos to enforce their
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
Messrs. Tsirigakis and Syllantavos to enforce their indemnification obligations to us, it is possible that our independent directors
in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose
not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public
shareholders may be reduced below $10.20 per share (or such higher amount then held in trust).
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our shareholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our shareholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments, and
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restrictions on the issuance of securities,
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each
of which may make it difficult for us to complete our business combination.
In
addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure;
and
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reporting, record keeping, voting, proxy and disclosure
requirements and other rules and regulations.
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We
do not believe that our principal activities subject us to the Investment Company Act. The proceeds held in the trust account
may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money
market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment
Company Act. Because the investment of the proceeds are restricted to these instruments, we believe we meet the requirements for
the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination,
our public shareholders may receive only approximately $10.20 per share (or such higher amount then held in trust) on the liquidation
of our trust account and our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and
results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time
and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a
failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our
business and results of operations.
We
may not hold an annual meeting of shareholders until after our consummation of a business combination.
Unless
otherwise required by law or the Nasdaq Capital Market, or we decide for other business or legal reasons, we do not currently
intend to hold an annual meeting of shareholders until after we consummate our initial business combination. The applicable laws
of the Marshall Islands do not require companies to hold a meeting of shareholders every year. In accordance with the Nasdaq Capital
Market rules, a newly listed company not previously subject to a requirement to hold an annual meeting is required to hold its
first annual meeting within one year after its first fiscal year-end following listing, unless such company is a foreign private
issuer. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to elect directors
and to discuss company affairs with management.
Also,
because do not currently intend to hold an annual meeting of shareholders until after we consummate a business combination, we
may not be in compliance with Section 64 of the BCA. Therefore, if our shareholders want us to hold an annual meeting prior to
our consummation of a business combination, they may attempt to force us to hold one by the holders of not less than 10% of the
shares entitled to vote in an election of directors may, in writing, demand the call of a special meeting specifying the time
thereof, which shall not be less than two (2) nor more than three (3) months from the date of such call in accordance with Section
64(3) of the BCA.
We
have not registered the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such
investor from being able to exercise its warrants and causing such warrants to expire worthless.
We
have not registered the shares of common stock issuable upon exercise of the warrants issued in our initial public offering under
the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed,
as soon as practicable, but in no event later than thirty (30) days after the closing of our initial business combination, to
use our best efforts to file a registration statement under the Securities Act covering such shares and no later than ninety (90)
days after the closing of our initial business combination to have a current prospectus relating to the common stock issuable
upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change
in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by
reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants
issued in our initial public offering are not registered under the Securities Act, we will be required to permit holders to exercise
their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be
obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise
is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available.
Notwithstanding the above, if our common stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement or register or qualify the shares under blue sky laws, and in the event we do not so elect,
we will use our best efforts to register or qualify the shares under the blue sky laws of the state of residence in those states
in which the warrants were initially offered by us in our initial public offering. In no event will we be required to net cash
settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to
register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance
of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the
holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may exercise
our redemption right even if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration
or qualification under applicable state blue sky laws and we are unable to effect such registration or qualification, subject
to our obligation in such case to use our best efforts to register or qualify the shares of common stock under the blue sky laws
of the state of residence in those states in which the warrants were initially offered by us in our initial public offering.
The
grant of registration rights to our initial shareholders and holders of our private placement warrants may make it more difficult
to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of
our common stock.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
shareholders and their permitted transferees can demand that we register the founder shares, holders of our private placement
warrants and their permitted transferees can demand that we register the private placement warrants and the shares of common stock
issuable upon exercise of the private placement warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of our 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 shareholders of the target business may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common
stock that is expected when the securities owned by our initial shareholders, holders of our private placement warrants or their
respective permitted transferees are registered.
Because
we are not limited to a particular industry or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’s operations.
We
seek to complete a business combination with an operating company in the international energy logistics industry, but may also
pursue acquisition opportunities in other industries, except that we will not, under our amended and restated articles of incorporation,
be permitted to effectuate our business combination with another blank check company or similar company with nominal operations.
Because we have not yet entered into a definitive agreement with any specific target business with respect to a business combination,
there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations,
cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination, we may be affected
by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable
business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or an early stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the
significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a
target business. We also cannot assure you that an investment in our shares will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a potential business combination target. Accordingly, any shareholders
who choose to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such
shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able
to successfully bring a private claim under securities laws that the tender offer or proxy statement materials relating to the
business combination contained an actionable material misstatement or material omission.
We
may seek investment opportunities in industries outside of the international energy logistics industry (which industries may or
may not be outside of our management’s area of expertise).
