Filed 2026-03-03 · Period ending 2025-12-31 · 79,109 words · SEC EDGAR
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# Digital Asset Acquisition Corp. (DAAQ) — 10-K
**Filed:** 2026-03-03
**Period ending:** 2025-12-31
**Accession:** 0001213900-26-022519
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/2052162/000121390026022519/)
**Origin leaf:** 4a88af7e5380766ec70f1eebb4b5d43fd14f68b9f8b286fdc6ce1f762e7af008
**Words:** 79,109
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**
UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C. 20549**
****
**FORM 10-K**
**(Mark One)**
**ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
****
**For the fiscal year ended December31,
2025**
****
** TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
****
**For the transition period from ______________
to ______________**
****
**Commission File Number: 001-42612**
****
**DIGITAL ASSET ACQUISITION CORP.**
(Exact name of registrant as specified in its
charter)
| Cayman Islands | | N/A | |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) | |
****
**174 Nassau Street, Suite 2100,**
**Princeton, New Jersey 08542**
**Telephone: (609) 924-0759**
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices)
**N/A**
(Former name, former address and former fiscal
year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | |
| Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant | | DAAQU | | The Nasdaq Stock Market LLC | |
| | | | | | |
| Class A ordinary shares, par value $0.0001 per share | | DAAQ | | The Nasdaq Stock Market LLC | |
| | | | | | |
| Warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share | | DAAQW | | The Nasdaq Stock Market LLC | |
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No
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 No
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of large accelerated filer, accelerated filer, smaller reporting company,
and emerging growth company in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | Accelerated filer | |
| Non-accelerated filer | Smaller reporting company | |
| | Emerging growth company | |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants
executive officers during the relevant recovery period pursuant to 240.10D-1(b).
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo
The aggregate market value of the registrants
voting and non-voting common equity held by non-affiliates, computed by reference to the closing sales price for the registrants
Class A Ordinary Shares on June 30, 2025, as reported on The Nasdaq Stock Market LLC of $10.48, was $180,780,000.
As of March 2, 2026, there were 17,250,000 shares of the registrants
Class A ordinary shares, par value $0.0001 per share, issued and outstanding, and 5,750,000 shares of the registrants Class B ordinary
shares, par value $0.0001 per share, issued and outstanding.
Documents Incorporated by Reference: None.
**DIGITAL ASSET ACQUISITION CORP.**
**TABLE OF CONTENTS**
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Page # | |
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PART I | |
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ITEM 1. |
BUSINESS |
1 | |
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ITEM 1A. |
RISK FACTORS |
16 | |
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ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
70 | |
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ITEM 1C. |
CYBERSECURITY |
70 | |
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ITEM 2. |
PROPERTIES |
70 | |
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ITEM 3. |
LEGAL PROCEEDINGS |
70 | |
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ITEM 4. |
MINE SAFETY DISCLOSURES |
70 | |
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PART II | |
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ITEM 5. |
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
71 | |
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ITEM 6. |
[RESERVED] |
71 | |
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ITEM 7. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
71 | |
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ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
75 | |
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ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
F-1 | |
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ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
77 | |
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ITEM 9A. |
CONTROLS AND PROCEDURES |
77 | |
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ITEM 9B. |
OTHER INFORMATION |
77 | |
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ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
77 | |
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PART III | |
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ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
78 | |
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ITEM 11. |
EXECUTIVE COMPENSATION |
83 | |
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ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
84 | |
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ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR |
85 | |
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ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
87 | |
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PART IV | |
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ITEM 15. |
EXHIBIT AND FINANCIAL STATEMENT SCHEDULES |
88 | |
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ITEM 16. |
FORM 10-K SUMMARY |
89 | |
i
**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**
Certain statements contained in this Annual Report
on Form 10-K, which reflect our current views with respect to future events and financial performance, and any other statements of a
future or forward-looking nature, constitute forward-looking statements for the purpose of the federal securities laws.
Our forward-looking statements include, but are not limited to, statements regarding our or our managements expectations, hopes,
beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipate,
believe, continue, could, estimate, expect, intends,
may, might, plan, possible, potential, predict, project,
should, will, would and similar expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not forward-looking. The following factors, among others, could cause actual
results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
|
| our
ability to complete our initial business combination; | |
|
| | | |
|
| the
ability to have our securities continue to be listed on The Nasdaq Stock Market LLC (Nasdaq),
including following a business combination; | |
|
| | | |
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| our
failure to achieve the anticipated benefits of the business combination; | |
|
| | | |
|
| the
use of funds not held in the trust account; | |
|
| | | |
|
| our
success in retaining or recruiting, or changes required in, our officers, key employees or
directors following our initial business combination; | |
|
| | | |
|
| our
officers and directors allocating their time to other businesses and potentially having conflicts
of interest with our business or in approving our initial business combination, as a result
of which they would then receive expense reimbursements; | |
|
| | | |
|
| our
potential ability to obtain additional financing to complete our initial business combination; | |
|
| | | |
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| our
pool of prospective target businesses; | |
|
| | | |
|
| the
ability of our officers and directors to generate a number of potential investment opportunities; | |
|
| | | |
|
| our
public securities potential liquidity and trading; | |
|
| | | |
|
| the
trust account not being subject to claims of third parties; | |
|
| | | |
|
| the
potential market for our securities; | |
|
| | | |
|
| our
financial performance; | |
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| | | |
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| changes
in current U.S. or global economic conditions; | |
|
| | | |
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| the
effects of inflation; | |
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| | | |
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| other
risks and uncertainties as may be detailed from time to time in our public announcements
and Securities and Exchange Commission (SEC) filings; | |
|
| | | |
|
| other
factors that the Company may not have currently identified or quantified; and | |
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| | | |
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| other
factors detailed under the section entitled Risk Factors. | |
The forward-looking statements contained in this
Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects
on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but
are not limited to, those factors described in Item 1A. Risk Factors. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
ii
In addition, statements that we believe
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available
to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not
to unduly rely upon these statements as predictions of future results. Our actual future results may be materially different from what
we expect. We qualify all of our forward-looking statements by these cautionary statements.
**Summary of Risk Factors**
****
An investment in our securities involves a high
degree of risk. The occurrence of one or more of the events or circumstances described in the section titled *Risk Factors*,
alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating
results. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks
include, but are not limited to:
|
| Our
Public Shareholders may not be afforded an opportunity to vote on our proposed initial Business
Combination (as defined below), and even if we hold a vote, holders of our Founder Shares
(as defined below) will participate in such vote, which means we may complete our initial
Business Combination even though a majority of our Public Shareholders (as defined below)
do not support such a combination. | |
****
|
| If
we seek shareholder approval of our initial Business Combination, our initial shareholders
and management team have agreed to vote in favor of such initial Business Combination, regardless
of how our Public Shareholders vote, and we may not need any Public Shares (as defined below)
in addition to our Founder Shares to be voted in favor of an initial Business Combination
in order to approve an initial Business Combination. | |
|
| Your
only opportunity to effect your investment decision regarding a potential Business Combination
may be limited to the exercise of your right to redeem your shares from us for cash. | |
|
| 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. | |
|
| The
ability of our Public Shareholders to exercise redemption rights with respect to a large
number of our shares and the amount of deferred underwriting compensation may not allow us
to complete the most desirable Business Combination or optimize our capital structure, and
may substantially dilute your investment in us. | |
|
| If
a shareholder fails to receive notice of our offer to redeem our Public Shares in connection
with our initial Business Combination, or fails to comply with the procedures for submitting
or tendering its shares, such shares may not be redeemed. | |
|
| You
will not be entitled to protections normally afforded to investors of many other blank check
companies. | |
|
| If
the net proceeds of our Initial Public Offering and the sale of the Private Placement Warrants
(as defined below) not being held in the Trust Account (as defined below) are insufficient
to allow us to operate for at least the duration of the Completion Window (as defined below),
it could limit the amount available to fund our search for a target business or businesses
and complete our initial Business Combination, and we will depend on loans from our Sponsor
(as defined below), its affiliates or our management team to fund our search and to complete
our initial Business Combination. | |
|
| Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely
affect our business, including our ability to negotiate and complete our initial Business
Combination, and results of operations. | |
iii
|
| If
we are deemed to be an investment company under the Investment Company Act (as defined below),
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. | |
|
| Our
search for a Business Combination, and any target business with which we ultimately consummate
a Business Combination, may be materially adversely affected by the status of debt and equity
markets. | |
|
| Unlike
some other similarly structured special purpose acquisition companies, our initial shareholders
will receive additional ClassA ordinary shares if we issue certain shares to consummate
an initial Business Combination in order to provide anti-dilutionprotection to our
initial shareholders. | |
|
| Our
Sponsor will control the appointment of our board of directors until consummation of our
initial Business Combination and will hold a substantial interest in us. As a result, it
will appoint all of our directors prior to the consummation of our initial Business Combination
and may exert a substantial influence on actions requiring a shareholder vote, potentially
in a manner that you do not support. | |
|
| Transactions
in connection with or in anticipation of our initial Business Combination and our structure
thereafter may not be tax-efficientto our shareholders and warrant holders. As a result
of our Business Combination, our tax obligations may be more complex, burdensome and/or uncertain. | |
|
| We
may reincorporate in or transfer by way of continuation to another jurisdiction which may
result in taxes imposed on shareholders or warrant holders. | |
|
| Our
officers and directors will allocate their time to other businesses thereby causing conflicts
of interest in their determination as to how much time to devote to our affairs. This conflict
of interest could have a negative impact on our ability to complete our initial Business
Combination. | |
|
| You
will not have any rights or interests in funds from the trust account, except under certain
limited circumstances. Therefore, to liquidate your investment, you may be forced to sell
your Public Shares or warrants, potentially at a loss. | |
|
| Nasdaq
may delist our securities from trading on its exchange, which could limit investors
ability to make transactions in our securities and subject us to additional trading restrictions. | |
|
| The
nominal purchase price paid by our Sponsor for the Founder Shares may result in significant
dilution to the implied value of your Public Shares upon the consummation of our initial
Business Combination, and our Sponsor is likely to make a substantial profit on its investment
in us in the event we consummate an initial Business Combination, even if the Business Combination
causes the trading price of our ordinary shares to materially decline. | |
|
| An
investment in our securities may result in uncertain or adverse U.S.federal income
tax consequences. | |
|
| We
are a blank check company with no operating history and no revenues, and you have no basis
on which to evaluate our ability to achieve our business objective. | |
|
| Past
performance by our management team, our advisors and their respective affiliates, including
investments and transactions in which they have participated and businesses with which they
have been associated, may not be indicative of future performance of an investment in the
company. | |
|
| We
may be a passive foreign investment company, or PFIC, which could result in
adverse UnitedStates federal income tax consequences to U.S.investors. | |
|
| The
Excise Tax could be imposed on redemptions of our ordinary shares if we were to become a
covered corporation in the future. | |
|
|
|
Our management concluded that there is substantial doubt about our ability to continue as a going concern. | |
|
| The
other risks and uncertainties discussed in Risk Factors and elsewhere
in this Form 10-K. | |
iv
**PART I**
****
**ITEM 1. BUSINESS.**
**
*References in this Form 10-K to we,
us, our, or the Company refer to Digital Asset Acquisition Corp. References to our management
or our management team refer to our officers and directors.*
Digital Asset Acquisition Corp. (the Company)
is a blank check company incorporated in the Cayman Islands on December 9, 2024. The Company was formed for the purpose of entering into
a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses
(a Business Combination). We have 18 months from the closing of our initial public offering (IPO or Initial
Public Offering) (or 21 months from the closing of the Initial Public Offering if the Company has executed a definitive agreement
for an initial Business Combination within 18 months of the Initial Public Offering), or until such earlier liquidation date as our board
of directors may approve (the Completion Window) to complete our initial Business Combination.
