c/o Infinity-C.S.V.C. Management Ltd.
3 Azrieli Center (Triangle Tower)
42
nd
Floor, Tel Aviv, Israel, 67023
011-972-3-607-5170
c/o Infinity-C.S.V.C. Management Ltd.
3 Azrieli Center (Triangle Tower)
42
nd
Floor, Tel Aviv, Israel, 67023
011-972-3-607-5170
(Name, Telephone, Email and/or Facsimile
number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b)
of the Act:
Securities registered or to be registered pursuant to Section 12(g)
of the Act: None
Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the Issuer’s
classes of capital or ordinary shares as of the close of the period covered by the annual report: 7,187,500 ordinary shares.
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes
¨
No
þ
If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934. Yes
¨
No
þ
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes
þ
No
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:
If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
þ
No
¨
Unless otherwise indicated and except where
the context otherwise requires,
This annual report
on Form 20-F (the “Annual Report”) contains forward-looking statements as defined in Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the “Exchange
Act”). This Annual Report contains forward-looking statements that involve risks and uncertainties. All statements other
than statements of historical facts are forward-looking statements. These forward-looking statements include information about
our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,”
“plans,” “believes,” “anticipates,” “estimates,” and variations of such words and
similar expressions are intended to identify the forward-looking statements.
The risk factors and
cautionary language referred to in this Annual Report provide examples of risks, uncertainties and events that may cause actual
results to differ materially from the expectations described by the Company in its forward-looking statements, including among
other things:
Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of this Annual Report.
Although we believe that the expectations
reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be
correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently
subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially
from those expressed or implied by such forward-looking statements.
We undertake no obligation to publicly
update or revise any forward-looking statements contained in this Annual Report, or the documents to which we refer readers in
this Annual Report, to reflect any change in our expectations with respect to such statements or any change in events, conditions
or circumstances upon which any statement is based.
PART
I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
A. Selected Financial Data
The
following selected financial data is derived from our audited financial statements as of and for the year ended March 31, 2013.
The financial statements were prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP.
The statements of operations for the year ended March 31, 2013, for the period from April 6, 2011 (inception) to March 31, 2013;
the statements of cash flow for the period from April 6, 2011 (inception) to March 31, 2013; and the balance sheet as of March
31, 2013 are included in this Annual Report.
Our results
of operations in any past period may not necessarily be indicative of the results that may be expected for any future period. See
“Risk Factors” included elsewhere in this Annual Report. The summary consolidated financial information for those periods
and as of those dates should be read in conjunction with those consolidated financial statements and the accompanying notes included
elsewhere in this Annual Report.
Summary
of statement of operation data:
(US$)
|
|
Year ended
March 31, 2013
|
|
|
April 6, 2011
(date of
inception) to
March 31, 2013
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
Loss from formation and operating costs
|
|
$
|
(294,154
|
)
|
|
$
|
(321,278
|
)
|
Net loss attributable to ordinary shareholders
|
|
$
|
(386,188
|
)
|
|
$
|
(413,312
|
)
|
Net loss per ordinary share attributable to ordinary shareholders, basic and diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.22
|
)
|
Summary
of statement of cash flow data:
(US$)
|
|
Year ended
March 31, 2013
|
|
|
April 6, 2011
(date of
inception) to
March 31, 2013
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(76,523
|
)
|
|
$
|
(103,647
|
)
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
$
|
(46,000,000
|
)
|
|
$
|
(46,000,000
|
)
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
$
|
46,461,499
|
|
|
$
|
46,488,775
|
|
Summary
of balance sheet data:
(US$)
|
|
March 31, 2013
|
|
|
March 31, 2012
|
|
Cash
|
|
$
|
385,128
|
|
|
$
|
152
|
|
Working capital (deficiency) (1)
|
|
$
|
40,156,263
|
|
|
$
|
(2,124
|
)
|
Total assets
|
|
$
|
46,409,260
|
|
|
$
|
-
|
|
Total shareholders’ equity (deficit)
|
|
$
|
5,000,0001
|
|
|
$
|
(2,124
|
)
|
|
(1)
|
Working capital is calculated as current assets minus current liabilities.
|
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
We are a blank check company in the
development stage with no operating history and no revenues, and there is no basis on which to evaluate our ability to achieve
our business objective.
We are a blank check
company with no operating results. We have commenced searching for our initial business combination following the offering. Because
we lack an operating history, there is 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. If we fail to complete our initial 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, unless such vote is required by law or Nasdaq, which means we may
consummate our initial business combination even though a majority of our public shareholders do not support such a combination.
We may not hold a
shareholder vote before we consummate our initial business combination unless the business combination would require shareholder
approval under applicable BVI law or Nasdaq rules or if we decide to hold a shareholder vote for business reasons. Accordingly,
we may consummate our initial business combination even if holders of a majority of our public shares do not approve of the business
combination we consummate.
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 enter into
a combination 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 may not be able to meet such closing condition,
and as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001. Our memorandum and articles of association
requires us to provide all of our public shareholders with an opportunity to redeem all of their shares in connection with the
consummation of any initial business combination, although our initial shareholders have agreed to waive their redemption rights
with respect to their founder shares and public shares in connection with the consummation of an initial business combination.
Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001
or such other amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and
the related business combination and may instead search for an alternate business combination. Prospective targets would be aware
of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of a large number of our
shareholders to exercise redemption rights may not allow us to consummate the most desirable business combination or optimize our
capital structure.
In connection with
the successful consummation of our business combination, we may redeem pursuant to a tender offer up to that number of ordinary
shares that would permit us to maintain net tangible assets of $5,000,001. If our business combination requires us to use substantially
all of our cash to pay the purchase price, the redemption threshold may be further limited. Alternatively, we may either need to
reserve part of the trust account for possible payment upon such redemption, or we may need to arrange third party financing to
help fund our business combination in case a larger percentage of shareholders exercise their redemption rights than we expect.
If the acquisition involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our
shares to the target or its shareholders to make up for the failure to satisfy a minimum cash requirement. Raising additional funds
to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may
limit our ability to effectuate the most attractive business combination available to us.
The requirement that we maintain a minimum
net worth or retain a certain amount of cash could increase the probability that our business combination would be unsuccessful
and that shareholders would have to wait for liquidation in order to redeem their shares.
If, pursuant to the
terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash
in trust in order to consummate the business combination and regardless of whether we proceed with redemptions under the tender
or proxy rules, the probability that our business combination would be unsuccessful is increased. If our business combination is
unsuccessful, shareholders would not receive their pro rata portion of the trust account until we liquidate. If shareholders are
in need of immediate liquidity, they could attempt to sell their shares in the open market. In either situation, shareholders may
suffer a material loss on their investment or lose the benefit of funds expected in connection with our redemption.
The requirement that we complete our
initial business combination by January 25, 2014 (or by April 25, 2014 if a definitive agreement is executed by January 25, 2014
but the business combination has not been consummated within such period) 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 consummate our initial business combination on terms
that would produce value for our shareholders.
Any potential target
business with which we enter into negotiations concerning our initial business combination will be aware that we must consummate
our initial business combination within the 18 or 21 month period. Consequently, such target businesses may obtain leverage over
us in negotiating our initial 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 timeframe 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 consummate our
initial business combination in the 18 or 21 month period 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 sponsors, officers
and directors have agreed that we must complete our initial business combination within the 18 or 21 month period. We may not be
able to find a suitable target business and consummate our initial business combination within such time period. If we are unable
to consummate our initial business combination in the 18 or 21 month period, as promptly as reasonably possible but no more than
five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the
net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all
operations except for the purposes of winding up of our affairs, as further described herein. This redemption of public shareholders
from the trust account shall be done automatically by function of our memorandum and articles of association and prior to any voluntary
winding up.
If we are no longer a FPI and seek shareholder
approval of our initial business combination, we, our sponsors, directors, officers, advisors and their affiliates may elect to
purchase shares from shareholders, in which case we or they may influence a vote in favor of a proposed business combination that
you do not support.
If we are no longer
a FPI and 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, we, our sponsors, directors, officers, advisors or their affiliates may enter into
privately negotiated transactions to purchase public shares following consummation of the business combination from shareholders
who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules.
Our sponsors, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions (in
addition to the open market purchases described herein) either prior to or following the consummation of our initial business combination.
Neither we nor our directors, officers, advisors or their affiliates will make any such purchases when we or they are in possession
of any material non-public information not disclosed to the seller. Such a purchase would 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 we or our sponsors, 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. Although neither we
nor they currently anticipate paying any premium purchase price (over trust value) for such public shares, in the event we or they
do, the payment of a premium may not be in the best interest of those shareholders not receiving any such premium. In addition,
the payment of a premium by us after the consummation of our initial business combination may not be in the best interest of the
remaining shareholders who do not redeem their shares. Such shareholders will experience a reduction in book value per share compared
to the value received by shareholders that have their shares purchased by us at a premium. Nevertheless, because any payment of
a premium by us will be made only from proceeds released to us from the trust account following completion of a business combination,
no such payments will reduce the per share amounts available in the trust account for redemption in connection with the business
combination.
The purpose of such
purchases would be to: (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) where the
purchases are made by our sponsors, directors, officers, advisors or their affiliates, 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 the business combination,
where it appears that such requirement would otherwise not be met. This may result in the consummation of an initial business combination
that may not otherwise have been possible and the majority of our shareholders may not approve our initial business combination.
Our purchases of ordinary shares in
privately negotiated transactions would reduce the funds available to us after the business combination.
If
we are no longer a FPI and 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, we may enter into privately negotiated transactions to purchase
shares effective immediately following the consummation of the business combination from shareholders who would have otherwise
elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules with proceeds released
to us from the trust account immediately following consummation of the initial business combination. As a consequence of such purchases,
the funds in our trust account that are so used will not be available to us after the business combination.
Purchases of ordinary shares or warrants
by us or our sponsors, directors, officers, advisors or their affiliates, as applicable, may make it difficult for us to continue
to list our securities on a national securities exchange.
If we or our sponsors,
directors, officers, advisors or their affiliates purchase ordinary shares in privately negotiated transactions, or if our sponsors
make purchases of our public warrants, the public “float” of our securities and the number of beneficial holders of
our securities would both be reduced. This may make it difficult to continue the listing of our securities on Nasdaq or another
national securities exchange. If the number of public holders of our ordinary shares or warrants falls below 300, we will be non-compliant
with the Nasdaq continued listing rules and our securities could be delisted.
Our purchases of ordinary shares in
privately negotiated transactions may have negative economic effects on our remaining public shareholders.
If we are no longer
a FPI and seek shareholder approval of our business combination and purchase shares in privately negotiated from shareholders who
would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules
for a per-share pro rata portion of the trust account, our remaining public shareholders will bear the economic burden of the taxes
payable. In addition, our remaining public shareholders following the consummation of our initial business combination will bear
the economic burden of the merger/acquisition fees as well as the amount of any premium we may pay to the per-share pro rata portion
of the trust account using funds released to us from the trust account following the consummation of the business combination.
This is because the shareholders from whom we purchase shares in privately negotiated transactions may receive a per share purchase
price payable from the trust account that is not reduced by a pro rata share of the taxes payable on the interest earned by the
trust account, or the merger/acquisition fees and, in the case of purchases at a premium, have received such premium.
Shareholders will not have any rights
or interests in funds from the trust account, except under certain limited circumstances. To liquidate their investments, therefore,
shareholders may be forced to sell their public shares, potentially at a loss.
Our public shareholders
shall be entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any
winding up in the event we do not consummate our initial business combination or our liquidation or if they redeem their shares
pursuant to a tender offer in connection with an initial business combination that we consummate. In no other circumstances will
a shareholder have any right or interest of any kind to the funds in the trust account. Accordingly, to liquidate their investments,
shareholders may be forced to sell their public shares, potentially at a loss.
Because we are a FPI, we are exempt
from certain SEC requirements that provide shareholders the protection of information that must be made available to shareholders
of U.S. public companies.
Because we are a FPI,
we are exempt from certain provisions applicable to U.S. public companies, including:
|
•
|
The rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or Current Reports on Form 8-K;
|
|
•
|
The sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
|
|
•
|
The provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and
|
|
•
|
The sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transactions (i.e., a purchase and sale, or a sale and purchase, of the issuer’s equity securities within less than six months).
|
As a result of these
exemptions, our shareholders will not be afforded the same protections or information generally available to investors holding
shares in public companies organized in the U.S. Although we currently have FPI status and are not required to file quarterly reports,
we have agreed with the underwriters in the offering to file quarterly reports containing unaudited interim financial statements
for each of the first three quarters of each fiscal year on Form 6-K until July 19, 2017 (or until consummation of our initial
business combination if a majority of the board of directors after such transaction do not constitute members of our current board).
Shareholders will not be entitled to
protections normally afforded to investors of many other blank check companies.
Since the net proceeds
of the offering are intended to be used to complete our 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, as we are listed on
a national securities exchange and have net tangible assets in excess of $5,000,000 and have filed a Form 6-K, including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies,
such as Rule 419. Accordingly, shareholders will not be afforded the benefits or protections of those rules.
If we are no longer a FPI and we seek
shareholder approval of our business combination and we do not conduct redemptions pursuant to the tender offer rules, and if a
shareholder or a “group” of shareholders are deemed to hold in excess of 12.5% of our ordinary shares, such shareholders
will lose the ability to redeem all shares in excess of 12.5% of our ordinary shares.
If we are no longer
a FPI and 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 memorandum and articles of association provides that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 12.5% of the public shares. Such shareholders will not receive redemption distributions with respect to the excess
shares if we consummate our business combination. As a result, such shareholders will continue to hold that number of shares exceeding
12.5% and, in order to dispose of such shares, such shareholders would be required to sell their shares in an open market transaction,
potentially at a loss.
Because of our limited resources and
the significant competition for business combination opportunities, it may be 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 $8.00 per
share on our redemption.
We expect to encounter
intense competition from other entities having a business objective similar to ours, including private investors (which may be
individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to
various industries. Many of these competitors possess greater technical, human and other resources, or more local industry knowledge
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there are numerous target businesses we could potentially acquire with the net proceeds of the offering, our ability
to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial
resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses
and places us at a competitive disadvantage in successfully negotiating our initial business combination. If we are unable to complete
our initial business combination, our public shareholders may receive only $8.00 per share on our redemption.
If the net proceeds of the offering
not being held in the trust account, together with the interest in the trust account (net of taxes payable) which may be released
to us for working capital purposes, are insufficient to allow us to operate through April 25, 2014, we may be unable to complete
our initial business combination.
The funds available
to us outside of the trust account, plus the interest earned on the funds held in the trust account that may be available to us,
may not be sufficient to allow us to operate through April 25, 2014, assuming that our initial business combination is not consummated
during that time. 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 are unable to fund such down payments or “no shop” provisions,
our ability to close a contemplated transaction could be impaired. Furthermore, 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.
The current low interest rate environment
could limit the amount available to fund our search for a target business or businesses and complete our initial business combination
since we will depend on interest earned on the trust account to fund our search, to pay our taxes and to complete our initial business
combination.
Of the net proceeds
obtained in the offering, only $385,128 was available to us outside the trust account to fund our working capital requirements
as of March 31, 2013. We will depend on sufficient interest being earned on the proceeds held in the trust account to provide us
with additional working capital we may need to identify one or more target businesses and to complete our initial business combination,
as well as to pay any taxes that we may owe. The current interest rate environment may make it more difficult for us to generate
sufficient interest from the proceeds in the trust account to structure, negotiate or close our initial business combination. In
such event, we would need to borrow funds from our sponsors or management team to operate or may be forced to liquidate. Neither
our sponsors nor our management team are under any obligation to advance funds to us in such circumstances. If we are unable to
complete our initial business combination, our public shareholders may only receive $8.00 per share on our redemption.
Subsequent to consummation 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 share price, which could cause
shareholders to lose some or all of their investment.
Even if we conduct
extensive due diligence on a target business with which we combine, this diligence may not reveal all material issues that may
be present inside a particular target business or that factors outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and may 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.
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 $8.00 per share.
Our placing of funds
in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims
against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to
a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it
and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any
reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the required
time frame, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $8.00 per share
initially held in the trust account, due to claims of such creditors. Our sponsors have agreed that they will be jointly and severally
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 business combination, reduce the amounts in the trust account to below $8.00
per share 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 the 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, our
sponsors will not be responsible to the extent of any liability for such third party claims. However, we have not asked our sponsors
to reserve for such indemnification obligations and we cannot assure you that our sponsors would be able to satisfy those obligations.
We currently believe that our sponsors are of substantial means and capable of funding a shortfall in our trust account, even though
we have not asked them to reserve for such an eventuality. We have not independently verified whether our sponsors have sufficient
funds to satisfy the potential indemnity obligation and, therefore, our sponsors may not be able to satisfy such obligation. We
believe the likelihood of our sponsors 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 independent directors may decide
not to enforce indemnification obligations against our sponsors, 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 $ 8.00 per share and our sponsors 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 our sponsors to enforce their indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsors 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 $8.00 per share.
If we are deemed to be an investment
company under the Investment Company Act of 1940, as amended (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 initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities.
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Each of these restrictions may make it
difficult for us to complete our initial 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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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 consummate our initial business combination.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to
laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of
operations.
We are not subject to the supervision
of the Financial Services Commission of the British Virgin Islands and so our shareholders are not protected by any regulatory
inspections in the British Virgin Islands.
We are not an entity
subject to any regulatory supervision in the British Virgin Islands by the Financial Services Commission. As a result, shareholders
are not protected by any regulatory supervision or inspections by any regulatory agency in the British Virgin Islands and the company
is not required to observe any restrictions in respect of its conduct save as disclosed in our prospectus or our memorandum and
articles of association.
If we are unable to consummate our initial
business combination, our public shareholders may be forced to wait up to 21 months before redemption from our trust account.
If we are unable to
consummate our initial business combination within the 18 or 21 month period, we will, as promptly as reasonably possible but no
more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000
of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease
all operations except for the purposes of winding up of our affairs. Any redemption of public shareholders from the trust account
shall be effected automatically by function of our memorandum and articles of association and will occur prior to any voluntary
winding up. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate
our initial business combination prior thereto and only then in cases where investors have sought to redeem their ordinary shares.
Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable to complete
our initial business combination.
If deemed to be insolvent, distributions,
or part of them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances,
prior payments made by the company may be deemed “voidable transactions.”
If we do not complete
our initial business combination within the 18 or 21 month period, this will trigger an automatic redemption of public shareholders
from the trust account pursuant to our memorandum and articles of association.
However, if at any
time we are deemed insolvent for the purposes of the British Virgin Islands Insolvency Act, 2003 (the “Insolvency Act”)
(i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the Insolvency
Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands court in favor of a creditor
of the company is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its
assets, or the company is unable to pay its debts as they fall due), we are required to immediately enter insolvent liquidation.
In these circumstances, a liquidator will be appointed who will give notice to our creditors inviting them to submit their claims
for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in the British
Virgin Islands Official Gazette and a British Virgin Islands newspaper, and taking any other steps the liquidator considers appropriate,
after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete a final
report and accounts and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”).
The liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty
over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British
Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events
might delay distribution of some or all of our assets to our public shareholders. In such liquidation proceedings, the funds held
in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of
our shareholders. To the extent any such claims deplete the trust account, we cannot assure you we will be able to return to our
public shareholders the amounts otherwise payable to them.
If we are deemed insolvent,
there are circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction”
for the purposes of the Insolvency Act. A voidable transaction would be, for these purposes, payments made as “unfair preferences”
or “transactions at an undervalue.” Where a payment was a risk of being a voidable transaction, a liquidator appointed
over an insolvent company could apply to the British Virgin Islands court for an order, inter alia, for the transaction to be set
aside as a voidable transaction in whole or in part.
Our initial shareholders
have waived their right to participate in any liquidation distribution with respect to the founder shares. If we have not consummated
an initial business combination within the required time frame, there will be no distribution from the trust account with respect
to our warrants. However, our sponsors have agreed to repurchase or tender for such public warrants if we are unable to consummate
a business combination. We will pay the costs of our liquidation and distribution of the trust account from our remaining assets
outside of the trust account and may request the trustee to release to us up to $50,000 of the net interest earned on the trust
account to pay dissolution expenses. In addition, our sponsors have agreed they will be jointly and severally liable to us, for
all claims of creditors to the extent we fail to obtain executed waivers from such entities in order to protect the amounts held
in trust, except as to any claims under our indemnity of the underwriters of the offering against certain liabilities, including
liabilities under the Securities Act. However, we cannot assure public shareholders that the liquidator will not determine that
he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity
or extent of the claims of any creditors). We also cannot assure public shareholders that a creditor or shareholder will not file
a petition with the BVI court which, if successful, may result in our liquidation being subject to the supervision of that court.
Such events might delay distribution of some or all of our assets to our public shareholders.
If deemed to be insolvent, distributions
made to public shareholders, or part of them, from our trust account may be subject to claw back in certain circumstances.
If we do not complete
our initial business combination within the 18 or 21 month period, and instead distribute the aggregate amount then on deposit
in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public
shareholders by way of redemption, it will be necessary for our directors to pass a board resolution approving the redemption of
those ordinary shares and the payment of the proceeds to public shareholders. Such board resolutions are required to confirm that
we satisfy the solvency test prescribed by the Companies Act, (namely that our assets exceed our liabilities and that we are able
to pay our debts as they fall due). If, after the redemption proceeds are paid to public shareholders, it transpires that our financial
position at the time was such that it did not satisfy the solvency test, the Companies Act provides a mechanism by which those
proceeds could be recovered from public shareholders. However, the Companies Act also provides for circumstances where such proceeds
could not be subject to claw back, namely where (a) the public shareholders received the proceeds in good faith and without knowledge
of our failure to satisfy the solvency test; (b) a public shareholder altered its position in reliance of the validity of the payment
of the proceeds; or (c) it would be unfair to require repayment of the proceeds in full or at all.
We have not registered the ordinary
shares issuable upon exercise of the warrants under the Securities Act or states securities laws at this time, and such registration
may not be in place when warrant holders desire to exercise their warrants, thus precluding such warrant holders from being able
to exercise their warrants at such time.
We have not registered
the ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time.
If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit
holders to exercise their warrants on a cashless basis under certain circumstances specified in the warrant agreement. 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. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified, such warrant may have no value. In such event, holders who acquired their warrants
as part of a purchase of units will have paid the full unit purchase price solely for the ordinary shares included in the units.
If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify
the underlying ordinary shares for sale under all applicable state securities laws.
We are subject to certain registration
rights that 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 ordinary shares.
Pursuant to an agreement
entered into concurrently with the offering, our initial shareholders, sponsors and underwriters and their respective permitted
transferees can demand that we register the founder shares, the insider warrants and the ordinary shares issuable upon exercise
of the insider warrants and warrants that may be issued upon conversion of working capital loans. We will bear the cost of registering
these securities. The registration and availability of such a significant number of securities for trading in the public market
may have an adverse effect on the market price of our ordinary shares. In addition, the existence of the registration rights may
make our 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 ordinary shares that is expected when the securities owned by our initial shareholders, sponsors and
underwriters, or their respective permitted transferees are registered.