Although
we are focused on identifying business combination candidates in the international energy logistics industry, and we are not initially
actively seeking to identify business combination candidates in other industries (which industries may be outside our management’s
area of expertise), we will consider a business combination outside of such sectors if a business combination candidate is presented
to us and we determine that such candidate offers an attractive investment opportunity for our company or we are unable to identify
a suitable candidate in such sectors after having expended a reasonable amount of time and effort in an attempt to do so. Although
our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure
you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment
in our securities will not ultimately prove to be less favorable to investors in our company than a direct investment, if an opportunity
were available, in a business combination candidate.
In
the event we elect to pursue an investment outside of the international energy logistics industry, our management’s expertise
may not be directly applicable to its evaluation or operation, and the information contained herein regarding the energy logistics
industry would not be relevant to an understanding of the business that we elect to acquire.
Although
we have identified general guidelines that we believe are important in evaluating prospective target businesses, we may enter
into our initial business combination with a target that does not meet such guidelines, and as a result, the target business with
which we enter into our initial business combination may not have attributes entirely consistent with our general guidelines.
Although
we have identified general guidelines for evaluating prospective target businesses, it is possible that a target business with
which we enter into our initial business combination will not have all of these guidelines. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general guidelines. In addition, if we announce a prospective business combination with
a target that does not meet our general guidelines, a greater number of shareholders may exercise their redemption rights, which
may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth
or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide to obtain
shareholder approval for business or other legal reasons, it may be more difficult for us to obtain shareholder approval of our
initial business combination if the target business does not meet our general guidelines. If we are unable to complete our initial
business combination, our public shareholders may receive only approximately $10.20 per share (or such higher amount then held
in trust) on the liquidation of our trust account and our warrants will expire worthless.
We
may seek investment opportunities with a financially unstable business or an entity lacking an established record of revenue or
earnings.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers
and directors endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain
or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking or accounting firm, and consequently, you may have
no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking or accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is
obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based
on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents
or proxy solicitation materials, as applicable, related to our initial business combination.
We
may issue additional common or preferred shares to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination, any one of which would dilute the interest of our shareholders and likely
present other risks.
Our
amended and restated articles of incorporation authorizes the issuance of up to 200,000,000 shares of common stock, par value
$0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. There are currently 175,858,725 authorized
but unissued shares of common stock available for issuance, which amount takes into account shares reserved for issuance upon
exercise of outstanding warrants and the underwriter’s unit purchase option. There are currently no shares of preferred
stock issued and outstanding. We may issue a substantial number of additional shares of common or preferred stock to complete
our initial business combination or under an employee incentive plan after completion of our initial business combination. However
our amended and restated articles of incorporation provide, among other things, that prior to our initial business combination,
we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust
account or (ii) vote on any initial business combination. These provisions of our amended and restated articles of incorporation,
like all provisions of our amended and restated articles of incorporation, may be amended with a shareholder vote. Our executive
officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended
and restated articles of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination by August 24, 2017 (or by May 24, 2018 if we fully extend the period
of time to consummate a business combination), unless we provide our public shareholders with the opportunity to redeem their
shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital released
to us), divided by the number of then outstanding public shares. The issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of existing
investors;
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may subordinate the rights of holders of common stock
if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial number
of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if
any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our
units, common stock and/or warrants.
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Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
shareholders may receive only approximately $10.20 per share (or such higher amount then held in trust) on the liquidation of
our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
shareholders may receive only approximately $10.20 per share (or such higher amount then held in trust) on the liquidation of
our trust account and our warrants will expire worthless.
We
are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed
our business combination. In addition, our executive officers and directors are not required to commit any specified amount of
time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities,
including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of
one or more of our directors or executive officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with
the target business in senior management or advisory positions following our business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after our business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These
individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have
to expend time and resources helping them become familiar with such requirements and take time away from oversight of our operations.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our business combination and as a result,
may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business. However, we believe the ability of such individuals to remain with us after the completion of our business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination
as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of
their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the tender offer or proxy statement
materials relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure
of a potential business combination target’s key personnel could negatively impact the operations and profitability of our
post-combination business. The role of an acquisition candidates’ key personnel upon the completion of our initial business
combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place.
Our
executive officers and directors allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in
a conflict of interest in allocating their time between our operations and our search for a business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our business combination. Each of our
executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation and
our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors
also serve as officers and board members for other entities. If our executive officers’ and directors’ other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination.
Certain
of our executive officers and directors are now, and all of them may in the future become, affiliated with entities engaged in
business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining
to which entity a particular business opportunity should be presented to our company or to another entity.