We have reviewed, and continue to review, a number
of opportunities to enter into a Business Combination, but we are not able to determine at this time whether we will complete a Business
Combination with any of the target businesses that we have reviewed or with any other target business. We may pursue an acquisition opportunity
in any industry, sector or geographic location. We also have neither engaged in any operations nor generated any revenue to date. Based
on our business activities, the Company is a shell company as defined under the Exchange Act of 1934, as amended (the Exchange
Act) because we have no operations and nominal assets consisting almost entirely of cash..
The registration statement for the Companys Initial
Public Offering was declared effective on April 28, 2025. On April 30, 2025, the Company consummated the Initial Public Offering
of 17,250,000 units (the Units and, with respect to the Class A ordinary shares included in the Units sold, the Public
Shares), including 2,250,000 Units issued pursuant to the exercise of the Underwriters (as defined below) over-allotment option
in full, generating gross proceeds of $172,500,000 . Each Unit consists of one Class A ordinary share and one-half of one redeemable warrant
of the Company (the Public Warrants), with each whole warrant entitling the holder thereof to purchase one Class A ordinary
share at $11.50 per share.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 5,450,000 warrants at a price of $1.00 per warrant (the Private Placement
Warrants), generating gross proceeds of $5,450,000. Of the 5,450,000 Private Placement Warrants, (i) Cohen & Company Capital
Markets, a division of Cohen & Company Securities, LLC (the Representative), purchased 1,466,250 Private Placement Warrants,
(ii) Clear Street LLC (Clear Street and together with the Representative, the Underwriters) purchased 258,750
Private Placement Warrants and (iii) DAAQ Sponsor LLC, a Delaware limited liability company (the Sponsor), purchased 3,725,000
Private Placement Warrants.
Prior to the consummation of the Initial Public
Offering, on December 11, 2024, our Sponsor made a capital contribution of $25,000, or approximately $0.004 per share, to cover certain
expenses on our behalf in exchange for issuance of 5,750,000 Class B ordinary shares (the Founder Shares). In January 2025,
our Sponsor transferred 25,000 Founder Shares to each our of independent directors (for an aggregate of 75,000 Founder Shares) and 10,000
Founder Shares to each of our advisors (for an aggregate of 40,000 Founder Shares) at the same per-share price that our Sponsor purchased
such shares, or approximately $0.004 per share, resulting in our Sponsor holding 5,635,000 Founder Shares.
1
Following the closing of the Initial Public Offering
on April 30, 2025, an amount of $172,500,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the sale
of the Private Placement Warrants was placed in a trust account (the Trust Account), to be invested only in U.S. government
treasury obligations with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act of 1940, as amended (the Investment Company Act), which invest only in direct U.S. government treasury
obligations. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which
risk increases the longer that we hold investments in the Trust Account, we may, at any time (based on our management teams ongoing
assessment of all factors related to our potential status under the Investment Company Act), instruct the trustee to liquidate the investments
held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest bearing demand deposit account
at a bank. Except with respect to interest earned on the funds held in the Trust Account that may be released to us for permitted withdrawals
and up to $100,000 of interest to pay liquidation expenses, the proceeds from the Initial Public Offering and the sale of the Private
Placement Warrants will not be released from the Trust Account until the earliest of (i) the completion of our initial Business Combination,
(ii) the redemption of our Public Shares if we are unable to complete our initial Business Combination within the Completion Window,
subject to applicable law, or (iii) the redemption of our Public Shares properly submitted in connection with a shareholder vote to amend
our Amended and Restated Memorandum and Articles of Association to (A) modify the substance or timing of our obligation to allow redemption
in connection with our initial Business Combination or to redeem 100% of our Public Shares if we have not consummated an initial Business
Combination within the Completion Window or (B) with respect to any other material provisions relating to shareholders rights
or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of our creditors,
if any, which could have priority over the claims of our Public Shareholders.
****
**Effecting Our Initial Business Combination**
****
**General**
We are not presently engaged in, and we will
not engage in, any operations for an indefinite period of time following the Initial Public Offering. We intend to effectuate our initial
Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, the
proceeds of the sale of our shares in connection with our initial Business Combination (including pursuant to forward purchase agreements
or backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the target, other securities issuances, or a combination
of the foregoing. We may seek to complete our initial Business Combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial Business Combination is paid for
using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the consideration in
connection with our initial Business Combination or used for redemptions of our Class A ordinary shares, we may use the balance of the
cash released to us from the Trust Account following the closing for general corporate purposes, including for maintenance or expansion
of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial
Business Combination, to fund the purchase of other companies, or for working capital.
We have not selected any Business Combination
target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any Business
Combination target. We may pursue an initial Business Combination in any business or industry but expect to focus on targets in the digital
asset and cryptocurrency sectors. Accordingly, there is no current basis to evaluate the possible merits or risks of the target business
with which we may ultimately complete our initial Business Combination. Although our management will assess the risks inherent in a particular
target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a
target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control
or reduce the chances that those risks will adversely affect a target business.
2
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial Business Combination and we may effectuate
our initial Business Combination using the proceeds of such offering rather than using the amounts held in the Trust Account. In addition,
we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of the Initial Public
Offering and the sale of the Private Placement Warrants, and, as a result, if the cash portion of the purchase price exceeds the amount
available from the Trust Account, net of amounts needed to satisfy any redemptions by public shareholders, we may be required to seek
additional financing to complete such proposed initial Business Combination. Subject to compliance with applicable securities laws, we
would expect to complete such financing only simultaneously with the completion of our initial Business Combination. In the case of an
initial Business Combination funded with assets other than the Trust Account assets, our proxy materials or tender offer documents disclosing
the initial Business Combination would disclose the terms of the financing and, only if required by law, we would seek shareholder approval
of such financing. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or
through loans, advances or other indebtedness in connection with our initial Business Combination, including pursuant to forward purchase
agreements or backstop agreements we may enter into. At this time, we are not a party to any arrangement or understanding with any third
party with respect to raising any additional funds through the sale of securities or otherwise. None of our Sponsor, officers, directors
or shareholders is required to provide any financing to us in connection with or after 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, personal relationships, operating executives
and private investment funds. 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 registration statement for our Initial Public Offering 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 do not presently anticipate engaging the services of professional firms or other individuals that specialize in business
acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finders
fee, consulting fee or other compensation to be determined in an arms length negotiation based on the terms of the transaction.
Prior to or in connection with the completion
of our initial Business Combination, there may be payment by the Company to our officers, independent directors, advisors, or their respective
affiliates, of a finders fee, advisory fee, consulting fee or success fee for any services they render in order to effectuate
the completion of our initial Business Combination, which, if made prior to the completion of our initial Business Combination, will
be paid from funds released to us pursuant to permitted withdrawals or held outside the Trust Account.
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 a finders fee 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.
3
We are not prohibited from pursuing an initial
Business Combination with a company that is affiliated with our Sponsor, officers, directors or advisors (or their respective affiliates
or related entities). In the event that we seek to complete our initial Business Combination with a company that is affiliated (as defined
in our Amended and Restated Memorandum and Articles of Association) with our Sponsor, officers, directors or advisors (or their respective
affiliates or related entities), we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm which is a member of FINRA or an independent firm that commonly renders valuation opinions for the type of company we are seeking
to acquire or from an independent accounting firm that our initial Business Combination is fair to our Company from a financial point
of view. We are not required to obtain such an opinion in any other context.
****
**Evaluation of a Target Business and Structuring
of Our Initial Business Combination**
In evaluating a prospective target business,
we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees,
document reviews, interviews of customers and suppliers, inspection of facilities, as applicable, as well as a review of financial, operational,
legal and other information which will be made available to us. If we determine to move forward with a particular target, we will proceed
to structure and negotiate the terms of the Business Combination transaction.
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, and negotiation
with, a prospective target business with which our initial Business Combination is not ultimately completed will result in our incurring
losses and will reduce the funds we can use to complete another Business Combination.