Because we have not entered into a definitive
agreement with any specific target businesses with which to pursue a business combination, you will be unable to ascertain the
merits or risks of any particular target business’ operations.
We will seek to capitalize
on the strength of our management team to identify, acquire and operate a business whose principal executive office is located
in Canada, Europe, Africa or Israel. Subject to the limitations that a target business have a fair market value of at least 80%
of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination,
we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Because we have
not yet entered into a definitive agreement with any specific target business with respect to our initial 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 consummate our initial 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 a development stage entity. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not 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.
An investment in our units may not ultimately prove to be more favorable to investors than a direct investment, if such opportunity
were available, in an acquisition target.
We may seek investment opportunities
outside of our management’s area of expertise and our management may not be able to adequately ascertain or assess all significant
risks associated with the target company.
There is no limitation
on the geography, industry or business sector we may consider when contemplating our initial business combination. We may therefore
be presented with a business combination candidate in an industry unfamiliar to our management team, but determine that such candidate
offers an attractive investment opportunity for our company. In the event we elect to pursue an investment outside of our management’s
expertise, our management’s experience may not be directly applicable to the target business or their evaluation of its operations.
Although we identified general criteria
and 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 criteria and 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 criteria and guidelines.
Although we have identified
specific criteria and 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 positive attributes. If we consummate 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 criteria and guidelines. In addition, if we announce our initial business combination
with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if we are no longer a FPI and shareholder approval of the transaction is required
by law or Nasdaq rules, or we decide to obtain shareholder approval for business reasons, it may be more difficult for us to attain
shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
If we are unable to complete our initial business combination, our public shareholders may only receive $8.00 per share on our
redemption.
We may not obtain an opinion from an
independent investment banking firm in connection with a business combination, and consequently, an independent source may not
confirm that the price we are paying for the business is fair to our shareholders from a financial point of view.
Unless we consummate
our initial business combination (i) with a company that is affiliated with our sponsors, initial shareholders, officers or directors,
(ii) by partnering, submitting joint bids, or entering into any similar transaction with our sponsor, or an affiliate of our sponsor
and (iii) with a portfolio company of, or otherwise affiliated with, or has received a financial investment from, any of the private
equity firms with which our initial shareholders, executive officers or directors are affiliated, we are not required to obtain
an opinion from an independent investment banking firm that the price we are paying is fair to our shareholders 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 and/or total enterprise value according to reasonably accepted valuation standards and methodologies.
Such standards and methodologies 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 ordinary or
preferred shares to complete our initial business combination or under an employee incentive plan after consummation of our initial
business combination, which would dilute the interest of our shareholders and likely present other risks.
Our memorandum and
articles of association authorize the issuance of an unlimited number of both ordinary shares of no par value and preferred shares
of no par value. We may issue a substantial number of additional ordinary or preferred shares to complete our initial business
combination or under an employee incentive plan after consummation of our initial business combination. Although no such issuance
of ordinary or preferred shares will affect the per share amount available for redemption from the trust account, the issuance
of additional ordinary or preferred shares:
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may significantly dilute the equity interest of investors in the offering;
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may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;
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could cause a change in control if a substantial number of ordinary shares 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, ordinary shares and/or warrants.
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Resources could be wasted in researching
acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business.
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 consummate 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 only receive $8.00 per share on our redemption.
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 in the
section of this Annual Report captioned “Taxation — United States Federal Income Taxation — General”)
of our ordinary shares 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. Because we are a blank check company, with no past or current active business, we believe
that we may have been a PFIC since our inception. 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 potential U.S. investors to consult their own tax advisors regarding the possible
application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders,
see the section of this Annual Report captioned “Taxation — United States Federal Income Taxation — U.S.
Holders — Passive Foreign Investment Company Rules.”
A shareholder 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.
As described in the
section of this Annual Report captioned “Taxation — United States Federal Income Taxation — General,”
we have not sought a ruling from the IRS as to any U.S. federal income tax consequences described herein. The IRS may disagree
with the descriptions of U.S. federal income tax consequences contained herein, and its determination may be upheld by a court.
Any such determination could subject a shareholder or our company to adverse U.S. federal income tax consequences that would be
different than those described herein. Accordingly, each shareholder is urged to consult a tax advisor with respect to the specific
tax consequences of the acquisition, ownership and disposition of our ordinary shares, warrants and units, including the applicability
and effect of state, local or non-U.S. tax laws, as well as U.S. federal tax laws.
After our initial business combination,
it is likely that a majority of our directors and officers will live outside the United States and all of our assets will be located
outside the United States; therefore shareholders may not be able to enforce federal securities laws or their other legal rights.
It is likely that
after our initial business combination, a majority of our directors and officers will reside outside of the United States and a
majority of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible,
for shareholders in the United States to enforce their legal rights, to effect service of process upon all of our directors or
officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors
and officers under United States laws.
We are dependent upon our officers and
directors and the loss of their services could adversely affect our ability to operate.
Our operations are
dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe that our success
depends on the continued service of our officers and directors, at least until we have consummated our initial business combination.
In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating management time among various business activities, including identifying potential
business combinations and monitoring the related due diligence. Additionally, our officers and directors hold executive positions
with the management company of our sponsors and certain of our officers and directors engage in consulting and advisory activities.
All of the above could cause our officers and directors to not spend the requisite time pursuing our potential targets for our
initial business combination. Furthermore, we do not have an employment agreement with, or key-man insurance on the life of, any
of our directors or officers. The unexpected loss of the services of one or more of our directors or officers, or their spending
less time than anticipated on our activities, could have a detrimental effect on us and our ability to consummate our initial business
combination.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be largely 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 initial 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 initial 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 initial
business combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with
the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping
them become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of
interest in determining whether a particular business combination is the most advantageous.
Our key personnel
may be able to remain with the company after the consummation of our initial 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 consummation 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 consummation of our initial business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the consummation of our initial business
combination. Our key personnel may not 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 effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of
the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or
abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage
a public company, the operations and profitability of the post-combination business may be negatively impacted.
The officers and directors of an acquisition
candidate may resign upon consummation of our initial business combination. The loss of an acquisition target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the consummation 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 some members of the management team of an acquisition
candidate will not wish to remain in place.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Until we consummate
our business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our executive
officers and directors may in the future become affiliated with other entities that are engaged in a similar business.
Our officers may become
involved with subsequent blank check companies similar to our company. Our officers may become aware of business opportunities
which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor or that a potential target business would not be presented to another entity prior to
its presentation to us.
Our officers, directors, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have
an interest. In fact, we may enter into our initial business combination with a target business that is affiliated with our sponsors,
our directors or officers, although we do not intend to do so. Additionally, unlike almost all other blank check companies which
have consummated an initial public offering, our board may decide to pay to our officers and directors up to an aggregate maximum
of $400,000 in finder’s fees, consulting fees or other compensation for the introduction to us of a target business (with
which we ultimately consummate our initial business combination) or in connection with services such person (or persons) may render
for us in connection with the consummation of our initial business combination. While any such fee or other compensation paid will
be disclosed in our tender offer documents if we proceed with our initial business combination under the tender offer rules or
in our proxy solicitation documents if we proceed with our business combination pursuant to the proxy rules, a shareholders’
only ability to “disapprove” of such fee would be to tender (or redeem) his or her shares. Further, we do not have
a policy that expressly prohibits any of our sponsors, officers, directors or their respective affiliates from engaging for their
own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours which could lead us to pursuing a less desirable target and/or ultimately being unable to consummate our
initial business combination.
We may engage in our initial 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, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with one
of our sponsors, officers and directors. Our directors also serve as officers and board members for other entities. Our sponsors,
officers and directors are not currently aware of any specific opportunities for us to consummate our initial business combination
with any entities with which they are affiliated, and there have been no discussions concerning a business combination with any
such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for our initial business combination
as set forth in “Proposed Business — Effecting our initial business combination — Selection
of a target business and structuring of our initial 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 shareholders 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 will
lose their entire investment in us if our initial business combination is not consummated and our officers and directors have significant
financial interests in us, a conflict of interest may arise in determining whether a particular acquisition target is appropriate
for our initial business combination.
Our initial shareholders
purchased the founder shares for $25,000. Our sponsors purchased warrants for $2,190,909 in a private placement simultaneously
with our public offering. The founder shares and sponsor warrants will be worthless if we do not consummate an initial business
combination. Additionally, our sponsors have agreed with the representative of the underwriters that they and certain of their
affiliates or designees will purchase up to 40% of the public warrants, in the open market during the period commencing on September
20, 2012 and terminating on the earlier of the date of the announcement of the business combination or until the maximum number
of such warrants have been purchased. Our sponsors have also agreed that they will tender for the balance of the public warrants
in connection with our initial business combination or if we are unable to consummate our initial business combination.
The shares acquired
prior to the offering and any warrants owned by our sponsors, directors and officers will be worthless if we do not consummate
a business combination. The personal and financial interests of our sponsors, directors and officers may influence their motivation
in timely identifying and selecting a target business and completing a business combination. Consequently, our sponsors’,
directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict
of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and
in our shareholders’ best interest.
Shareholders may not be able to sell
their warrants to our sponsors pursuant to the 10b5-1 purchase plan at a time they wish to do so.
Our sponsors agreed
with the representative of the underwriters in the offering that they and certain of their affiliates or designees would purchase
up to 40% of the public warrants in the open market during the period commencing on September 20, 2012 and terminating on the earlier
of the date of the announcement of the business combination or until the maximum number of such warrants have been purchased. However,
for purchases to take place, the broker effectuating the purchases for our sponsors must be able to comply with all of the technical
requirements of Rule 10b-18. If any of the technical requirements of Rule 10b-18 cannot be complied with, purchases will not be
made under the plan. Accordingly, it is possible that our sponsors will not be able to purchase any warrants under the plan. As
a result, shareholders may not be able to sell their warrants at a time they wish to do so.
Purchases of our warrants by our sponsors
may artificially inflate the post-offering price of our warrants and could result in liability under the Exchange Act.
Our sponsors agreed
with the representative of the underwriters in the offering that they and certain of their affiliates or designees would purchase
up to 40% of the public warrants in the open market during the period commencing on September 20, 2012 and terminating on the earlier
of the date of the announcement of the business combination or until the maximum number of such warrants have been purchased. Our
sponsors have also agreed that they will tender for the balance of the public warrants that will commence after our announcement
of a business combination and occur in connection with such business combination. Since Rule 10b-18, a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act, does not apply to warrants, our sponsors will make purchases
outside of the safe harbor provided by Rule 10b-18. However, all purchases will be made in accordance with the technical requirements
of Rule 10b-18 (including timing, pricing and volume of the warrants purchases) although the purchases will not actually be effectuated
under Rule 10b-18. Because purchases will not be effectuated under Rule 10b-18, such purchases could result in liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. However, pursuant to the 10b-5 plan to be entered into by the sponsors,
the broker effectuating the plan is permitted to make warrant purchases only when such purchases are made in accordance with the
technical requirements under Rule 10b-18 and it is not permitted to do so in any other circumstances. However, the potential for
liability nevertheless exists. As such, a shareholder could bring an action against the sponsors or us (as the sponsors are our
agents) claiming the sponsors’ purchases have resulted in market manipulation, by artificially increasing the warrant price
above what it would have been without such purchases. If a shareholder brought such an action and a court found that we and our
sponsors violated Section 9(a)(2) and Rule 10b-5 of the Exchange Act, we could be subject to monetary damages to the shareholder.
In addition, we may be subject to an enforcement action by the SEC. Accordingly, this could cause the proceeds held in the trust
account to be reduced and the per-share redemption price received by shareholders to be less than approximately $8.00. Additionally,
if the purchases do result in our warrants having an artificially high price in the post offering marketplace, it could cause an
investor wishing to purchase our warrants at below $0.40 when he believes the true market price of the warrants is in fact below
$0.40 to be unable to do so, as the limit order would keep the warrant price at no less than $0.40 per warrant. However, the purpose
of such purchases is solely to provide a readily available market for public warrant holders wishing to sell their warrants prior
to the announcement of a business combination where such market might not exist.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete our initial 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 Annual 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 initial business combination. We and our officers and directors 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 any monies held in the trust account. As such, although no issuance of debt will affect the per share
amount available for redemption from the trust account, 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 ordinary shares;
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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 ordinary shares 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 the offering, 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
the offering provided us with $46,000,000 that we may use to complete our initial business combination.
We may effectuate
our initial business combination with a single target business or multiple target businesses simultaneously. However, we may not
be able to effectuate our initial 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 consummating our initial business combination with only a single entity, our lack of diversification may subject us to
numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
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solely dependent upon the performance of a single business, 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 initial business combination.
We may attempt to simultaneously consummate
business combinations with multiple prospective targets, which may hinder our ability to consummate our initial 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 the 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 consummate our initial
business combination with a private company about which little information is available, which may result in our initial 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 our initial business combination with a company
that is not as profitable as we suspected, if at all.
We may not be able to maintain control
of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our
initial business combination to acquire less than 100% of the equity interests or assets of a target business, but we will only
consummate such business combination if we will become the majority shareholder (or majority holder of the economic benefits) of
the target or are otherwise not required to register as an investment company under the Investment Company Act. Even though we
will own a majority interest (or majority economic interest) in 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 in exchange for all of the outstanding capital shares of a target. In this case, we 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
such transaction could own less than a majority of our outstanding shares subsequent to such transaction. In addition, other minority
shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
shares than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of
the target business.
Unlike many blank check companies, we
do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to
consummate our initial business combination with which a substantial majority of our shareholders do not agree.
Since we have no specified
percentage threshold for redemption contained in our memorandum and articles of association, our structure is different in this
respect from the structure that has been used by many blank check companies. Many blank check companies would not be able to consummate
an initial business combination if the holders of the company’s public shares voted against a proposed business combination
and elected to redeem or convert more than a specified percentage of the shares sold in such company’s initial public offering,
which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable
to complete business combinations because the amount of shares voted by their public shareholders electing redemption exceeded
the maximum redemption threshold pursuant to which such company could proceed with our initial business combination. As a result,
we may be able to consummate our initial business combination even though a substantial majority of our public shareholders do
not agree with the transaction and have redeemed their shares or, if we are no longer a FPI and 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, shareholders that would otherwise vote against the transaction may be able to enter into privately negotiated agreements
to sell their shares to us or our sponsors, officers, directors, advisors or their affiliates. However, 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. Furthermore, the redemption
threshold may be further limited by the terms and conditions of our initial business combination. In such case, we would not proceed
with the redemption of our public shares and the related business combination, and instead may search for an alternate business
combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing
instruments. We may seek to amend our memorandum and articles of association or governing instruments in a manner that will make
it easier for us to consummate an initial business combination that our shareholders may not support.
In order to effectuate
our initial business combination, blank check companies have, in the recent past, amended various provisions of their charters
and modified governing instruments. For example, blank check companies have amended the definition of business combination, increased
redemption thresholds and changed industry focus. We may seek to amend our charter or governing instruments in order to effectuate
our initial business combination. However, we and our directors and officers have agreed not to propose any amendment to our memorandum
and articles of association that would affect the substance and timing of our obligation to redeem our public shares if we are
unable to consummate our initial business combination within the 18 or 21 month period.
The provisions of our memorandum and
articles of association, that relate to us entering into a business combination may be amended by a lower amendment threshold than
that employed by many blank check companies. It may be easier for us, therefore, to amend our memorandum and articles of association
to facilitate the consummation of an initial business combination that our shareholders may not support.
Many 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.
Typically, amendment of these provisions requires approval by between 90% and 100% of the company’s public shareholders.
Our memorandum and articles of association provides that any of its provisions, including those related to pre-business combination
activity, may be amended prior to our business combination if approved by the affirmative vote of holders holding at least 65%
(or 50% if approved in connection with our initial business combination) of our outstanding shares that have voted on such amendment
and are entitled to vote. Prior to our initial business combination, if we seek to amend any provisions of our memorandum and articles
of association relating to shareholders’ rights or pre-business combination activity, we will provide dissenting public shareholders
with the opportunity to redeem their public shares in connection with any such vote on any proposed amendments to our memorandum
and articles of association. In addition, our memorandum and articles of association, excluding the provisions relating to shareholders’
rights or pre-business combination activity, may be amended with the approval of the directors. Our initial shareholders, which
will beneficially own 20% of our ordinary shares upon the closing of the offering (assuming they do not purchase any units in the
public markets), will participate in any vote to amend our memorandum and articles of association 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 memorandum and articles of association
which govern our pre-business combination behavior more easily than many blank check companies, and this may increase our ability
to consummate our initial business combination with which you do not agree. However, we and our directors and officers have agreed
not to propose any amendment to our memorandum and articles of association that would affect the substance and timing of our obligation
to redeem our public shares if we are unable to consummate our initial business combination within the 18 or 21 month period.
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. If we are unable to complete our initial business combination,
our public shareholders may only receive $8.00 per share on our redemption.
Although we believe
that the net proceeds of the offering, including the interest earned on the proceeds held in the trust account that may be available
to us for our initial business combination, will be sufficient to allow us to consummate our initial business combination, because
we have not 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 the offering 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. Financing may not be available on acceptable terms,
if at all. The current economic environment has made it especially difficult for companies to obtain acquisition financing. To
the extent that additional financing proves to be unavailable when needed to consummate our initial business combination, we would
be compelled to either restructure the transaction or abandon that particular initial business combination and seek an alternative
target business candidate. If we are unable to complete our initial business combination, our public shareholders may only receive
$8.00 per share on our redemption. In addition, even if we do not need additional financing to consummate our initial 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 initial business combination.
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
public shareholders do not support.
Our initial shareholders
own 20.0% of our issued and outstanding ordinary shares. Accordingly, they may exert a substantial influence on actions requiring
a shareholder vote, potentially in a manner that public shareholders do not support, including amendments to our memorandum and
articles of association. If our sponsors or management team purchases any units or any additional ordinary shares in the aftermarket
or in privately negotiated transactions, this would increase their control. Factors that would be considered in making such additional
purchases would include consideration of the current trading price of our ordinary shares. Additionally, our sponsors have indicated
they may purchase: (1) if we are no longer a FPI and we hold a shareholder meeting and conduct redemptions pursuant to the proxy
rules, up to $10,000,000 worth of shares in open market transactions as described herein; provided, however, to the extent our
sponsors do not purchase $10,000,000 worth of shares in the open market, our sponsors have the option to purchase the difference
in a private placement of shares occurring simultaneously with the closing of the business combination or (2) if we conduct redemptions
pursuant to the tender offer rules, up to $10,000,000 worth of shares (at our offering price of $8.00 per share) in a private placement
occurring simultaneously with the closing of the business combination. All such shares purchased shall be on similar terms as those
offered in the offering.
In addition, our board
of directors, whose members were elected by our sponsor, is and will be 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. It is unlikely that there will be an
annual meeting of shareholders to elect new directors prior to the consummation of our initial business combination, in which case
all of the current directors will continue in office until at least the consummation of the business combination. If there is an
annual meeting, as a consequence of our “staggered” board of directors, 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 consummation of
our initial business combination.
If we do not hold an annual meeting
of shareholders until after the consummation of our initial business combination shareholders will not be afforded an opportunity
to elect directors and to discuss company affairs with management until such time.
Unless otherwise required
by law or Nasdaq, or we decide for other business reasons, we do not currently intend to hold an annual meeting of shareholders
until after we consummate our initial business combination. If our shareholders want us to hold a meeting prior to our consummation
of our initial business combination, they may do so by members holding not less than thirty per cent of voting rights in respect
of the matter for which the meeting is requested making a request in writing to the directors in accordance with Section 82 of
the Companies Act. Under British Virgin Islands law, we may not increase the required percentage to call a meeting above thirty
percent. 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.
As a FPI, we are permitted to and we will rely on exemptions
from certain NASDAQ corporate governance standards. This may afford less protection to holders of our securities.
As a FPI, we
are permitted to and we will follow home country corporate governance practices instead of certain corporate governance rules of
the Nasdaq Capital Market. The corporate governance practice in our home country, the British Virgin Islands, does not require
the implementation of various Nasdaq Capital Market corporate governance rules. Accordingly, we intend to rely on our home country
corporate governance practice including, among other things, the composition and responsibilities of its board of directors and
board committees (including the audit, compensation and nominating committees), the participation of independent directors in the
determination of executive compensation and the nomination of directors, the requirement of annual meetings of shareholders, the
review and oversight of related-party transactions, the scheduling of executive sessions, the availability and content of a code
of conduct, the number of shareholders representing a quorum at shareholders’ meetings and any other home country practice
that would be permitted by the Nasdaq Capital Market under its rules from time to time.
We do not currently have a nominating
or compensation committee and do not intend ato establish one prior to the consummation of our initial business combination.
Furthermore,
we intend to follow home country practice instead of Rule 5635 of the Nasdaq Capital Market, which requires shareholder approval
for certain issuances of securities, including acquisitions of stock or assets of third parties resulting in the issuance of 20%
or more of an issuer’s outstanding shares, issuances resulting in a change of control of an issuer and certain equity compensation
plans. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. company
listed on the Nasdaq Capital Market may provide less protection than is accorded to investors under the rules of the Nasdaq Stock
Market applicable to domestic issuers.
We may amend the terms of the warrants
in a manner that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
Our warrants were
issued in registered form under a warrant agreement between Continental Transfer & Stock 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 a majority of the then outstanding 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 a majority of the then outstanding warrants (including the insider warrants) approve
of such amendment. As of the date of this Annual Report, our initial shareholders own approximately 41% of the outstanding warrants
and the underwriters own approximately 4% of the outstanding warrants. Therefore, it is possible that we may only need the approval
from a small number of holders of public warrants to amend the terms of the warrants. Although our ability to amend the terms of
the warrants with the consent of a majority of the then outstanding warrants is unlimited, examples of such amendments could be
amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number
of ordinary shares purchasable upon exercise of a warrant.
We may redeem unexpired warrants prior
to their exercise at a time that is disadvantageous to a warrant holder, thereby making such 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 the ordinary shares equals or exceeds $10.50 per share for any 20 trading
days within a 30 trading-day period ending on the third business day prior to proper notice of such redemption provided that commencing
five business days prior to the date we give notice of redemption and during the entire period thereafter until the time we redeem
the warrants, we have an effective registration statement under the Securities Act covering the ordinary shares issuable upon exercise
of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable
state securities laws. Redemption of the outstanding warrants could force holders (1) to exercise their warrants and pay the exercise
price therefor at a time when it may be disadvantageous for them to do so, (2) to sell their warrants at the then-current market
price when they might otherwise wish to hold on to the warrants or (3) 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 their warrants.
None of the insider warrants or the repurchased public warrants will be redeemable by us so long as they are held by the initial
purchasers or their permitted transferees.
Our warrants may have an adverse effect
on the market price of our ordinary shares and make it more difficult to effectuate our initial business combination.
