Item 1A. Risk Factors
Item
1A. Risk Factors
An
investment in our securities involves a high degree of risk. This Annual Report contains a discussion of the risks applicable to an investment
in our securities. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties are not
presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown
risks might cause you to lose all or part of your investment in the offered securities. We may not be successful in preventing the material
adverse effects that any of the following risks and uncertainties may cause. You could lose all or a significant portion of your investment
due to any of these risks and uncertainties.
You
should carefully consider the following risks, as well as the other information contained in this Annual Report on Form 10-K, including our historical
financial statements and related notes included elsewhere in this Annual Report on Form 10-K before you decide to purchase our securities. Any one of
these risks and uncertainties has the potential to cause material adverse effects on our business, prospects, financial condition and
operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and a significant
decrease in the value of our Ordinary Shares and warrants. Refer to “Cautionary Statement Regarding Forward-Looking Statements.”
Risks
Related to our Ordinary Shares
Our
stock price may be volatile, and purchasers of our Ordinary Shares could incur substantial losses.
The
stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate
to operating performance of individual companies, particularly following a public offering of a company with a small public float. There
is the potential for rapid and substantial price volatility of our Ordinary Shares. These broad market factors may seriously harm the
market price of our Ordinary Shares, regardless of our actual or expected operating performance and financial condition or prospects,
which may make it difficult for investors to assess the rapidly changing value of our Ordinary Shares.
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We
are currently listed on The Nasdaq Stock Market (“Nasdaq”). If we are unable to maintain listing of our securities on Nasdaq
or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing
could be impaired and it may be more difficult for our shareholders to sell their securities.
Although
our Ordinary Shares are currently listed on Nasdaq, we may not be able to continue to meet the exchange’s minimum listing requirements
or those of any other national exchange. If we are unable to maintain a listing on Nasdaq or if a liquid market for our Ordinary Shares
does not develop or is sustained, our Ordinary Shares may remain thinly traded.
As
previously reported on Form 6-K on September 4, 2024, on August 28, 2024, the Company received a letter from the Listing Qualifications
staff of Nasdaq notifying the Company that based on the closing bid price of the Company for the period for the prior 30 consecutive
business days, the Company no longer meets Nasdaq Listing Rules 5550(a)(2) (the “Rules”) requirement that listed securities
maintain a minimum bid price of $1 per share.
Nasdaq
provided the Company with 180 calendar days compliance period, or until February 24, 2025, in which to regain compliance with Nasdaq
continued listing requirement. In the event that the Company does not regain compliance in the compliance period, the Company may be
eligible for an additional 180 calendar days, should the Company meet the continued listing requirement for market value of publicly
held shares and all other initial listing standards for Nasdaq, with the exception of the bid price requirement, and is able to provide
written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
However, if it appears that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq
will provide notice that the Company’s securities will be subject to delisting.
The
Nasdaq notification letter has no immediate effect on the Company’s continued listing on Nasdaq and does not result in the immediate
delisting of the Company’s ordinary shares, and the shares will continue to trade uninterrupted under the symbol “COOT.”
The Company is currently evaluating options to regain compliance and intends to timely regain compliance with Nasdaq’s continued
listing requirement. Although the Company will use all reasonable efforts to achieve compliance with Rule 5550(a)(2), there can be no
assurance that the Company will be able to regain compliance with that rule or will otherwise comply with other Nasdaq continued listing
requirement.
The
listing rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any
reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its
exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may
occur, each of which could have a material adverse effect on our shareholders:
●
the
liquidity of our Ordinary Shares;
●
the
market price of our Ordinary Shares;
●
our
ability to obtain financing for the continuation of our operations;
●
the
number of institutional and general investors that will consider investing in our Ordinary Shares;
●
the
number of investors in general that will consider investing in our Ordinary Shares;
●
the
number of market makers in our Ordinary Shares;
●
the
availability of information concerning the trading prices and volume of our Ordinary Shares; and
●
the
number of broker-dealers willing to execute trades in our Ordinary Shares.
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Our
principal shareholders will continue to have significant influence over the election of our board of directors and approval of any significant
corporate actions, including any sale of the Company.
Our
founders, executive officers, directors, and other principal shareholders, in the aggregate, beneficially own a majority of our outstanding
shares. These shareholders currently have, and likely will continue to have, significant influence with respect to the election of our
board of directors and approval or disapproval of all significant corporate actions. The concentrated voting power of these shareholders
could have the effect of delaying or preventing an acquisition of the Company or another significant corporate transaction.
We
could be subject to securities class action litigation.
In
the past, securities class action litigation has often been brought against companies following a decline in the market price of their
securities. In 2020, 22% of securities class action litigation filings were against defendants in the health technology and services
sector, which accounted for 22% of new filings. If we face such litigation, it could result in substantial costs and a diversion of management’s
attention and resources, which could harm our business.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market
price for the shares and trading volume could decline.
The
trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who
cover us downgrades our Ordinary Shares or publishes inaccurate or unfavorable research about our business, the market price for our
Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us
regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our
Ordinary Shares to decline.
We
do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your Ordinary Shares for return
on your investment.
We
have paid no cash dividends on any class of our stock to date, and we do not anticipate paying cash dividends in the near term. For the
foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our stock. Accordingly, investors must be prepared to rely on sales of their shares after price appreciation
to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our shares. Any determination
to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations,
financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
Future
sales of substantial amounts of our Ordinary Shares or securities convertible into or exchangeable or exercisable for Ordinary Shares,
either by us or by our existing shareholders, or the possibility that such sales could occur, could adversely affect the market price
of our Ordinary Shares.