Until
we consummate our initial business combination, we will continue to engage in the business of identifying and combining with one
or more businesses. Our executive officers and directors are, or may in the future become, affiliated with entities 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 to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in
determining whether a particular business opportunity should be presented to our company or to another entity. 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 articles of incorporation 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 we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue.
Members
of our management team directly or indirectly own common stock and warrants, and, accordingly, may have a conflict of interest
in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination
if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our executive officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsors, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with our sponsors, executive officers and directors. Our directors also serve as officers and board
members for other entities. Such entities may compete with us for business combination opportunities. Although we are not specifically
focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that
such affiliated entity met our criteria for a business combination and such transaction was approved by a majority of our disinterested
directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our
company from a financial point of view of a business combination with one or more domestic or international businesses affiliated
with our executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result,
the terms of the business combination may not be as advantageous to our public shareholders as they would be absent any conflicts
of interest.
Since
our initial shareholders, executive officers and directors will lose their entire investment in us if our business combination
is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate
for our initial business combination.
Our
initial shareholders currently own 2,003,403 shares of common stock (initially purchased by Messrs. Tsirigakis and Syllantavos
in January 2016 for an aggregate of $25,000). In addition, Dominium Investments Inc. and Firmus Investments Inc. purchased an
aggregate of 7,970,488 private placement warrants, each exercisable for one share of our common stock at $11.50 per share, for
a purchase price of $3,985,244, or $0.50 per warrant, that will also be worthless if we do not complete a business combination.
The
founder shares are identical to the shares of common stock included in the units being sold in our initial public offering. However,
the holders have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem
any shares in connection with a shareholder vote to approve a proposed initial business combination.
The
personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following
the initial business combination.
Since
our sponsors, executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our business
combination is not completed, a conflict of interest may arise in determining whether a particular business combination target
is appropriate for our initial business combination.
At
the closing of our initial business combination, our sponsors, executive 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. In the event our business combination is completed,
there is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf.
However, our sponsors, executive officers and directors, or any of their respective affiliates will not be eligible for any such
reimbursement if our business combination is not completed. These financial interests of our sponsors, executive officers and
directors may influence their motivation in identifying and selecting a target business combination and completing an initial
business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although
we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur any
indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the
monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating
revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness
even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest,
if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing
if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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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;
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limitations on our flexibility in planning for and reacting
to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general
economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts
for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and
other disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
The
net proceeds from our initial public offering and the private placement of warrants have provided us with approximately $70,887,000
(including approximately $491,000 held outside the trust as of November 30, 2016) that we may use to complete our initial business
combination and pay deferred underwriting commissions being held in the trust account.
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a
short period of time. However, we may not be able to effectuate our business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity our lack
of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify
our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the
resources to complete several business combinations in different industries or different areas of a single industry. Accordingly,
the prospects for our success may be:
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solely dependent upon the performance of a single business,
property or asset, or
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dependent upon the development or market acceptance
of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a business combination so that the post-transaction company in which our public shareholders own shares will own
less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a
minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common
stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the
target. However, as a result of the issuance of a substantial number of new shares of common stock, our shareholders immediately
prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction.
In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining
a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management
will not be able to maintain our control of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our shareholders do not agree.
Our
amended and restated articles of incorporation do not provide a specified maximum redemption threshold, except that in no event
will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation
of our business combination (such that we are not subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As a
result, we may be able to complete our business combination even if a substantial majority of our public shareholders do not agree
with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and
do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, have entered into privately
negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the
aggregate cash consideration we would be required to pay for all shares of 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, all shares of common stock
submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
The
exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly,
the warrants are more likely to expire worthless.
The
exercise price of the public warrants is higher than is typical in many similar blank check companies in the past. Historically,
the exercise price of a warrant was generally a fraction of the purchase price of the units in the initial public offering. The
exercise price for our public warrants is $11.50 per share. As a result, the warrants are less likely to ever be in the money
and more likely to expire worthless.
The
provisions of our amended and restated articles of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders
of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier
for us, therefore, to amend our amended and restated articles of incorporation to facilitate the completion of an initial business
combination that some of our shareholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
shareholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s
public shareholders. Our amended and restated articles of incorporation provide that any of its provisions related to pre-business
combination activity (including the requirement to deposit proceeds of our initial public offering and the private placement of
warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights
to public shareholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding
provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders
of 65% of our common stock. In all other instances, our amended and restated articles of incorporation may be amended by holders
of a majority of our common stock, subject to applicable provisions of the BCA or NASDAQ rules. Our initial shareholders, who
collectively beneficially own 22.2%, will participate in any vote to amend our amended and restated articles of incorporation
and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the
provisions of our amended and restated articles of incorporation which govern our pre-business combination behavior more easily
than some other blank check companies, and this may increase our ability to complete a business combination with which you do
not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated articles of incorporation.