We issued warrants
to purchase 5,750,000 ordinary shares as part of the units offered in the offering (including the underwriters’ over-allotment
option) and an additional 4,820,000 insider warrants (including the over-allotment option) as part of a private placement occurring
simultaneously with the offering. Each of these warrants is exercisable to purchase one ordinary share at $7.00 per share. In addition,
if the sponsors make any working capital loans, they may convert up to $500,000 of those loans into additional sponsor warrants
at $0.50 per warrant. Additionally, the exercise price of the warrants is lower than in many similar recent blank check companies
(which are exercisable at or above the unit offering price).
To the extent we issue
ordinary shares to effectuate our initial business combination, the potential for the issuance of a substantial number of additional
ordinary shares 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 ordinary shares and reduce the value of the ordinary
shares issued to complete the business combination. Therefore, our warrants may make it more difficult to effectuate our initial
business combination or increase the cost of acquiring the target business.
Although currently listed on Nasdaq,
our securities may not continue to be listed on this exchange in the future, which could limit investors’ ability to make
transactions in our securities and subject us to additional trading restrictions.
Although our securities
are listed on Nasdaq, we cannot assure you that our securities will continue to be listed on Nasdaq in the future. Additionally,
in connection with our business combination, Nasdaq will require us to file a new initial listing application and meet its initial
listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to
meet those initial listing requirements at that time.
If Nasdaq delists
our securities from trading on its exchange, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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a reduced liquidity with respect to our securities;
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a determination that our ordinary shares are a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;
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a limited amount of news and analyst coverage for our company; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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Furthermore, The National Securities Markets
Improvement Act of 1996 (“NSMIA”) is a federal statute which prevents or preempts states from regulating the sale of
certain securities, which are referred to as “covered securities.” Because our securities are listed on Nasdaq, they
are covered securities for the purpose of NSMIA. If our securities were no longer listed on Nasdaq and therefore not “covered
securities,” we would be subject to regulation in each state in which we offer our securities.
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 United States
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 must be prepared in accordance with, accounting principles generally accepted in the United States of
America, GAAP, or International Financial Reporting Standards, or IFRS, and the historical financial statements must be audited
in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such
statements in time for us to disclose such statements in accordance with federal proxy rules and consummate our initial business
combination within the 18 or 21 month period.
The requirements of being a public company
may strain our resources and divert management’s attention.
As a public company,
we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements
of The Nasdaq Capital Market and other applicable securities rules and regulations. Compliance with these rules and regulations
will 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.
In addition, changing
laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies,
increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards
are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in
practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend
to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance
activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings
against us and our business may be adversely affected.
However, for as long
as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer
to herein as the JOBS Act), we may take advantage of certain exemptions from various reporting requirements that are applicable
to “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions
until we are no longer an “emerging growth company.”
We will remain an
“emerging growth company” for up to five years. If our non-convertible debt issued within a three year period or revenues
exceeds $1 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last
day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following
fiscal year.
We are an “emerging growth company”
and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary
shares less attractive to investors.
We are an “emerging
growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” including, but not limited to,
not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards
that have different effective dates for public and private companies until those standards apply to private companies. As such,
our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict
if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find our
ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price
may be more volatile.
Compliance
with the Sarbanes-Oxley Act of 2002 could require substantial financial and management resources and may increase the time and
costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes Oxley Act, requires registrants to evaluate and report on their system of
internal controls. Since we have a market capitalization of less than $75 million, Section 404(b) of the Sarbanes-Oxley Act (added
as part of the Dodd-Frank Act) exempts us from the requirement that we have such system of internal controls audited. If no further
action is taken by Congress or the SEC, at such time as we exceed a market capitalization of $75 million, we will be required to
comply with such audit requirement. Further, if we generally fail to maintain the adequacy of our internal controls, we could be
subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation and any inability to provide reliable
financial reports could harm our business.
Regardless
of value and sophistication (if privately held) or market capitalization (if public), there can be no assurances a target company
will be in compliance with all the applicable provisions of the Sarbanes-Oxley Act regarding adequacy of its internal
controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls,
or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future,
could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause
investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of
our securities.
We may re-incorporate in another jurisdiction
in connection with our initial 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
our initial business combination, we may relocate the home jurisdiction of our business from the British Virgin 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.
Shareholders may face difficulties in
protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited, because we
are incorporated under British Virgin Islands law.
We are a company incorporated
under the laws of the British Virgin Islands. As a result, it may be difficult for shareholders to enforce judgments obtained in
the United States courts against our directors or officers.
Our corporate affairs
will be governed by our memorandum and articles of association, the Companies Act and the common law of the British Virgin Islands.
The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities
of our directors to us under British Virgin Islands law are to a large extent governed by the Companies Act and the common law
of the British Virgin Islands. The common law of the British Virgin Islands is derived from English common law, and while the decisions
of the English courts are of persuasive authority, they are not binding on a court in the British Virgin Islands. The rights of
our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly established
as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin
Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have
more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in British
Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders in British Virgin Islands companies
may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in
which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may
result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company
organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate
wrongdoing has occurred.
The British Virgin
Islands courts are also unlikely:
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to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and
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to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
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There is no statutory
recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin
Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be
sued upon as a debt at common law so that no retrial of the issues would be necessary provided that:
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the U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;
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the U.S. judgment is final and for a liquidated sum;
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the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company;
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in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;
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recognition or enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and
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the proceedings pursuant to which judgment was obtained were not contrary to natural justice.
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In appropriate circumstances,
a British Virgin Islands court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as
declaratory orders, orders for performance of contracts and injunctions.
As a result of all
of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management,
members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
Our memorandum and articles of association
permit the board of directors to create additional classes of securities, including shares with rights, preferences, designations
and limitations as they determine which may have an anti-takeover effect.
Our memorandum and
articles of association permits the board of directors to designate rights, preferences, designations and limitations attaching
to the preferred shares as they determine in their discretion, without shareholder approval with respect to the terms or the issuance.
If issued, the rights, preferences, designations and limitations of the preferred shares would be set by the board of directors
and could operate to the disadvantage of the outstanding ordinary shares. Such terms could include, among others, preferences as
to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers. We may issue some or all
of such preferred shares in connection with our initial business combination. Notwithstanding the foregoing, we and our directors
and officers have agreed not to propose any amendment to our memorandum and articles of association that would affect the substance
and timing of our obligation to redeem our public shares if we are unable to consummate our initial business combination within
the 18 or 21 month period.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Infinity Cross Border
Acquisition Corporation was incorporated on April 6, 2011 (under the name Infinity China 1 Acquisition Corporation). We are a blank
check company incorporated as a British Virgin Islands business company with limited liability (meaning that our public shareholders
have no additional liability, as members of our company, for the liabilities of our company over and above the amount paid for
their shares) and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual
control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination
with one or more businesses or entities. All activity through July 25, 2012 related to our formation and consummation of our offering.
Since July 25, 2012 we have been investigating prospective target businesses with which to consummate our initial business combination.
Our registered agent is Ogier Fiduciary Services (BVI) Limited and is located at Nemours Chambers, Road Town, Tortola, British
Virgin Islands.
On July 25, 2012,
we consummated our offering of 5,000,000 units (the “Units”), each unit (a “Unit”) consisting of one ordinary
share, no par value per share (the “Ordinary Shares”), and a warrant (a “Warrant”) to purchase one Ordinary
Share, pursuant to the registration statement on Form S-1 as amended on Form F-1 (File No. 333-173575) (the “Registration
Statement”) which was declared effective on July 19, 2012. The units were sold at an offering price of $8.00
per unit, generating gross proceeds of $40,000,000. The underwriters of the IPO were granted an option to purchase up to an additional
750,000 Units to cover over-allotments, if any. On July 26, 2012, the underwriters exercised the option in full and, on July 27,
2012, the underwriters purchased all of the Over-Allotment Units, which were sold at an offering price of $8.00 per Unit, generating
gross proceeds of $6,000,000. Simultaneously with the closing of the offering and the closing of the over-allotment, the Company
closed a private placement (the “Private Placement”) where it sold an aggregate of 4,381,818 Warrants to the Company’s
sponsors (including warrants sold in connection with the over-allotment option) (the “Sponsor Warrants”) and 438,182
Warrants to EBC (including warrants sold in connection with the over-allotment option) (“Placement Warrants”). As a
result of the offering and the full exercise of the over-allotment option, we raised $46,000,000.
On July 20, 2012,
our Units commenced trading on The Nasdaq Capital Market under the symbol INXBU. On September 20, 2012, our Units were separated
and our ordinary shares and warrants began to trade on the Nasdaq Capital Market under the symbols INXB and INXBW, respectively.
B. Business Overview
Our efforts in identifying
a prospective target business will not be limited to a particular country, although we intend to focus on operating businesses
that have their principal executive office located in Canada, Europe, Africa or Israel. We believe that we may add value to this
business by enhancing its growth prospects in China via strategic partnerships, sales/marketing, IP licensing, joint ventures or
manufacturing.
We will seek to capitalize
on the strength of our management team. Our co-Chief Executive Officers, officers and directors have an aggregate of 80 years of
experience managing, advising, acquiring, financing and selling private and public companies in a variety of industries. We believe
that our contacts and sources, ranging from private and public company contacts, private equity funds and investment bankers to
attorneys, accountants and business brokers, will allow us to generate acquisition opportunities. Our Co-Chairpersons have been
actively engaged in entrepreneurship and investments for over 50 years and have been assisting western companies operate in China
since 2004. Their efforts in China have led to the development of contacts and relationships that we hope to leverage in implementing
our business plan.
In 2005, the
Chinese government granted to Infinity-CSVC Venture Capital Enterprise, an entity affiliated with our Co-Chairpersons and the
managers of our sponsors, the first license ever issued to a foreign invested venture capital fund, a new form of investment vehicle
incorporating features akin to a limited partnership and specifically formed for the purpose of investing in Israeli and Chinese
technology companies. In addition to certain subsidiaries of IDB Group and its other Israel-based limited partners, the China
Development Bank, a development-oriented financial institution of the Chinese government under the jurisdiction of China’s
State Council, is a limited partner of our sponsors. The IDB Group is active globally in international business. Furthermore,
a subsidiary of China Singapore Suzhou Industrial Park Ventures Co. Ltd., a government sponsored investment fund (with a majority
of its funds provided by local governmental entities), is a shareholder of our sponsor’s general partner with representation
on our sponsors’ investment committee and the general partner’s board of directors. Our executive officers and directors
will seek to capitalize on these and other relationships in China in order to locate potential target businesses in the western
world that will be synergistic with the current growth strategies in China. We caution investors that the strength of our network
and relationships cannot guarantee that we will source an attractive acquisition opportunity or successfully consummate an initial
business combination.
The Infinity I-China
Funds include 12 offices in China and 10 satellite funds that are investment funds managing local currency funds on behalf of municipalities
in certain cities. These funds give Infinity access to local Chinese business looking to partner with western businesses to enhance
global enterprise.
There is no priority
with respect to the geographic locations we will focus on initially and we will use the same search process for each of these geographic
locations. While we have not established the factors we would consider in deciding to invest in a target business, we will seek
to identify a target that is likely to provide attractive financial returns. We have not established specific criteria that would
trigger our consideration of businesses outside of Canada, Europe, Africa or Israel, although we may focus on other geographic
regions if we believe that those regions are better able to provide attractive financial returns or if an opportunity outside of
Canada, Europe, Africa or Israel was brought to our attention. We have not determined a time frame, monetary amount or any other
factor that would trigger our search of a target business outside of these regions.
Pursuant to the Nasdaq
listing requirements and our memorandum and articles of association, our initial business combination must be with a target business
or businesses whose collective fair market value is at least equal to 80% of the balance in the trust account at the time of the
execution of a definitive agreement for such business combination, although this may entail simultaneous acquisitions of several
target businesses. The fair market value of the target business will be determined by our board of directors based upon one or
more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book
value). The target business or businesses that we acquire may have a collective fair market value substantially in excess of 80%
of the trust account balance. In order to consummate such a business combination, we may issue a significant amount of our debt
or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or
equity securities. There are no limitations on our ability to incur debt or issue securities in order to consummate a business
combination. Since we have no specific business combination under consideration, we have not entered into any such arrangement
to issue our debt or equity securities and have no current intention of doing so.
We anticipate structuring
our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may,
however, structure our initial business combination to acquire less than 100% of such interests or assets of the target business,
but we will only consummate such business combination if we (or any entity that is a successor to us in an initial business combination)
will become the majority or greater shareholder or majority holder of economic benefits of the target. We will not consider any
transaction that does not meet these criteria. Even though we will own a majority interest in 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 in exchange for all of the outstanding capital shares 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.
Our management team
intends to focus on creating shareholder value by leveraging its experience in the management, operation and financing of businesses
to improve the efficiency of operations and implement strategies to grow revenue either organically or through acquisitions. Consistent
with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide
to enter into a business combination with a target business that does not meet these criteria and guidelines.
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Middle-Market Growth Business
. We will seek to acquire one or more growth businesses with a total enterprise value ranging from roughly $32,000,000 to $150,000,000, determined in the sole discretion of our officers and directors according to reasonably accepted valuation standards and methodologies. We believe that our focus on businesses in this segment of the middle market will offer us a substantial number of potential business targets that we believe can benefit from improved operations and achieve and maintain significant revenue and earnings growth (particularly when exposed to the Chinese market). We do not intend to acquire either a start-up company or a company with negative cash flow. Under our memorandum and articles of association, we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
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Companies with Opportunity
to Strengthen Management and Add Value
. We will seek to acquire one or more businesses that provide a platform
for us to develop the acquired business' management team and leverage the experience of our officers, directors and sponsor investors.
We believe that the operating expertise of our officers and directors is well suited to complement and, if required, replace the
target's management team.
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Companies in Business Segments that are Strategically Relevant to China
. We will seek to acquire a western business with strong technology, know-how, distribution networks or business practices that will be strategic to China and its growth such as alternative energy, water, agriculture, automated machinery, medical devices, Internet, IT services, natural resources and communications.
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Business with Revenue and Earnings Growth Potential
. We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of brand and new product development, increased production capacity, expense reduction, synergistic follow-on acquisitions and increased operating leverage.
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Companies with Potential for Strong Free Cash Flow Generation
. We will seek to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash flow. We will focus on one or more businesses that have predictable revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value.
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Benefit from Being a Public Company
. We intend to only acquire a company that will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company.
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These criteria are
not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based,
to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may
deem relevant.
Competitive Advantages
We believe the experience
and contacts of our directors and officers will give us an advantage in sourcing, structuring and consummating a business combination.
The future role of our key personnel following a business combination, however, cannot presently be fully ascertained. Specifically,
none of the members of our current management team are obligated to remain with us subsequent to a business combination, and we
cannot assure you the resignation or retention of our current management will be included as a term or condition in any agreement
relating to a business combination. In addition, despite the competitive advantages we believe we enjoy, we remain subject to significant
competition with respect to identifying and executing a business combination.
Established Deal Sourcing Network
Through our management
team and our directors, we believe we have contacts and sources from which to generate acquisition opportunities and seek complimentary
business arrangements. These contacts and sources include those in government, private and public companies around the world, private
equity and venture capital funds, investment bankers, attorneys and accountants.
For more information
regarding our executive officers and directors, please refer to the more detailed disclosure set forth under Item 6, “Directors,
Senior Management and Employees” below.
Unique positioning
We are a western investment
team with experience in China. We understand cultural, business and economic differences and opportunities that will allow us to
negotiate a transaction with a western business whose value we can enhance with Chinese business partners.
Status As A Public Company
We believe our structure
will make us an attractive business combination partner to potential target businesses. As an existing public company, we will
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 in the target business for our ordinary shares.
We believe target businesses will find this path to be less expensive, and offer greater certainty of becoming a public company
than the typical initial public offering process. In an initial public offering, there are typically expenses incurred in marketing,
roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination
with us. Furthermore, once a proposed business combination is approved by our shareholders and the transaction is consummated,
the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’
ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public,
we believe the target business would have greater access to capital and additional means of creating management incentives that
are better aligned with shareholders’ interests than it would as a private company. It can offer further benefits by augmenting
a company’s profile among potential new customers and vendors and aid in attracting talented employees.
Strong Financial Position and Flexibility
With a trust account
initially in the amount of $46,000,000 and a public market for our ordinary shares, we offer a target business a variety of options
to facilitate a business combination and fund growth and expansion of business operations. Because we are able to consummate a
business combination using the cash proceeds of the offering, our share capital, debt or a combination of the foregoing, we have
the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address
the needs of the parties. However, if our business combination requires us to use substantially all of our cash to pay the purchase
price, we may need to arrange third party financing to help fund our business combination. Since we have no specific business combination
under consideration, we have not taken any steps to secure third party financing. Accordingly, our flexibility in structuring a
business combination will be subject to these contingencies.
Effecting
our initial business combination
General
As of the filing of
this Annual Report we are not engaged in any operations. We intend to effectuate our initial business combination using cash from
the proceeds of the offering and the private placement of the sponsor warrants and EBC warrants, our shares, debt or a combination
of these as the consideration to be paid in our initial business combination. We may seek to consummate 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, although we will not be permitted to effectuate our initial
business combination with another blank check company or a similar company with nominal operations.
If our initial business
combination is paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment
of the purchase price in connection with our business combination or used for redemptions of purchases of our ordinary shares,
we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes,
including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness
incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.
Subject to the limitations
that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution
of a definitive agreement for our initial business combination, our management will have virtually unrestricted flexibility in
identifying and selecting a prospective target business. Accordingly, 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, this assessment may not 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 consummation of our initial business
combination, and we may effectuate an 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 consummate such financing only simultaneously
with the consummation of our initial 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.
Sources
of target businesses
We anticipate that
target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture
capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls
or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read the prospectus and know what types of businesses we are targeting. Our officers
and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of
through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions. In addition, we expect to 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. While
we have not presently engaged the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis (other than EBC), we may engage these firms or other individuals in the future, in which event we may pay a
finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms
of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities
to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction
that our management determines is in our best interest to pursue.
Payment of finder’s
fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust
account. Additionally, our board may decide to pay to our officers and directors up to an aggregate maximum of $400,000 in finder’s
fees, consulting fees or other compensation for the introduction to us of a target business (with which we ultimately consummate
our initial business combination) or in connection with services such person (or persons) may render for us in connection with
the consummation of our initial business combination. Any such fee or other compensation paid will be disclosed in our tender offer
documents if we proceed with our initial business combination under the tender offer rules or in our proxy solicitation documents
if we proceed with our business combination pursuant to the proxy rules. Although some of our officers and directors may enter
into employment or consulting agreements with the acquired business following our initial business combination, the presence or
absence of any such arrangements will not be used as a criterion in our selection process of an acquisition candidate.
With respect to our
initial business combination, we are not prohibited from pursuing a business combination under any of the following scenarios (however
in each case, we have agreed to obtain an opinion from an independent investment banking firm which is a member of FINRA reasonably
acceptable to EBC that our initial business combination is fair to our unaffiliated shareholders from a financial point of view):
(i) with a company that is affiliated with our sponsors, officers or directors, (ii) by partnering, submitting joint bids, or entering
into any similar transaction with our sponsor, or an affiliate of our sponsor and (iii) with a portfolio company of, or otherwise
affiliated with, or has received a financial investment from, any of the private equity firms with which our existing shareholders,
executive officers or directors are affiliated. Generally, an opinion from an independent investment banking firm is rendered to
a company’s board of directors and investment banking firms may take the view that shareholders may not rely on the opinion.
Such view will not impact our decision on which investment banking firm to hire.
Selection
of a target business and structuring of our initial business combination
Subject to the limitations
that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution
of a definitive agreement for our initial business combination, our management will have virtually unrestricted flexibility in
identifying and selecting a prospective target business. We will only consummate an initial business combination in which we (or
any entity that is a successor to us in an initial business combination) become the majority shareholder or majority holder of
the economic benefits of the target. There is no basis for our public shareholders to evaluate the possible merits or risks of
any target business with which we may ultimately complete our initial business combination. To the extent we effect our initial
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 expect to conduct an extensive due diligence review which will encompass, among other things, meetings with
incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well
as 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 a 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 consummation of our initial business combination, the prospects for our success may depend entirely on the
future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple
entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By consummating our initial business combination with only a single entity, our
lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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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 initial
business combination with that business, our assessment of the target business’ management may not prove to be correct. The
future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. Consequently,
members of our management team may not become a part of the target’s management team, and the future management may not have
the necessary skills, qualifications or abilities to manage a public company. Further, it is also not certain whether one or more
of our directors will remain associated in some capacity with us following our initial business combination. Moreover, members
of our management team may not have significant experience or knowledge relating to the operations of the particular target business.
Our key personnel may not 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 our initial
business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We may not have the ability to recruit additional managers, or that 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
We intend to conduct
redemptions without a shareholder vote pursuant to the tender offer rules of the SEC. Therefore we do not intend to seek shareholder
approval before we effect our initial business combination as not all business combinations require shareholder approval under
applicable state law.
Regardless of whether
we are required by law, or we decide to seek shareholder approval for business reasons, so long as we maintain our status as a
FPI and are required to comply with the foreign private issuer rules, we will conduct the redemptions pursuant to the tender offer
rules. If we are no longer a FPI (and no longer required to comply with the foreign private issuer rules) and we are required by
law or Nasdaq to seek shareholder approval, or we decide to seek shareholder approval for other business reasons, we will conduct
the 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.
Presented in the table
below is a graphic explanation of the types of initial business combinations we may consider and whether shareholder approval would
be required under the Companies Act 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 shares of target not involving a merger with the company
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No
|
Merger of target with a subsidiary of the company
|
|
No
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Merger of the company with a target
|
|
Yes
|
Permitted
purchases of our securities
If we are no longer
a FPI and 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, we may enter into privately negotiated transactions to purchase public shares following
the consummation of the business combination from shareholders who would have otherwise elected to have their shares redeemed in
conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the trust account. Our sponsors,
directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to
or following the consummation of our initial business combination. Such a purchase would 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 we or our sponsors, directors, officers, advisors or their affiliates
purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption
rights, such selling shareholders would be required to revoke their prior elections to redeem their shares.
The purpose of such
purchases would be to (i) increase the likelihood of obtaining shareholder approval of the business combination or (ii), where
the purchases are made by our sponsors, directors, officers, advisors or their affiliates, 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 the business
combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of our initial
business combination that may not otherwise have been possible.