Future
sales in the public market of our Ordinary Shares or securities convertible into or exchangeable or exercisable for Ordinary Shares,
shares held by our existing shareholders or shares issued upon the exercise of our outstanding shares options or warrants, or the perception
by the market that these sales could occur, could lower the market price of our Ordinary Shares or make it difficult for us to raise
additional capital.
We
are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make
our Ordinary Shares less attractive to investors.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“the JOBS Act”). For
as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that
are applicable to other public companies that are not emerging growth companies, including exemption from compliance with the auditor
attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation 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 will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the closing of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares held by non-affiliates
exceeds $700 million as of the end of our prior second fiscal quarter, and (2) the date on which we have issued more than $1 billion
in non-convertible debt during the prior three-year period.
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In
addition, under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those
standards apply to private companies. We may elect not to avail ourselves of this exemption from new or revised accounting standards
and, therefore, may be subject to the same new or revised accounting standards as other public companies that are not emerging growth
companies. 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.
Anti-takeover
provisions contained in our certificate of incorporation and bylaws as well as provisions of Cayman Act, could impair a takeover attempt.
Our
certificate of incorporation, bylaws and the Cayman Act contain provisions which could have the effect of rendering more difficult, delaying
or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
●
authorizing
“blank check” preferred stock, which could be issued by our board of directors without shareholder approval and may contain
voting, liquidation, dividend, and other rights superior to our Ordinary Shares;
●
limiting
the liability of, and providing indemnification to, our directors and officers;
●
limiting
the ability of our shareholders to call and bring business before special meetings;
●
requiring
advance notice of shareholder proposals for business to be conducted at meetings of our shareholders and for nominations of candidates
for election to our board of directors;
●
controlling
the procedures for the conduct and scheduling of board of directors and shareholder meetings; and
●
providing
our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled
special meetings.
These
provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. We are also
subject to provisions of our Amended and Restated Memorandum and Articles of Association that include language that inhibits a takeover
of the Company. This change could limit the price investors might be willing to pay in the future for the Company’s securities
and could entrench management.
Any
provision of our Amended and Restated Memorandum and Articles of Association or Cayman Islands law that has the effect of delaying or
deterring a change in control could limit the opportunity for our shareholders to receive a premium for their Ordinary Shares and could
also affect the price that some investors are willing to pay for our Ordinary Shares.
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Risks
Related to the Company and our Business
We
are significantly dependent on the revenues from the sale of our products and, therefore, our results of operations could be negatively
impacted if we are unable to sell a sufficient number of products at satisfactory margins.
We
sell cold pressed vegetable oils and vegetable protein meals extracted from oil seeds. For fiscal years June 30, 2024 and 2023, we derived
approximately 85% and 89%, respectively, of our total revenue from the sale of cold pressed vegetable oils with the balance from the
sale of vegetable protein meals extracted from oil seeds. The Company processes and sells high quality protein meal for the agricultural
market (including the feedstock industry) and is leveraging this by-product to expand into the plant-based meats and proteins markets.
Presently, the Cootamundra facility is capable of crushing canola, safflower and sunflower seeds with a current processing capacity of
more than 33,000 metric tons per annum. Edible oils and protein meal serve as the largest outlet for oilseed derivative products. The
food industry demands healthy oils for cooking and dining. A key example being Canola Oilseed — in which Australia produces over
15-20% of the global Canola seed trade. Australian oilseed production, due to relative proximity and high-quality output, are well-placed
to supply the rapidly expanding consumer export markets of the Asia-Pacific as well as satisfy increased domestic demands.
Our
dependence on the market for oil seeds for pressing and extraction makes us particularly vulnerable to negative market changes that may
occur in these product lines. In particular, if demand for oil seeds such as olives, canola seeds and sunflower seeds increase or if
industry demand exceeds supply, the price of oil seeds will be driven upward and our product margins will be negatively impacted, which
would have an adverse effect on our business, results of operations and financial condition.
We
lack product and business diversification. Accordingly, our future revenues and earnings are more susceptible to fluctuations than a
more diversified company.
Our
current primary business activities focus on agriculturally derived products. Because our focus is limited in this way, any risk affecting
the agricultural industry could disproportionately affect our business. Our lack of product and business diversification could inhibit
the opportunities for growth of our business, revenues and profits.
We
are dependent on contracts with local and regional farmers for oilseeds and loss of these contracts could have a material adverse effect
on our business, financial condition and revenues.
We
have a grower contract base for oil seeds made up of local and regional farmers and shareholders. These contracts provide oilseeds
on a fixed acre or hectare contract basis as well as standard tonnage contracts for oil seeds. For example, farmers in Cootamundra, New
South Wales (“NSW”) have been growing and supplying us with genetically modified organism (“GMO”) free harvested
canola for over ten years. There can be no assurance, however, that we will be able to renew these contracts or find adequate replacements
for these contracts should they expire. Likewise, while we have long-standing contracts and relationships with our local and regional
farmers and shareholders, who have provided qualified GMO free harvested oil seeds in the past, there can be no assurance that they will
continue to produce and provide oil seeds of the same quality or at the same amounts going forward. If the sales performance of any supplier
declines or if any of our suppliers terminates the cooperation with us or even starts to cooperate with any of our competitors, or if
there is any modification as to the sales and purchase terms entered into by and between the Company and any of our key local and regional
farmers and shareholders, our business, financial condition and revenue would be seriously impacted. Furthermore, we rely on a concentration
of certain suppliers for the bulk of our oilseeds. If the sales performance of any of these suppliers, and particularly our top suppliers,
declines or if any of these suppliers terminates the cooperation with us, or if there is any modification as to the sales and purchase
terms entered into with these suppliers, our business, financial condition and revenue would be seriously impacted.
