IPO and Fundraising - The company completed its initial public offering on June 26, 2020, raising gross proceeds of $40 million from the sale of 4,000,000 units at $10.00 per unit[28]. - A private placement of 240,000 units was simultaneously completed, generating an additional $2.4 million in gross proceeds[29]. - The total proceeds held in the trust account reached $46 million after an additional sale of 600,000 units on June 30, 2020[30]. - The company has approximately $46,000,000 in net proceeds from its initial public offering and the sale of private units available for completing its initial business combination[200]. Acquisition Strategy - The company aims to acquire growth businesses with a total enterprise value between $200 million and $300 million, focusing on those that can benefit from new capital[25]. - The management team seeks to leverage its operational experience across various sectors, including healthcare, energy, and technology, to identify attractive acquisition opportunities[23]. - The acquisition strategy includes targeting companies with strong revenue and earnings growth potential through new product development and operational efficiencies[27]. - The company is open to acquiring businesses affiliated with its sponsor, provided an independent valuation opinion is obtained[41]. - The management team emphasizes the importance of long-term revenue visibility and strong free cash flow generation in potential target businesses[27]. Business Combination Timeline and Requirements - The company has a 12-month period to complete its initial business combination, extendable up to 21 months[32]. - The initial business combination must involve target businesses or assets with a fair market value of at least 80% of the trust account value at the time of the agreement[47]. - The company anticipates acquiring 100% of the equity interest or assets of the target business, but may acquire less than 100% if it becomes the majority shareholder[48]. - The company must maintain net tangible assets of at least $5,000,001 to proceed with its initial business combination, which may limit its ability to complete desirable transactions[121]. - The deadline for consummating a business combination is December 25, 2021, or March 25, 2022, if the period is fully extended[219]. Shareholder Approval and Redemption Rights - A majority of the outstanding ordinary shares must vote in favor of the business combination for it to be approved, requiring at least 789,001 of the 4,600,000 public shares[67]. - The company will not redeem public shares if it would cause net tangible assets to fall below $5,000,001 prior to or upon consummation of the initial business combination[68]. - Shareholder approval may not be required for certain types of transactions, such as asset purchases or mergers with subsidiaries[54]. - If the initial business combination is not approved, public shareholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the pro rata share of the trust account[80]. - Public shareholders may need to wait for the redemption of shares to receive a pro rata share of the trust account if the initial business combination cannot be consummated[219]. Financial Considerations and Risks - The company may incur costs related to the identification and evaluation of prospective target businesses that do not result in a completed business combination, leading to potential losses[46]. - The company anticipates that it may need to purchase shares to increase the likelihood of obtaining shareholder approval for the business combination[71]. - The fair market value of the target business will be determined based on standards accepted by the financial community, including gross margins and comparable business values[49]. - The company may face intense competition from other entities with similar business objectives, which could limit its ability to acquire target businesses[105]. - The company may incur substantial debt to complete its initial business combination, which could adversely affect its financial condition and shareholder value[199]. Management and Governance - The company has flexibility in selecting acquisition targets, which may include businesses outside management's expertise[156]. - Past performance of management is not indicative of future success in identifying suitable business combinations[155]. - Management has significant discretion in selecting acquisition candidates, which may not align with shareholders' best interests[158]. - Officers and directors may have conflicts of interest in determining which business opportunities to pursue, potentially affecting the selection of target businesses[193]. - The shares beneficially owned by the company's officers and directors may not participate in liquidation distributions, creating a conflict of interest in selecting target businesses[195]. Legal and Regulatory Considerations - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[110]. - The company is not subject to regulatory supervision in the British Virgin Islands, leaving shareholders without certain protections[145]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements and restrictions on activities[142]. - Future U.S. laws may restrict the company's ability to complete business combinations with certain companies, particularly those based in China[186]. Potential Conflicts and Challenges - The company may face conflicts of interest due to relationships with affiliated entities, which could affect the terms of business combinations[196]. - The company may not maintain control of a target business after the initial business combination, potentially leading to minority ownership for existing shareholders[208]. - The company may face write-downs or restructuring charges post-combination, which could negatively impact its financial condition and share price[136]. - The inability to locate an alternative funding source could prevent the company from consummating the initial business combination[219].
Nukkleus(NUKK) - 2020 Q4 - Annual Report