Our
executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated articles of incorporation that would affect the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination by August 24, 2017 (or by May 24, 2018 if we fully
extend the period of time to consummate a business combination), unless we provide our public shareholders with the opportunity
to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest (net of the interest which may be withdrawn to pay taxes
or working capital expenses) divided by the number of then outstanding public shares. These agreements are contained in letter
agreements that we have entered into with our sponsor, executive officers and directors. Prior to acquiring any securities from
our initial shareholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restriction.
Our shareholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability
to pursue remedies against our sponsor, executive officers, or directors for any breach of these agreements. As a result, in the
event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
Our
letter agreement with our sponsor, directors and officers may be amended without shareholder approval.
Our
letter agreement with our sponsor, directors and officers contains provisions relating to transfer restrictions of our founder
shares and sponsor warrants, indemnification of the trust account, waiver of redemption rights and participation in liquidation
distributions from the trust account. This letter agreement may be amended without shareholder approval. While we do not expect
our board to approve any amendment to this agreement prior to our initial business combination, it may be possible that our board,
in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to such agreement.
Any such amendment may have an adverse effect on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient
to allow us to complete our initial business combination, because we have not yet entered into a definitive agreement with any
prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of
our initial public offering and the sale of the private placement warrants prove to be insufficient, either because of the size
of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation
to repurchase for cash a significant number of shares from shareholders who elect redemption in connection with our initial business
combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we
may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing
will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed
to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular
business combination and seek an alternative target business. In addition, even if we do not need additional financing to complete
our business combination, we may require such financing to fund the operations or growth of the target business. The failure to
secure additional financing could have a material adverse effect on the continued development or growth of the target business.
None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our business
combination. If we are unable to complete our initial business combination, our public shareholders may only receive approximately
$10.20 per share (or such higher amount then held in trust) on the liquidation of our trust account, and our warrants will expire
worthless.
Our
initial shareholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder
vote, potentially in a manner that you do not support.
Our
initial shareholders owns 22.2% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial
influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our
amended and restated articles of incorporation. If our initial shareholders purchase any additional shares of common stock in
the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial shareholders nor,
to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as
disclosed in this Report. Factors that would be considered in making such additional purchases would include consideration of
the current trading price of our common stock. In addition, our board of directors, whose members were elected by our sponsor,
is divided into two classes, each of which will generally serve for a term of two years with only one class of directors being
elected in each year. We may not hold an annual meeting of shareholders to elect new directors prior to the completion of our
business combination, in which case all of the current directors will continue in office until at least the completion of the
business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only
a minority of the board of directors will be considered for election and our initial shareholders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our initial shareholders will continue to exert
control at least until the completion of our business combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 65%
of the then outstanding public warrants.
Our
warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then
outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we
may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public
warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least 65% of
the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable
upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $21.00 per share
for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of
redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even
if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under
applicable state blue sky laws and we are unable to effect such registration or qualification, subject to our obligation in such
case to use our best efforts to register or qualify the shares of common stock under the blue sky laws of the state of residence
in those states in which the warrants were initially offered by us in our initial public offering. Redemption of the outstanding
warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants
or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely
to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by
us so long as they are held by their initial purchasers or their permitted transferees.
Our
warrants may have an adverse effect on the market price of our common stock and make it more difficult to effectuate our business
combination.
We
issued warrants to purchase 6,900,610 shares of our common stock as part of the units offered in our initial public offering,
and, simultaneously with the closing of our initial public offering, we issued in a private placement an aggregate of 7,970,488
private placement warrants, each exercisable to purchase one share of common stock at $11.50 per share. In addition, we issued
a unit purchase option to the underwriters of our initial public offering, pursuant to which the underwriters have the option
to purchase 130,000 units consisting of common stock and warrants to purchase an additional 130,000 shares of our common stock.