We
are dependent on a material concentration of revenue from a small group of customers and the impact on the loss of any of these customer
could have an adverse impact on cash flows from operations.
Historically,
the Company has been dependent on a material concentration of revenue from a small group of customers and the impact on the loss of any
of these customer could have an adverse impact on cash flows from operations. There can be no assurance, however, that we will be able
to renew these contracts with our customers or that we will source new additional customers should these legacy customer contracts not
be renewed or if the sales volumes decline under the legacy contracts. If any of these risks materialize, our business, financial condition
and revenue would be seriously impacted.
The
Company faces risks related to global, federal, state, and local regulation affecting its operations, including changes to and the imposition
of new practices and regulations on trade restrictions, food safety regulations, sustainability requirements, traceability, environmental
laws and other matters, which could materially and adversely affect its business, results of operations and financial condition.
Agricultural
production and trade flows are subject to government policies, mandates, and regulations, including in relation to the regulation of
employee conditions and entitlements. Governmental policies affecting the agricultural industry, such as taxes, tariffs, duties, subsidies,
incentives, foreign exchange rates, and import and export restrictions on agricultural commodities and commodity products, including
policies related to genetically modified organisms, renewable fuel and low carbon fuel mandates, can influence the planting of certain
crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, the volume and types
of imports and exports, the availability and competitiveness of raw materials, the viability and volume of production of certain of the
Company’s products, and industry profitability.
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For
example, changes in government policies or regulations can adversely affect agricultural commodity trade flows by limiting or disrupting
trade between countries or regions and create uncertainty and may lead to additional risks and costs and could adversely affect the Company’s
agricultural commodity risk management practices as well as its business. Future government policies may adversely affect the supply
of, demand for, and prices of the Company’s products; restrict its ability to do business in its existing and target markets; and
adversely affect its revenues and operating results. Any failure to comply with applicable laws and regulations or appropriately resolve
these challenges could subject the Company to fines, penalties, disgorgement, injunctions, and recalls of its products, resulting in
damage to its reputation, which could adversely affect its product sales, financial condition and results of its operations.
Our
operations are inherently subject to changing conditions that can affect our profitability, such as a decrease in sales of our products
and unfavorable weather and environmental conditions.
Our
operations are subject to changing conditions that can affect levels of production and production costs for varying lengths of time and
can result in decreases in profitability. We are exposed to price risks related to the sale of vegetable oils. In addition, our operating
results might also be adversely impacted by unfavorable weather and environmental conditions including but not limited to blight, bush
fires, drought and flooding. Under unfavorable weather and environmental conditions, we might be forced to pursue special production
plans which differ from our routine production activities, including temporarily closing our production facilities, shortening operation
time, and reducing production shifts. As a result, our productivity might materially decrease.
A
majority of our revenue stream depends on timely obtaining oil seeds for extraction into vegetable oils and vegetable protein meals.
The supply of oil seeds and their timely availability can be negated by blight, drought, floods, storms or other woes of farming in NSW.
Any such event or a combination thereof could render us unable to meet our product demands. This could have a long-term negative effect
on our ability to grow our business.
The
Company is developing appropriate client related policies and is focused on producing sustainable and chemical free products. Its management
have assessed current and pending climate related legislation and can confirm that:
● The
Company is not currently subject to climate related legislation that has a material impact
on the business;
● The
Company does not believe any pending climate related legislation will have a material impact on the business;
and
● Management
has considered and determined that there will not be a material increase in capital expenditures or operating
costs associated with climate-related matters, including costs and expenditures incurred to mitigate the
physical effects of climate change or incurred in connection with any plans they may have to reduce emissions
or their reliance on carbon-based energy.
Disruptions
in water and power supply may adversely affect our and our suppliers’ operations.
Our
operations are reliant upon stable supply of electricity and access to transportation routes to optimally run our oil seed grinding and
extraction operations and/or deliver our products to customers. Our suppliers’ farming operations are, in addition, reliant on
access to water for the cultivation of oil seeds, which we then use to produce our products. Should we not have access to reliable electricity
supply or should our suppliers have limited access to water or experience infrastructure challenges, this could have a material adverse
effect on our access to oil seeds and therefore our business, operating results, cash flows, financial condition and future growth.
Water,
as a resource, is becoming increasingly limited as global demand for water increases and extreme temperatures become mundane. A significant
part of our suppliers’ operations requires the use of large volumes of water. In recent times, Australia has experienced prolonged periods
of drought and there may be significant changes in the future to current water laws which could increase the cost or availability of
water in reaction to extended periods of drought and extreme weather.
Our
operating results may fluctuate, and our operating results could be adversely affected by various factors such as a decrease of product
sales, price changes in response to competitive factors and increases in oil seed costs.
Our
quarterly results of operations may fluctuate as a result of a number of factors, including fluctuation in the demand for our products
and changes in the price of oil seeds, which directly affect the price of our products and may influence the demand for our products.
Therefore, quarter-to-quarter comparisons of results of operations have been and will be impacted by the volume of such orders and shipments.
In addition, our operating results could be adversely affected by, among others, the following factors: variations in the mix of product
sales; price changes in response to competitive factors; increases in oil seed costs and other significant costs; increases in utility
costs (particularly electricity), and interruptions in plant operations resulting from the interruption of oil seed and other raw material
supplies.
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Our
revenue may not achieve budget in FY 2025 while we expend capital to expand our Cootamundra facility and construct our new
Queensland facility.