As a consequence of
any such purchases by us:
|
•
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the funds in our trust account that are so used will not be available to us after the business combination;
|
|
•
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the public “float” of our ordinary shares may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to obtain the listing or trading of our securities on a national securities exchange;
|
|
•
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because the shareholders who sell their shares in a privately negotiated transaction or pursuant to market transactions as described above may receive a per share purchase price payable from the trust account that is not reduced by the merger/acquisition fee or taxes payable, our remaining shareholders may bear the entire payment merger/acquisition fee and taxes payable (as well as, in the case of purchases which occur prior to the consummation of our initial business combination, up to $50,000 of net interest that may be released to us from the trust account to fund our dissolution expenses in the event we do not complete our initial business combination within the 18 or 21 month period. That is, if we are no longer a FPI and seek shareholder approval of our initial business combination, the redemption price per share payable to public shareholders who elect to have their shares redeemed will be reduced by a larger percentage of the taxes payable than it would have been in the absence of such privately negotiated or market transactions, and shareholders who do not elect to have their shares redeemed and remain our shareholders after the business combination will bear the economic burden of the merger/acquisition fee and taxes payable because such amounts will be payable by us; and
|
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•
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the payment of any premium would result in a reduction in book value per share for the remaining shareholders compared to the value received by shareholders that have their shares purchased by us at a premium.
|
Our sponsors, officers,
directors and/or their affiliates anticipate that they will identify the shareholders with whom our sponsors, 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 sponsors, 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. Pursuant to the terms of such arrangements, any
shares so purchased by our sponsors, officers, advisors, directors and/or their affiliates would then revoke their election to
redeem such shares. The terms of such purchases would operate to facilitate our ability to consummate a proposed business combination
by potentially reducing the number of shares redeemed for cash.
In addition to the
above described permitted purchases, our sponsors have indicated they may, if we are no longer a FPI and we structure our initial
business combination to require a shareholder vote, purchase up to $10,000,000 of our ordinary shares in the open market commencing
two business days after we file a preliminary proxy statement relating to our initial business combination and ending on the business
day immediately preceding the record date for the meeting of shareholders at which such initial business combination is to be approved.
These purchases will be made in accordance with Rule 10b5-1 under the Exchange Act and the broker’s purchase obligation will
otherwise be subject to applicable law, including Regulation M which may prohibit purchases under certain circumstances. The price
per share at which such purchases will be made will not be more than the per-share amount held in the trust account (less taxes
payable) as reported in the preliminary proxy statement. These purchases will be made until the earlier of the expiration of the
buyback period or until the purchases reach the maximum amount set by our sponsors, not to exceed $10,000,000. Our sponsors will
not have any discretion or influence over these purchases other than the decision as to whether to undertake any purchases at all.
Our sponsors have agreed to vote any ordinary shares purchased in the open market in favor of our initial business combination,
representing a maximum of approximately 25% of the public shares entitled to vote on the business combination. Unless our initial
business combination is approved by our shareholders, our sponsors have agreed not to resell these shares. However, our sponsors
will be entitled to participate in any liquidating distributions with respect to the shares purchased in the open market in the
event we do not consummate an initial business combination. In the event our sponsors do not purchase the full $10,000,000 of ordinary
shares through open market purchases, our sponsors have the option to purchase from us ordinary shares in a private placement at
a purchase price of $8.00 per share until they have spent an aggregate of $10,000,000 in the open market purchases described above
and the private placement.
If instead we offer
redemption under the tender offer rules in connection with our initial business combination, then our sponsors have the option
to purchase from us 1,250,000 ordinary shares in a private placement at a purchase price of $8.00 per share, for an aggregate of
$10,000,000.
In either case, the
definitive agreement relating to the private placement will be entered into concurrently with the definitive agreement for our
initial business combination, and the closing of the private placement purchase will occur immediately prior to the consummation
of our initial business combination. No commissions, fees or other compensation will be payable in connection with the private
placement.
Redemption
rights for public shareholders upon consummation of our initial business combination
We will provide our
shareholders with the opportunity to redeem their shares upon the consummation 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, including interest but net of taxes
payable, 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 $8.00 per share. Our initial shareholders have agreed to waive their redemption rights
with respect to any founder shares and any public shares they may hold in connection with the consummation of our initial business
combination. In addition, our directors and officers have also agreed to waive their redemption rights with respect to any public
shares in connection with the consummation of our initial business combination.
Manner
of Conducting Redemptions
Unlike many blank
check companies that hold shareholder votes and conduct proxy solicitations in conjunction with their business combinations and
related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required
by law, so long as we are a FPI or if we are no longer a FPI and a shareholder vote is not required by law or Nasdaq and we do
not decide to hold a shareholder vote for business reasons, we will, pursuant to our memorandum and articles of association:
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•
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offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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|
•
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file tender offer documents with the SEC prior to consummating our initial business combination which will 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, and we will not be permitted to consummate our initial business combination until the expiration of the tender offer period.
|
In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act.
In connection with
the successful consummation of our business combination, we may redeem pursuant to a tender offer up to that number of ordinary
shares that would permit us to maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited
by the terms and conditions of our proposed initial business combination. For example, the proposed business combination may require:
(i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for
working capital or other general corporate purposes or (iii) the allocation 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 that are validly tendered 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 consummate the business combination, we will not purchase
any shares pursuant to the tender offer and all shares will be returned to the holders thereof following the expiration of the
tender offer. Additionally, since we are required to maintain net tangible assets of at least $5,000,001 (which may be substantially
higher depending on the terms of our potential business combination), the chance that the holders of our ordinary shares electing
to redeem in connection with a redemption conducted pursuant to the proxy rules will cause us to fall below such minimum requirement
is increased.
When we conduct a
tender offer to redeem our public shares upon consummation of our initial business combination, in order to comply with the tender
offer rules, the offer will be made to all of our shareholders, not just our public shareholders. Our initial shareholders have
agreed to waive their redemption rights with respect to any founder shares and public shares in connection with any such tender
offer.
Regardless of whether
we are required by law or Nasdaq, or we decide to seek shareholder approval for business reasons, so long as we maintain our status
as a FPI and are required to comply with the foreign private issuer rules (which exempts us from the proxy rules pursuant to the
Exchange Act), we will conduct the redemptions pursuant to the tender offer rules. If we are no longer a FPI (and no longer required
to comply with the foreign private issuer rules) and we are required by law or Nasdaq to seek shareholder approval, or we decide
to seek shareholder approval for other business reasons, we will:
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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
|
|
•
|
file proxy materials with the SEC.
|
In the event that
we seek shareholder approval of our initial business combination and we are no longer a FPI, we will distribute proxy materials
and, in connection therewith, provide our public shareholders with the redemption rights described above upon consummation of the
initial business combination.
If we are no longer
a FPI and we seek shareholder approval, we will consummate our initial business combination only if a majority of the ordinary
shares voted are voted in favor of the business combination. In such case, our initial shareholders have agreed to vote any founder
shares and any public shares purchased after the offering in favor of our initial business combination and our officers and directors
have also agreed to vote any public shares purchased after the offering in favor of our initial business combination. 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 agreed to waive their redemption rights with respect to any founder shares and public
shares in connection with the consummation of our initial business combination.
If we seek shareholder
approval of our business combination while we are subject to the foreign private issuer rules, regardless of how any such shareholder
votes, our public shareholders will only be able to redeem their ordinary shares in connection with a tender offer which will be
conducted pursuant to the tender offer rules.
Many blank check companies
would not be able to consummate our initial business combination if the holders of the company’s public shares voted against
a proposed business combination and elected to redeem or convert more than a specified maximum percentage of the shares sold in
such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result,
many blank check companies have been unable to complete business combinations because the amount of shares voted by their public
shareholders electing redemption exceeded the maximum redemption threshold pursuant to which such company could proceed with our
initial business combination. Since we have no such specified maximum redemption threshold, our structure is different in this
respect from the structure that has been used by many blank check companies. However, 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. Furthermore, the redemption threshold may be
further limited by the terms and conditions of our initial business combination. In such case, we would not proceed with the redemption
of our public shares and the related business combination, and instead may search for an alternate business combination.
Limitation
on redemption rights upon consummation of our initial business combination if we seek shareholder approval
Notwithstanding the
foregoing, if we are no longer a FPI and 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 memorandum and articles of association
provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to more than an aggregate of 12.5% of the shares sold in the offering. 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 as a means to force us or our management team 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 12.5% of the shares sold in the offering could threaten to exercise its redemption rights if such holder’s shares
are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting
our shareholders’ ability to redeem no on more than 12.5% of the shares sold in the offering, we believe we will limit the
ability of a small group of shareholders to unreasonably attempt to block our ability to consummate our initial business combination,
particularly in connection with our initial business combination with a target that requires as a closing condition that we have
a minimum net worth or a certain amount of cash.
Repurchases
and Tender Offer of Public Warrants
Our sponsors or their
designees have committed to purchase up to 40% of the public warrants in the aftermarket at $0.40 per public warrant during the
period commencing on September 20, 2012 and terminating on the earlier of the date of the announcement of the business combination
or until the maximum number of such warrants have been purchased. Purchases will be made only in open market transactions pursuant
to a 10b5-1 plan entered into by the sponsors on or prior to the date of this prospectus which requires the sponsors to maintain
an irrevocable limit order for such public warrants at $0.40 per warrant. Pursuant to the 10b5-1 plan, all such purchases will
be made in accordance with the technical requirements of Rule 10b-18 (including timing, pricing and volume requirements with respect
to the warrants) although the purchases will not actually be effectuated under Rule 10b-18. If any of the purchases cannot be made
in accordance with the technical requirements of Rule 10b-18, such purchases will not be made under the plan. As a result, it is
possible that the sponsors will not be able to purchase any warrants under the plan. Our sponsors will monitor the activities of
the broker effectuating the 10b5-1 plan in an effort to ensure that purchases are made in accordance with the technical requirements
of Rule 10b-18.
In addition to up to
40% of the public warrants being purchased as described above, our sponsors have committed to purchase at $0.60 per public warrant
the balance of the outstanding public warrants in a tender offer that will commence after our announcement of a business combination
and occur in connection with our initial business combination. The warrant tender offer will not be conditioned upon any minimum
number of warrants being tendered.
In the event that we
are unable to close a business combination within the allotted time, the escrow agent will be authorized to transfer $0.60 per
public warrant, to holders of public warrants other than our sponsors, as promptly as reasonably possible but no more than five
business days thereafter and all such public warrants and repurchased public warrants will expire worthless.
Tendering
share 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 expiration date set forth in the tender offer
documents or proxy materials mailed to such holders, or in the event we distribute proxy materials, up to two business days prior
to the vote on the proposal to approve the business combination, or to deliver their shares to the transfer agent electronically
using 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 business 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 $45.00 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 our 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 redemption rights. After the business combination was approved, the company would contact
such shareholder to arrange for him to deliver his certificate to verify ownership. As a result, the shareholder then had an “option
window” after the consummation of the business combination during which he could monitor the price of the company’s
shares in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually
delivering his 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 consummation 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 initial business combination.
If the 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 consummated, we may continue to try to consummate our initial business combination with a different
target until the 18 or 21 month period elapses.
Redemption
of public shares and subsequent voluntary liquidation if no initial business combination
Our sponsors, officers
and directors have agreed that we must complete our initial business combination within the 18 or 21 month period. We may not be
able to find a suitable target business and consummate our initial business combination within such time period. If we are unable
to consummate our initial business combination within such time period, we will promptly distribute the aggregate amount then on
deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses) pro rata to our
public shareholders by way of redemption and cease all operations except for the purposes of winding up our affairs. This redemption
of public shareholders from the trust account shall be done automatically by function of our memorandum and articles of association
and prior to any voluntary winding up, although at all times subject to the Companies Act.
In order to redeem
public shareholders from the trust account, we will instruct the trustee to distribute the aggregate amount then on deposit in
the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders.
Our initial shareholders have agreed to waive their rights to liquidating distributions with respect to their founder shares if
we fail to consummate our initial business combination within the 18 or 21 month period. However, if our sponsors, or any of our
officers, directors or affiliates acquire public shares in or after the offering, they will be entitled to receive liquidating
distributions with respect to such public shares if we fail to consummate our initial business combination within the required
time period. There will be no redemption rights or liquidating distributions with respect to our warrants in the event we do not
consummate our initial business combination within the 18 or 21 month period. However, our sponsors have agreed to purchase or
tender for public warrants, as described in the prospectus. We will pay the costs of our liquidation of the trust account from
our remaining assets outside of the trust account or from interest not previously withdrawn from the trust account. However, if
those funds are not sufficient to cover these costs and 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. In addition, our sponsors have agreed to indemnify us,
jointly and severally, for all claims of creditors to the extent that we fail to obtain executed waivers from such entities in
order to protect the amounts held in trust and except as to any claims under our indemnity of the underwriters of the offering
against certain liabilities, including liabilities under the Securities Act. Following the redemption of public shareholders from
the trust account and payment of our creditors, such that we will have no operations or assets (other than funds sufficient to
pay the costs of our liquidation), we intend to enter “
voluntary liquidation
,” which is the statutory process
for formally closing and dissolving a company under the laws of the British Virgin Islands. If we do not complete our initial business
combination within the 18 or 21 month period, we intend to enter voluntary liquidation following the redemption of public shareholders
from the trust account. Therefore in these circumstances, we expect the “
voluntary liquidation
” process will
not cause any delay to the payment of redemption proceeds from our trust account to our public shareholders. The voluntary liquidation
process which includes the registered agent of the company making a number of filings at the Registry of Corporate Affairs and
the placing of statutory advertisements in the British Virgin Islands Official Gazette and a British Virgin Islands newspaper.
At the end of the voluntary liquidation process, the liquidator will prepare its final statement of the company’s accounts
and make a notification filing with the Registrar of Corporate Affairs (the “Registrar”). The final stage is for the
Registrar to issues a Certificate of Dissolution, at which point the company is dissolved. However, we also cannot assure you that
a creditor or shareholder will not file a petition with the BVI court which, if successful, may result in our liquidation being
subject to the supervision of that court in the event such a petition is successfully made prior to the redemption of public shareholders
from the trust account, such events might delay distribution of some or all of our assets to our public shareholders.
If we were to expend
all of the net proceeds of the 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 $8.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would
have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption amount
received by shareholders will not be less than $8.00, plus interest (net of any taxes payable).
Although we will seek
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of
our public shareholders, 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, our sponsors have agreed that they
will be jointly and severally 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 business combination, reduce the amounts in
the trust account to below $8.00 per share, 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 the offering against
certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable
against a third party, our sponsors will not be responsible to the extent of any liability for such third party claims. We cannot
assure you, however, that our sponsors would be able to satisfy those obligations. We currently believe that our sponsors are of
substantial means and capable of funding a shortfall in our trust account, even though we have not asked them to reserve for such
an eventuality. We have not independently verified whether our sponsors have sufficient funds to satisfy their indemnity obligations
and, therefore, we cannot assure you that our sponsors will be able to satisfy those obligations. We believe the likelihood of
our sponsors 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.
In the event that
the proceeds in the trust account are reduced below $8.00 per share and our sponsors assert that they are unable to satisfy any
applicable obligations or that they have no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsors to enforce the indemnification obligations. While we currently
expect that our independent directors would take legal action on our shareholders’ behalf against our sponsors 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 less than $8.00 per share.
We will seek to reduce
the possibility that our sponsors will have to indemnify the trust account due to claims of creditors by endeavoring to have all
vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsors will also not be
liable as to any claims under our indemnity of the underwriters of the offering against certain liabilities, including liabilities
under the Securities Act. We will have access to up to $385,128 from the proceeds of the offering not placed in the trust account
(as of March 31, 2013), and the interest income earned on the balance of the trust account (net of taxes payable) 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.
As described above,
pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective
target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made
against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust
account is remote. Further, our sponsors may be liable only to the extent necessary to ensure that the amounts in the trust account
are not reduced below $8.00 per share less any per-share amounts distributed from our trust account to our public shareholders
in the event we are unable to consummate our initial business combination within the 18 or 21 month period, and will not be liable
as to any claims under our indemnity of the underwriters of the offering against certain liabilities, including liabilities under
the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsors will
not be responsible to the extent of any liability for such third-party claims.
If the Company is
deemed insolvent for the purposes of the Insolvency Act (i.e. (i) it fails to comply with the requirements of a statutory demand
that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree
or order of a British Virgin Islands court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii)
either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall
due), then there are very limited circumstances where prior payments made to shareholders or other parties may be deemed to be
a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would be, for these purposes,
payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment was a risk of
being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands court
for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part.
Additionally, if the
company enters insolvent liquidation under the Insolvency Act, the funds held in our trust account will likely be included in our
estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any insolvency
claims deplete the trust account we cannot assure you we will be able to return to our public shareholders the liquidation amounts
due them.
Our public shareholders
will be entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any
winding up in the event we do not consummate our initial business combination or our liquidation or if they redeem their shares
in connection with an initial business combination that we consummate. In no other circumstances shall a shareholder have any right
or interest of any kind to or in the trust account. In the event we are no longer a FPI and 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.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter intense competition from other entities
having a business objective similar to ours, including other blank check companies, 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 an 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.
Legal Proceedings
There is no material
litigation, arbitration or governmental proceeding currently pending or known to be contemplated against us or any members of our
management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding
in the prior 12 months.
C. Organizational Structure
Not Applicable.
D. Property, plants and equipment
We currently maintain
our executive offices at 3 Azrieli Center (Triangle Tower) 42
nd
Floor, Tel Aviv, Israel, 67023. Commencing on July 20,
2012, we have been obligated to pay Infinity-C.S.V.C. Management Ltd, an affiliate of our sponsors, an aggregate of $10,000 per
month for office space, administrative services and secretarial support. We believe, based on rents and fees for similar services,
that this amount is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office
space adequate for our current operations.
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
We are a blank check
company incorporated as a British Virgin Islands business company with limited liability (meaning our public shareholders have
no additional liability, as members of our company, for the liabilities of our company over and above the amount paid for their
shares) formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation or contractual
control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination
with one or more businesses or entities. All activity through July 25, 2012 was related to our formation and initial public offering.
Since July 25, 2012 we have been investigating prospective target businesses with which to consummate our initial business combination.
We intend to effectuate our initial business combination using cash from the proceeds of the offering and the private placement
of the sponsor warrants, our shares, debt or a combination of cash, shares and debt.
The issuance of additional
shares in our initial business combination:
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may significantly dilute the equity interest of investors in the offering;
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may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;
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could cause a change in control if a substantial number of ordinary shares 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;
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may have the effect of delaying or preventing a change of control of us by diluting the shares ownership or voting rights or a person seeking to obtain control of us; and
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may adversely affect prevailing market prices for our ordinary shares and/or warrants.
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Similarly, if we issue
debt securities, it could result in:
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default and foreclosure on our assets if our operating revenues after 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 ordinary shares;
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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 ordinary shares 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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As indicated in the
accompanying financial statements, at March 31, 2013 we had $385,128 in cash. Further, we expect to continue to incur significant
costs in the pursuit of our acquisition plans. Our plans to consummate our initial business combination may not be successful.
A. Results of Operations and Known Trends or Future Events
We have neither engaged
in any operations nor generated any revenues to date. Our only activities from inception to the closing of the offering had been
organizational activities and those necessary to prepare for and close the offering. Since consummation of the offering, our activity
has been limited to evaluating business combination candidates. We have not generated any operating revenues and will not until
after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash
and cash equivalents after the offering. We expect to incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase
substantially after the closing of the offering.
We are an emerging
growth company as defined in the JOBS Act. As an emerging growth company, we have elected to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private
companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
B. Liquidity and Capital Resources
Prior to the offering,
our liquidity needs had been satisfied through receipt of $25,000 from the sale of the founder shares to our sponsors and loans
and advances from our sponsors in the amount of approximately $138,265. As of March 31, 2013, we had $46,013,666 in a trust account
available for use by management to cover the costs associated with indentifying a target business and negotiating an acquisition
or merger. Additionally, on March 31, 2013 we had $385,128 held outside of our trust account.
For the year ended
March 31, 2013, we used cash of $76,523 in operating activities. The net increase in cash over this period ending March 31, 2013
was $384,976. We started April 1, 2012 with a cash balance of $152. We ended March 31, 2013 with a cash balance of $385,128. From
inception (April 6, 2011) through March 31, 2012, we used cash of $27,124 in operating activities. The net increase in cash over
this period ending March 31, 2012 was $152. We started April 6, 2011 with a cash balance of $0. We ended March 31, 2012 with a
cash balance of $152.
We intend to use substantially
all of the funds held in the trust account, including any amounts representing interest earned on the trust account (net of taxes
payable) to consummate our initial business combination. We may use interest earned on the trust account to pay taxes. To the extent
that our shares or debt are used, in whole or in part, as consideration to consummate our initial business combination, the remaining
proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
We will have available
to us $385,128 of proceeds held outside the trust account (as of March 31, 2013) and all of the interest (net of taxes payable)
that will be released to us to fund our working capital requirements. Should this amount be insufficient, our sponsors or an affiliate
of our sponsors may fund our additional working capital requirements or finance transaction costs, as necessary, however, such
parties are under no obligation to do so. We will use these funds, including any loans from our sponsors or an affiliate of our
sponsors, to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to
and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate
documents and material agreements of prospective target businesses, and structure, negotiate and consummate our initial business
combination.
In order to fund working
capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsors or
affiliates of our sponsors or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we consummate an initial business combination, we would repay such loaned amounts. In the event that the initial business combination
does not close, we may use a portion of the offering proceeds held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment, other than the interest on such proceeds that may be released
to us for working capital purposes. Up to $500,000 of such loans may be convertible into warrants of the post business combination
entity at a price of $0.50 per warrant at the option of the lender. The warrants would be identical to the sponsor warrants. The
terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect
to such loans.
We could use a portion
of the funds outside of the trust to pay commitment fees for financing, fees to consultants to assist us with our search for a
target business or as a down payment or to fund a “no-shop” provision (a provision 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 enter into
an agreement where we pay for the right to receive exclusivity from a target business, the amount that would be used as a down
payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination
and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise)
could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective
target businesses.
We do not believe
we will need to raise additional funds following the offering in order to meet the expenditures required for operating our business.
However, if our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is
less than the actual amount necessary to do so, or the amount of interest (net of taxes payable) available to us from the trust
account is less than anticipated, we may have insufficient funds available to operate our business prior to our initial business
combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because
we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance
with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business
combination. In the current economic environment, it has become especially difficult to obtain acquisition financing. Following
our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet
our obligations.
C. Research and development, patents
and licenses, etc.
None.
D. Trend information
None.
E. Off-Balance Sheet Arrangements; Commitments
and Contractual Obligations; Quarterly Results
As of March 31, 2013,
we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
F. Tabular disclosure of contractual
obligations
As of March 31, 2013,
we did not have any long-term debt obligations, capital lease obligations, purchase obligations or other long-term liabilities
reflected on our balance sheet.
Critical Accounting Policies and Estimates
Basis of
Presentation
The accompanying financial statements of
the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
and pursuant to the rules and regulations of the Securities and Exchange Commission.
Development Stage Company
The Company is considered to be in the
development stage as defined by FASB ASC 915, “Development Stage Entities,” and is subject to the risks associated
with activities of development stage companies. The Company has neither engaged in any operations nor generated any income to date.