To the extent we issue shares of common stock to effectuate a business combination, the potential for the issuance of a substantial
number of additional shares of common stock upon exercise of these warrants could make us a less attractive acquisition vehicle
to a target business. Such warrants, when exercised, will increase the number of issued and outstanding shares of our common stock
and reduce the value of the shares of common stock issued to complete the business combination. Therefore, our warrants may make
it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by the initial purchasers or their permitted transferees, (i) they will not be redeemable by us, (ii)
they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by the sponsor until 30 days after the completion of our initial business combination and (iii)
they may be exercised by the holders on a cashless basis.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes
Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ and other
applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance
costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly
after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and,
if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard,
significant resources and management oversight may be required. As a result, management’s attention may be diverted from
other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in
the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are currently listed on NASDAQ. However, we cannot assure you that our securities will continue to be, listed on NASDAQ
in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in shareholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements,
in order to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required
to be at least $4 per share and our shareholders’ equity would generally be required to be at least $5 million and we will
be required to have a minimum of 300 public holders. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a limited
availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a determination
that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more
stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited
amount of news and analyst coverage; and
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a decreased
ability to issue additional securities or obtain additional financing in the future.
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Because
we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financing reporting standards, or IFRS,
depending on the circumstances and the historical financial statements will be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statements may also be required to
be prepared in accordance with GAAP in connection with our current report on Form 8-K announcing the closing our initial business
combination within four business days following such closing. These financial statement requirements may limit the pool of potential
target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such
statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our
periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders
may not have access to certain information they may deem important. We could be an emerging growth company for up to five years,
although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates
exceeds $700 million as of any May 31 before that time, in which case we would no longer be an emerging growth company as of the
following November 30. We cannot predict whether investors will find our securities less attractive because we will rely on these
exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading
prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending November 30, 2017. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be
required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our
business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal
controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition.
Provisions
in our amended and restated articles of incorporation may inhibit a takeover of us, which could limit the price investors might
be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated articles of incorporation contain provisions that may discourage unsolicited takeover proposals that shareholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board
of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of
management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for
our securities.
Risks
Associated with Acquiring and Operating a Business outside of the United States
We may qualify as a passive
foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S.
investors.
If
we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder
(as defined below) of our shares of common stock or warrants, the U.S. Holder may be subject to increased U.S. federal income
tax liability and may be subject to additional reporting requirements. Our actual PFIC status for our taxable year ending November
30, 2016 may depend on whether we qualify for the PFIC start-up exception. Since we did not complete our initial business combination
by the end of our taxable year ending November 30, 2016, we likely will be a PFIC for such taxable year unless we complete our
initial business combination before the end of our taxable year ending November 30, 2017 and are not treated as a PFIC for either
of our taxable years ending November 30, 2017 or November 30, 2018. Our actual PFIC status for any taxable year, however, will
not be determinable until after the end of such taxable year. In addition, we may not provide timely financial information that
would be required for U.S. investors to make a potentially favorable “qualified electing fund” election, and such
election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their own tax advisors
regarding the possible application of the PFIC rules.
The
discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of
our securities that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States; (ii) a
corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or
under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate whose income is includible
in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust if (A) a U.S. court can exercise
primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial
decisions of the trust, or (B) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a
U.S. person.
A
foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year,
including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares
by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year
of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its
pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held
for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties
(other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive
assets.
Because
we are a blank check company, with no current active business, we believe that it is likely that we will meet the PFIC asset or
income test for our initial taxable year ended June 30, 2016. However, pursuant to the PFIC start-up exception, a corporation
will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a
PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the
start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception
to us will not be known until a future time.
If
we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder
of our ordinary shares or warrants and, in the case of our ordinary shares, the U.S. Holder did not make either a timely QEF election
for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares or a timely “mark-to-market”
election, in each case as described below, such holder generally will be subject to special rules with respect to:
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any
gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares
or warrants;
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any
“excess distribution” made to the U.S. Holder (generally, any distributions
to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125%
of the average annual distributions received by such U.S. Holder in respect of the ordinary
shares during the three preceding taxable years of such U.S. Holder or, if shorter, such
U.S. Holder’s holding period for the ordinary shares);
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the
U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S.
Holder’s holding period for the ordinary shares or warrants;
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the
amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized
the gain or received the excess distribution, or to the period in the U.S. Holder’s
holding period before the first day of our first taxable year in which we are a PFIC,
will be taxed as ordinary income;
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the
amount allocated to other taxable years (or portions thereof) of the U.S. Holder and
included in its holding period will be taxed at the highest tax rate in effect for that
year and applicable to the U.S. Holder; and
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the
interest charge generally applicable to underpayments of tax will be imposed in respect
of the tax attributable to each such other taxable year of the U.S. Holder.
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In
general, if we are determined to be a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our
ordinary shares (but not our warrants) by making a timely QEF election (if eligible to do so) to include in income its pro rata
share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis,
in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends.