The
Company’s operation in fiscal year 2025 may be reduced substantially from our original projections while we expend capital to construct
our new Queensland facility due to factory break down or overhaul or spec adjustment. The Company expanded its existing Cootamundra facility with full operations occurring in August 2024.
Presently, the Company is constructing a new crushing and production plant in Emerald, Central Queensland for a projected total cost
of AUD$25 million. In connection with the funding of the new Queensland plant, the Company has received government support through an
Industrial Partnership Program through CQ Oilseeds Pty Ltd. and its parent entity, Energreen Nutrition Australia Pty Ltd., in the amount
of AUD$5 million of incentives plus a grant of tax incentives. The balance of the capital stack to fund the plant includes AUD$3 million
of funding generated from operating cashflow, AUD$6 million to AUD$10 million in a bank funding facility for construction and equipment
financing, and AUD$8 million to AUD$11 million of equity funding to complete the new plant within 15 months. If the Company does not
raise all or any of the AUD$8 million to AUD$11 million of equity funding, the Company intends to fund the shortfall from the Company’s
operating cashflow, which would reduce its results of operation. Upon completion of construction of the new facility, Energreen Nutrition
Australia Pty Ltd. will transfer CQ Oilseeds Pty Ltd. and its assets, including the new facility to the Company via a transfer agreement.
Between
the two facilities, total capacity is expected to be approximately four times the current capacity (160,000 metric tons anticipated,
up from 40,000 metric tons). The Company’s revenue growth included in the financial projections assumed this significant increase
in production capacity due to the new facility in Emerald, Queensland and expansion of the Cootamundra facility, as well as success in
rolling out AOI’s branded products.
The
development and construction of real estate is subject to timing, budgeting and other risks that may adversely affect AOI’s operating
results such as the availability of financing on favorable terms and development risks relating to an inability to obtain, or delays
in obtaining, necessary entitlements, zoning, land-use, building occupancy and other required governmental permit authorizations. Acts
of God such as earthquakes, hurricanes, floods or fires could adversely impact a project and governmental restrictions on the nature
or size of the project. Other significant risks include management of the architect and general contractor (including development of
a timeline for construction), procurement of all necessary equipment and inventory, and sufficient and capable staffing related thereto.
If any of the above occurs, or fails to occur, as the case may be, the ability of the Company to achieve its revenue projections could
be adversely affected. In addition, development activities, regardless of whether they are ultimately successful, may require a substantial
portion of the Company’s time and attention. As a result, our business, financial condition and results of operations may be materially
and adversely affected.
If
we fail to effectively promote our brand, our business, financial condition and results of operations may be materially and adversely
affected.
We
believe that brand image plays an important role in influencing consumers’ decisions in purchasing our products. The
reputation of our products, particularly our GMO free cold-pressed vegetable oils, is critical to the success of our business. We
believe consumers are attracted to our cold pressed vegetable oils, which are pressed and ground without the use of chemicals or
solvents. For fiscal years 2023 and 2022, we derived approximately 98% and 89%, respectively, of our total revenue from the sale of
our cold-pressed vegetable oils and its product meal cake. We cannot assure you that our marketing and promotional activities will remain effective going
forward. If we fail to successfully market or promote our brands, our brand recognition may be adversely affected and the demand for
our products may decline or fail to increase as much as we expect. If our brands are tarnished in any manner, particularly with
regard to our environmentally friendly pressing and grinding processes, we may lose our competitive advantage and our business,
financial condition and results of operations may be materially and adversely affected.
31
We
may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire qualified personnel
in the future, our ability to improve our products and implement our business objectives could be adversely affected.
We
must attract, recruit and retain a sizeable workforce of technically competent employees. Competition for senior management and senior
personnel in the industry is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services
of our senior executives or senior personnel or attract and retain high-quality senior executives or senior personnel in the future.
This failure could materially and adversely affect our future growth and financial condition.
We
are dependent on certain key personnel and loss of these key personnel could have a material adverse effect on our business, financial
condition and results of operations.
Our
success is, to a certain extent, attributable to the management, sales and marketing, and research and development expertise of key personnel.
We are dependent upon the services of Gary Seaton for our continued growth and operation because of their experience in the industry
and their personal and business contacts. Although we have no reason to believe that Gary Seaton will discontinue their services with
us, the interruption or loss of their services would adversely affect our ability to effectively run our business and pursue our business
strategy as well as our results of operations. Besides, our success depends on the continuous devotion of our directors and senior management,
and they are well experienced and have a deep understanding as to our business and operation. The loss of these officers could have a material
adverse effect upon our business, financial condition, and results of operations. We do not carry key man life insurance for any of our
key personnel nor do we foresee purchasing such insurance to protect against a loss of key personnel.
We
may be subject to claims, litigation or regulatory actions filed or pending by or against us, and any obligation to pay a judgment or
damages could materially harm our business or financial condition.
From
time to time, we may be engaged in litigation and incur significant costs relating to these matters. For example, two of AOI’s
subsidiaries, Cowcumbla Investments Pty Ltd. and Cootamundra Oilseeds Pty Ltd. recently settled litigation claims filed against them
in the Supreme Court of New South Wales stemming from a related party loan with a former director totaling AUD$1.2 million. The amount
due under this related party loan was repaid through monthly instalments from January 2023 to April 2023. The cases pending against Cowcumbla
Investments Pty Ltd. and Cootamundra Oilseeds Pty Ltd. have concluded following the local mediation process held on 30 May 2023 and the
payment of an additional sum to the plaintiff under this loan in the amount of AUD95,000 as final settlement on 1 June 2023.The Company
does not expect to incur any further costs in relation to the matter, however, the inherent uncertainties of any future litigation, and
the ultimate cost and outcome of future litigation cannot be predicted. We currently carries director and officer liability insurance
and other insurance policies that provide protection against various liabilities relating to claims against us and our executive officers
and directors. Any expenses and liabilities relating to future lawsuits will materially harm our financial condition. In addition, we
might not be able to obtain the sufficient insurance coverage due to cost or other reasons. It could make it more difficult for us to retain and attract
officers and directors and could expose us to potentially self-funding certain future liabilities ordinarily mitigated by director and
officer liability insurance.