All activity through March 31, 2013 relates to the Company’s formation and the offering and since consummation of the offering,
the search for a prospective target business with which to complete an initial business combination. The Company will not generate
any operating revenues until after completion of an initial business combination, at the earliest. The Company may generate non-operating
income in the form of interest income from the designated Trust Account.
Net Loss Per Share
Basic net loss per share is computed by
dividing net loss by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is
computed by dividing net loss per share by the weighted average number of ordinary shares outstanding, plus to the extent dilutive,
the incremental number of ordinary shares to settle warrants held by the Sponsor and the Public (see Note 4), as calculated using
the treasury stock method. As the Company reported a net loss for all periods presented in the accompanying interim statements
of operations, the effect of the 10,570,000 warrants (including 4,820,000 sponsor warrants and EBC warrants), have not been considered
in the diluted loss per ordinary share because their effect would be anti-dilutive. As a result, dilutive loss per ordinary share
is equal to basic loss per ordinary share.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Income Taxes
The Company was incorporated in the British
Virgin Islands, and as such, is not subject to corporate income taxes. The Company is required to determine whether its tax positions
are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related
appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest
amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant
taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces
ending retained earnings. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized
tax benefits as of March 31, 2013. The Company’s conclusions may be subject to review and adjustment at a later date based
on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.
The Company recognizes interest and penalties
related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have
been recognized as of and for the year ended March 31, 2013. The Company is subject to income tax examinations by major taxing
authorities since inception.
The Company may be subject to potential
examination by U.S. federal, U.S. state or foreign jurisdiction authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized
tax benefits will materially change over the next twelve months.
Warrant Liability
The Company accounts for the 10,570,000
warrants issued in connection with its Offering (consisting of 5,750,000 warrants issued in the Offering and the 4,820,000 sponsor
warrants and EBC warrants) in accordance with the guidance contained in 815-40-15-7D, “Contracts in Entity's Own Equity”
whereby under that provision they do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly,
the Company classifies the warrant instrument as a liability at its fair value and adjusts the instrument to fair value at each
reporting period. Management used the quoted market price for the valuation of the warrants to determine the warrant liability
to be $6,024,900 as of March 31, 2013. This liability is subject to re-measurement at each balance sheet date until exercised,
and any change in fair value is recognized in the Company's statement of operations.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and senior management
Our current directors
and executive officers are listed below. None of such persons are, or have been, involved with any other blank check companies.
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Name
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Age
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Position
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Amir Gal-Or
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50
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Co-Chief Executive Officer, Co-President and Co-Chairman
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Avishai Silvershatz
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55
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Co-Chief Executive Officer, Co-President and Co-Chairman
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Mark Chess
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35
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Executive Vice President
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Limei Zhao
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36
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Vice President Legal Structuring
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Kersten Hui
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44
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Vice President Business Development
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Mark B. Segall
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50
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Director
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Amir Gal-Or
has been our Co-Chief Executive Officer, Co-President and Co-Chairman since inception. Mr. Gal-Or joined Infinity Venture Capital
as a partner during August, 1999 and has been managing partner of FBR Infinity II Ventures since its formation in August, 2001.
Since January 2007, Mr. Gal-Or has been the Managing Partner of Infinity I-China Fund. Mr. Gal-Or is also a member of the board
of directors of the management company and general partner of each of FBR Infinity II Ventures and Infinity I-China Fund and is
a member of their respective investment committees. From December 2002 until November 2010 Mr. Gal-Or served as chairman of Maayan
Ventures Ltd., (Tel Aviv Stock Exchange — MAYN), Israel’s first publicly traded technology incubator and
has served as a director of TecnoPlus Ventures Ltd., a publicly traded venture capital investment company from December, 2006 until
2009. Since 2002, Mr. Gal-Or has been a director and controlling shareholder of I.M.S. Group Ltd., a company providing venture
capital portfolio management services to Clal Industries and Investments Ltd. and Orama Ltd. Mr. Gal-Or has been a director of
I-CSVC Venture Management Co. Ltd. since its inception during May, 2004. Mr. Gal-Or has also served on the board of directors of
a number of Israeli and Chinese technology companies including China Wafer Level CSP Ltd., China’s leading wafer level packaging
provider and Shellcase Ltd., a leading developer of wafer level packaging products whose intellectual property and certain other
assets were sold to Tessera Technologies Inc., during 2005. Mr. Gal-Or was a director of Nanomotion Ltd., a leader in the development
and manufacture of ceramic servo motors which is controlled by Hong Kong based Johnson Electric Holdings Ltd. Mr. Gal-Or also served
on the board of directors of Proneuron Biotechnologies, Inc., Glucon Medical Ltd., Applisonix Ltd., Nicast Ltd., Redent-Nova Ltd.,
Opthocare Ltd., Bio-Sense Technologies Ltd., Orama Ltd., Engineering and IP Advanced Technologies Ltd., D&A Hi-Tech Information
Ltd. and Tegrity Ltd. Mr. Gal-Or holds an MBA from Tel Aviv University and completed a Harvard University program in venture capital
and private equity investments. Mr. Gal-Or is a Major (Ret.) in the Israeli Air Force where he piloted F-16 and F-4 fighter aircraft
and was a member of the A-4 Acrobatic team. Mr. Gal-Or’s designation as a director and co-Chairman of our board of directors
was based on his extensive background in acquiring businesses operating in China and his substantial experience with growing businesses.
Avishai Silvershatz
has been our Co-Chief Executive Officer, Co-President and Co-Chairman since inception. Mr. Silvershatz has been managing partner
of FBR Infinity II Ventures since its formation in August 2001. Mr. Silvershatz has been the Managing Partner of Infinity I-China
Fund since January 2007. Mr. Silvershatz is also a member of the board of directors of the management company and general partner
of the Infinity I-China Fund and is a member of its investment committee. Since 2002, Mr. Silvershatz has been a director and controlling
shareholder of I.M.S. Group Ltd., a company providing venture capital portfolio management services to Clal Industries and Investments
Ltd. and Orama Ltd. During 1995, Mr. Silvershatz co-founded Verisity Ltd. (formerly Nasdaq: VRST), a provider of software tools
for chip designers and served as its President and Chief Executive Officer from 1995 until 1999. Mr. Silvershatz also co-founded
ScanVec Amiable Ltd. (Nasdaq: SVECF) during 1991 and served as its Chief Executive Officer from 1991 to 1993, a leader in CAD/CAM
software solutions for the sign making, machining and imaging industries. Mr. Silvershatz was a director of Maayan Ventures Ltd.,
(Tel Aviv Stock Exchange — MAYN), Israel’s first publicly traded technology incubator, Tegrity Ltd. and Mate — Media
Access Technologies Ltd. Mr. Silvershatz has been a director of Infinity-CSVC Venture Capital Enterprise since its inception during
May 2004. Mr. Silvershatz was also a director of Power Paper Ltd., Mate-Media Access Technologies Ltd., Cerel (Ceramics Technologies)
Ltd., PowerID Ltd., On-Line Media SolutionsLtd., Orama Ltd., Capital Point Ltd., Exelate Ltd. and Tegrity Ltd. Mr. Silvershatz
has a B.Sc. in Computer Science from Ben Gurion University (cum laude) and a M.Sc. in Computer Science from the Weizman Institute
of Science (cum laude). Mr. Silvershatz’s designation as a director and co-Chairman of our board of directors was based on
extensive background in acquiring businesses operating in China and his substantial experience with growing businesses.
Mark Chess
has been our Executive Vice President since inception. Mr. Chess is a Venture Partner with Infinity Equity and has been with the
firm since 2001. He recently negotiated investments on behalf of Infinity with Futuragene (AIM: FGN) which was subsequently sold
to Suzano for USD$90 million. Mark was actively involved in helping to establish the first Infinity-CSVC fund in China in 2005
and manages the Fund’s strategic relationships with institutions in the United States, particularly the Infinity-NSF portfolio.
Mr. Chess has been with Infinity since 2001. Since January 2007, Mr. Chess has been responsible for off-shore investments in the
information technology and agriculture industries for Infinity I-China Fund. Prior to Infinity, Mark was a Director with Partners500,
leading the company’s international business strategy. Mark is currently a Director of Oberon Media Ltd. In the philanthropic
community, Mr. Chess is the Chairman of The Presentense Group, LEG-UP Microfinance Fund, and Yesh Shabbat. In addition, Mr. Chess
sits on the Boards of The Museum of Psalms, JSC, and The Initiative Center of the Negev. Mark graduated with a degree
in Business Honors from the University of Texas at Austin.
Limei Zhao
has been our Vice President, Legal Structuring since inception. Since January 2008, Limei has been Infinity’s Senior Director
of Legal Structuring in China. In this capacity, Limei is responsible for the structure and all aspects of the legal functions
of the Infinity group in China, including fund raising, formation and management of RMB funds, negotiating and drafting investment
documents, and administering portfolio companies in China. Prior to joining Infinity, in 2007, Limei was an associate at Debevoise
& Plimpton LLP after working with Davis Wright Tremaine’s Shanghai Office. Before that, she served as PRC legal director
of the worldwide biggest laptop manufacturer, Quanta Computer Group. Her prior practice focused on private equity, venture capital,
mergers & acquisitions, commercial transactions, foreign direct investments, and general corporate matters. Limei is a member
of the New York State Bar Association and is qualified for the national bar of China. She received her LL.M. degree from the University
of Pennsylvania School of Law, and both LL.B. and LL.M. degrees from Fudan University Law School with first-class honors. Limei
has published several books and written about 20 articles addressing various legal issues.
Kersten Hui
has been our Vice President Business Development since inception. Since January 2008, Mr. Hui has been Managing Director of the
Hong Kong office of Infinity Group. In this capacity, Kersten is responsible for a wide range of projects including: investment
analysis, transaction structuring, financial modeling/forecasting, business development/sourcing, due diligence and investment
monitoring. He is also responsible for the origination and execution of investments across the region and development of new investments,
capitalizing on Infinity’s networks in the market. Mr. Hui is a board member of Power Paper. Kersten is an investment professional
with over 12 years of experience in the corporate M&A, private equity investment, property investment and corporate development
arena and ranging from Internet start-ups to infrastructure projects, FMCG and Business activities covering primarily China and
Hong Kong. In 2007, prior to joining Infinity, Kersten was a Partner at Stone Drum Capital, a company focused on the private equity
secondary markets in Asia. Mr. Hui has a Master of Business Administration (MBA) from Washington State University and a BSc in
Business Administration from Lewis Clark State College.
Mark B. Segall
has been our director since February 2012. Mr. Segall is the Senior Managing Director of Kidron Corporate Advisors, LLC, a New
York based mergers and acquisitions corporate advisory boutique serving emerging growth companies primarily in the technology,
media and financial services sectors, which he founded in 2003. He is also a Founder and Managing Member of Kidron’s private
equity fund, Kidron Opportunity Fund I, LLC and is the Chief Executive Officer of Kidron Capital Advisors LLC, a registered broker
dealer. Mr. Segall was the Co-Chief Executive Officer of Investec, Inc., the U.S. investment banking operations of the Investec
Group, a South African based specialist bank, from 2001 to 2003. He served as head of investment banking and general counsel at
Investec Inc. from 1999 to 2001. From 1996 to 1999, Mr. Segall was a partner at the law firm of Kramer, Levin, Naftalis & Frankel
LLP, specializing in cross-border mergers and acquisitions and capital markets activities and between 1991 and 1995 he was an associate
at the same firm. Mr. Segall has served as a director and chairman of the audit committee of ATMI Inc. (NASDAQ:ATMI), an enabling
process materials and technology company for the semiconductor, display and life sciences industries, since May 2013. He has served
as a director of Integrated Asset Management plc, an alternative asset management company, since 2000. Mr. Segall has served as
a director of Ronson Europe N.V., a Polish residential real estate development company, since 2008 (appointed Vice Chairman in
2010 and Chairman in 2011). Mr. Segall has served as director of Temco Service Industries, Inc., a facilities support services
company, since February 2011 and as a director of Bel Fuse, Inc. (NASDAQ:ATMI), an electronic component manufacturer, since July
2011. Mr. Segall served as a director of Answers Corporation, the owner and operator of the Q&A site Answers.com, from December
2004 through April 2011 (when it was sold to Announce Media). Mr. Segall served as director of the Spectrum Group (formerly Escala
Group Inc.), a trading and collectibles network company, from 1999 to June 2007, and of Cogo (formerly Comtech Group Inc.), a customized
module design solutions business, focusing on the digital media, telecommunications equipment, and industrial business end-markets
in China, from 2000 to 2006. Mr. Segall served as a director of Siliconix Inc., a semiconductor component company, from 2000 to
2005. Mr. Segall received an AB in History from Columbia University and a JD from New York University Law School.
B. Compensation
None of our executive
officers or directors has received any cash (or non-cash) compensation for services rendered. As of the date that our securities
were first listed on Nasdaq and terminating on the consummation of our initial business combination (or our earlier liquidation),
we have agreed to pay Infinity-C.S.V.C. Management Ltd, an affiliate of our sponsors, an aggregate of $10,000 per month for office
space, administrative services and secretarial support. This arrangement was agreed to by our sponsors for our benefit and is not
intended to provide our sponsors compensation in lieu of a salary. We believe that such fees are at least as favorable as we could
have obtained from an unaffiliated third party for such services. Other than this fee, and an aggregate maximum of $400,000 in
potential finder’s and/or consulting fees as determined by our board, no compensation will be paid to our sponsor, executive
officers and directors, or any of their respective affiliates, prior to or in connection with the consummation of an initial business
combination. Additionally, these individuals 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.
After the completion
of our initial business combination, directors or members of our management team who remain with us, may be paid consulting, management
or other fees from the combined company with any and all amounts being fully disclosed to shareholders, to the extent then known,
in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business
combination. It is unlikely the amount of such compensation will be known at the time, as it will be up to the directors of the
post-combination business to determine executive and director compensation. Any compensation to be paid to our officers will be
determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by
independent directors or by a majority of the independent directors on our post-consummation board of directors.
We do not intend to
take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial
business combination, although it is possible that some or all of our executive officers and directors may negotiate employment
or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment
or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or
selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of
an initial business combination will be a determining factor in our decision to proceed with any potential business combination.
We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
C. Board practices
Number and Terms of Office of Officers
and Directors
Our board of directors
is divided into two classes with only one class of directors being elected in each year and each class (except for those directors
appointed prior to our first annual meeting of shareholders) serving a two year term. The term of office of the first class of
directors, consisting of Mark B. Segall, will expire at our first annual meeting of shareholders. The term of office of the second
class of directors, consisting of Amir Gal-Or and Avishai Silvershatz, will expire at the second annual meeting of shareholders.
We do not currently intend to hold an annual meeting of shareholders until after we consummate our initial business combination.
Therefore, if our shareholders want us to hold a meeting prior to such consummation, they may requisition the directors to hold
one upon the written request of members entitled to exercise at least 30 percent of the voting rights in respect of the matter
for which the meeting is requested. Under British Virgin Islands law, we may not increase the required percentage to call a meeting
above 30 percent.
Our officers are appointed
by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our
board of directors is authorized to appoint persons to the offices set forth in our memorandum and articles of association as it
deems appropriate. Our memorandum and articles of association provide that our officers may consist of a chairman of the board,
chief executive officer, president, chief financial officer, vice presidents, secretary, treasurer and such other offices as may
be determined by the board of directors.
Collectively, through
their positions described above, our officers and directors have experience in the fields of information technology, communication,
medical devices, agriculture technology, capital equipment, and water. These individuals will play a key role in identifying and
evaluating prospective acquisition candidates, selecting the target businesses, and structuring, negotiating and consummating their
acquisition.
Director Independence
The Nasdaq Capital
Market generally requires that a majority of the board of directors of a company listed on The Nasdaq Capital Market must be composed
of “independent directors,” which is defined generally as a person other than an officer or employee of the company
or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors
would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.
Mark B. Segall is
currently our sole independent director. As a FPI, we are permitted to follow home country corporate governance practices instead
of certain requirements of Nasdaq Marketplace Rules. The corporate governance practice in our home country, the British Virgin
Islands, does not require that a majority of the board of directors consist of independent directors. As such, we do not intend
to comply with such requirement of the Nasdaq Marketplace Rules.
Any affiliated transactions
will be on terms no less favorable to us than could be obtained from independent parties. Any affiliated transactions must be approved
by a majority of our disinterested directors.
Board Committees
Audit Committee
We established an
audit committee of the board of directors following consummation of the offering. The audit committee consists of Mark B. Segall,
who is an independent director under The Nasdaq Capital Market’s listing standards. As a FPI, we are permitted to, and will,
follow home country corporate governance practices instead of certain requirements of Nasdaq Marketplace Rules. The corporate governance
practice in our home country, the British Virgin Islands, does not require that we have an audit committee, nor if there is such
a committee that it consist of at least three members. The audit committee’s duties, which are specified in our Audit Committee
Charter, include, but are not limited to:
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reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 20-F;
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•
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discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
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•
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discussing with management major risk assessment and risk management policies;
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•
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monitoring the independence of the independent auditor;
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•
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verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
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•
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reviewing and approving all related-party transactions;
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•
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inquiring and discussing with management our compliance with applicable laws and regulations;
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•
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pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;
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•
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appointing or replacing the independent auditor;
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•
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determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
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•
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
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•
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approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
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The audit committee
will at all times be composed exclusively of “independent directors” who are “financially literate” as
defined under The Nasdaq Capital Market listing standards. The Nasdaq Capital Market listing standards define “financially
literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet,
income statement and cash flow statement. Mr. Segall is the sole member of our audit committee and, due to his past experience,
our board of directors has determined that Mr. Segall has the requisite experience and independence necessary to comply with the
applicable provisions of Rule 10A-3 as required by The Nasdaq Capital Market Rules. Since we are electing to follow our home country
corporate governance practices instead of certain requirements of The Nasdaq Capital Market Rules, we will not have an audit committee
financial expert.
Compensation and Nominating Committee
As an FPI, we are
permitted to, and will, follow home country corporate governance practices instead of certain requirements of The Nasdaq Capital
Market. The corporate governance practice in our home country, the British Virgin Islands, does not require that we have a nominating
or compensation committee. As such, we intend to follow our home country governance practice and not have a nominating or compensation
committee. Additionally, we do not intend to have independent director oversight over our executive compensation or director nominations.
We do not believe a compensation committee
is necessary prior to our initial business combination as there will be no salary, fees or other compensation being paid to our
officers or directors prior to our initial business combination.
D. Employees
We currently have
5 executive officers. These individuals 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.
We expect they will initially spend approximately 20 hours per month in the aggregate on our business; however, the amount of time
they will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation
of our initial business combination.
E. Share ownership
See Item 7 below.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders
The following table
sets forth information regarding the beneficial ownership of our ordinary shares as of June 30, 2013 by:
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each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares;
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each of our officers, directors and director nominees that beneficially owns ordinary shares; and
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•
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all our officers and directors as a group.
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Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially
owned by them. The following table does not reflect record or beneficial ownership of the insider warrants as these warrants are
not exercisable within 60 days of the date of the prospectus.
Name and Address of Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership
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Approximate Percentage of
Outstanding Ordinary
shares
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Infinity I-China Fund (Cayman), L.P.
(1)(2)
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536,940
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7.47
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%
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Infinity-CSVC Partners, Ltd.
(1)(2)(3)
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1,150,000
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16.00
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%
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Amir Gal-Or, Co-Chief Executive Officer, Co-President and Co-Chairman
(1)(2)(3)(4)
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79,061
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1.10
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%
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Avishai Silvershatz, Co-Chief Executive Officer, Co-President and Co-Chairman
(1)(2)(3)(4)
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79,061
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1.10
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%
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Limei Zhao
(1)(4)
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25,000
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0.35
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%
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Kersten Hui
(1)(4)
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25,000
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0.35
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%
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Mark Chess
(1)(4)
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71,875
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1.00
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%
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Mark B. Segall
(1)(5)
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7,503
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0.10
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%
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JFI Fixed, LLC
(6)
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400,000
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5.57
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%
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Jacobson Family Investments, Inc.
(6)
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400,000
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5.57
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%
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Mitchell Jacobson
(6)
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400,000
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5.57
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%
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Marjorie Gershwind
(6)
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400,000
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5.57
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%
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Davidson Kempner Partners
(7) (10)
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63,862
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0.89
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%
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Davidson Kempner Institutional Partners, L.P.
(8) (10)
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149,554
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2.08
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%
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Davidson Kempner International, Ltd.
(9) (10)
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156,584
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2.18
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%
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Davidson Kempner Capital Management LLC
(10)
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370,000
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5.15
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%
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Thomas L. Kempner, Jr.
(10)
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370,000
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5.15
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%
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Stephen M. Dowicz
(10)
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370,000
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5.15
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%
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Woodland Partners
(11)
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250,000
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3.48
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%
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Brookwood Partners, L.P.
(11)
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100,000
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1.39
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%
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Barry Rubenstein
(11)
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590,800
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8.22
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%
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Marilyn Rubenstein
(11)
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590,800
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8.22
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%
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Polar Securities Inc.
(12)
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528,199
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7.40
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%
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Bulldog Investors
(13)
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323,700
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5.06
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%
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All directors and executive officers as a group (5 individuals)
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1,437,500
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20.00
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%
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(1)
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The business address of each of the individuals is located at c/o Infinity-C.S.V.C. Management Ltd., 3 Azrieli Center (Triangle Tower), 42
nd
Floor, Tel Aviv, Israel, 67023.
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(2)
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Infinity-CSVC Partners, Ltd. is the general partner of each of our sponsors, which are Infinity I-China Fund (Cayman), L.P., Infinity I-China Fund (Israel), L.P., Infinity I-China Fund (Israel 2), L.P. and Infinity I-China Fund (Israel 3), L.P. The board of managers of Infinity-CSVC Partners, Ltd. makes investment decisions on behalf of the limited partners of the Infinity I-China Funds. No limited partner holds an interest in the Infinity I-China Funds that could be deemed a 5% owner of us. Additionally, Infinity-CSVC Partners, Ltd. holds voting and dispositive power over the ordinary shares owned by the Infinity I-China Funds. The board of managers is comprised of five individuals, including Amir Gal-Or, Avishai Silvershatz, Avi Fischer, Lin Xianghong and Fei Jianjiang. As a result, we have determined no single member of this board holds voting and dispositive power over our ordinary shares.
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(3)
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The shareholders of Infinity-CSVC Partners, Ltd., the general partner of each of our sponsors, are Amir Gal-Or, Avishai Silvershatz, Clal Industries and Investments Ltd. and Hua Yuan International Limited.
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(4)
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Amounts include ordinary shares directly owned by each of these directors and officers as a result of transfers made by our sponsors to such officers and directors as of May 3, 2011.
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(5)
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Amount includes ordinary shares directly owned by Mr. Segall as a result of transfers made to him by Limei Zhao and Kersten Hui in February 2012
.