****
**Lack of Business Diversification**
For an indefinite period of time after the completion
of our initial Business Combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete Business Combination with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By completing our initial Business Combination with only a single entity, our lack of diversification may:
|
| 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 | |
|
| cause
us to depend on the marketing and sale of a single product or limited number of products
or services. | |
****
**Limited Ability to Evaluate the Targets
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 businesss management may not prove to be correct. In addition, future management may not
have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management
team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members
of our management team will remain with the combined company will be made at the time of our initial Business Combination. While it is
possible that one or more of our directors will remain associated in some capacity with us following our initial Business Combination,
it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial Business Combination. Moreover,
we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of
the particular target business.
4
We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial Business Combination.
Following a Business Combination, we may seek
to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have
the ability to recruit additional managers, or that 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 may conduct redemptions without a shareholder
vote pursuant to the tender offer rules of the SEC subject to the provisions of our Amended and Restated Memorandum and Articles of Association.
However, we will seek shareholder approval if it is required by applicable law or stock exchange listing requirement, or we may decide
to seek shareholder approval for business or other reasons.
Under Nasdaqs listing rules, shareholder
approval would be required for our initial Business Combination if, for example:
|
| We
issue ordinary shares that will be equal to or in excess of 20% of the number of our ordinary
shares then outstanding (other than in a public offering); | |
|
| Any
of our directors, officers or substantial shareholders (as defined by Nasdaq rules) has a
5% or greater interest (or such persons collectively have a 10% or greater interest), directly
or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of ordinary shares could result in an increase in outstanding ordinary
shares or voting power of 5% or more; or | |
|
| The
issuance or potential issuance of ordinary shares will result in our undergoing a change
of control. | |
The decision as to whether we will seek shareholder
approval of a proposed Business Combination in those instances in which shareholder approval is not required by applicable law or stock
exchange listing requirements will be made by us, solely in our discretion, and will be based on business and legal reasons, which include
a variety of factors, including, but not limited to: (i) the timing of the transaction, including in the event we determine shareholder
approval would require additional time and there is either not enough time to seek shareholder approval or doing so would place the Company
at a disadvantage in the transaction or result in other additional burdens on the Company; (ii) the expected cost of holding a shareholder
vote; (iii) the risk that the shareholders would fail to approve the proposed Business Combination; (iv) other time and budget constraints
of the Company; and (v) additional legal complexities of a proposed Business Combination that would be time-consuming and burdensome
to present to shareholders.
****
**Permitted Purchases of Our Securities**
If we seek shareholder approval of our initial
Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer
rules, our Sponsor, initial shareholders, directors, officers, advisors and their affiliates may purchase Public Shares or Public Warrants
in privately negotiated transactions or in the open market either prior to or following the completion of our initial Business Combination,
although they are under no obligation or duty to do so. Such a purchase may include a contractual acknowledgment that such shareholder,
although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. In the event that our Sponsor, initial shareholders, directors, officers, advisors and 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. It is intended that, if Rule 10b-18 would apply to purchases
by our Sponsor, initial shareholders, directors, officers, advisors and their affiliates, then such purchases will comply with Rule 10b-18
under the Exchange Act, to the extent it applies, which provides a safe harbor for purchases made under certain conditions, including
with respect to timing, pricing and volume of purchases.
5
Additionally, at any time at or prior to our
initial Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), our Sponsor,
initial shareholders, directors, officers, advisors and their affiliates may enter into transactions with investors and others to provide
them with incentives to acquire Public Shares, vote their Public Shares in favor of our initial Business Combination or not redeem their
Public Shares. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase Public Shares or Public
Warrants in such transactions.
The purpose of any such transactions could be
to (1) increase the likelihood of obtaining shareholder approval of the Business Combination, (2) reduce the number of Public Warrants
outstanding and/or increase the likelihood of approval on any matters submitted to the Public Warrant holders for approval in connection
with our initial Business Combination or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial Business Combination, where it appears that such requirement would
otherwise not be met. Any such purchases of our securities may result in the completion of our initial Business Combination that may
not otherwise have been possible.
In addition, if such purchases are made, the
public float of our securities may be reduced and the number of beneficial holders of our securities may be reduced, which
may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our Sponsor, initial shareholders, directors,
officers, advisors and their affiliates anticipate that they may identify the shareholders with whom our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates may pursue privately negotiated transactions by either the shareholders contacting
us directly or by our receipt of redemption requests submitted by shareholders (in the case of Class A ordinary shares) following our
mailing of proxy materials in connection with our initial Business Combination. To the extent that our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates enter into a private transaction, they would identify and contact only potential selling
or redeeming shareholders who have expressed their election to redeem their shares for a pro rata share of the Trust Account or vote
against our initial Business Combination, whether or not such shareholder has already submitted a proxy with respect to our initial Business
Combination but only if such shares have not already been voted at the general meeting related to our initial Business Combination. Our
Sponsor, initial shareholders, directors, officers, advisors and their affiliates will select which shareholders to purchase shares from
based on the negotiated price and number of shares and any other factors that they may deem relevant, and will be restricted from purchasing
shares if such purchases do not comply with Regulation M under the Exchange Act and the other federal securities laws.
Our Sponsor, initial shareholders, directors,
officers, advisors and their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the
extent such purchasers are subject to such reporting requirements. Additionally, in the event our Sponsor, initial shareholders, directors,
officers, advisors and their affiliates were to purchase Public Shares or Public Warrants from Public Shareholders after the announcement
of our initial Business Combination, such purchases would be structured in compliance with the requirements of Rule 14e-5 under the Exchange
Act including, in pertinent part, through adherence to the following:
|
| our
registration statement/proxy statement filed for our Business Combination transaction would
disclose the possibility that our Sponsor, initial shareholders, directors, officers, advisors
and their affiliates may purchase Public Shares or Public Warrants from Public Shareholders
outside the redemption process, along with the purpose of such purchases; | |
|
| if
our Sponsor, initial shareholders, directors, officers, advisors and their affiliates were
to purchase Public Shares or Public Warrants from Public Shareholders, they would do so at
a price no higher than the price offered through our redemption process; | |
6
|
| our
registration statement/proxy statement filed for our Business Combination transaction would
include a representation that any of our securities purchased by our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates would not be voted in favor of approving
the Business Combination transaction; | |
|
| our
Sponsor, initial shareholders, directors, officers, advisors and their affiliates would not
possess any redemption rights with respect to our securities or, if they do acquire and possess
redemption rights, they would waive such rights; and | |
|
| we
would disclose in a Current Report on Form 8-K, before our security holder meeting to approve
the Business Combination transaction, the following material items: | |
|
| the
amount of our securities purchased outside of the redemption offer by our Sponsor, initial
shareholders, directors, officers, advisors and their affiliates, along with the purchase
price; | |
|
| the
purpose of the purchases by our Sponsor, initial shareholders, directors, officers, advisors
and their affiliates; | |
|
| the
impact, if any, of the purchases by our Sponsor, initial shareholders, directors, officers,
advisors and their affiliates on the likelihood that the Business Combination transaction
will be approved; | |
|
| the
identities of our security holders who sold to our Sponsor, initial shareholders, directors,
officers, advisors and their affiliates (if not purchased on the open market) or the nature
of our security holders (e.g., 5% security holders) who sold to our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates; and | |
|
| the
number of our securities for which we have received redemption requests pursuant to our redemption
offer. | |
Please see *Risk Factors If
we seek shareholder approval of our initial Business Combination, our Sponsor, initial shareholders, directors, officers, advisors and
their affiliates may elect to purchase Public Shares or Public Warrants from Public Shareholders, which may influence a vote on a proposed
Business Combination and reduce the public float of our Class A ordinary Public Shares or Public Warrants* for
additional information.
****
**Redemption Rights for Public Shareholders
Upon Completion of Our Initial Business Combination**
We will provide our Public Shareholders with
the opportunity to redeem, regardless of whether they abstain, vote for, or against, our initial Business Combination, all or a portion
of their Public Shares in connection with the completion of our initial Business Combination at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial
Business Combination, including interest earned on the funds held in the Trust Account (net of taxes paid or payable) and not previously
released to us for permitted withdrawals, divided by the number of then issued and outstanding Public Shares, subject to the limitations
and on the conditions described herein. The amount in the Trust Account is initially anticipated to be $10.00 per Public Share. The per
share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions
we will pay to the underwriters. Our Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which
they have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares they may hold in connection
with the completion of our initial Business Combination.
7
Our proposed initial Business Combination may
impose a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or
other general corporate purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration
we would be required to pay for all Public Shares that are validly submitted for redemption plus any amount required to satisfy cash
conditions pursuant to the terms of the proposed initial Business Combination exceed the aggregate amount of cash available to us, we
will not complete the initial Business Combination or redeem any shares, and all Public Shares submitted for redemption will be returned
to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other
indebtedness in connection with our initial Business Combination, including pursuant to forward purchase agreements or backstop arrangements
we may enter into following consummation of the Initial Public Offering, in order to, among other reasons, satisfy such net tangible
assets or minimum cash requirements.
****
**Manner of Conducting Redemptions**
We will provide our Public Shareholders with
the opportunity to redeem, regardless of whether they abstain, vote for, or against, our initial Business Combination, all or a portion
of their Public Shares in connection with the completion of our initial Business Combination either (i) in connection with a general
meeting called to approve the Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to
whether we will seek shareholder approval of a proposed Business Combination or conduct a tender offer will be made by us, solely in
our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction
would require us to seek shareholder approval under applicable law or stock exchange listing requirement or whether we were deemed to
be a foreign private issuer (which would require a tender offer rather than seeking shareholder approval under SEC rules), as described
above under the heading *Shareholders May Not Have the Ability to Approve Our Initial Business Combination*. Asset
acquisitions and share purchases would not typically require shareholder approval while direct mergers with our company (other than with
a 90% subsidiary of ours) and any transactions where we issue more than 20% of our issued and outstanding ordinary shares or seek to
amend our Amended and Restated Memorandum and Articles of Association would require shareholder approval. So long as we obtain and maintain
a listing for our securities on Nasdaq, we will be required to comply with Nasdaqs shareholder approval rules.