A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules,
but if deferred, any such taxes will be subject to an interest charge.
In
order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us.
If we determine we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder such information as the IRS may
require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election.
However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information
to be provided.
Alternatively,
if a U.S. Holder makes a timely, valid “mark-to-market” election for the first taxable year of the U.S. Holder in
which the U.S. Holder holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, such holder
generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Notwithstanding the foregoing,
U.S. Holders who do not make a timely, valid mark-to-market election for such first taxable year but make a mark-to-market election
with respect to a subsequent taxable year may be subject to special tax rules, and the discussion below does not address any mark-to-market
election consequences to such U.S. Holders.
If
a U.S. Holder makes a timely, valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder
holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, in general, the U.S. Holder will
include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable
year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect
of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end
of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market
election). The U.S. Holder’s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and
any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income.
Currently, a mark-to-market election may not be made with respect to our warrants.
The
mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered
with the Securities and Exchange Commission, including the Nasdaq Capital Market, or on a foreign exchange or market that the
IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S.
Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in
respect to our ordinary shares under their particular circumstances.
Although
a determination as to our PFIC status will be made annually, an initial determination that we are a PFIC will generally apply
for subsequent years to a U.S. Holder who held ordinary shares or warrants while we were a PFIC, whether or not we meet the test
for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year
as a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC
tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to
the QEF inclusion regime with respect to such shares for any taxable year of us that ends within or with a taxable year of the
U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years
in which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will
continue to apply to such shares unless the holder makes a purging election, as described above, and pays the tax and interest
charge with respect to the gain inherent in such shares attributable to the pre-QEF election period.
An
investment in our securities may result in uncertain or adverse United States federal income tax consequences.
An
investment in our securities may result in uncertain United States federal income tax consequences. For instance, because there
are no authorities that directly address instruments similar to the units we issued in our initial public offering, the allocation
an investor made with respect to the purchase price of the unit between the share of common stock and the warrant to purchase
one share of common stock included in each unit could be challenged by the IRS or the courts. Furthermore, the United States federal
income tax consequences of a cashless exercise of a warrant included in the units is unclear under current law. Finally, it is
unclear whether the redemption rights with respect to our shares of common stock suspend the running of a U.S. holder’s
holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of common
stock is long-term capital gain or loss. Prospective investors are urged to consult their tax advisors with respect to these and
other tax consequences when purchasing, holding or disposing of our securities.
An
investor may be subject to adverse U.S. federal income tax consequences in the event the Internal Revenue Service (“IRS”)
were to disagree with the U.S. federal income tax consequences described herein.
We
have not sought a ruling from the IRS as to any U.S. federal income tax consequences described in our public filings. The IRS
may disagree with the descriptions of U.S. federal income tax consequences contained therein, 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 herein. 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 shares of common stock and units,
including the applicability and effect of state, local or non-U.S. tax laws, as well as U.S. federal tax laws.
A
majority of our directors and officers lives outside the United States and all of our assets may be located outside the United
States after our initial business combination; therefore investors may not be able to enforce federal securities laws or their
other legal rights.
All
of our directors and officers, and their assets, are located outside of the United States. As a result, you may have difficulty
serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in
and outside the United States, judgments you may obtain in U.S. courts against us or these persons in any action, including actions
based upon the civil liability provisions of U.S. Federal or state securities laws. You may also have difficulty bringing an original
action in the appropriate court of the Marshall Islands or any other foreign jurisdiction in which our directors or officers may
reside to enforce liabilities against us or any person based upon the U.S. federal securities laws.
If
we effect our initial business combination with a company located outside of the United States, we would be subject to a variety
of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company located outside of the United States, we would be subject to any special
considerations or risks associated with companies operating in the target business’ home jurisdiction, including any of
the following:
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rules and regulations or currency redemption or corporate
withholding taxes on individuals;
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laws governing the manner in which future business combinations
may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles;
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tax issues, such as tax law changes and variations in
tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist
attacks and wars; and
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deterioration of political relations with the United
States. We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
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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.
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
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 our initial public 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. dollars than
the U.S. dollar amount that you will actually ultimately receive.
If
you are a U.S. holder of our shares of 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, our management 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.
After
our initial business combination, substantially all of our assets will likely be located in a foreign country and substantially
all of our revenue will be derived from our operations in such country. Accordingly, our results of operations and prospects will
be subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country
in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located
could affect our business. The economies in developing countries differ from the economies of most developed countries in many
respects. For the most part, such economies have grown at a rate in excess of the United States; however (1) such economic growth
has been uneven, both geographically and among various sectors of the economy and (2) 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.