In
addition, a substantial number of lawsuits have been filed by former special purpose acquisition company (SPAC) shareholders seeking to contest the terms of, or disclosures surrounding,
de-SPAC merger transactions. While shareholders and plaintiffs’ firms have long contested public company M&A transactions and
are bringing similar challenges to de-SPAC merger transactions, certain structural features of SPACs have led shareholders to make new
twists on those arguments. For example, shareholders in a SPAC sued in Delaware state court to enjoin a de-SPAC transaction arguing that
the SPAC directors and officers breached their fiduciary duties by rushing to sign a deal just before the time limit to return capital
to investors expired that was not in the best interests of SPAC shareholders. The plaintiffs also alleged that several of the SPAC’s
managers lacked independence because they were promised board membership in the post-transaction company. The lawsuit was voluntarily
dismissed after the SPAC issued additional disclosures.
Shareholders
have also filed dozens of nuisance claims alleging misleading disclosures in proxy statements soliciting shareholder approval of de-SPAC
merger transactions. These kinds of proxy statement challenges, which are common in the public M&A setting, are frequently brought
under Section 14 of the Exchange Act and SEC Rule 14a-9. In these actions, plaintiffs’ lawyers threaten to enjoin a shareholder
vote until the issuer releases supplemental information. These actions frequently settle or are voluntarily dismissed when the company
issues additional disclosures, and plaintiffs’ lawyers then seek a “mootness fee” usually after the closing of the
business combination. Commentators and courts have criticized this minuet on the ground that the supplemental disclosures confer no real
benefits on shareholders. We can expect plaintiffs’ securities law firms to continue to file these claims in connection with many
de-SPAC merger transactions to recoup these fees.
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Unfavorable
outcomes or developments relating to proceedings to which we are a party or transactions involving our products, such as judgments for
monetary damages, injunctions, or denial or revocation of permits, could have a material adverse effect on our business, financial condition,
and results of operations. In addition, settlement of claims could adversely affect our financial condition and results of operations.
The
retail price of our products may be subject to control by government authorities which may cause a material adverse effect on our financial
condition and results of operations.
Our
main products are our vegetable oils derived from oil seeds, which may be recognized by governments and regulators as one of the essential
daily goods purchased by common people. When domestic and international market prices of edible vegetable oil roars sharply and cause
serious impact on consumption, governmental authorities may consider conducting price controls in the form of fixed retail prices or
retail price ceilings. If this were to happen in Australia, we may face operational pressure for increasing costs, and our profit level
may be likely lowered. Any future price controls or government mandated price reductions may have a material adverse effect on our financial
condition and results of operations, including significantly reducing our revenue and profitability.
Our
business requires a number of permits and licenses in order to carry on our business.
Food
manufacturers in Australia are required to obtain certain permits and licenses from various governmental authorities, including Food
Standards Australia New Zealand (“FSANZ”). All foods sold in Australia must also comply with a range of laws designed to
protect consumer, plant, and animal health and we are subject to regulations pertaining to the agricultural and forestry industry. We
have obtained licenses currently required, including for the manufacture and operation of edible vegetable oil.
However,
we cannot assure you that we can maintain all required licenses and certificates to carry on our business at all times, and in the past
from time to time we may not have been in compliance with all such required licenses or certificates. Moreover, these licenses and certificates
are subject to periodic renewal and/or reassessment by the relevant governmental authorities and the standards of such renewal or reassessment
may change from time to time. We intend to apply for the renewal of these licenses and certificates when required by then applicable laws
and regulations. Any failure by us to obtain and maintain all licenses or certificates necessary to carry on our business at any time
could have a material adverse effect on our business, financial condition and results of operations. In addition, any inability to renew
these licenses and certificates could severely disrupt our business and prevent us from continuing to carry on our business. Any changes
in the standards used by governmental authorities in considering whether to renew or reassess our business licenses, as well as any enactment
of new regulations that may restrict the conduct of our business, may also decrease our revenue and/or increase our costs and materially
reduce our profitability and prospects. Furthermore, if the interpretation or implementation of existing laws and regulations changes
or if new regulations come into effect requiring us to obtain any additional licenses, permits or certifications that were previously
not required to operate our existing businesses, we cannot assure you that we may successfully obtain such licenses, permits or certifications.
Adverse
publicity associated with our products, raw materials or top suppliers and customers, could harm our reputation, financial condition
and operating results.
The
results of our operations may be significantly affected by the public’s perception of our products and similar companies. This
perception is dependent upon opinions concerning:
● the
safety and quality of our products and oil seeds;
● the
safety and quality of similar products distributed by other companies; and
● Our
top suppliers and customers.