The requirement that we provide our Public Shareholders
with the opportunity to redeem their Public Shares by one of the two methods listed above is contained in provisions of our Amended and
Restated Memorandum and Articles of Association and will apply whether or not we maintain our registration under the Exchange Act or
our listing on Nasdaq. Such provisions may be amended if approved by a special resolution, which requires the affirmative vote of at
least two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by
proxy at the applicable general meeting of the Company, so long as we offer redemption in connection with such amendment.
If we provide our Public Shareholders with the
opportunity to redeem their Public Shares in connection with a general meeting, we will, pursuant to our Amended and Restated Memorandum
and Articles of Association:
|
| 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, we will distribute proxy materials and, in connection therewith, provide our Public Shareholders
with the redemption rights described above upon completion of the initial Business Combination.
8
If we seek shareholder approval, we will complete
our initial Business Combination only if we obtain the approval of an ordinary resolution under Cayman Islands law and our Amended and
Restated Memorandum and Articles of Association, which requires the affirmative vote of at least a majority of the votes cast by such
shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of
the Company. A quorum for such meeting will be present if the holders of at least one-third of issued and outstanding shares entitled
to vote at the meeting are represented in person or by proxy. Our Sponsor, officers and directors will count toward this quorum and,
pursuant to the letter agreement, our Sponsor, officers and directors have agreed to vote their Founder Shares and any Public Shares
purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of our
initial Business Combination (including any proposals recommended by the Companys board of directors in connection with such Business
Combination) (except with respect to any Public Shares which may not be voted in favor of approving the Business Combination transaction
in accordance with the requirements of Rule 14e-5 under the Exchange Act and any SEC interpretations or guidance relating thereto). For
purposes of seeking approval of an ordinary resolution, non-votes will have no effect on the approval of our initial Business Combination
once a quorum is obtained. As a result, in addition to our initial shareholders Founder Shares, we would need 5,744,250, or 33.3%,
of the 17,250,000 Public Shares sold in the Initial Public Offering to be voted in favor of an initial Business Combination in order
to have our initial Business Combination approved, assuming all outstanding shares are voted and the parties to the letter agreement
do not acquire any Class A ordinary shares. Assuming that only the holders of one-third of our issued and outstanding ordinary shares,
representing a quorum under our Amended and Restated Memorandum and Articles of Association, vote their ordinary shares at a general
meeting of the Company, we will not need any Public Shares in addition to our Founder Shares to be voted in favor of an initial Business
Combination in order to approve an initial Business Combination. However, if our initial Business Combination is structured as a statutory
merger or consolidation with another company under Cayman Islands law, the approval of our initial Business Combination will require
the approval of a special resolution, which requires the affirmative vote of at least two-thirds of the votes cast by such shareholders
as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the Company.
Assuming all outstanding shares are voted at a special meeting of the Company and the parties to the letter agreement do not acquire
any Class A ordinary shares, we will need 9,584,100, or 55.56%, of the 17,250,000 Public Shares in addition to our initial shareholders
Founder Shares to be voted in favor of an initial Business Combination in order to approve an initial Business Combination. Assuming
that only the holders of one-third of our issued and outstanding ordinary shares, representing a quorum under our Amended and Restated
Memorandum and Articles of Association, vote their ordinary shares at a special meeting of the Company, we will not need any Public Shares
in addition to our Founder Shares to be voted in favor of an initial Business Combination in order to approve an initial Business Combination.
In addition, prior to the closing of our initial Business Combination, only holders of our Class B ordinary shares (i) will have the
right to appoint and remove directors prior to or in connection with the completion of our initial Business Combination and (ii) will
be entitled to vote on continuing our Company in a jurisdiction outside the Cayman Islands (including any special resolution required
to amend our constitutional documents or to adopt new constitutional documents, in each case, as a result of our approving a transfer
by way of continuation in a jurisdiction outside the Cayman Islands). These quorum and voting thresholds, and the voting agreement of
our Sponsor, officers and directors, may make it more likely that we will consummate 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, or whether they do
not vote or abstain from voting on the proposed transaction, or whether they were a public shareholder on the record date for the general
meeting held to approve the proposed transaction.
If a shareholder vote is not required and we
do not decide to hold a shareholder vote for business or other legal reasons, we will:
|
| conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and | |
|
| file
tender offer documents with the SEC prior to completing our initial Business Combination
which contain substantially the same financial and other information about the initial Business
Combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. | |
9
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial Business Combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on Public Shareholders not tendering more than the number of Public Shares
we are permitted to redeem. If Public Shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer
and not complete the initial Business Combination.
Upon the public announcement of our initial Business
Combination, if we elect to conduct redemption pursuant to the tender offer rules, we or our Sponsor will terminate any plan established
in accordance with Rule 10b5-1 to purchase our Class A ordinary shares in the open market, in order to comply with Rule 14e-5 under the
Exchange Act.
We intend to require our Public Shareholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name, to, at
the holders option, either deliver their share certificates to our transfer agent or deliver their shares to our transfer agent
electronically using the Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth
in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business
days prior to the scheduled vote on the proposal to approve the initial Business Combination. In addition, if we conduct redemptions
in connection with a shareholder vote, we intend to require a Public Shareholders seeking redemption of its Public Shares to also submit
a written request for redemption to our transfer agent two business days prior to the scheduled vote in which the name of the beneficial
owner of such shares is included. The proxy materials or tender offer documents, 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. We believe that this will allow our transfer agent to efficiently process any redemptions without the need
for further communication or action from the redeeming Public Shareholders, which could delay redemptions and result in additional administrative
cost. If the proposed initial Business Combination is not approved and we continue to search for a target company, we will promptly return
any certificates or shares delivered by Public Shareholders who elected to redeem their shares.
Our proposed initial Business Combination may
impose a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or
other general corporate purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration
we would be required to pay for all Public Shares that are validly submitted for redemption plus any amount required to satisfy cash
conditions pursuant to the terms of the proposed initial Business Combination exceed the aggregate amount of cash available to us, we
will not complete the initial Business Combination or redeem any shares, and all Public Shares submitted for redemption will be returned
to the holders thereof. We may, however, raise funds through the issuance of equity or equity-linked securities or through loans, advances
or other indebtedness in connection with our initial Business Combination, including pursuant to forward purchase agreements or backstop
arrangements we may enter into following consummation of our Initial Public Offering, in order to, among other reasons, satisfy such
net tangible assets or minimum cash requirements.
****
10
****
**Limitation on Redemption Upon Completion
of Our Initial Business Combination If We Seek Shareholder Approval**
If we seek shareholder approval of our initial
Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer
rules, our Amended and Restated Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate
of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the
Public Shares without our prior consent, which we refer to as the Excess Shares. We believe this restriction will discourage
shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their
redemption rights against a proposed Business Combination as a means to force us or our management to purchase their shares at a significant
premium to the then-current market price or on other undesirable terms. Absent this provision, a Public Shareholder holding more than
an aggregate of 15% of the shares sold in our Initial Public Offering could threaten to exercise its redemption rights if such holders
shares are not purchased by us, our Sponsor or our management at a premium to the then-current market price or on other undesirable terms.
By limiting our shareholders ability to redeem no more than 15% of the shares sold in our Initial Public Offering without our
prior consent, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to
complete our initial Business Combination, particularly in connection with a Business Combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our shareholders
ability to vote all of their shares (including Excess Shares) for or against our initial Business Combination.
****
**Delivering Share Certificates in Connection
with the Exercise of Redemption Rights**
As described above, we intend to require our
Public Shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street
name, to, at the holders option, either deliver their share certificates to our transfer agent or deliver their shares
to our transfer agent electronically using the Depository Trust Companys DWAC (Deposit/Withdrawal At Custodian) system, prior
to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may
be up to two business days prior to the scheduled vote on the proposal to approve the initial Business Combination. In addition, if we
conduct redemptions in connection with a shareholder vote, we intend to require a Public Shareholder seeking redemption of its Public
Shares to also submit a written request for redemption to our transfer agent two business days prior to the scheduled vote in which the
name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, 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 Shareholders would have up to two business days prior to the scheduled vote
on the initial Business Combination if we distribute proxy materials, or from the time we send out our tender offer materials until the
close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights.
In the event that a shareholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials,
as applicable, its shares may not be redeemed. 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
process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge
the broker submitting or tendering shares a fee of approximately $100 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 submit or 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.
Any request to redeem such shares, once made,
may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, 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.
11
If our initial Business Combination is not approved
or completed for any reason, then our Public Shareholders who elected to exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the Trust Account. In such case, we will promptly return any certificates delivered
by Public Shareholders who elected to redeem their shares.
If our initial proposed Business Combination
is not completed, we may continue to try to complete a Business Combination with a different target until the end of the Completion Window.
****
**Redemption of Public Shares and Liquidation
if No Initial Business Combination**
Our Amended and Restated Memorandum and Articles
of Association provide that we will have only the duration of the Completion Window to complete our initial Business Combination. If
we have not completed our initial Business Combination within such time period, we will as promptly as reasonably possible but not more
than ten business days thereafter (and subject to lawfully available funds therefor), redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the
Trust Account (which interest shall be net of amounts not previously released to us for permitted withdrawals and up to $100,000 of interest
to pay liquidation expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish
public shareholders rights as shareholders (including the right to receive further liquidating distributions, if any), subject
to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete
our initial Business Combination within the Completion Window.
Our Sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the Trust Account
with respect to any Founder Shares held by them if we fail to complete our initial Business Combination within the Completion Window,
although they will entitled to liquidating distributions from assets outside the Trust Account. However, if our Sponsor or management
team acquire Public Shares in or after our Initial Public Offering, they will be entitled to liquidating distributions from the Trust
Account with respect to such Public Shares if we fail to complete our initial Business Combination within the allotted Completion Window.
