Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
We will be forced to liquidate if we fail to close a business
combination by May 16, 2022.
Since inception, we have extended the period of
time to consummate a business combination eight times (for a total of up to 36 months to complete a business combination). As of the date
of this report, the Company has extended eight times (including three times approved by shareholders on February 5, 2021 and two times
by shareholders on November 2, 2021) by an additional three months each time, and so it now has until May 16, 2022 to consummate a business
combination. If we fail to complete the transactions contemplated by the Business Combination Agreement or any business combination by
May 16, 2022, we will be forced to liquidate pursuant to the terms of our current amended and restated memorandum and articles of association.
There is uncertainty regarding our ability to continue as a going
concern, indicating the possibility that we may be required to curtail or discontinue our operations in the future. If we discontinue
our operations, you may lose all of your investment.
As of December 31, 2021, we had cash outside our
trust account of $164,863 available for working capital needs. All remaining cash was held in the trust account and is generally unavailable
for our use, prior to the business combination. If our estimates of the costs of consummating our proposed business combination is less
than the actual amount necessary to do so, or the amount of interest available to us from the trust account is less than we expect as
a result of the current interest rate environment, we may have insufficient funds available to operate our business prior to our initial
business combination. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity
which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and
reducing overhead expenses from the filing date of this Annual Report, assuming that a business combination is not consummated during
that time. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These
conditions raise substantial doubt about our ability to continue as a going concern if a business combination is not consummated by May
16, 2022.
Moreover, we may need to obtain additional financing
either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares
upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with
such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously
with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations, and there is no assurance that such financing can be obtained
on favorable terms, or at all.
Our Private warrants are accounted for as liabilities and the
changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the
Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting
considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting
Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”).
Specifically, the SEC Statement focused on certain provisions that provided for potential changes to the settlement amounts dependent
upon the characteristics of the holder of the warrant, which terms are similar to those contained in the warrant agreement governing the
Company’s warrants. As a result of the SEC Statement, the Company reevaluated the accounting treatment of the 225,000 warrants that
were issued to the Company’s sponsor in a private placement that closed concurrently with the closing of the Initial Public Offering
(the “Private Warrants”). The Company previously accounted for the Private Warrants as components of equity.
In further consideration of the guidance in Accounting
Standards Codification (“ASC”) 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (“ASC
815”), the Company concluded that a provision in the warrant agreement related to certain transfer provisions precludes the Private
Warrants from being accounted for as components of equity. As the Private Warrants meet the definition of a derivative as contemplated
in ASC 815, the Private Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at inception
(on the date of the Initial Public Offering) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes
in fair value recognized in the Statements of Operations in the period of change.
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Our ordinary shares subject to redemption
are classified for as outside permanent equity and the changes in classification could have a material effect on our financial results.
In addition, in preparation of the Company’s
financial statements as of and for the year ended December 31, 2021, the Company concluded it should restate its financial statements
to classify all ordinary shares subject to possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance
on redeemable equity instruments, ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480), paragraph 10-S99, redemption provisions
not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity.
The Company had previously classified a portion of its ordinary shares in permanent equity. Although the Company did not specify a maximum
redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount that would cause
its net tangible assets to be less than $5,000,001. The Company considered that the threshold would not change the nature of the underlying
shares as redeemable and thus would be required to be disclosed outside equity. As a result, the Company restated its previously filed
financial statements to classify all ordinary shares as temporary equity and to recognize accretion from the initial book value to redemption
value at the time of its Initial Public Offering and in accordance with ASC 480. The change in the carrying value of redeemable shares
of ordinary shares resulted in charges against accumulated deficit.
We have identified a material weakness in
our internal control over financial reporting as of December 31, 2021 and 2020. If we are unable to develop and maintain an effective
system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner,
which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following the issuance of the SEC Statement, our
management and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued
audited financial statements as of and for the years ended December 31, 2021 and 2020. See “—Our Private warrants are
accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As
part of such process, we identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material
weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
If we identify any new material weaknesses in
the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or
disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable
to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange
listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot
assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future
material weaknesses.
We may face litigation and other risks as
a result of the material weakness in our internal control over financial reporting.
Following the issuance of the SEC Statement,
our management and our audit committee concluded that it was appropriate to restate our previously issued audited financial statements
as of December 31, 2020. See “— Our warrants are accounted for as liabilities and the changes in value of our warrants
could have a material effect on our financial results.” As part of such restatement, we identified a material weakness in our internal
controls over financial reporting. As a result of such material weakness, the restatement described above, the change in accounting for
the warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes
which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from
the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.
As of the date of this Annual Report, we have no knowledge of any such litigation or dispute arising due to restatement or material weakness
of our internal controls over financial reporting. However, we can provide no assurance that such litigation or dispute will not arise
in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results
of operations and financial condition or our ability to complete a business combination .
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.