33
Adverse
publicity concerning any actual or purported failure to comply with applicable laws and regulations regarding product claims and advertising
or other aspects of our business, whether or not resulting in enforcement actions or the imposition of penalties, could have an adverse
effect on our goodwill and could negatively affect our sales and ability to generate revenue. In addition, our consumers’ perception
of the safety and quality of products and raw materials as well as similar products and raw materials distributed by other companies
can be significantly influenced by media attention, publicized scientific research or findings, widespread product liability claims and
other publicity concerning our products or raw materials, or similar products and raw materials distributed by other companies. Adverse
publicity, whether or not accurate or resulting from consumers’ use or misuse of our products, that associates consumption of our
products or ingredients or any similar products or ingredients with illness or other adverse effects, questions the benefits of our or
similar products or claims that any such products are ineffective, inappropriately advertised or have inaccurate instructions as to their
use, could negatively impact our reputation or the market demand for our products. For example, public sentiment may move away from the
use of vegetable oils for consumption which would impact market demand for our products.
We
may not be able to develop new products and as a result, our business and financial condition could be adversely affected.
The
launch and development of new products involve considerable time and commitment which may exert a substantial strain on our ability to
manage our existing business and operations. We cannot ensure the success of any new brand or products or that any income will be generated
from such new brand or products. If we are not able to develop and introduce new products successfully, or if new products fail to generate
sufficient revenues to offset research and development costs, our business, financial condition and results of operations could be adversely
affected.
Our
operations may be disrupted for maintenance services or reasons beyond our control, which could adversely affect our business, financial
condition and results of operations.
Our
operations could be disrupted for maintenance services or reasons beyond our control. Our oil seed pressing and grinding facilities are
subject to regular maintenance during which operations may halt. Moreover, other causes of disruption include extreme weather conditions,
fire, natural catastrophes, raw material supply disruptions, equipment and system failures, mechanical malfunctions, workforce shortages,
workforce actions, human errors or environmental issues. Any significant disruption to our operations could adversely affect our ability
to produce our vegetable oils and vegetable protein meal products, which could have a material adverse effect on our business, financial
condition and results of operations.
We
could be harmed by improper disclosure or loss of sensitive or confidential company, employee, supplier or customer data.
In
connection with the operation of our business, we store, process and transmit data, including information about our business, employees,
suppliers and customers. Unauthorized disclosure or loss of sensitive or confidential data may occur through a variety of methods. These
include, but are not limited to, systems failure, employee negligence, fraud or misappropriation, or unauthorized access to or through
our information systems, whether by our employees or third parties, including a cyberattack by computer programmers, hackers, members
of organized crime and/or state-sponsored organizations, who may develop and deploy viruses, worms or other malicious software programs.
We
take action to mitigate these risks by (a) keeping our software and security systems up to date, (b) using strong passwords and two factor
authorization on all online accounts, (c) providing IT security training to employees to identify scam emails and building internal procedures
to verify suspicious requests, (d) backing up all data daily and storing the backup offline and online, (e) using a VPN to encrypt internet
traffic and protect against cyberattacks when assessing sensitive data, (f) developing and implementing an incident response plan to
ensure a rapid and effective response in case of a cyberattack, and (g) partnering with a cybersecurity company to conduct regular intranet
and employee laptop checks.
34
Nonetheless,
there can be no assurance that we will prevent all instances of improper disclosure or loss of sensitive or confidential information.
Such disclosure, loss or breach could harm our reputation and subject us to government sanctions and liability under our contracts and
laws that protect sensitive or personal data and confidential information, resulting in increased costs or loss of revenues. It is possible
that security controls over sensitive or confidential data and other practices we follow may not prevent the improper access to, disclosure
of, or loss of such information. The potential risk of security breaches and cyberattacks may increase as we introduce new services and
offerings. Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various
jurisdictions in which we provide services. Any failure or perceived failure to successfully manage the collection, use, disclosure,
or security of personal information or other privacy related matters, or any failure to comply with changing regulatory requirements
in this area, could result in legal liability or impairment to our reputation in the marketplace.
Our
business operations and international expansion may be subject to geopolitical risks including with respect to our supply chain and inflation.
Our
business operation and international expansion may be subject to geopolitical risks. Any significant deterioration in the international
landscape may have a negative effect on our ability to fulfill contractual obligations because of shipping and other impediments that
could arise, which could have a material and adverse effect on our business, financial condition and results of operations. We exported
our products to various countries outside of Australia and derive sales from exporting to those countries, and we intend to continue
to sell our current and future products to countries outside of Australia. Changes to trade policies, treaties and tariffs in or affecting
the jurisdictions in which we sell our products, or the perception that these changes could occur, could adversely affect the financial
and economic conditions in those jurisdictions, as well as our international sales, results of operations and financial condition.
The
Company purchases from Energreen mainly relate to additional canola seed purchases, which seeds are sourced from Energreen’s high-quality
and long-standing supply chain. All sales and purchase transactions among the Company and any related parties such as Energreen are structured
on an arm’s length basis. Energreen mainly purchases the quality canola seed from Cargill, Grain Corp, and other trade companies
in Australia.
In
February 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing
military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility
in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in
Ukraine and globally and assessing its potential impact on our business. Additionally, Russia’s prior annexation of Crimea, recent
recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine
have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus,
the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including
agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT,
payment system, expansive ban on imports and exports of products to and from Russia and ban on exportation of U.S. denominated bank notes
to Russia or persons located there. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military
actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack
of liquidity in capital markets. In October 2023, the Israel-Hamas war commenced. As a result of the war, instability in the Middle East
and various other regions of the world may occur and affect the world economy. Various nations, including the United States, as a reaction
to the Israel-Hamas war have begun taking actions that may further affect the world economy. Such effects on the world economy are not
determinable as of the date of these unaudited condensed consolidated financial statements. The specific impact on the Company’s
financial condition, results of operations and cash flows is also not determinable as of the date of the Company’s June 30, 2024,
yearend financials.