Our Sponsor, officers, directors and director
nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our Amended and Restated Memorandum
and Articles of Association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial
Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Completion
Window or (B) with respect to any other material provisions relating to shareholders rights or pre-initial Business Combination
activity, in each case unless we provide our Public Shareholders with the opportunity to redeem their Public Shares upon approval of
any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account (net of taxes paid or payable) and not previously released to us for permitted
withdrawals, divided by the number of then issued and outstanding Public Shares.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately
$1,300,000 of proceeds held outside the Trust Account and funds we may withdraw from interest earned on the Trust Account pursuant to
permitted withdrawals, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are
not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the Trust Account not required to pay taxes, we may request the trustee to release to us an additional amount of
up to $100,000 of such accrued interest to pay those costs and expenses.
12
If we were to expend all of the net proceeds
of our Initial Public Offering and the sale of the Private Placement Warrants, other than the proceeds deposited in the Trust Account,
and without taking into account interest, if any, earned on the Trust Account less taxes paid or payable, the per-share redemption amount
received by shareholders upon our dissolution would be approximately $10.00. 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 substantially less than $10.00. While we
intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors
claims.
Although we will seek to have all vendors, service
providers, prospective target businesses and 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 consider whether competitive alternatives are reasonably available to us and
will only enter into an agreement with such third party if management believes that such third partys engagement would be in the
best interests of the Company under the circumstances. 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. WithumSmith+Brown, PC, our independent registered public accounting firm, and
the Underwriters will not execute agreements with us waiving such claims to the monies held in the trust account. 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 Sponsor has agreed that it will be liable to us if and to the extent any claims by a third
party for services rendered or products sold to us (except for the Companys independent registered public accounting firm), or
a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement
or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share
and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less
than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes paid or payable and up to $100,000
of interest to pay liquidation expenses, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933 (the Securities Act). However, we have not asked our Sponsor to reserve for such indemnification
obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we
believe that our Sponsors only assets are securities of the Company. Therefore, we cannot assure you that our Sponsor would be
able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available
for our initial Business Combination and redemptions could be reduced to less than $10.00 per Public Share.
In such event, we may not be able to complete
our initial Business Combination, and you would receive such lesser amount per share in connection with any redemption of your Public
Shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
13
In the event that the proceeds in the Trust Account
are reduced below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as
of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets,
in each case less taxes paid or payable and up to $100,000 of interest to pay liquidation expenses, and our Sponsor asserts that it is
unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its 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, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount
recoverable or if the independent directors determine that a favorable outcome is not likely. 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 $10.00 per share.
We will seek to reduce the possibility that our
Sponsor 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 Sponsor will also not be liable as to any claims under our indemnity of the
Underwriters against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately
$1,300,000 from the proceeds of the Initial Public Offering 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 $100,000). 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.
If we file a bankruptcy or winding-up petition
or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the proceeds held in the Trust Account
could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy or insolvency estate and subject to
the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy or insolvency claims deplete
the Trust Account, we cannot assure you we will be able to return $10.00 per share to our Public Shareholders. Additionally, if we file
a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, any
distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy/insolvency laws as either a
preferential transfer or a fraudulent conveyance, preference or disposition. As a result, a liquidator or
bankruptcy, insolvency or other court could seek to recover some or all amounts received by our shareholders. Furthermore, our board
of directors may be viewed as having breached its fiduciary duty to us or our creditors and/or may have acted in bad faith, and thereby
exposing itself and the Company to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our Public Shareholders will be entitled to receive
funds from the Trust Account only (i) in the event of the redemption of our Public Shares if we do not complete our initial Business
Combination within the Completion Window, (ii) in connection with a shareholder vote to amend our Amended and Restated Memorandum and
Articles of Association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial Business
Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Completion Window
or (B) with respect to any other material provisions relating to shareholders rights or pre-initial Business Combination activity
or (iii) if they redeem their respective shares for cash in connection with the completion of our initial Business Combination. In no
other circumstances will a shareholder have any right or interest of any kind to or in the Trust Account. In the event that we seek shareholder
approval in connection with our initial Business Combination, a shareholders voting in connection with the Business Combination
alone will not result in a shareholders 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. These provisions of our Amended and Restated Memorandum and
Articles of Association, like all provisions of our Amended and Restated Memorandum and Articles of Association, may be amended with
a shareholder vote.
****
14
****
**Competition**
In identifying, evaluating and selecting a target
business for our initial Business Combination, we may encounter competition from other entities having a business objective similar to
ours, including other special purpose acquisition companies, private equity groups and leveraged buyout funds, public companies 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 similar or greater financial,
technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our Public Shareholders who exercise their redemption rights may reduce the resources available to us
for our initial Business Combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed
favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating
an initial Business Combination.
****
**Emerging Growth Company and Smaller Reporting
Company**
We are an emerging growth company,
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act).
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also
provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to
take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our Initial Public Offering,
(b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our Class A Ordinary Shares that are held by non-affiliates exceeds $700 million as of the prior June
30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year
period.
15
Additionally, we are a smaller reporting
company as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates is equal to
or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled to or exceeded $100 million during such completed
fiscal year and the market value of our ordinary shares held by non-affiliates is equal to or exceeds $700 million as of the prior June
30th.
****
**Recent Developments**
On January 13, 2026 the Company and Old Glory
Banks Bank Holding Company (Old Glory Bank), entered into a definitive business combination agreement to create
OGB Financial Company, a Texas corporation to be listed on Nasdaq under the reserved ticker symbol OGB. Old Glory Bank
is a digital-first financial institution focused on personal and small-business banking services.
The transaction is expected to be funded by a
combination of the Companys Trust Account and expected proceeds from a public investment in private equity (PIPE). Existing
Old Glory Bank investors will rollover 100% of their equity as part of the transaction. The closing of the transaction is expected to
occur in the second quarter of 2026 and is subject to approval by the shareholders of the parties and other customary closing conditions,
including regulatory approval.
****
**ITEM 1A. RISK FACTORS.**
**
*An investment in our securities involves a
high degree of risk. If any of the following events occur, our business, financial condition and operating results may be materially
adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.*
****
**Risks Relating to our Search for, and Consummation
of or Inability to Consummate, a Business Combination**
****
**Our Public Shareholders may not be afforded
an opportunity to vote on our proposed initial Business Combination, and even if we hold a vote, holders of our Founder Shares will participate
in such vote, which means we may complete our initial Business Combination even though a majority of our Public Shareholders do not support
such a combination.**
We may choose not to hold a shareholder vote
to approve our initial Business Combination unless the Business Combination would require shareholder approval under applicable law or
stock exchange listing requirements. In such case, the decision as to whether we will seek shareholder approval of a proposed Business
Combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and
will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise
require us to seek shareholder approval. Even if we seek shareholder approval, the holders of our Founder Shares will participate in
the vote on such approval. Accordingly, we may complete our initial Business Combination even if holders of a majority of our ordinary
shares do not approve of the Business Combination we complete. Please see the section entitled *Item 1. Business Effecting
Our Initial Business Combination Shareholders May Not Have the Ability to Approve Our Initial Business Combination*
for additional information.
****
16
****
**If we seek shareholder approval of our
initial Business Combination, our initial shareholders and management team have agreed to vote in favor of such initial Business Combination,
regardless of how our Public Shareholders vote, and we may not need any Public Shares in addition to our Founder Shares to be voted in
favor of an initial Business Combination in order to approve an initial Business Combination.**
Our initial shareholders own 25% of our issued
and outstanding ordinary shares. Our initial shareholders and management team also may from time to time purchase Class A ordinary shares
prior to our initial Business Combination. Our Amended and Restated Memorandum and Articles of Association provides that, if we seek
shareholder approval of an initial Business Combination, such initial Business Combination will be approved if we obtain the approval
of an ordinary resolution under Cayman Islands law and our Amended and Restated Memorandum and Articles of Association, which requires
the affirmative vote of at least a majority of the votes cast by such shareholders as, being entitled to do so, vote in person or, where
proxies are allowed, by proxy at the applicable general meeting of the company. As a result, in addition to our initial shareholders
Founder Shares, we would need 5,744,250, or 33.3%, of the 17,250,000 Public Shares sold in our Initial Public Offering to be voted in
favor of an initial Business Combination in order to have our initial Business Combination approved, assuming all outstanding shares
are voted and the parties to the letter agreement do not acquire any Class A ordinary shares. Assuming that only the holders of one-third
of our issued and outstanding ordinary shares, representing a quorum under our Amended and Restated Memorandum and Articles of Association,
vote their ordinary shares at a general meeting of the Company, we will not need any Public Shares in addition to our Founder Shares
to be voted in favor of an initial Business Combination in order to approve an initial Business Combination. However, if our initial
Business Combination is structured as a statutory merger or consolidation with another company under Cayman Islands law, the approval
of our initial Business Combination will require the approval of a special resolution, which requires the affirmative vote of at least
two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy
at the applicable general meeting of the company. Assuming all outstanding shares are voted at a special meeting of the company and the
parties to the letter agreement do not acquire any Class A ordinary shares, we will need 9,584,100, or 55.56%, Public Shares in addition
to our Founder Shares to be voted in favor of an initial Business Combination in order to approve an initial Business Combination. Assuming
that only the holders of one-third of our issued and outstanding ordinary shares, representing a quorum under our Amended and Restated
Memorandum and Articles of Association, vote their ordinary shares at a special meeting of the company, we will not need any Public Shares
in addition to our Founder Shares to be voted in favor of an initial Business Combination in order to approve an initial Business Combination.
Accordingly, if we seek shareholder approval of our initial Business Combination, the agreement by our initial shareholders and management
team to vote in favor of our initial Business Combination will increase the likelihood that an ordinary resolution will be passed, being
the requisite shareholder approval for such initial Business Combination.