Because
foreign law could govern almost all of our material agreements, we may not be able to enforce our rights within such jurisdiction
or elsewhere, which could result in a significant loss of business, business opportunities or capital.
Foreign
law could govern almost all of our material agreements. The target business may not be able to enforce any of its material agreements
or that remedies will be available outside of such foreign jurisdiction’s legal system.
The
system of laws and the enforcement of existing laws and contracts in such jurisdiction may not be as certain in implementation
and interpretation as in the United States. The judiciaries in developing countries are relatively inexperienced in enforcing
corporate and commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. As a result,
the inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business
and business opportunities.
We
may re-incorporate in another jurisdiction in connection with a business combination, and the laws of such jurisdiction will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
In
connection with a business combination, we may relocate the home jurisdiction of our business from the Republic of the Marshall
Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction would likely govern all of our material
agreements. We cannot assure you that the system of laws and the enforcement of existing laws in such jurisdiction would 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. Any such reincorporation
and the international nature of our business will likely subject us to foreign regulation.
If
the company we acquire is in breach of any environmental regulations or has not obtained necessary certificates or permits will
negatively affect our profitability.
The
company we acquire, or any of its subsidiaries, as part of our business combination we shall ensure to have all material permits,
licenses, certificates or other authorizations necessary for the conduct of our operations currently in force. However, there
can be no assurance that any company we may acquire will be in such compliance at the time of the business combination or that
we will have or maintain all such material permits, licenses, certificates or other authorizations. Moreover, additional legislation
or regulation applicable to the operation of our vessels that may be implemented in the future could negatively affect our profitability.
We
face risks related to companies in the maritime transport industry.
Messrs.
Tsirigakis and Syllantavos were founders, officers and directors of two prior blank check companies, each of which consummated
a business combinations with a company in the maritime transport industry. Business combinations with companies in the maritime
transport industry, including target companies such as the ones previously acquired by our management, entail special considerations
and risks, in particular with tanker vessels which may carry crude oil, petroleum products or liquefied gases. If we are successful
in completing a business combination with such a target business, we will be subject to, and possibly adversely affected by, the
following risks:
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if our business involves the ownership of tanker vessels,
such vessels could be arrested by maritime claimants, which could result in the interruption of business and have an adverse effect
on revenue and profitability;
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governments could requisition vessels during a period
of war or emergency, resulting in a loss of earnings;
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if we experience a catastrophic loss and our insurance
is not adequate to cover such loss, it could have a material adverse effect on our operations;
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the dangers inherent in the transporting of energy could
cause disruptions and could expose us to potentially significant losses, costs or liabilities;
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the maritime transport of energy industry is subject
to intense governmental regulation;
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we may incur significant costs in complying with environmental,
safety and other governmental regulations and our failure to comply with these regulations could result in the imposition of penalties,
fines and restrictions on our operations;
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our operations may harm the environment;
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inherent in our operations may be hazards which require
continual oversight and control;
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conservation measures and technological advances could
reduce demand for oil and gas;
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political instability could harm our business;
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our business may be subject to foreign currency risks;
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charterhire rates for tanker vessels are volatile and
remain significantly below their high in 2008, which may have an adverse effect on our revenues, earnings and profitability and
our ability to comply with our loan covenants;
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an over-supply of tanker vessels capacity may affect
or depress charter rates and, in turn, adversely affect our profitability;
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the market values of our vessels may decrease, which
could limit the amount of funds that we can borrow or cause us to breach certain covenants in our credit facilities and we may
incur a loss if we sell vessels following a decline in their market value;
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a further economic slowdown or changes in the economic
and political environment in the Middle East region may have a material adverse effect on our business, financial condition and
results of operations;
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the current state of global financial markets and current
economic conditions may adversely impact our ability to obtain additional financing on acceptable terms which may hinder or prevent
us from expanding our business;
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charterers have been placed under significant financial
pressure, thereby increasing our charter counterparty risk;
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acts of piracy on ocean-going vessels may have an adverse
effect on our business;
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political instability, terrorist attacks and international
hostilities can affect the seaborne transportation industry, which could adversely affect our business;
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our revenues may be subject to seasonal fluctuations,
which could affect our operating results and our ability to pay dividends, if any, in the future;
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rising fuel prices may adversely affect our profits;
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we would be subject to international safety regulations
and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage
and may result in our vessels being denied access to, or detained in, certain ports;
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we would be subject to complex laws and regulations,
including environmental regulations that can adversely affect the cost, manner or feasibility of doing business;
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increased inspection procedures and tighter import and
export controls could increase costs and disrupt our business;
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maritime claimants could arrest one or more of our vessels,
which could interrupt our cash flow;
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governments could requisition our vessels during a period
of war or emergency, resulting in a loss of earnings;
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in the highly competitive international shipping industry,
we may not be able to compete for charters with new entrants or established companies with greater resources and, as a result,
we may be unable to employ our vessels profitably; and
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risks associated with operating ocean-going vessels
could affect our business and reputation, which could adversely affect our revenues and stock price.