There
have also been concerns over unrest in Ukraine, the Middle East and Africa, which have resulted in volatility in financial and other
markets and concerns over the rising level of inflation in major industrial countries including the United States and worries that efforts
to curb inflation may result in recession. There were and could be in the future a number of domino effects from such turmoil on our
business, including significant decreases in orders from our customers, insolvency of key suppliers resulting in product delays, rises
in raw material prices leading up to increased level of cost of sales that we may not be able to pass onto customers, inability of customers
to obtain credit to finance purchases of our products and/or customer insolvencies, and counterparty failures negatively impacting our
operations. Any systemic economic or financial crisis could cause revenues for the food production industry as a whole to decline dramatically
and could materially and adversely affect our results of operations.
35
Although
our operations have not experienced material and adverse impact on supply chain, cybersecurity or other aspects of our business from
the ongoing unrest in Ukraine, the Middle East and Africa or due to COVID-19 or other acts of God or causes, there is no assurance that
such conflict would not develop or escalate in a way that could materially and adversely affect our business, financial condition, and
results of operations in the future.
We
face risks of natural disasters, acts of God and occurrence of epidemics, which could severely disrupt our business operations.
Natural
disasters, epidemics and other acts of God which are beyond our control may adversely affect the economy, infrastructure and livelihood
of the people in Australia and may materially and adversely affect our operations as our facilities and offices are currently located
in Australia. Material damage to, or the loss of, such facilities due to fire, severe weather, flood, drought, earthquake, or other acts
of God or causes may not be adequately covered by proceeds of our insurance coverage and could materially and adversely affect our business
and results of operations. For example, rains and floods in Eastern Australia in 2022 (in February, July, November), which were the fifth
storms in 19 months were the area was inundated, resulted in billions of AUD of damage. Bushfires in 2019-2020 resulted in more than
2,000 homes being destroyed, losses of more than $900 million and 400+ deaths. Of the more than 10 million hectares burnt in south-eastern
Australia during the 2019-2020 fire season, around one-quarter was agricultural land, which caused an estimated $4-5 billion worth of
economic losses to the Australian food system. Any such further instances of natural disasters, fires or any outbreaks of contagious
disease, acts of war or terrorist attacks may cause damage or disruption to our business, our employees and our markets, any of which
could adversely impact our business, results of operations and financial condition.
If
our products become contaminated, we may be subject to product liability claims and product recalls.
Our
products may be subject to contamination by disease-producing organisms or pathogens. These pathogens are found generally in the environment
and therefore, there is a risk that they could be present in our products. These pathogens can also be introduced to our products as
a result of improper handling during processing or at the consumer level. We have little, if any, control over proper handling procedures
once our products are delivered to our customers.
Our
products are subject to sampling examinations on product quality by government authorities. If the products materially fail to meet any
relevant quality or safety standards, we may be required by government authorities to recall the products and we may be held responsible
for such failure, in which case our reputation and operations will be adversely affected. While we have insurance coverage for such recalls,
we may be liable for any loss and injury caused by such products, which may have a materially adverse effect on our financial condition
and results of operations. We may also be required to incur extra expenditures to comply with the additional regulatory requirements
from time to time. So far there has been no product liability claim, product recall or other incident due to contamination of our products.
Our
failure to compete effectively may adversely affect our ability to generate revenue.
We
compete with other companies, many of whom are developing or can be expected to develop products similar to ours. Many of our competitors
are also more established than we are, and have significantly greater financial, technical, marketing and other resources than we presently
possess. Some of our competitors have greater name recognition and a larger operation scale and customer base. These competitors may
be able to respond more quickly to new or changing opportunities and customer requirements and may be able to undertake more extensive
promotional activities, offer more attractive terms to customers, and adopt more aggressive pricing policies. We cannot assure you that
we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not harm our
business.
36
Increased
competition could lead to lower revenues and higher costs. There is no guarantee that we will be able to compete effectively with current
and future competitors, nor will it be possible to ensure that competitors will not actively resort to legal or illegal means which aim
at destroying the brand and product quality or affecting the confidence of our consumers.
Risks
Related to Being a Public Company
Our
management has limited experience in operating a public company.
Our
executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or
effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations
under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies
could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which
will result in less time being devoted to the management and growth of our Company. We may not have adequate personnel with the appropriate
level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required
of public companies in the United States. The development and implementation of the standards and controls necessary for us to achieve
the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible
that we will be required to expand our employee base and hire additional employees to support our operations as a public company which
will increase our operating costs in future periods.
We
will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business,
financial condition and results of operations.
We
face increased legal, accounting, administrative and other costs and expenses as a public company. The Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), including the requirements of Section 404, as well as rules and regulations subsequently implemented
by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be
promulgated thereunder, the Public Company Accounting Oversight Board (PCAOB) and the securities exchanges, impose additional reporting and other obligations on public companies.
Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements
will require us to carry out activities we have not done previously. For example, we have created new Board committees and adopted new
internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred.
Furthermore, while the Company has not identified a material weakness in its internal control over financial reporting, if any
issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant
deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence
of those issues could adversely affect our reputation or investor perceptions of it. It may also be more expensive to obtain director
and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain
qualified people to serve on our Board or as executive officers. The additional reporting and other obligations imposed by these rules
and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities.
These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and
achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and
reporting requirements, which could further increase costs.
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or the market in which
we operate, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities
could decline.
The
trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about
us, our business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on us. If
no securities or industry analysts commence coverage of us, our share price and trading volume would likely be negatively impacted. If
any of the analysts who may cover us change their recommendation regarding our Ordinary Shares adversely, or provide more favorable relative
recommendations about our competitors, the price of our Ordinary Shares would likely decline. If any analyst who may cover us were to
cease our coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets, which in turn
could cause our share price or trading volume to decline.