****
**Your only opportunity to effect your investment
decision regarding a potential Business Combination may be limited to the exercise of your right to redeem your shares from us for cash.**
You will not be provided with an opportunity
to evaluate the specific merits or risks of our initial Business Combination. Since our board of directors may complete a Business Combination
without seeking shareholder approval, Public Shareholders may not have the right or opportunity to vote on the Business Combination,
unless we seek such shareholder vote. Accordingly, your only opportunity to effect your investment decision regarding our initial Business
Combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set
forth in our tender offer documents mailed to our Public Shareholders in which we describe our initial Business Combination. The per
share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting
commission and after such redemptions, the per-share value of shares held by non-redeeming shareholders will reflect our obligation to
pay the deferred underwriting commissions.
****
17
****
**The ability of our Public Shareholders
to redeem their shares for cash may make our financial condition unattractive to potential Business Combination targets, which may make
it difficult for us to enter into a Business Combination with a target.**
We may seek to enter into a Business Combination
transaction agreement with a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for
working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If too many Public Shareholders
exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed
with the Business Combination. Consequently, if accepting all properly submitted redemption requests would not allow us to satisfy a
closing condition as described above, we would not proceed with such redemption and the related Business Combination and may instead
search for an alternate Business Combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a Business Combination transaction with us.
****
**The ability of our Public Shareholders
to exercise redemption rights with respect to a large number of our shares and the amount of deferred underwriting compensation may not
allow us to complete the most desirable Business Combination or optimize our capital structure, and may substantially dilute your investment
in us.**
At the time we enter into an agreement for our
initial Business Combination, we will not know how many shareholders may exercise their redemption rights, and therefore will need to
structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial
Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us
to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements,
or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected,
we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for third party financing.
Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable
levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B ordinary shares results
in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares immediately
prior to, concurrently with or immediately following the consummation of our initial Business Combination. The above considerations may
limit our ability to complete the most desirable Business Combination available to us or optimize our capital structure. As a result,
our obligations to redeem Public Shares for which redemption is requested and to pay the deferred underwriting commissions may not allow
us to complete the most desirable Business Combination or optimize our capital structure.
In addition, raising additional third-party financing
may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would
increase to the extent that the anti-dilution provisions of the Class B ordinary shares result in the issuance of Class A ordinary shares
on a greater than one-to-one basis upon conversion of the Class B ordinary shares at the time of our Business Combination. The above
considerations may limit our ability to complete the most desirable Business Combination available to us or optimize our capital structure
and may result in substantial dilution from your purchase of our Class A ordinary shares. The effect of this dilution will be greater
for shareholders who do not redeem. We may not be able to generate sufficient value from the completion of our initial Business Combination
in order to overcome the dilutive impact of these and other factors, and, accordingly, you may incur a net loss on your investment. Please
see *Risks Relating to Our Securities The nominal purchase price paid by our Sponsor for the Founder Shares
may result in significant dilution to the implied value of your Public Shares upon the consummation of our initial Business Combination,
and our Sponsor is likely to make a substantial profit on its investment in us in the event we consummate an initial Business Combination,
even if the Business Combination causes the trading price of our ordinary shares to materially decline*.
****
18
****
**The ability of our Public Shareholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial Business Combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.**
If our initial Business Combination agreement
requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial Business Combination would be unsuccessful is increased. If our initial Business Combination
is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account until we liquidate the Trust Account.
If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares
may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on
your investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate or you
are able to sell your shares in the open market.
****
**The requirement that we complete our initial
Business Combination within the Completion Window may give potential target businesses leverage over us in negotiating a Business Combination
and may limit the time we have in which to conduct due diligence on potential Business Combination targets, in particular as we approach
our liquidation deadline, which could undermine our ability to complete our initial Business Combination on terms that would produce
value for our shareholders.**
Any potential target business with which we enter
into negotiations concerning a Business Combination will be aware that we must complete our initial Business Combination within the Completion
Window. Consequently, such target business may obtain leverage over us in negotiating a Business Combination, knowing that if we do not
complete our initial Business Combination with that particular target business, we may be unable to complete our initial Business Combination
with any target business. This risk will increase as we get closer to the 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. The length of time it may take us to complete our diligence and negotiate a Business Combination may reduce the amount
of time available for us to ultimately complete an initial Business Combination should such diligence or negotiations not lead to a consummated
initial Business Combination.
****
**We may engage one or more of our underwriters
or one of their respective affiliates to provide additional services to us after our Initial Public Offering, which may include acting
as M&A advisor in connection with an initial Business Combination or as placement agent in connection with a related financing transaction.
Our underwriters are entitled to receive deferred underwriting commissions that will be released from the Trust Account only upon completion
of an initial Business Combination. These financial incentives may cause them to have potential conflicts of interest in rendering any
such additional services to us after our Initial Public Offering, including, for example, in connection with the sourcing and consummation
of an initial Business Combination.**
We may engage one or more of our underwriters
or one of their respective affiliates to provide additional services to us after our Initial Public Offering, including, for example,
identifying potential targets, providing M&A advisory services, acting as a placement agent in a private offering or arranging debt
financing transactions. We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined
at that time in an arms length negotiation; provided that no agreement will be entered into with any of the underwriters or their
respective affiliates and no fees or other compensation for such services will be paid to any of the underwriters or their respective
affiliates prior to the date that is 60 days from the date of the Initial Public Offering, unless such payment would not be deemed underwriters
compensation in connection with the Initial Public Offering.
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The underwriters are also entitled to receive
deferred underwriting commissions that are conditioned on the completion of an initial Business Combination. The underwriters
or their respective affiliates financial interests tied to the consummation of a Business Combination transaction may give rise
to potential conflicts of interest in providing any such additional services to us, including potential conflicts of interest in connection
with the sourcing and consummation of an initial Business Combination. The underwriters are under no obligation to provide any further
services to us in order to receive all or any part of the deferred underwriting commissions.
****
**We may not be able to complete our initial
Business Combination within the Completion Window, in which case we would redeem our Public Shares.**
We may not be able to find a suitable target
business and complete our initial Business Combination within the Completion Window after the closing of our Initial Public Offering.
In recent years, a number of SPACs have liquidated due to an inability to complete an initial Business Combination within their allotted
time periods. Furthermore, our ability to complete our initial Business Combination may be negatively impacted by general market conditions,
volatility in the capital and debt markets and the other risks described herein, including the impact of events such as the conflict
between Russia and Ukraine and the war between Israel and Hamas. If we have not completed our initial Business Combination within such
time period, we will as promptly as reasonably possible but not more than ten business days thereafter (and subject to lawfully available
funds therefor), redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account (which interest shall be net of amounts not previously
released to us for permitted withdrawals and up to $100,000 of interest to pay liquidation expenses), divided by the number of then issued
and outstanding Public Shares, which redemption will completely extinguish Public Shareholders rights as shareholders (including
the right to receive further liquidating distributions, if any), subject to our obligations under Cayman Islands law to provide for claims
of creditors and the requirements of other applicable law. In such case, our Public Shareholders may only receive $10.00 per share, or
possibly less, and our warrants will expire without value to the holder. In certain circumstances, our Public Shareholders may receive
less than $10.00 per share on the redemption of their shares. See *If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share*
and other risk factors described in this *Risk Factors* section.
****
**We may decide not to extend the term we
have to consummate our initial Business Combination, in which case we would redeem our Public Shares, and the warrants may be worthless.**
We have until the date that is 18 months from
our Initial Public Offering (or 21 months from Initial Public Offering if we have executed a definitive agreement for an initial Business
Combination within 18 months from Initial Public Offering) or until such earlier liquidation date as our board of directors may approve,
to consummate our initial Business Combination. If we anticipate that we may be unable to consummate our initial Business Combination
within such period, we may seek shareholder approval to amend our Amended and Restated Memorandum and Articles of Association to extend
the date by which we must consummate our initial Business Combination. However, we may decide not to seek to extend the date by which
we must consummate our initial Business Combination. If we do not seek to extend the date by which we must consummate our initial Business
Combination, and we are unable to consummate our initial Business Combination within the applicable time period, we will as promptly
as reasonably possible but not more than ten business days thereafter (and subject to lawfully available funds therefor), redeem the
Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest
earned on the funds held in the Trust Account (which interest shall be net of amounts not previously released to us for permitted withdrawals
and up to $100,000 of interest to pay liquidation expenses), divided by the number of then issued and outstanding public shares, which
redemption will completely extinguish Public Shareholders rights as shareholders (including the right to receive further liquidating
distributions, if any), subject to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of
other applicable law. In such event, the warrants may be worthless.
****
20
****
**If we seek shareholder approval of our
initial Business Combination, our Sponsor, initial shareholders, directors, officers, advisors and their affiliates may elect to purchase
Public Shares or Public Warrants from Public Shareholders, which may influence a vote on a proposed Business Combination and reduce the
public float of our Class A ordinary shares or Public Warrants.**
If we seek shareholder approval of our initial
Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer
rules, our Sponsor, initial shareholders, directors, officers, advisors and their affiliates may purchase Public Shares or Public Warrants
in privately negotiated transactions or in the open market either prior to or following the completion of our initial Business Combination,
although they are under no obligation or duty to do so. Such a purchase may include a contractual acknowledgment that such shareholder,
although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. In the event that our Sponsor, initial shareholders, directors, officers, advisors and 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. It is intended that, if Rule 10b-18 would apply to purchases
by our Sponsor, initial shareholders, directors, officers, advisors and their affiliates, then such purchases will comply with Rule 10b-18
under the Exchange Act, to the extent it applies, which provides a safe harbor for purchases made under certain conditions, including
with respect to timing, pricing and volume of purchases.
Additionally, at any time at or prior to our
initial Business Combination, subject to applicable securities laws (including with respect to material nonpublic information), our Sponsor,
initial shareholders, directors, officers, advisors and their affiliates may enter into transactions with investors and others to provide
them with incentives to acquire Public Shares, vote their Public Shares in favor of our initial Business Combination or not redeem their
Public Shares. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase Public Shares or Public
Warrants in such transactions.