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(6)
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Jacobson Family Investments, Inc. and JFI Fixed, LLC may each be deemed to have the sole power to direct the voting and disposition of the ordinary shares. Mitchell Jacobson and Marjorie Gershwind may be deemed to share the power to direct the voting and disposition of the 400,000 ordinary shares that may be deemed to be owned beneficially by each of Jacobson Family Investments, Inc. and JFI Fixed, LLC. The address of the principal office of each of JFI Fixed, LLC, Jacobson Family Investments, Inc., Mitchell Jacobson and Marjorie Gershwind is 152 West 57th Street, 56th Floor, New York, New York, 10019.
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(7)
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MHD Management Co., a New York limited partnership ("MHD"), is the general partner of Davidson Kempner Partners, a New York limited partnership ("DKP") and MHD Management Co. GP, L.L.C., a Delaware limited liability company is the general partner of MHD. DKCM (as defined below) is responsible for the voting and investment decisions of DKP. The business address for DKP is c/o Davidson Kempner Partners, 65 East 55th Street, 19th Floor, New York, New York 10022.
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(8)
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Davidson Kempner Advisers Inc., a New York corporation, is the general partner of Davidson Kempner Institutional Partners, L.P., a Delaware limited partnership ("DKIP"). DKCM is responsible for the voting and investment decisions of DKIP. The business address for DKIP is c/o Davidson Kempner Partners, 65 East 55th Street, 19th Floor, New York, New York 10022.
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(9)
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Davidson Kempner International Advisors, L.L.C., a Delaware limited liability company, is the investment manager of Davidson Kempner International, Ltd., a British Virgin Islands corporation ("DKIL"). DKCM is responsible for the voting and investment decisions of DKIL. The business address for DKIL is c/o Davidson Kempner Partners, 65 East 55th Street, 19th Floor, New York, New York 10022.
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(10)
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Davidson Kempner Capital Management LLC, a New York limited liability company and a registered investment adviser with the U.S. Securities and Exchange Commission, acts as investment manager to each of DKP, DKIP and DKIL ("DKCM") either directly or by virtue a sub-advisory agreement with the investment manager of the relevant fund. The managing members of DKCM are Messrs. Thomas L. Kempner, Jr., Stephen M. Dowicz, Scott E. Davidson, Timothy I. Levart, Robert J. Brivio, Jr., Anthony A. Yoseloff, Eric P. Epstein, Avram Z. Friedman, Conor Bastable, Shulamit Leviant and Morgan Blackwell; and Messrs. Thomas L. Kempner, Jr. and Stephen M. Dowicz, through DKCM, are responsible for the voting and investment decisions relating to the securities held by DKP, DKIP and DKIL reported herein. The business address for such reporting persons is c/o Davidson Kempner Partners, 65 East 55th Street, 19th Floor, New York, New York 10022.
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(11)
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Barry Rubenstein and Marilyn Rubenstein are general partners of Woodland Partners and Brookwood Partners, L.P. Barry Rubenstein is the husband of Marilyn Rubenstein. Barry Rubenstein and Marilyn Rubenstein have shared power to vote or to direct the vote of (i) the 200,000 ordinary shares held between them in a joint account, (ii) the 250,000 ordinary shares held by Woodland Partners and (iii) the 100,000 ordinary shares held by Brookwood Partners, L.P. Marilyn Rubenstein has sole power to vote or to direct the vote of the 40,800 shares held solely by her and Barry Rubenstein has shared power to vote or direct the vote of such shares. Both Barry and Marilyn Rubenstein disclaim beneficial ownership of these securities except to the extent of their equity interest therein. The business address for each of Barry and Marilyn Rubenstein, Woodland Partners and Brookwood Partners, L.P. is 68 Wheatley Road, Brookville, New York 11545.
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(12)
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Based on information contained in a Schedule 13G/A filed by the following persons on February 14, 2013, Polar Securities Inc. and North Pole Capital Master Fund share voting and dispositive power with respect to these shares. Paul Sabourin serves as the Chief Investment Officer of each of Polar Securities and North Pole, and their address is 372 Bay Street, 21st floor, Toronto, Ontario M5H 2W9, Canada.
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(13)
|
Based on information contained in a Schedule 13G/A filed by the following persons on February 13, 2013, Phillip Goldstein and Andrew Dakos are principals of Bulldog Investors. Bulldog Investors has the sole voting with respect to 311,700 ordinary shares and sole dispositive power with respect to 52,600 ordinary shares. The address of Bulldog Investors is Park 80 West, 250 Pehle Ave. Suite 708, Saddle Brook, NJ 07663.
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Our initial shareholders
beneficially own 20.0% of the issued and outstanding ordinary shares. Because of this ownership block, our initial shareholders
may be able to effectively influence the outcome of all matters requiring approval by our shareholders, including the election
of directors, amendments to our memorandum and articles of association and approval of significant corporate transactions other
than approval of our initial business combination.
Additionally, our
sponsors have indicated they may purchase: (i) if we are no longer a FPI and hold a shareholder meeting and conduct redemptions
pursuant to proxy rules, up to $10,000,000 worth of shares in open market transactions as described herein; provided, however,
to the extent our sponsors do not purchase $10,000,000 worth of shares in the open market, our sponsors have the option to purchase
the difference in a private placement of ordinary shares occurring simultaneously with the closing of the business combination
or (ii) if we conduct redemptions pursuant to the tender offer rules, up to $10,000,000 worth of shares (at our offering price
of $8.00 per share) in a private placement occurring simultaneously with the closing of the business combination. These purchases
will be made only when the sponsors are not in possession of any material non-public information and will otherwise be subject
to applicable law, including Regulation M which may prohibit purchases under certain circumstances. The price per share at which
such purchases will be made will not be more than the per-share amount held in the trust account (less taxes payable) as reported
in the preliminary proxy statement. These purchases may commence two business days after we file a preliminary proxy statement
relating to our initial business combination and end on the business day immediately preceding the record date for the meeting
of shareholders at which such initial business combination is to be approved or at such time the purchases reach the maximum set
by our sponsors, not to exceed $10,000,000 in total. Our sponsors will not have any discretion or influence over these purchases
other than the decision as to whether to undertake any purchases at all. Our sponsors have agreed to vote any ordinary shares purchased
in the open market in favor of our initial business combination, representing a maximum of approximately 25% of the public shares
entitled to vote on the business combination. Unless our initial business combination is approved by our shareholders, our sponsors
have agreed not to resell these shares. However, our sponsors will be entitled to participate in any liquidating distributions
with respect to the shares purchased in the open market in the event we do not consummate an initial business combination.
Our sponsors purchased
an aggregate of 4,381,818 insider warrants at a price of $0.50 per warrant ($2,190,909) and the underwriters or their designees
purchased an aggregate of 438,182 insider warrants at a price of $0.50 per warrant ($219,091) in private placements that occurred
simultaneously with the closing of the offering and the closing of the over-allotment option. Each insider warrant entitles the
holder to purchase one ordinary share at $7.00 per share. The purchase price of the insider warrants was added to the proceeds
from the offering to be held in the trust account pending our completion of our initial business combination. If we do not complete
our initial business combination within the 18 or 21 month period, the proceeds of the sale of the insider warrants will be used
to fund the redemption of our public shares, and the insider warrants will expire worthless. The insider warrants are identical
to the warrants underlying the units being sold in the offering except that the insider warrants are exercisable for cash or on
a cashless basis, at the holder’s option, and are not redeemable by us, in each case so long as they are held by the initial
purchasers or their affiliates. Additionally, the period during which the EBC warrants are exercisable may not be extended beyond
five years from the effective date of the registration statement relating to the offering. The purchasers have agreed that the
insider warrants will not be sold or transferred by them (except to certain permitted transferees) until after we have completed
an initial business combination. If the insider warrants are not held by such holders, the insider warrants will be redeemable
by us and exercisable on the same basis as the warrants included in the units being sold in the offering.
Our sponsors and our
executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities
laws.
Transfers of Founder Shares and Insider Warrants
The founder shares,
insider warrants, repurchased public warrants and any ordinary shares and warrants purchased in the offering or issued upon exercise
of the insider warrants or repurchased public warrants are each subject to transfer restrictions pursuant to lockup provisions
in the letter agreements entered into between us, each of the members of our sponsor and each of our initial shareholders and the
representative of our underwriters. Those lock-up provisions provide that such securities are not transferable or salable (i) in
the case of the founder shares, until the earlier of (1) one year after the completion of our initial business combination and
(2) the date on which we consummate a liquidation, merger, share exchange or other similar transaction after our initial business
combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or
other property, and (ii) in the case of the insider warrants, repurchased warrants and the ordinary shares underlying such warrants,
until after the completion of our initial business combination, except in the case of both (i) and (ii) (a) to our officers or
directors, any affiliates or family members of any of our officers or directors, any of our sponsors, or any affiliates of our
sponsors, including any members of management of any of the sponsors, (b) by gift to a member of one of the members of our sponsor’s
immediate family or to a trust, the beneficiary of which is a member of one of the members of our sponsor’s immediate family,
an affiliate of our sponsors or to a charitable organization; (c) by virtue of laws of descent and distribution upon death of one
of the members of our sponsor; (d) pursuant to a qualified domestic relations order; (e) by virtue of the laws of the jurisdiction
of organization of our sponsors upon dissolution of our sponsor; (f) in the event of our liquidation prior to our completion of
our initial business combination; or (g) in the event of our consummation of a liquidation, merger, share exchange or other similar
transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or
other property subsequent to our consummation of our initial business combination; provided, however, in the case of each of clauses
(a) through (e), that these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.
Notwithstanding the foregoing, in the event the sales price of our shares reaches or exceeds $9.60 for any 20 trading days within
any 30-trading day period during such one year period, 50% of the founder shares shall be released from the lock-up and, if the
Company’s share price reaches or exceeds $12.00 for any 20 trading days within any 30-trading day period during such one
year period, the remaining 50% of the founder shares shall be released from the lock-up.
Registration Rights
The holders of the
founder shares, insider warrants and warrants that may be issued upon conversion of working capital loans have registration rights
to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement signed on July
19, 2012. These holders will be entitled to make up to three demands (or one demand in the case of the EBC warrants), excluding
short form registration demands, that we register such securities for sale under the Securities Act. In addition, these shareholders
will have “piggy-back” registration rights to include their securities in other registration statements filed by us.
B. Related party transactions
On July 25, 2012,
simultaneously with the closing of the offering, we consummated the private sale of 4,400,000 warrants at a price of $0.50 per
warrant, for an aggregate purchase price of $2,200,000. On July 27, 2012, simultaneously with the sale of the over-allotment units,
we consummated the private sale of an additional 420,000 warrants at a price of $0.50 per warrant, for an aggregate purchase price
of $210,000. The private warrants, which were purchased by the sponsors of the Company ($2,190,909 in the aggregate) and EBC
($
219,091
in the aggregate), the representative of the underwriters of the offering, are identical
to the warrants included in the units sold in the offering except that the private warrants are exercisable for cash or on a cashless
basis, at the option of the holder, and are not redeemable by the Company so long as they are still held by the initial purchasers
or their permitted transferees. Additionally, the period during which the private warrants purchased by EBC are exercisable may
not be extended beyond July 19, 2017. The purchasers have agreed that the private warrants will not be sold or transferred by them
(except to certain permitted transferees) until after the Company has completed an initial business combination.
In April 2011, we
issued an aggregate of 1,150,000 founder shares to our sponsors for an aggregate purchase price of $25,000 in cash, or approximately
$0.022 per share. As of May 3, 2011, our sponsors sold, at approximately $0.022 per share, an aggregate of 230,000 of such founder
shares to certain of our officers and directors. In February 2012, each of Limei Zhao and Kersten Hui (two of our executive officers)
sold, at cost, 3,001 founder shares (for an aggregate of 6,002 founder shares) to Mark B. Segall, our independent director. On
May 24, 2012, we effectuated a 1.25-for-1 forward split of our outstanding ordinary shares, leaving our sponsors and initial shareholders
with 1,437,500 founder shares.
Each of Amir Gal-Or,
Avishai Silvershatz, Kersten Hui, Limei Zhao and Mark Chess holds an executive position with the management company of our sponsors.
As a result, each of our officers and directors has agreed, pursuant to a written agreement with us, that until the earliest of
our initial business combination, our liquidation or such time as he ceases to be an officer or director, to present to us for
our consideration, prior to presentation to any other entity, any business opportunity, where the total consideration to be paid
(either in ordinary shares, cash or otherwise) is expected to be at least $32,000,000 or more, subject to any pre-existing fiduciary
or contractual obligations he might have. If any of our officers or directors becomes aware of a business combination opportunity
that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may
be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity
to us.
Infinity-C.S.V.C.
Management Ltd, an affiliate of our sponsors, has agreed to, from the date that our securities were first listed on Nasdaq through
the earlier of our consummation of our initial business combination and our liquidation, make available to us office space and
certain office and secretarial services, as we may require from time to time. We have agreed to pay until the consummation of our
business combination, an aggregate of $10,000 per month to our sponsors for these services. However, this arrangement is solely
for our benefit and is not intended to provide our sponsors with compensation in lieu of salary. We believe, based on rents and
fees for similar services in the Tel Aviv, Israel area, that the fee charged by Infinity-C.S.V.C. Management Ltd is at least as
favorable as we could have obtained from an unaffiliated person.
Other than the $10,000
per-month administrative fee which will be paid to Infinity-C.S.V.C. Management Ltd reimbursement of 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 and up to an aggregate maximum of $400,000 in finder’s fees, consulting fees or other similar
compensation as determined by our board, no compensation will be paid to our sponsors, officers or directors, or to any of their
respective affiliates, prior to or in connection with our initial business combination (regardless of the type of transaction).
We have not determined any specific criteria nor do we have any agreement with any officer or director related to the payment of
any such finders’, consulting or similar fees and the decision to pay any finders’, consulting or similar compensation
to our officers or directors will be in the sole discretion of our board, subject to the Companies Act. Our independent directors
will review on a quarterly basis all payments that were made to our sponsors, officers, directors or our or their affiliates and
will be responsible for reviewing and approving all related party transactions as defined under Item 404 of Regulation S-K, after
reviewing each such transaction for potential conflicts of interests and other improprieties.
In addition, in order
to finance transaction costs in connection with an intended initial business combination, our sponsors, affiliates of our sponsors
or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we consummate an initial
business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we
may use a portion of the offering proceeds held outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment, other than the interest on such proceeds that may be released to us for working
capital purposes. Up to $500,000 of such loans may be convertible into warrants of the post business combination entity at a price
of $0.50 per warrant at the option of the lender. The warrants would be identical to the sponsor warrants. The terms of such loans
by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
Our sponsors have
committed that they or their designees will purchase up to 40% of the public warrants in the aftermarket at $0.40 per public warrant
during the period commencing on September 20, 2012 and terminating on the earlier of the date of the announcement of the business
combination or until the maximum number of such warrants have been purchased. Purchases will be made only in open market transactions
pursuant to a 10b5-1 plan entered into by the sponsors on or prior to the date of the prospectus which requires the sponsors to
maintain an irrevocable limit order for such public warrants at $0.40 per warrant. Pursuant to the 10b5-1 plan, all such purchases
will be made in accordance with the technical requirements of Rule 10b-18 (including timing, pricing and volume requirements with
respect to the warrants) although the purchases will not actually be effectuated under Rule 10b-18. If any of the purchases cannot
be made in accordance with the technical requirements of Rule 10b-18, such purchases will not be made under the plan. As a result,
it is possible that the sponsors will not be able to purchase any warrants under the plan. Our sponsors will monitor the activities
of the broker effectuating the 10b5-1 plan in an effort to ensure that purchases are made in accordance with the technical requirements
of Rule 10b-18.
Additionally, our
sponsors have committed to purchase at $0.60 per public warrant the balance of the outstanding public warrants in a tender offer
that will commence after our announcement of a business combination and filing of proxy or tender offer materials related to such
business combination. If we are unable to consummate a business combination within the allotted time, Continental Stock Transfer
& Trust Company will use the funds held in a segregated escrow account, initially in the amount of $3,450,000, in order to
distribute $0.60 per public warrant to the holders of such warrants, excluding public warrants held by our sponsors, and thereafter,
all such public warrants and repurchased public warrants will expire. $2,530,000 of the funds held in the escrow account will be
invested only in United States treasuries with a maturity of 180 days or less and the remaining $920,000 may be invested in either
United States treasuries with a maturity of 180 days or less or in money market funds that invest solely in United States treasuries.
In the event that
we are unable to close a business combination within the allotted time, the escrow agent will be authorized to transfer $0.60 per
public warrant, to holders of public warrants other than our sponsors, as promptly as reasonably possible but no more than five
business days thereafter and all such public warrants and repurchased public warrants will expire worthless.
After our initial
business combination, members of our management team who remain with us may be paid consulting, management or other fees from the
combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer
or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will
be known at the time of distribution of such tender offer materials or at the time of a shareholder meeting held to consider our
initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive
and director compensation.
All ongoing and future
transactions between us and any member of our management team or his or her respective affiliates will be on terms believed by
us at that time, based upon other similar arrangements known to us, to be no less favorable to us than are available from unaffiliated
third parties. It is our intention to obtain estimates from unaffiliated third parties for similar goods or services to ascertain
whether such transactions with affiliates are on terms that are no less favorable to us than are otherwise available from such
unaffiliated third parties. If a transaction with an affiliated third party were found to be on terms less favorable to us than
with an unaffiliated third party, we would not engage in such transaction.
C. Interests of experts and counsel
None.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated statements and other
financial information
Please see “Item
18. Financial Statements” for a list of the financial statements filed as part of this Annual Report.
B. Significant changes
Not applicable.
ITEM 9. THE OFFER AND LISTING
A. Offer and listing details
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Units
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Ordinary Shares
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Warrants
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Reference period
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High
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Low
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High
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Low
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High
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Low
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Most recent fiscal years
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2013
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8.55
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8.22
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7.81
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7.41
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0.59
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0.56
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2012
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8.42
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8.01
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8.03
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7.60
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0.591
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0.55
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Most recent quarters
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June 30, 2013
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8.39
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8.34
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7.86
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7.7
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0.59
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0.56
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March 31, 2013
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8.55
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8.22
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7.81
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7.41
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0.59
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0.56
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December 31, 2012
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8.42
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8.11
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8.03
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7.50
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0.591
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0.55
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September 30, 2012
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8.1556
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8.01
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7.95
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7.55
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0.57
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0.55
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Most recent six months
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June 2013
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8.39
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8.31
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7.85
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7.84
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0.59
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0.59
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May 2013
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8.3401
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8.31
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7.84
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7.84
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0.59
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0.56
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April 2013
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8.3304
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8.3304
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7.86
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7.70
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0.59
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0.56
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March 2013
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8.55
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8.22
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7.80
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7.70
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0.57
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0.57
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February 2013
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8.27
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8.26
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7.80
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7.62
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0.57
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0.57
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January 2013
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8.42
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8.25
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7.81
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7.41
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0.59
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0.56
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December 2012
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8.42
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8.22
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7.90
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7.60
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0.591
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0.555
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November 2012
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8.30
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8.20
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7.75
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7.50
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0.58
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0.58
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October 2012
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8.22
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8.11
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8.03
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7.64
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0.58
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0.55
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B. Plan of distribution
Not applicable.
C. Markets
Our units, ordinary
shares and warrants are listed on The Nasdaq Capital Market under the symbols INXBU, INXB and INXBW respectively.
D. Selling shareholders
Not applicable.
E.
Dilution
Not applicable.
F.
Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share capital
Our memorandum and
articles of association authorize the issuance of an unlimited amount of both ordinary shares of no par value and preferred shares
of no par value. We may issue a substantial number of additional ordinary or preferred shares to complete our initial business
combination or under an employee incentive plan after consummation of our initial business combination.
As of March 31, 2013
, there were 7,187,500 ordinary shares outstanding and 10,570,000 warrants outstanding (including 5,750,000
public warrants and 4,820,000 private warrants). As of March 31, 2013 there were no shares of preferred stock outstanding.
B. Memorandum and articles of association
The
description of our Amended and Restated
Memorandum and Articles of Association
is
contained in our Registration Statement on Form F-1, as amended (File No.
333-173575
), filed with the Commission,
which is incorporated herein by reference. A copy of our Amended and Restated Memorandum and Articles of Association is filed as
an exhibit with our
Form 6-K filed on July 25, 2012
.
C. Material contracts
We have not entered
into any material contracts other than in the ordinary course of business and other than those described in Item 4, “Information
on the Company” and in Item 7, “Major Shareholders and Related Party Transactions” or elsewhere in this Annual
Report on Form 20-F which are incorporated herein by reference.
D. Exchange controls and other limitations
affecting security holders
Under British Virgin
Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions
that affect the remittance of dividends, interest or other payments to nonresident holders of our ordinary shares.
E. Taxation
British Virgin Islands Taxation
The company and all
distributions, interest and other amounts paid by the company to persons who are not tax resident in the British Virgin Islands
will not be subject to any income, withholding or capital gains taxes in the British Virgin Islands, with respect to the shares
in the company owned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes
in the British Virgin Islands.
No estate, inheritance,
succession or gift tax, rate, duty, levy or other charge is payable by persons who are not tax resident in the British Virgin Islands
with respect to any shares, debt obligations or other securities of the company.
All instruments relating
to transactions in respect of the shares, debt obligations or other securities of the company and all instruments relating to other
transactions relating to the business of the company are exempt from the payment of stamp duty in the British Virgin Islands.
There are currently
no withholding taxes or exchange control regulations in the British Virgin Islands applicable to the company or its securityholders.
United States Federal Income Taxation
General
Because the components
of a unit are separable at the option of the holder, the holder of a unit generally will be treated, for U.S. federal income tax
purposes, as the owner of the underlying ordinary share and warrant components of the unit, as the case may be. As a result, the
discussion below of the U.S. federal income tax consequences with respect to actual holders of ordinary shares and warrants should
also apply to holders of units (as the deemed owners of the underlying ordinary shares and warrants that comprise the units).
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:
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an individual citizen or resident of the United States;
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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;
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an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust if (i) 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 (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
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If a beneficial owner
of our securities is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity
for U.S. federal income tax purposes, such owner will be considered a “Non-U.S. Holder.” The material U.S. federal
income tax consequences applicable specifically to Non-U.S. Holders are described below under the heading “Non-U.S. Holders.”
This discussion is
based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations
promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change
or differing interpretations, possibly on a retroactive basis.
This discussion does
not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s
individual circumstances. In particular, this discussion considers only holders that own our securities as capital assets within
the meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax. In addition,
this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules, including:
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financial institutions or financial services entities;
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broker-dealers;
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taxpayers that are subject to the mark-to-market accounting rules under Section 475 of the Code;
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tax-exempt entities;
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governments or agencies or instrumentalities thereof;
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insurance companies;
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regulated investment companies;
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real estate investment trusts;
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expatriates or former long-term residents of the United States;
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persons that actually or constructively own 5 percent or more of our voting shares;
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persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;
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persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or
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persons whose functional currency is not the U.S. dollar.