37
Our
Ordinary Shares may be subject to extreme volatility.
The
trading price of our Ordinary Shares may be subject to extreme volatility. We cannot predict the magnitude of future fluctuations in
the trading price of our Ordinary Shares. The trading price of our Ordinary Shares may be affected by several factors, including events
described in the risk factors set forth in this Annual Report on Form 10-K and in our periodic reports filed with the SEC from time to time, as well
as our operating results, financial condition and other events or factors. Any of the factors listed below could have a material adverse
effect on your investment in our securities. Factors affecting the trading price of our securities may include:
●
announcements
by us or our competitors regarding technical developments and levels of performance achieved by our or their real-world data and
real-world evidence offering;
●
announcements
by us regarding developments in our relationship with existing and future key customers;
●
our
ability to bring our products and technologies to market on a timely basis, or at all;
●
our
operating results or development efforts failing to meet the expectations of securities analysts or investors in a particular period;
●
Actual
or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar
to it;
●
changes
in the market’s expectations about our operating results or the real-world data and real-world evidence industry;
●
success
of competitors actual or perceived development efforts;
●
changes
in financial estimates and recommendations by securities analysts concerning the Company or the real-world data and real-world evidence
industry in general;
●
operating
and share price performance of other companies that investors deem comparable to the Company;
●
disputes
or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain intellectual
property protection for our technologies;
●
changes
in laws and regulations affecting our business;
●
our
ability to meet compliance requirements;
●
commencement
of, or involvement in, litigation involving the Company;
●
changes
in our capital structure, such as future issuances of securities or the incurrence of additional debt;
●
the
volume of Ordinary Shares available for public sale;
●
the
level of demand for our Ordinary Shares, including the amount of short interest in our stock;
●
any
major change in our Board or management;
●
sales
of substantial amounts of the Ordinary Shares by our directors, executive officers or significant shareholders or the perception
that such sales could occur;
●
the
expiration of contractual lock-up agreements with our executive officers, directors and shareholders, which we have entered and may
enter into in the future from time to time; and
●
general
economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of
war or terrorism.
Broad
market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock
market in general, and the Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities,
may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors
perceive to be similar to the Company could depress our share price regardless of our business, prospects, financial conditions or results
of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities
and our ability to obtain additional financing in the future.
Following
certain periods of volatility in the market price of our securities, we may become the subject of securities litigation. We have experienced
and may in the future experience additional litigation following periods of volatility. This type of litigation may result in substantial
costs and a diversion of management’s attention and resources.
38
Our
business model is capital-intensive, and we may not be able to raise additional capital on attractive terms, if at all, which could be
dilutive to shareholders. If we cannot raise additional capital when needed, our operations and prospects could be materially and adversely
affected.
We
can be expected to continue to sustain substantial operating expenses without generating sufficient revenue to cover expenditures. Over
time, we expect that we will need to raise additional funds, including through the issuance of equity, equity-related or debt securities
or through obtaining credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs, any
significant unplanned or accelerated expenses, and new strategic investments. We cannot be certain that additional capital will be available
on attractive terms, if at all, when needed, which could be dilutive to shareholders, and our financial condition, results of operations,
business and prospects could be materially and adversely affected.
We have a history of net losses, we may increase expenses in the future, and we may not be able to achieve or maintain
profitability.
As
stated above, we have a history of losses. We generated net losses of $33,725,100 for the year ended June 30, 2024. Our ability to
continue as a going concern is dependent upon our ability to generate cashflows from operations and draw down additional long-term
debt from the senior debt provider, Commonwealth Bank of Australia, who has provided a total facility loan of AUD$14,000,000 with
unused facilities as at 30 June 2024 of AUD$8,000,000 and draw down an additional US$6 million of redeemable debentures from the
existing PIPE investors or the executed US$50 million equity line of credit (ELOC) once the Company lodges the registration
statement of the ELOC. The Company has determined that the Company’s sources of liquidity will be sufficient to meet the Company’s
financing requirements for the one year period from the issuance of its consolidated financial statements but there can no assurance these
sources are sufficient to fund our capital expenditures, working capital and other cash requirements in the long term. There can be no
assurance that the steps management is taking will be successful.
Risks
Related to Our Warrants
We
may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to Warrant holders.
Our
public Warrants are currently exercisable for one share of Ordinary Shares at a price of $11.50 per share. We have the ability to redeem
outstanding Warrants at any time prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price
of Ordinary Shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date we send the notice of redemption to Warrant holders and provided certain other conditions are met. If and when the
Warrants become redeemable by us, we may exercise our redemption rights even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. As a result, we may redeem the Warrants, as set forth above even if the holders
are otherwise unable to exercise the Warrants.
Redemption
of the outstanding Warrants could force Warrant holders (i) to exercise their Warrants and pay the exercise price therefor at a time when
it may be disadvantageous for them to do so, (ii) to sell their Warrants at the then-current market price when they might otherwise wish
to hold their Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption,
we expect would be substantially less than the market value of their Warrants. None of the private placement Warrants will be redeemable
by us so long as they are held by the Sponsor or its permitted transferees.
If we choose to exercise this redemption right, warrant holders would be
forced to either exercise their warrants at a time when it may be economically disadvantageous to do so or accept the redemption price,
which could be significantly lower than the market value of the warrants at that time. This could result in warrant holders receiving
less value than they might have otherwise realized had they been able to exercise their warrants at a later date. Additionally, the redemption
of warrants could result in dilution to our existing shareholders and may adversely affect the market price of our ordinary shares.