The purpose of any such transactions could be
to (1) increase the likelihood of obtaining shareholder approval of the Business Combination, (2) reduce the number of Public Warrants
outstanding and/or increase the likelihood of approval on any matters submitted to the Public Warrants holders for approval in connection
with our initial Business Combination or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial Business Combination, where it appears that such requirement would
otherwise not be met. Any such purchases of our securities may result in the completion of our initial Business Combination that may
not otherwise have been possible.
In addition, if such purchases are made, the
public float of our securities may be reduced and the number of beneficial holders of our securities may be reduced, which
may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Any
such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to
such reporting requirements. Additionally, in the event our Sponsor, initial shareholders, directors, officers, advisors and their affiliates
were to purchase Public Shares or Public Warrants from Public Shareholders after the announcement of our initial Business Combination,
such purchases would be structured in compliance with the requirements of Rule 14e-5 under the Exchange Act including, in pertinent part,
through adherence to the following:
|
| our registration statement/proxy
statement filed for our Business Combination transaction would disclose the possibility that
our Sponsor, initial shareholders, directors, officers, advisors and their affiliates may
purchase Public Shares or Public Warrants from Public Shareholders outside the redemption
process, along with the purpose of such purchases; | |
21
|
| if our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates were to purchase Public Shares or Public
Warrants from Public Shareholders, they would do so at a price no higher than the price offered
through our redemption process; | |
|
| | | |
|
| our registration statement/proxy
statement filed for our Business Combination transaction would include a representation that
any of our securities purchased by our Sponsor, initial shareholders, directors, officers,
advisors and their affiliates would not be voted in favor of approving the Business Combination
transaction; | |
|
| | | |
|
| our Sponsor, initial shareholders,
directors, officers, advisors and their affiliates would not possess any redemption rights
with respect to our securities or, if they do acquire and possess redemption rights, they
would waive such rights; and | |
|
| | | |
|
| we would disclose in a Form 8-K,
before our security holder meeting to approve the Business Combination transaction, the following
material items: | |
|
| | | |
|
| the amount of our securities purchased
outside of the redemption offer by our Sponsor, initial shareholders, directors, officers,
advisors and their affiliates, along with the purchase price; | |
|
| | | |
|
| the purpose of the purchases by our
Sponsor, initial shareholders, directors, officers, advisors and their affiliates; | |
|
| | | |
|
| the impact, if any, of the purchases
by our Sponsor, initial shareholders, directors, officers, advisors and their affiliates
on the likelihood that the Business Combination transaction will be approved; | |
|
| | | |
|
| the identities of our security holders
who sold to our Sponsor, initial shareholders, directors, officers, advisors and their affiliates
(if not purchased on the open market) or the nature of our security holders (e.g., 5% security
holders) who sold to our Sponsor, initial shareholders, directors, officers, advisors and
their affiliates; and | |
|
| | | |
|
| the number of our securities for which
we have received redemption requests pursuant to our redemption offer. | |
Please see *Item 1. Business
Effecting Our Initial Business Combination Permitted Purchases of Our Securities* for a description of how such persons
will determine from which shareholders to seek to acquire securities.
****
**If a shareholder fails to receive notice
of our offer to redeem our Public Shares in connection with our initial Business Combination, or fails to comply with the procedures
for submitting or tendering its shares, such shares may not be redeemed.**
We will comply with the proxy rules or tender
offer rules, as applicable, when conducting redemptions in connection with our initial Business Combination. Despite our compliance with
these rules, if a shareholder fails to receive our proxy materials or tender offer documents, as applicable, such shareholder may not
become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we
will furnish to holders of our Public Shares in connection with our initial Business Combination will describe the various procedures
that must be complied with in order to validly tender or submit public shares for redemption. For example, we intend to require our Public
Shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name,
to, at the holders option, either deliver their share certificates to our transfer agent, or to deliver their shares to our transfer
agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the scheduled vote on the proposal to approve the initial Business Combination.
In addition, if we conduct redemptions in connection with a shareholder vote, we intend to require a Public Shareholder seeking redemption
of its Public Shares to also submit a written request for redemption to our transfer agent two business days prior to the scheduled vote
in which the name of the beneficial owner of such shares is included. In the event that a shareholder fails to comply with these or any
other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. See the section entitled
*Item 1. Business Effecting Our Initial Business Combination Delivering Share Certificates in Connection with
the Exercise of Redemption Rights.*
****
22
****
**You will not be entitled to protections
normally afforded to investors of other blank check companies subject to Rule 419 of the Securities Act.**
Since the net proceeds of our Initial Public
Offering and the sale of the Private Placement Warrants are intended to be used to complete one or more initial Business Combinations
with a target business or businesses that has not been selected, we may be deemed to be a blank check company under the
United States securities laws. However, because we will be listed on a national securities exchange meeting certain quantitative requirements
set out in Rule 3a51-1(a)(2) of the Exchange Act, we are exempt from rules promulgated by the SEC to protect investors in blank check
companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things,
this means our Units will be immediately tradable and we will have a longer period of time to complete our respective initial Business
Combinations than do companies subject to Rule 419.
Moreover, if our Initial Public Offering were
subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the Trust Account to us unless and
until the funds in the Trust Account were released to us in connection with our completion of an initial Business Combination.
However, if we are not able to list our ordinary
shares on Nasdaq or any other national stock exchange, and if we fail to have net tangible assets in excess of $5,000,000, we may be
required to comply with the penny stock rules and this could negatively affect the market for our securities and our ability
to complete an initial Business Combination.
****
**If we seek shareholder approval of our
initial Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a group
of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you may lose the ability to redeem all such shares
in excess of 15% of our Class A ordinary shares.**
If we seek shareholder approval of our initial
Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer
rules, our Amended and Restated 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 redeeming its shares with respect to more than an aggregate of 15% of the then
outstanding public shares, which we refer to as the Excess Shares, without our prior consent. However, we would not be
restricting our shareholders ability to vote all of their shares (including Excess Shares) for or against our initial Business
Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial Business
Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally,
you will not receive redemption distributions with respect to the Excess Shares if we complete our initial Business Combination. And
as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required
to sell your shares in open market transactions, potentially at a loss.
****
23
****
**Because of our limited resources and the
significant competition for Business Combination opportunities, it may be more difficult for us to complete our initial Business Combination.
If we are unable to complete our initial Business Combination, our Public Shareholders may receive only their pro rata portion of the
funds in the Trust Account that are available for distribution to Public Shareholders, and our warrants will expire worthless.**
We expect to encounter 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 similar or greater
technical, human and other resources to ours 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 our Initial Public Offering and the sale of the Private Placement Warrants, our ability to compete with
respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated
to offer holders of our Public Shares the right to redeem their shares for cash at the time of our initial Business Combination in conjunction
with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for
our initial Business Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business
Combination. If we are unable to complete our initial Business Combination, our Public Shareholders may receive only their pro rata portion
of the funds in the Trust Account that are available for distribution to Public Shareholders, and our warrants will expire worthless.
****
**If the net proceeds of our Initial Public
Offering and the sale of the Private Placement Warrants not being held in the Trust Account are insufficient to allow us to operate for
at least the duration of the Completion Window, it could limit the amount available to fund our search for a target business or businesses
and complete our initial Business Combination, and we will depend on loans from our Sponsor or management team to fund our search and
to complete our initial Business Combination.**
Of the net proceeds of our Initial Public Offering,
only $1,300,000 will be available to us initially outside the Trust Account to fund our working capital requirements. We believe that
the funds available to us outside of the Trust Account will be sufficient to allow us to operate for at least the duration of the Completion
Window; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds
available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds
as a down payment or to fund a no-shop provision (a provision in letters of intent or merger agreements designed to keep
target businesses from shopping around for transactions with other companies or investors on terms more favorable to such
target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so.
If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and
were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds
to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional capital,
we would need to borrow funds from our Sponsor, management team or other third parties to operate or may be forced to liquidate. Neither
our Sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our
initial Business Combination. Up to $1,500,000 of such loans may be convertible into private placement warrants of the post-Business
Combination entity at a price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement
Warrants. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor
or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any
and all rights to seek access to funds in our Trust Account. If we are unable to complete our initial Business Combination because we
do not have sufficient funds available to us, we will be forced to liquidate the Trust Account. Consequently, our Public Shareholders
may only receive an estimated $10.00 per share, or possibly less, on our redemption of our Public Shares, and our warrants will expire
worthless.
****
24
****
**If third parties bring claims against us,
the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than
$10.00 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 and 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with
such third party if management believes that such third partys engagement would be in the best interests of the company under
the circumstances. WithumSmith+Brown, PC, our independent registered public accounting firm, and the Underwriters of our Initial Public
Offering will not execute agreements with us waiving such claims to the monies held in the Trust Account.
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 prescribed timeframe, 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 $10.00 per Public Share initially held in the Trust Account, due to claims of such creditors. Pursuant to the
letter agreement, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered
or products sold to us (except for the Companys independent registered public accounting firm), or a prospective target business
with which we have entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement,
reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public
Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions
in the value of the trust assets, in each case less taxes paid or payable and up to $100,000 of interest to pay for liquidation expenses,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under
our indemnity of the Underwriters against certain liabilities, including liabilities under the Securities Act. However, we have not asked
our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds
to satisfy its indemnity obligations and we believe that our Sponsors only assets are securities of our company. Therefore, we
cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made
against the Trust Account, the funds available for our initial Business Combination and redemptions could be reduced to less than $10.00
per Public Share. In such event, we may not be able to complete our initial Business Combination, and you would receive such lesser amount
per share in connection with any redemption of your Public Shares. None of our officers or directors will indemnify us for claims by
third parties including, without limitation, claims by vendors and prospective target businesses.