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This discussion does
not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, state, local or non-U.S. tax laws
or, except as discussed herein, any tax reporting obligations of a holder of our securities. Additionally, this discussion does
not consider the tax treatment of partnerships or other pass-through entities or persons who hold our securities through such entities.
If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of
our securities, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the
partner and the activities of the partnership. This discussion also assumes that any distributions made (or deemed made) by us
on our ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition
of our securities will be in U.S. dollars.
We have not sought,
and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with
the descriptions herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation,
regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
THIS DISCUSSION IS
ONLY A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES.
EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES
TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.
Allocation of Purchase Price and Characterization
of a Unit
There is no authority
addressing the treatment, for U.S. federal income tax purposes, of securities with terms substantially the same as the units, and,
therefore, that treatment is not entirely clear. Each unit should be treated for U.S. federal income tax purposes as an investment
unit consisting of one ordinary share and one warrant to acquire one ordinary share. For U.S. federal income tax purposes, each
holder of a unit generally must allocate the purchase price of a unit between the ordinary share and the warrant that comprise
the unit based on the relative fair market value of each at the time of issuance. The price allocated to each ordinary share and
the warrant generally will be the holder’s tax basis in such share or warrant, as the case may be.
The foregoing treatment
of our ordinary shares and warrants and a holder’s purchase price allocation are not binding on the IRS or the courts. Because
there are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS
or the courts will agree with the characterization described above or the discussion below. Accordingly, each holder is advised
to consult its own tax advisor regarding the risks associated with an investment in a unit (including alternative characterizations
of a unit) and regarding an allocation of the purchase price between the ordinary share and the warrant that comprise a unit. The
balance of this discussion assumes that the characterization of the units described above is respected for U.S. federal income
tax purposes.
U.S. Holders
Tax Reporting
Certain U.S. Holders
may be required to file an IRS Form 926 (Return of a U.S. Transferor of Property to a Foreign Corporation) to report a transfer
of property (including cash) to us. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting
requirement. Each U.S. Holder is urged to consult with its own tax advisor regarding this reporting obligation.
Taxation of Distributions Paid on Ordinary
Shares
Subject to the passive
foreign investment company (“PFIC”) rules discussed below, a U.S. Holder generally will be required to include in gross
income as dividends the amount of any cash distribution paid on our ordinary shares. A cash distribution on such shares generally
will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current or
accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividends paid by us will be taxable
to a corporate U.S. holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to
domestic corporations in respect of dividends received from other domestic corporations. Distributions in excess of such earnings
and profits generally will be applied against and reduce the U.S. Holder’s basis in its ordinary shares (but not below zero)
and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares.
With respect to non-corporate
U.S. Holders, dividends will be taxed at the lower applicable long-term capital gains rate (see “— Taxation on the
Disposition of Ordinary Shares and Warrants” below) only if our ordinary shares are readily tradable on an established securities
market in the United States and certain other requirements are met. U.S. Holders should consult their own tax advisors regarding
the availability of the lower rate for any dividends paid with respect to our ordinary shares.
Possible Constructive Distributions
The terms of each
warrant provide for an adjustment to the number of shares for which the warrant may be exercised or to the exercise price of the
warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. However, the U.S.
Holders of the warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases
the warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number
of ordinary shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of our ordinary shares
which is taxable to the U.S. Holders of such ordinary shares as described under “— Taxation of Distributions Paid on
Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same
manner as if the U.S. Holders of the warrants received a cash distribution from us equal to the fair market value of such increased
interest.
Taxation on the Disposition of Ordinary
Shares and Warrants
Upon a sale or other
taxable disposition of our ordinary shares or warrants (which, in general, would include a redemption of warrants or ordinary shares,
as discussed below, and including as a result of a dissolution and liquidation in the event we do not consummate an initial business
combination within the required time), and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital
gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in
the ordinary shares or warrants. See “— Exercise or Lapse of a Warrant” below for a discussion regarding a U.S.
Holder’s basis in the ordinary share acquired pursuant to the exercise of a warrant.
The regular U.S. federal
income tax rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on
ordinary income, except that under tax law currently in effect long-term capital gains recognized by non-corporate U.S. Holders
are generally subject to U.S. federal income tax at a maximum regular rate of 15%. Capital gain or loss will constitute long-term
capital gain or loss if the U.S. Holder’s holding period for the ordinary shares or warrants exceeds one year. It is unclear
whether the redemption rights with respect to the ordinary shares described in the prospectus may prevent a U.S. Holder from satisfying
the applicable holding period requirements for this purpose. The deductibility of capital losses is subject to various limitations
that are not described herein because a discussion of such limitations depends on each U.S. Holder’s particular facts and
circumstances. Among such limitations is the deduction for losses upon a taxable disposition by a U.S. Holder of a warrant (whether
or not held as part of a unit) if, within a period beginning 30 days before the date of such disposition and ending 30 days after
such date, such U.S. Holder has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized
by law), or has entered into a contract or option so to acquire, substantially identical shares or securities. U.S. Holders who
recognize losses with respect to a disposition of our ordinary shares or warrants should consult their own tax advisors regarding
the tax treatment of such losses.
Redemption of Ordinary Shares
Subject to the PFIC
rules described below, if a U.S. Holder redeems ordinary shares for the right to receive cash pursuant to the exercise of a shareholder
redemption right or if we purchase a U.S. Holder’s ordinary shares in an open market transaction, for U.S. federal income
tax purposes, such redemption will be subject to the following rules. If the redemption qualifies as a sale of the ordinary shares
under Section 302 of the Code, the tax treatment of such redemption will be as described under “— Taxation on the Disposition
of Ordinary Shares and Warrants” above. If the redemption does not qualify as a sale of ordinary shares under Section 302
of the Code, a U.S. Holder will be treated as receiving a distribution with the tax consequences described below. Whether redemption
of our shares qualifies for sale treatment will depend largely on the total number of our ordinary shares treated as held by such
U.S. Holder (including any shares constructively owned as a result of, among other things, owning warrants). The redemption of
ordinary shares generally will be treated as a sale or exchange of the ordinary shares (rather than as a distribution) if the receipt
of cash upon the redemption (i) is “substantially disproportionate” with respect to a U.S. Holder, (ii) results in
a “complete termination” of such holder’s interest in us or (iii) is “not essentially equivalent to a dividend”
with respect to such holder. These tests are explained more fully below.
In determining whether
any of the foregoing tests are satisfied, a U.S. Holder must take into account not only our ordinary shares actually owned by such
holder, but also our ordinary shares that are constructively owned by such holder. A U.S. Holder may constructively own, in addition
to our ordinary shares owned directly, ordinary shares owned by related individuals and entities in which such holder has an interest
or that have an interest in such holder, as well as any ordinary shares such holder has a right to acquire by exercise of an option,
which would generally include ordinary shares which could be acquired pursuant to the exercise of the warrants. In order to meet
the substantially disproportionate test, the percentage of our outstanding voting shares actually and constructively owned by a
U.S. Holder immediately following the redemption of our ordinary shares must, among other requirements, be less than 80% of the
percentage of our outstanding voting and ordinary shares actually and constructively owned by such holder immediately before the
redemption. There will be a complete termination of a U.S. Holder’s interest if either (i) all of our ordinary shares actually
and constructively owned by such U.S. Holder are redeemed or (ii) all of our ordinary shares actually owned by such U.S. Holder
are redeemed and such holder is eligible to waive, and effectively waives, in accordance with specific rules, the attribution of
shares owned by family members and such holder does not constructively own any other shares. The redemption of the ordinary shares
will not be essentially equivalent to a dividend if such redemption results in a “meaningful reduction” of a U.S. Holder’s
proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate
interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that
even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises
no control over corporate affairs may constitute such a “meaningful reduction.” U.S. Holders should consult with their
own tax advisors as to the tax consequences of an exercise of the redemption right.
If none of the foregoing
tests are satisfied, then the redemption may be treated as a distribution and the tax effects will be as described under “—
Taxation of Distributions Paid on Ordinary Shares,” above. After the application of those rules, any remaining tax basis
a U.S. Holder has in the redeemed ordinary shares will be added to the adjusted tax basis in such holder’s remaining ordinary
shares. If there are no remaining ordinary shares, a U.S. Holder should consult its own tax advisors as to the allocation of any
remaining basis.
U.S. Holders who actually
or constructively own one percent or more of our shares (by vote or value) may be subject to special reporting requirements with
respect to a redemption of ordinary shares, and such holders should consult with their own tax advisors with respect to their reporting
requirements.
Exercise or Lapse of a Warrant
Subject to the PFIC
rules discussed below, a U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary share on the
exercise of a warrant for cash. An ordinary share acquired pursuant to the exercise of a warrant for cash generally will have a
tax basis equal to the U.S. Holder’s tax basis in the warrant, increased by the amount paid to exercise the warrant. The
holding period of such ordinary share generally would begin on the day after the date of exercise of the warrant and will not include
the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder generally
will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences
of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the
exercise is not a gain realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes.
In either tax-free situation, a U.S. Holder’s basis in the ordinary shares received would equal the holder’s basis
in the warrant. If the cashless exercise were treated as not being a gain realization event, a U.S. Holder’s holding period
in the ordinary shares would be treated as commencing on the date following the date of exercise of the warrant. If the cashless
exercise were treated as a recapitalization, the holding period of the ordinary shares would include the holding period of the
warrant. It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss would be recognized.
In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of ordinary shares having a value
equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss
in an amount equal to the difference between the fair market value of the ordinary shares represented by the warrants deemed surrendered
and the U.S. Holder’s tax basis in the warrants deemed surrendered. In this case, a U.S. Holder’s tax basis in the
ordinary shares received would equal the sum of the fair market value of the ordinary shares represented by the warrants deemed
surrendered and the U.S. Holder’s tax basis in the warrants exercised. A U.S. Holder’s holding period for the ordinary
shares would commence on the date following the date of exercise of the warrant. Due to the absence of authority on the U.S. federal
income tax treatment of a cashless exercise, there can be no assurance which, if any, of the alternative tax consequences and holding
periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors
regarding the tax consequences of a cashless exercise.
Additional Taxes After 2012
For taxable years
beginning after December 31, 2012, U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds
generally will be subject to a 3.8% Medicare contribution tax on unearned income, including, among other things, dividends on,
and capital gains from the sale or other taxable disposition of, our securities, subject to certain limitations and exceptions.
U.S. Holders should consult their own tax advisors regarding the effect, if any, of such tax on their ownership and disposition
of our securities.
Passive Foreign Investment Company Rules
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, 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 we may have been a PFIC since our inception.
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 qualified electing fund
(“QEF”) election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary
shares, as described below, such holder generally will be subject to special rules with respect to:
|
•
|
any gain recognized by the
U.S. Holder on the sale or other disposition of its ordinary shares or warrants; and
|
|
•
|
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).
|
Under these rules,
|
•
|
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;
|
|
•
|
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;
|
|
•
|
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
|
|
•
|
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.
|
In general, if we
are determined to be a PFIC, a U.S. Holder will avoid the PFIC tax consequences described above in respect to our ordinary shares
by making a timely QEF election 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.
A U.S. Holder may
not make a QEF election with respect to its warrants to acquire our ordinary shares. As a result, if a U.S. Holder sells or otherwise
disposes of such warrants (other than upon exercise of such warrants), any gain recognized generally will be subject to the special
tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during
the period the U.S. Holder held the warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with
respect to the newly acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the
QEF election will apply to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted
to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such
newly acquired ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes
the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election under the PFIC rules. The purging
election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject
to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the
purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired upon the exercise of
the warrants for purposes of the PFIC rules.
The QEF election is
made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally
makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign investment Company or
Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal
income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing
a protective statement with such return and if certain other conditions are met or with the consent of the IRS. U.S. Holders should
consult their own tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular
circumstances.
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.
If a U.S. Holder has
made a QEF election with respect to our ordinary shares, and the special tax and interest charge rules do not apply to such shares
(because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such
shares or a purge of the PFIC taint pursuant to a purging election, as described above), any gain recognized on the sale of our
ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders
of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a
subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable as
a dividend to such U.S. Holders. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included
in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply
to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares
in a QEF.
Although a determination
as to our PFIC status will be made annually, an initial determination that our company is 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.
Alternatively, if
a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable shares, the U.S. Holder may
make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a 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. Instead, 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
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.
If we are a PFIC and,
at any time, have a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of
the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above
if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise
were deemed to have disposed of an interest in the lower-tier PFIC. We will endeavor to cause any lower-tier PFIC to provide to
a U.S. Holder the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. However,
there is no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition, we may not hold
a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower-tier PFIC
to provide the required information. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by
lower-tier PFICs.
A U.S. Holder that
owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether
or not a QEF or market-to-market election is made) and such other information as may be required by the U.S. Treasury Department.
The rules dealing
with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those
described above. Accordingly, U.S. Holders of our ordinary shares and warrants should consult their own tax advisors concerning
the application of the PFIC rules to our ordinary shares and warrants under their particular circumstances.
Non-U.S. Holders
Dividends (including
constructive dividends) paid or deemed paid to a Non-U.S. Holder in respect to its ordinary shares generally will not be subject
to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade
or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment
or fixed base that such holder maintains in the United States).
In addition, a Non-U.S.
Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our
ordinary shares or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States
(and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder
maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more
in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from United States
sources generally is subject to tax at a 30% rate or a lower applicable tax treaty rate).
Dividends and gains
that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required
by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally
will be subject to U.S. federal income tax (but not the Medicare contribution tax) at the same regular U.S. federal income tax
rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income
tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
The U.S. federal income
tax treatment of a Non-U.S. Holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. Holder, generally
will correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. Holder, as described under
“U.S. Holders — Exercise or Lapse of a Warrant,” above, although to the extent a cashless exercise
results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S.
Holders gain on the sale or other disposition of our ordinary shares and warrants.
Backup Withholding and Information Reporting
In general, information
reporting for U.S. federal income tax purposes should apply to distributions made on our ordinary shares within the United States
to a U.S. Holder, subject to certain exceptions, and to the proceeds from sales and other dispositions of our ordinary shares or
warrants by a U.S. Holder to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at
an office) outside the United States will be subject to information reporting in limited circumstances.
In addition, backup
withholding of U.S. federal income tax, currently at a rate of 28%, generally will apply to dividends paid on our ordinary shares
to a U.S. Holder and the proceeds from sales and other dispositions of shares or warrants by a U.S. Holder, in each case who:
|
•
|
fails to provide an accurate taxpayer identification number;
|
|
•
|
is notified by the IRS that backup withholding is required; or
|
|
•
|
fails to comply with applicable certification requirements.
|
A Non-U.S. Holder
generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign
status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
We will withhold all
taxes required to be withheld by law from any amounts otherwise payable to any holder of our ordinary shares or securities, including
tax withholding required by the backup withholding rules. Backup withholding is not an additional tax. Rather, the amount of any
backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax
liability and may entitle such holder to a refund, provided that the requisite information is timely furnished to the IRS. Holders
are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedure
for obtaining an exemption from backup withholding in their particular circumstances.
Recently enacted legislation
imposes withholding tax at a rate of 30% on payments to certain foreign entities after December 31, 2012, on dividends on and the
gross proceeds of dispositions of U.S. equity interests, unless various U.S. information reporting and due diligence requirements
(generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied. Non-U.S.
Holders should consult their tax advisors regarding the possible implications of this legislation on their investment in the units.
Also, under recently
enacted legislation, a U.S. holder is required to file with such U.S. holder’s income tax return new Form 8938 to report
the ownership of shares or securities issued by a foreign corporation exceeding certain threshold amounts.
F. Dividends and paying agents
The Company has no
current plans to pay dividends. The Company does not currently have a paying agent.
G. Statement by experts
Not applicable.
H. Documents on display
The Company files
annual reports and other information with the SEC. You may read and copy any report or document we file, including the exhibits,
at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the public reference room. Such materials can also be obtained on the SEC’s site on the internet
at
http://www.sec.gov
.
I. Subsidiary information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
The net proceeds of
our initial public offering held in the trust account, will be invested only in any of (i) U.S. treasuries having a maturity of
180 days or less, (ii) any open ended investment company that holds itself out as a registered money market fund, which invests
in U.S. treasuries, or (iii) any open ended investment company that holds itself out as a money market fund, which invests in U.S.
treasuries selected by the Company meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 promulgated under
the Investment Company Act. Due to the short-term nature of these investments, we do not believe we will have a material exposure
to interest rate risk.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
STATEMENTS OF CASH FLOWS
|
|
Year ended
March 31, 2013
|
|
|
Period from
April 6,
2011
(inception)
to March
31, 2012
|
|
|
Period from
April 6,
2011
(inception)
to March
31, 2013
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the period
|
|
|
(386,188
|
)
|
|
|
(27,124
|
)
|
|
|
(413,312
|
)
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in fair value of warrant liability
|
|
|
105,700
|
|
|
|
-
|
|
|
|
105,700
|
|
Increase in fair value of Trust Fund
|
|
|
(13,666
|
)
|
|
|
-
|
|
|
|
(13,666
|
)
|
Change in operating liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(10,466
|
)
|
|
|
-
|
|
|
|
(10,466
|
)
|
Accrued expenses
|
|
|
128,097
|
|
|
|
-
|
|
|
|
128,097
|
|
Deferred legal fees
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
Net cash used in operating activities
|
|
|
(76,523
|
)
|
|
|
(27,124
|
)
|
|
|
(103,647
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash contributed to Trust Fund
|
|
|
(46,000,000
|
)
|
|
|
-
|
|
|
|
(46,000,000
|
)
|
Net cash used in investing activities
|
|
|
(46,000,000
|
)
|
|
|
-
|
|
|
|
(46,000,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred offering costs
|
|
|
53,664
|
|
|
|
(53,664
|
)
|
|
|
-
|
|
Proceeds from sale of ordinary shares to Sponsor
|
|
|
-
|
|
|
|
25,000
|
|
|
|
25,000
|
|
Proceeds from note and advances payable to affiliate
|
|
|
(55,940
|
)
|
|
|
55,940
|
|
|
|
-
|
|
Proceeds from issuance of warrants
|
|
|
2,410,000
|
|
|
|
-
|
|
|
|
2,410,000
|
|
Portion of net proceeds from sale of units through Public offering allocable to shares subject to possible redemption
|
|
|
39,078,774
|
|
|
|
-
|
|
|
|
39,078,774
|
|
Net proceeds from sale of units through public offering allocable to shareholders' equity
|
|
|
4,975,001
|
|
|
|
-
|
|
|
|
4,975,001
|
|
Net cash provided by financing activities
|
|
|
46,461,499
|
|
|
|
27,276
|
|
|
|
46,488,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
384,976
|
|
|
|
152
|
|
|
|
385,128
|
|
Cash beginning of period
|
|
|
152
|
|
|
|
-
|
|
|
|
-
|
|
End of period
|
|
|
385,128
|
|
|
|
152
|
|
|
|
385,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE FOR NON-CASH FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred offering costs included in accrued offering costs
|
|
|
-
|
|
|
|
8,836
|
|
|
|
8,836
|
|
Deferred legal fees
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
Adjustment for warrant liability in connection with the public offering
|
|
|
5,919,200
|
|
|
|
-
|
|
|
|
5,919,200
|
|
The accompanying notes should be read in conjunction with
the financial statements
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Business Operations
Incorporation
Infinity Cross Border Acquisition Corporation
f/k/a Infinity China 1 Acquisition Corporation (the “Company”) was incorporated in the British Virgin Islands on April
6, 2011.
Sponsor
The Company’s sponsors are Infinity
I-China Fund (Cayman), L.P., Infinity I-China Fund (Israel), L.P., Infinity I-China Fund (Israel 2), L.P. and Infinity I-China
Fund (Israel 3), L.P., the general partner of each of aforementioned funds is Infinity-CSVC Partners, Ltd., a Cayman Islands exempted
company (the “Sponsor”).
Fiscal Year End
The Company has selected March 31 as its
fiscal year end.
Business Purpose
The Company was formed to effect a merger, capital share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (an “Initial
Business Combination”).
Financing
The registration statement for the Company’s
initial public offering was declared effective on July 19, 2012. On July 25, 2012, the Company consummated a public offering of
5,000,000 units (the “Public Units”) (the “Public Offering” – Note 3). Each Unit consists
of one ordinary share, no par value (“Ordinary Shares”), and one redeemable Ordinary Share purchase warrant (the “Public
Warrant”). The Ordinary Shares sold as part of the units in the Public Offering are referred herein as “Public Shares.”
On July 25, 2012, the Company completed a private placement of 4,400,000 Warrants to the initial investors and the lead underwriter
(the “Private Placement Warrants”). The Company received gross proceeds of $42,200,000 before deducting
underwriters’ compensation of $1,400,000, and including $2,200,000 received for the purchase of the 4,400,000 Private Placement
Warrants by the sponsors and the lead underwriter, Early BirdCapial, Inc ("EBC").
On July 26, 2012, the underwriters of the
Public Offering exercised in full their option (the “Over-Allotment Option”) to purchase up to an additional 750,000
Units (the “Over-Allotment Units”) for additional gross proceeds of $6,000,000 (before deduction of underwriters compensation
of $210,000) to the Company. Simultaneously with the closing of the Over-Allotment Option, the Company consummated the private
sale of an additional 420,000 Private Placement Warrants (together with the sale of the 4,400,000 Private Placement Warrants, the
“Private Placement”).
After giving effect to the Public Offering,
the sale of the Over-Allotment Units and the Private Placement, a total of 7,187,500 Ordinary Shares (including 5,750,000 public
shares and 1,437,500 shares held by the Company’s initial shareholders) and 10,570,000 Warrants (including 5,750,000 public
warrants and 4,820,000 Private Placement Warrants) are outstanding. Of the proceeds from the Public Offering, the sale of the Over-Allotment
Units and the Private Placement, a total of $46,000,000 (or $8.00 per public share) was initially placed in a trust account (the
“Trust Account”) established for the benefit of the Company’s public shareholders.
The proceeds placed into the Trust Account
may be invested only in any of (i) U.S. Treasuries having a maturity of 180 days or less, (ii) any open ended investment company
that holds itself out as a registered money market fund, which invests in U.S. Treasuries, or (iii) any open ended investment company
that holds itself out as a money market fund, which invests in U.S. Treasuries selected by the Company meeting the conditions of
paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended (the “Act”),
as determined by the Company and, with respect to option (iii) above, accompanied by an opinion of counsel reasonably satisfactory
to EBC that such investment would not cause the Company to be an investment company under the Act. The Trust Account is held overseas
and maintained by Continental Stock Transfer & Trust Company, acting as trustee. At March 31, 2013 all proceeds in the trust
account were held in USA Treasury Bills.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Business Operations- (continued)
Except for a portion of the interest
income from trust fund that may be released to the Company to pay any taxes and to fund the Company’s working capital
requirements, none of the funds held in trust will be released from the Trust Account until the earlier of: (i) the
consummation of an Initial Business Combination within 18 months from the closing of the Public Offering (or 21 months from
the closing of the Public Offering, if a definitive acquisition agreement is executed within 18 months but the Initial
Business Combination has not been consummated within such period) and (ii) a redemption to public shareholders prior to any
voluntary winding-up in the event the Company does not consummate an Initial Business Combination within the applicable
period.