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Any
of the foregoing could have a negative adverse impact on our operations following a business combination. However, our efforts
in identifying prospective target businesses will not be limited to the maritime transport industry. 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.
We
face risks related to companies in the energy storage industry.
Business
combinations with companies in the energy storage industry entail special considerations and risks. If we are successful in completing
a business combination with such a target business, we will be subject to, and possibly adversely affected by, the following risks:
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our customers may experience significant interruptions,
which could harm our business;
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our financial results could depend on the market fundamentals
surrounding the price volatility and supply of and demand for crude oil, petroleum products and chemicals, among other factors;
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we might depend on a relatively limited number of customers
for a significant portion of our revenues;
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the carrying values of our terminals may be impaired
and could be required to recognize non-cash charges in future periods;
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our operations may be subject to operational hazards
and unforeseen interruptions, including interruptions from hurricanes, floods or earthquakes, for which we may not be adequately
insured;
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if our services agreements are terminated and we are
unable to secure comparable alternative arrangements, our business, financial condition and results of operations could be harmed;
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we may experience competition from other terminals that
are able to supply our customers with comparable logistics and storage capacity at a lower price;
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any reduction in the capability of our customers to
utilize third-party pipelines and railroads that interconnect with our terminals or to continue utilizing them at current costs
could cause a reduction of volumes transported through our terminals;
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our facilities may have been in service for many years,
which could result in increased maintenance expenditures or remediation projects, which could adversely affect our business, results
of operations and financial condition;
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we may incur significant costs and liabilities in complying
with environmental, health and safety laws and regulations, which are complex and frequently changing;
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we could incur significant costs and liabilities in
responding to contamination that occurs at our facilities;
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we could incur substantial costs or disruptions in our
business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with health, safety, environmental
and other laws and regulations;
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our operations may be subject to federal and state laws
and regulations relating to product quality specifications, and we could be subject to damages based on claims brought against
us by our customers or lose customers as a result of the failure of products we distribute to meet certain quality specifications;
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mergers among our customers and competitors could result
in lower levels of activity at our terminals, thereby reducing the amount of cash we generate; and
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terrorist attacks aimed at our facilities or surrounding
areas could adversely affect our business.
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Any
of the foregoing could have a negative adverse impact on our operations following a business combination. However, our efforts
in identifying prospective target businesses will not be limited to the energy storage industry. 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.
We
face risks related to companies in the energy pipeline industry.
Business
combinations with companies in the energy pipeline industry entail special considerations and risks. If we are successful in completing
a business combination with such a target business, we will be subject to, and possibly adversely affected by, the following risks:
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changes in petroleum demand and distribution and weakness
in the global economy may adversely affect our business;
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a significant decline in production at certain refineries
served by certain of our pipelines and terminals, or a fundamental change in the primary source of supply of petroleum products
to a region, could materially reduce the volume of liquid petroleum products we transport and adversely impact our operating results;
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competition could adversely affect our operating results;
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mergers among our customers and competitors could result
in lower volumes being shipped on our pipelines and stored in our terminals, thereby reducing the amount of cash we generate;
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we may incur unknown and contingent liabilities from
assets we have acquired;
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climate change legislation or regulations restricting
emissions of “greenhouse gases” or setting fuel economy or air quality standards could result in increased operating
costs or reduced demand for the liquid petroleum products and other hydrocarbon products that we transport, store or otherwise
handle in connection with our business;
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environmental regulation may impose significant costs
and liabilities on us;
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existing or future government regulations relating to
certain chemicals or additives in gasoline or diesel fuel could require capital expenditures or result in lower pipeline volumes
and thereby adversely affect our results of operations and cash flows;
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terrorist attacks or other security threats could adversely
affect our business;
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our business may be exposed to customer credit risk,
and we may not be able to fully protect ourselves against such risk;
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pipeline operations may be subject to operational hazards
and unforeseen interruptions for which we may not be insured or entitled to indemnification; and
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hurricanes and other severe weather conditions could
have a material adverse effect on our business, financial results and cash flow.
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Any
of the foregoing could have a negative adverse impact on our operations following a business combination. However, our efforts
in identifying prospective target businesses will not be limited to the energy pipeline industry. 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.