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Public Offering and Private Placement, although
substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an Initial
Business Combination.
The Company’s initial shareholders,
officers and directors have agreed that the Company will only have until January 25, 2014 to consummate its Initial Business Combination
(or April 25, 2014, if the Company has entered into a definitive agreement for, but has not yet consummated, its Initial Business
Combination with a target business by January 25, 2014). If the Company does not consummate its Initial Business Combination within
this period of time, it will (i) as promptly as reasonably possible but no more than five business days thereafter, distribute
the aggregate amount then on deposit in the Trust Account (less up to $50,000 of the net interest earned thereon to pay dissolution
expenses), pro rata to the public shareholders by way of redemption and cease all operations except for the purposes of winding
up its affairs. This redemption of public shareholders from the Trust Account shall be done automatically by function of the Company’s
memorandum and articles of association and prior to any voluntary winding up. The initial shareholders have waived their rights
to participate in any redemption with respect to their initial shares. However, if the initial shareholders or any of the Company’s
officers, directors or affiliates acquire Ordinary Shares in or after the Public Offering, they will be entitled to a pro rata
share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not consummate its
Initial Business Combination within the required time period. In the event of such distribution, it is possible the per share value
of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public
offering price per Unit in the Public Offering.
Business Combination
An Initial Business Combination is subject to the following
size, focus and shareholder approval provisions:
Size —
The
prospective target business or businesses must have a fair market value that is at least equal to 80% of the balance of the Trust
Account at the time of the execution of a definitive agreement with such target. The Company will not consummate an Initial Business
Combination unless it acquires a controlling interest in a target company or is otherwise not required to register as an investment
company under the Act.
Focus
— The
Company will seek to identify, acquire and operate a business located in Canada, Europe, Africa or Israel, although the Company
may pursue acquisition opportunities in other geographic regions.
Tender Offer/Shareholder Approval
— The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) provide
shareholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for
a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account,
including interest
but less taxes payable plus amounts released to fund working capital requirements
,
or (ii) if the Company loses its status as a foreign private issuer (“FPI”) and is subject to the Exchange Act rules
applicable to domestic issuers, seek shareholder approval of the Initial Business Combination at a meeting called for such purpose
in connection with which shareholders may seek to redeem their shares, regardless of whether they vote for or against the Initial
Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including
interest
but less taxes payable plus amounts released to fund working capital requirements
.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Business Operations- (continued)
The decision as to whether the
Company will seek shareholder approval of the Initial Business Combination or will allow shareholders to sell their shares in
a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as
whether the Company is deemed a FPI, the timing of the transaction and whether the terms of the transaction would otherwise
require the Company to seek shareholder approval. If the Company seeks shareholder approval, it will consummate its Initial
Business Combination only if a majority of the outstanding ordinary shares voted are voted in favor of the Initial Business
Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible
assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions
of the Initial Business Combination.
Regardless of whether the Company holds
a shareholder vote or a tender offer in connection with an Initial Business Combination, a public shareholder will have the right
to redeem their Public Shares for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account, including interest but less taxes payable and amounts released to fund working capital requirements. As a result,
such Ordinary Shares are recorded at redemption/tender value and classified as temporary equity as of the completion of the Public
Offering, in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, Accounting Standards
Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
Liquidation
— If
the Company does not consummate an Initial Business Combination within 18 (or 21 months) from the closing of the Public Offering,
the Company (i) will, as promptly as reasonably possible but no more than five business days thereafter, distribute the aggregate
amount then on deposit in the Trust Account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses),
pro rata, to holders of Public Shares by way of redemption and (ii) intends to cease all operations except for the purposes of
any winding up of its affairs. This redemption of public shareholders from the Trust Account shall be done automatically by function
of the Company’s memorandum and articles of association and prior to any voluntary winding up, although at all times subject
to the BVI Business Companies Act, 2004 of the British Virgin Islands.
In the event of liquidation, it is possible
the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than
the initial public offering price per share in the Public Offering (assuming no value is attributed to the Public Warrants discussed
in Note 3).
2. Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of
the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America
and pursuant to the rules and regulations of the Securities and Exchange Commission.
Development Stage Company
The Company is considered to be in the
development stage as defined by FASB ASC 915, “Development Stage Entities,” and is subject to the risks associated
with activities of development stage companies. The Company has neither engaged in any operations nor generated any income to date.
All activity through March 31, 2013 relates to the Company’s formation and the Public Offering and since consummation of
the Public Offering, the search for a prospective target business with which to complete an Initial Business Combination. The Company
will not generate any operating revenues until after completion of an Initial Business Combination, at the earliest. The Company
may generate non-operating income in the form of interest income from the designated Trust Account.
Net Loss Per Share
Basic net loss per share is computed by
dividing net loss by the weighted average number of Ordinary Shares outstanding during the period. Diluted net loss per share is
computed by dividing net loss per share by the weighted average number of Ordinary Shares outstanding, plus to the extent dilutive,
the incremental number of Ordinary Shares to settle warrants held by the Sponsor and the Public (see Note 4), as calculated using
the treasury stock method. As the Company reported a net loss for all periods presented in the accompanying interim statements
of operations, the effect of the 10,570,000 warrants (including 4,820,000 Private Placement Warrants issued to the Sponsor and
lead underwriter in the private placement), have not been considered in the diluted loss per ordinary share because their effect
would be anti-dilutive. As a result, dilutive loss per ordinary share is equal to basic loss per ordinary share.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
2. Significant Accounting Policies- (continued)
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Income Taxes
The Company was incorporated in the British
Virgin Islands, and as such, is not subject to corporate income taxes. The Company is required to determine whether its tax positions
are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related
appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest
amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant
taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces
ending retained earnings. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized
tax benefits as of March 31, 2013. The Company’s conclusions may be subject to review and adjustment at a later date based
on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.
The Company recognizes interest and penalties
related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have
been recognized as of and for the year ended March 31, 2013. The Company is subject to income tax examinations by major taxing
authorities since inception.
The Company may be subject to potential
examination by U.S. federal, U.S. state or foreign jurisdiction authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized
tax benefits will materially change over the next twelve months.
Deferred Offering Costs
Deferred offering costs consist principally
of legal and accounting fees incurred through the balance sheet date that are related to the Public Offering and that were charged
to capital upon the receipt of the capital raised.
Warrant Liability
The Company accounts for the 10,570,000
warrants issued in connection with its Offering (consisting of 5,750,000 warrants issued in the Offering and the 4,820,000 Sponsor
Warrants) in accordance with the guidance contained in 815-40-15-7D, “Contracts in Entity's Own Equity” whereby under
that provision they do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company
classifies the warrant instrument as a liability at its fair value and adjusts the instrument to fair value at each reporting period.
Management used the quoted market price for the valuation of the warrants to determine the warrant liability to be $6,024,900 as
of March 31, 2013. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair
value is recognized in the Company's statement of operations.
Fair Value of Financial Instruments
Unless otherwise disclosed, the fair values
of financial instruments, including cash and the note payable to related party, approximate their carrying amount due primarily
to their short-term nature.
Recent Accounting Pronouncements
Management does not believe that any other
recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s
financial statements.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
2. Significant Accounting Policies- (continued)
Redeemable ordinary shares
As discussed in Note 1, all of the 5,750,000
Public Shares contain a redemption feature which allows for the redemption of such shares under the Company's liquidation or tender
offer/shareholder approval provisions. In accordance with ASC 480, redemption provisions not solely within the control of the Company
require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and
liquidation of all of the entity's equity instruments, are excluded from the provisions of ASC 480. Although the Company does not
specify a maximum redemption threshold, its memorandum and articles of association provides that in no event will the Company redeem
its public shares in an amount that would cause its net tangible assets (shareholders' equity) to be less than $5,000,001.
The Company recognizes changes in redemption
value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of
each reporting period. Increases or decreases in the carrying amount of redeemable Ordinary Shares shall be affected by charges
against the par value of common stock and retained earnings, or in the absence of retained earnings, by charges against paid-in
capital in accordance with ASC 480-10-S99.
Accordingly, at March 31, 2013, 4,394,533
of the 5,750,000 public shares are classified outside of permanent equity at their redemption value. The redemption value is equal
to the pro rata share of the aggregate amount then on deposit in the Trust Account, including interest
but
less taxes payable
(approximately $8.00 at March 31, 2013).
3. Public Offering
Public Units
On July 25, 2012, the Company sold 5,000,000
Public Units at a price of $8.00 per unit. Each Public Unit consists of one Public Share and one Public Warrant to purchase one
Ordinary Share. On July 26, 2012, the Company sold an additional 750,000 Public Units at a price of $8.00 per unit. See footnote
1 for a discussion of the "Public Offering".
On September 14, 2012, the Company, announced
that EBC notified it that commencing September 20, 2012, the holders of the Company’s Public Units may elect to separately
trade the Ordinary Shares and Public Warrants underlying such Public Units. Those Public Units not separated will continue to trade
on the Nasdaq Capital Market under the symbol “INXBU” and each of the underlying Ordinary Shares and Warrants will
trade under the symbols “INXB” and “INXBW”, respectively. Holders of Public Units will need to have their
brokers contact Continental Stock Transfer & Trust Company, the Company’s transfer agent, in order to separate the Public
Units into Ordinary Shares and Public Warrants.
Public Warrant Terms and Conditions:
Exercise Conditions
— Each Public Warrant entitles the holder to purchase from the Company one Ordinary Share at an exercise price
of $7 per share commencing on the later of the completion of an Initial Business Combination and July 25, 2013, provided that the
Company has an effective registration statement under the Securities Act of 1933, as amended, covering the Ordinary Shares issuable
upon exercise of the Public Warrants and such shares are registered or qualified under the securities laws of the state of residence
of the exercising holder. The Public Warrants expire three years from the date of the completion of the Company’s Initial
Business Combination, unless earlier redeemed. The Public Warrants will be redeemable in whole and not in part at a price of $0.01
per warrant upon a minimum of 30 days’ notice after the warrants become exercisable, only in the event that the last sale
price of the Ordinary Shares exceeds $10.50 per share for any 20 trading days within a 30-trading day period. If the Public Warrants
are redeemed by the Company, management will have the option to require all holders that wish to exercise such warrants to do so
on a cashless basis.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
3. Public Offering- (continued)
Registration Risk
— In accordance with a warrant agreement relating to the Public Warrants, the Company will be required to use
its best efforts to maintain the effectiveness of a registration statement relating to the Ordinary Shares issuable upon exercise
of the Public Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure
to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event a registration
statement is not effective at the time of exercise, the holders of such Public Warrants shall not be entitled to exercise such
Public Warrants (except on a cashless basis under certain circumstances) and in no event (whether in the case of a registration
statement not being effective or otherwise) will the Company be required to net cash settle or cash settle the Public Warrants.
Consequently, the Public Warrants may expire unexercised, unredeemed and worthless, and an investor in the Public Offering may
effectively pay the full unit price solely for the ordinary shares included in the Public Units.
Accounting
— Management
has determined, in accordance with the guidance contained in 815-40-15-7D, “Contracts in Entity's Own Equity” whereby
under that provision the Public Warrants, Sponsor Warrants or EBC Warrants do not meet the criteria for equity treatment and must
be recorded as a liability. Accordingly, the Company classifies the warrant instrument as a liability at its fair value and adjusts
the instrument to fair value at each reporting period.
Underwriting Agreement
— The Company paid an underwriting discount of 3.5% of the Public Unit offering price to the underwriters at the
closing of the Public Offering (an aggregate of $1,610,000). The Company also issued a unit purchase option, for $100, to EBC or
its appointees or its designees, to purchase 500,000 units at an exercise price of $8.80 per unit. The unit purchase option is
exercisable commencing on the later to occur of the consummation of the Initial Business Combination and July 19, 2013 and expires
July 19, 2017. The units issuable upon exercise of this option are identical to the units sold in the Public Offering. The Company
has accounted for the fair value of the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the
Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair value of this
unit purchase option was approximately $1,105,719 (or $2.21 per unit) using a Black-Scholes option-pricing model. The fair value
of the unit purchase option was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%,
(2) risk-free interest rate of 0.27% and (3) expected life of five years. The unit purchase option may be exercised for cash or
on a “cashless” basis, at the holder’s option (except in the case of a forced cashless exercise upon the Company’s
redemption of the Warrants, as described above), such that the holder may use the appreciated value of the unit purchase option
(the difference between the exercise prices of the unit purchase option and the underlying Warrants and the market price of the
Units and underlying ordinary shares) to exercise the unit purchase option without the payment of any cash. The holder of the unit
purchase option is entitled to certain demand and piggy-back registration rights. The Company has no obligation to net cash settle
the exercise of the unit purchase option or the Warrants underlying the unit purchase option. The holder of the unit purchase option
is not entitled to exercise the unit purchase option or the Warrants underlying the unit purchase option unless a registration
statement covering the securities underlying the unit purchase option is effective or an exemption from registration is available.
If the holder is unable to exercise the unit purchase option or underlying Warrants, the unit purchase option or Warrants, as applicable,
will expire worthless.
The Company has engaged EBC on a non-exclusive
basis, to act as its advisor and investment banker in connection with its Initial Business Combination to provide it with assistance
in negotiating and structuring the terms of its Initial Business Combination. The Company will pay EBC a cash fee of $860,000 for
such services upon the consummation of its Initial Business Combination.
4. Related Party Transactions
Founder Shares
— In
April 2011, the Sponsors purchased 1,150,000 ordinary shares as adjusted, (the “Founder Shares”) for $25,000, or approximately
$0.022 per share. On May 24, 2012, the Company effectuated a 1.25-for-1 forward split of the outstanding Ordinary Shares, leaving
the sponsors and initial shareholders with 1,437,500 founder shares.
Forfeiture
— The
Founder Shares included 187,500 Ordinary Shares that were subject to forfeiture if and to the extent the underwriters’ over-allotment
option was not exercised, so that the initial shareholders would own 20% of the Company’s issued and outstanding shares after
the Public Offering. On July 26, 2012 the over-allotment option was exercised in full and therefore no such shares are subject
to forfeiture.
Rights
— The
Founder Shares are identical to the Ordinary Shares included in the Public Units sold in the Public Offering except that (i) the
Founder Shares are subject to certain transfer restrictions, as described in more detail below, and (ii) the initial shareholders
have agreed to waive their redemption rights with respect to the Founder Shares and any Public Shares they purchase in connection
with the Initial Business Combination and have also
waived their redemption rights with respect to the Founder Shares if the Company fails to consummate an Initial Business Combination
within 18 (or 21) months from the closing of the Public Offering.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
4. Related Party Transactions- (continued)
Voting
— If
the Company seeks shareholder approval of its Initial Business Combination, the initial shareholders have agreed to vote the Founder
Shares and any Public Shares purchased during or after the Public Offering in favor of the Initial Business Combination.
Liquidation
— Although
the initial shareholders and their permitted transferees have waived their redemption rights with respect to the Founder Shares
if the Company fails to consummate an Initial Business Combination within 18 (or 21) months from the closing of the Public Offering,
they are entitled to redemption rights with respect to any Public Shares they may own.
Sponsor and EBC Warrants
— On July 25, 2012, the Sponsors and EBC purchased an aggregate of 4,000,000 and 400,000 warrants, respectively
(the “Sponsor Warrants” and “EBC Warrants”, respectively) at $0.50 per warrant (for an aggregate purchase
price of $2,200,000) from the Company on a private placement basis simultaneously with the closing of the Public Offering. On July
26,2012 the Sponsors and EBC purchased an aggregate of 381,818 and 38,182 warrants, respectively at $0.50 per warrant (for an aggregate
purchase price of $210,000) from the Company on a private placement basis simultaneously with the closing of the over-allotment
closing.
Exercise Conditions
— Each Sponsor Warrant and EBC Warrant is exercisable into one ordinary share at $7 per share. The proceeds from
the Sponsor Warrants and EBC Warrants were added to the proceeds from the Public Offering held in the Trust Account. The Sponsor
Warrants and EBC Warrants are identical to the Public Warrants except that (a) the Sponsor Warrants and EBC Warrants and any Public
Warrants purchased by the Sponsors or their affiliates (i) will be exercisable for cash or on a cashless basis, at the holder’s
option, and will not be redeemable by the Company, in each case so long as they are held by the initial purchasers or their affiliates,
and (ii) will be subject to certain transfer restrictions described in more detail below, and (b) the period during which the EBC
Warrants are exercisable may not be extended beyond five years from the effective date of the registration statement of which this
prospectus forms a part. The purchasers have agreed that the Sponsor Warrants and EBC Warrants will not be sold or transferred
by them (except to certain permitted transferees) until after the Company has completed the Initial Business Combination.
Accounting
— Management
has determined, in accordance with the guidance contained in 815-40-15-7D, “Contracts in Entity's Own Equity” whereby
under that provision the Sponsor Warrants, EBC Warrants, or the Public Warrants do not meet the criteria for equity treatment
and must be recorded as a liability. Accordingly, the Company classifies the warrant instrument as a liability at its fair value
and adjusts the instrument to fair value at each reporting period.
Disposition Restrictions
The initial shareholders have agreed not
to transfer, assign or sell any of their Founder Shares (except in limited circumstances to permitted assigns) until the earlier
of (1) one year after the completion of its Initial Business Combination and (2) the date on which the Company consummate a liquidation,
share exchange, share reconstruction and amalgamation, or other similar transaction after its Initial Business Combination that
results in all of its shareholders having the right to exchange their ordinary shares for cash, securities or other property (the
“Lock-Up Period”). Notwithstanding the foregoing, if the Company’s share price reaches or exceeds $9.60 for any
20 trading days within at least one 30-trading day period during the Lock-Up Period, 50% of the Founder Shares will be released
from the lock-up and, if the Company’s share price reaches or exceeds $12.00 for any 20 trading days within at least one
30-trading day period during such Lock Up Period, the remaining 50% of the Founder Shares shall be released from the lock-up. The
Sponsor has agreed not to transfer, assign or sell any of the Sponsor Warrants including the Ordinary Shares issuable upon exercise
of the Sponsor Warrants until after the completion of an Initial Business Combination.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
4. Related Party Transactions- (continued)
Registration Rights
The holders of the Founder Shares, Sponsor
Warrants, EBC Warrants and warrants that may be issued upon conversion of working capital loans (and the Ordinary Shares underlying
all of such warrants) have registration rights to require the Company to register a sale of any of the securities held by them
pursuant to a registration rights agreement signed on July 19, 2012. These holders are entitled to make up to three demands (or
one demand in the case of the EBC Warrants), excluding short form demands, that the Company register such securities for sale
under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities
in other registration statements filed by the Company. However, the registration rights agreement provides that the Company will
not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up
period, which occurs (i) in the case of the Founder Shares, upon the earlier of (1) one year after the completion of the Company’s
Initial Business Combination or (2) the date (1) one year after the completion of the Company’s Initial Business Combination
or (2) the date on which the Company consummates a liquidation, merger, share exchange or other similar transaction after the
Company’s Initial Business Combination that results in all of the Company’s shareholders having the right to exchange
their ordinary shares for cash, securities or other property, and (ii) in the case of the Sponsor Warrants and EBC Warrants and
the respective Ordinary Shares underlying such warrants, after the completion of the Company’s Initial Business Combination.
Notwithstanding the foregoing, in the event the sales price of the Company’s Ordinary Shares reaches or exceeds $9.60 for
any 20 trading days within any 30-trading day period during such one year period, 50% of the Founder Shares shall be released
from the lock-up and, if the sales price of the Company’s shares reaches or exceeds $12.00 for any 20 trading days within
any 30-trading day period during such one year period, the remaining 50% of the Founder Shares shall be released from the lock-up.
In addition, members of the Company’s Sponsor and the underwriters have agreed not to, subject to certain limited exceptions,
transfer, assign or sell any of the Sponsor Warrants or EBC Warrants (including the Ordinary Shares issuable upon exercise of
such Warrants) until after the completion of the Initial Business Combination. The Company will bear the costs and expenses of
filing any such registration statements.
Administrative Services
The Company has agreed pay $10,000 per
month for up to 21 months for office space, utilities and secretarial and administrative services to Infinity-C.S.V.C. Management
Ltd, an affiliate of the Company’s sponsors. Services commenced July 20, 2012 and will terminate upon the earlier of (i)
the consummation of an Initial Business Combination or (ii) the liquidation of the Company.
Note and advances Payable
In April, 2011, the Company issued an unsecured
promissory note for $45,000 to the Sponsors and received from the Sponsors advances in the amount of $93,265; proceeds from the
loan and the advances were used to fund a portion of the organizational and offering expenses owed by the Company to third parties.
The principal balances of the loan and the advances are repayable on the earlier of (i) the date of the consummation of the Public
Offering or (ii) September 30, 2012. The principal balance was pre-payable without penalty at any time in whole or in part. No
interest accrued on the unpaid principal balance of the loan and the advances. The loan and the advances were due and payable upon
the consummation of the Public Offering. As at March 31, 2013, the loan and the advances have been paid.
5. Shareholders’ Equity
Ordinary Shares
— The
Company has unlimited Ordinary Shares authorized. Holders of the Company’s Ordinary Shares are entitled to one vote for each
Ordinary Share. At March 31, 2013, there were 2,792,488 Ordinary Shares outstanding (excluding 4,394,533 shares subject to possible
redemption).
Preferred Shares
— The
Company is authorized to issue an unlimited number of preferred shares in five different classes with such designations, voting
and other rights and preferences as may be determined from time to time by Board of Directors. At March 31, 2013 the Company has
not issued any preferred shares.
6. Commitments
The Company has committed to pay its attorneys
a deferred legal fee of $100,000 upon the consummation of the Initial Business Combination relating to services performed in connection
with the Public Offering. This amount has been accrued in the accompanying balance sheet.
INFINITY CROSS BORDER ACQUISITION CORPORATION
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
4. Related Party Transactions- (continued)
7. Fair Value Measurement
The Company complies with FASB ASC 820,
Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting
period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The following tables present information
about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2013, and indicate the fair
value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined
by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined
by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined
by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any,
market activity for the asset or liability:
Fair Value of Financial Assets as of
March 31, 2013
Description
|
|
Balances, at March
31, 2013
|
|
|
Quoted Prices in
Active Markets
(level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
$
|
46,013,666
|
|
|
$
|
46,013,666
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
6,024,900
|
|
|
$
|
6,024,900
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
39,988,766
|
|
|
$
|
39,988,766
|
|
|
|
-
|
|
|
|
-
|
|
The fair values of the Company’s
investments held in the Trust Account are determined through market, observable and corroborated sources. Under the terms of the
trust there was an increase in fair value of $13,666 as of March 31,2013.
Glori Energy (CE) (USOTC:GLRI)
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