****
25
****
**Our directors may decide not to enforce
the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution
to our Public Shareholders.**
In the event that the proceeds in the Trust Account
are reduced below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as
of the date of the liquidation of the Trust Account if less than $10.00 per Public Share due to reductions in the value of the trust
assets, in each case less taxes paid or payable and up to $100,000 of interest to pay liquidation expenses, and our Sponsor asserts that
it is unable to satisfy his, her or its obligations or that he has no indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While
we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not
likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account
available for distribution to our Public Shareholders may be reduced below $10.00 per Public Share.
****
**We may not have sufficient funds to satisfy
indemnification claims of our directors and officers.**
We have agreed to indemnify our officers and
directors to the fullest extent permitted by law, including for any liability incurred in their capacities as such, except through their
own actual fraud, willful default or willful neglect. However, our officers and directors have agreed to waive any right, title, interest
or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever
(except to the extent they are entitled to funds from the Trust Account due to their ownership of Public Shares). Accordingly, any indemnification
provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate an
initial Business Combination. Our obligation to indemnify our officers and directors may discourage shareholders from bringing a lawsuit
against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood
of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and
our shareholders. Furthermore, a shareholders investment may be adversely affected to the extent we pay the costs of settlement
and damage awards against our officers and directors pursuant to these indemnification provisions.
****
**If, after we distribute the proceeds in
the Trust Account to our Public Shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up
petition is filed against us that is not dismissed, a liquidator or a bankruptcy, insolvency or other court may seek to recover such
proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to us or our creditors, thereby
exposing the members of our board of directors and us to claims of punitive damages.**
If, after we distribute the proceeds in the Trust
Account to our Public Shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is
filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or
bankruptcy/insolvency laws as either a preferential transfer or a fraudulent conveyance, preference or disposition.
As a result, a liquidator or a bankruptcy, insolvency or other court could seek to recover some or all amounts received by our shareholders.
In addition, our board of directors may be viewed as having breached its fiduciary duty to us or our creditors and/or having acted in
bad faith, thereby exposing itself and us to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to
addressing the claims of creditors.
****
26
****
**If, before distributing the proceeds in
the Trust Account to our Public Shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be
reduced.**
If, before distributing the proceeds in the Trust
Account to our Public Shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is
filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy or insolvency
law, and may be included in our bankruptcy or insolvency estate and subject to the claims of third parties with priority over the claims
of our shareholders. To the extent any bankruptcy or insolvency claims deplete the Trust Account, the per-share amount that would otherwise
be received by our shareholders in connection with our liquidation may be reduced.
**Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
Business Combination, 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
and numerous complex tax laws. 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, including our ability to negotiate
and complete our initial Business Combination, and results of operations.
On January 24, 2024, the SEC adopted a series
of new rules relating to SPACs (the SPAC Rules) requiring, among other items, (i) additional disclosures relating to SPAC
business combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving Sponsors and
their affiliates in both SPAC initial public offerings and de-SPAC transactions; (iii) the use of projections by SPACs in SEC filings
in connection with proposed Business Combination transactions; and (iv) both the SPAC and the target companys status as co-registrants
on de-SPAC registration statements.
In addition, the SECs adopting release
provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including
its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals.
Compliance with the SPAC Rules and related guidance
may increase the costs of and the time needed to negotiate and complete an initial Business Combination and may constrain the circumstances
under which we could complete an initial Business Combination.
****
**If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial Business Combination.**
As described in the risk factor above entitled
*Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including
our ability to negotiate and complete our initial Business Combination, and results of operations*, the SECs adopting
release with respect to the SPAC Rules provided guidance describing the extent to which SPACs could become subject to regulation under
the Investment Company Act and the regulations thereunder. Whether a SPAC is an investment company will be a question of facts and circumstances.
If our facts and circumstances change over time, we will update our disclosure to reflect how those changes impact the risk that we may
be considered to be operating as an unregistered investment company. We can give no assurance that a claim will not be made that we have
been operating as an unregistered investment company.
27
If we are deemed to be an investment company under
the Investment Company Act, we may have to change our operations, wind down our operations, or register as an investment company under
the Investment Company Act. Our activities may be restricted, including:
|
| restrictions on the nature of our investments; and | |
|
| restrictions on the issuance of securities, each of which may make it difficult for us to complete our
initial Business Combination. | |
|
| In addition, we may have imposed upon us burdensome requirements, including: | |
|
| registration as an investment company; | |
|
| adoption of a specific form of corporate structure; and | |
|
| reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. | |
In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding
or trading investment securities constituting more than 40% of our total assets (exclusive of U.S. government securities
and cash items) on an unconsolidated basis. Our business will be to identify and complete a Business Combination and thereafter to operate
the post-transaction business or assets for the long term. We do not intend to spend a considerable amount of time actively managing the
assets in the Trust Account for the primary purpose of achieving investment returns. We do not plan to buy businesses or assets with a
view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal
activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be held as cash,
including in demand deposit accounts at a bank, or invested in U.S. government securities within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations; the holding of
these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended Business Combination and may
at any time be held as cash or cash items, including in demand deposit accounts at a bank. Pursuant to the trust agreement, the trustee
is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having
a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner
of a merchant bank or private equity fund), we intend to avoid being deemed an investment company within the meaning of
the Investment Company Act. The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion
of our initial Business Combination; (ii) the redemption of any Public Shares properly submitted in connection with an amendment of our
Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing of our obligation to provide for the
redemption of our Public Shares in connection with an initial Business Combination or to redeem 100% of our Public Shares if we have not
consummated our initial Business Combination within the Completion Window or (B) with respect to any other material provisions relating
to shareholders rights or pre-initial Business Combination activity; or (iii) absent an initial Business Combination within the
Completion Window, our return of the funds held in the Trust Account to our Public Shareholders as part of our redemption of the Public
Shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.
28
Further, under the subjective test of a investment
company pursuant to Section 3(a)(1)(A) of the Investment Company Act, even if the funds deposited in the Trust Account were invested
in the assets discussed above (U.S. government securities or money market funds registered under the Investment Company Act), such assets,
other than cash, are securities for purposes of the Investment Company Act and, therefore, nevertheless, there is a risk
that we could be deemed an unregistered investment company and subject to the Investment Company Act at any time.
In the adopting release for the SPAC Rules, the
SEC provided guidance that a SPACs potential status as an investment company depends on a variety of factors, such
as a SPACs duration, asset composition, business purpose and activities and is a question of facts and circumstances
requiring individualized analysis. If we were deemed to be an unregistered investment company and subject to compliance with and regulation
under the Investment Company Act, we would be subject to additional regulatory burdens and expenses for which we have not allotted funds.
Unless we are able to modify our activities so that we would not be deemed an investment company, we would either register as an investment
company or wind-down and abandon our efforts to complete a Business Combination and instead liquidate the Trust Account. As a result,
our Public Shareholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution
to Public Shareholders and would be unable to realize the potential benefits of an initial Business Combination, including the possible
appreciation of the combined companys securities.
****
**To mitigate the risk that we might be deemed
to be an investment company for purposes of the Investment Company Act, we may, at any time, instruct the trustee to liquidate the securities
held in the Trust Account and instead to hold the funds in the Trust Account in cash until the earlier of the consummation of our initial
Business Combination or our liquidation. As a result, following the liquidation of securities in the Trust Account, the interest earned,
on the funds held in the Trust Account may be materially reduced, which would reduce the dollar amount our Public Shareholders would receive
upon any redemption or liquidation of the Company.**
We intend to initially hold the funds in the Trust
Account as cash, including in demand deposit accounts at a bank, or in U.S. government treasury obligations with a maturity of 185 days
or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7
under the Investment Company Act. U.S. government treasury obligations are considered securities for purposes of the Investment
Company Act, while cash is not. As noted above, one of the factors the SEC identified as relevant to the determination of whether a SPAC
which holds securities could potentially be deemed an investment company under the Investment Company Act is the SPACs
duration. To mitigate the risk of us being deemed to be an unregistered investment company (including under the subjective test of Section
3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act, we may, at any time, instruct
Efficiency, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations or money market funds
held in the Trust Account and thereafter to hold all funds in the Trust Account in cash until the earlier of consummation of our initial
Business Combination or liquidation of the company. Following such liquidation, the rate of interest we receive on the funds held in the
Trust Account may be materially decreased. However, interest previously earned on the funds held in the Trust Account still may be released
to us for permitted withdrawals and certain other expenses as permitted. As a result, any decision to liquidate the securities held in
the Trust Account and thereafter to hold all funds in the Trust Account in cash would reduce the dollar amount our Public Shareholders
would receive upon any redemption or liquidation of the company.
****
29
****
**Our search for a Business Combination, and
any target business with which we ultimately consummate a Business Combination, may be materially adversely affected by the status of
debt and equity markets.**
Our ability to consummate a transaction may be
dependent on the ability to raise equity and debt financing which may be impacted by certain events, including as a result of increased
market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.
****
**Our search for an initial Business Combination,
and any target business with which we may ultimately consummate an initial Business Combination, may be materially adversely affected
by current global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the recent escalation of conflict in
the Middle East and Southwest Asia.**
United States and global markets are experiencing
volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation
of conflict in the Middle East and Southwest Asia. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization
(NATO) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union
and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities,
including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment
system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance
to Ukraine and to Israel, or have undertaken or will undertake military strikes in Southwest Asia, increasing geopolitical tensions among
a number of nations. The invasion of Ukraine by Russia and the escalation of conflict in the Middle East and Southwest Asia and the resulting
measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel
and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and
global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions,
including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased
cyber-attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets
and lead to instability and lack of liquidity in capital markets.
Any of the above mentioned factors, or any other
negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine,
the escalation of conflict in the Middle East and Southwest Asia and subsequent sanctions or related actions, may lead to increased volume
and price volatility for publicly traded securities or could adversely affect our search for an initial Business Combination by adversely
affecting the operations or financial condition of potential target companies, any of which could make it more difficult for us to identify
a Business Combination target and consummate an initial Business Combination on acceptable commercial terms, or at all.
The extent and duration of the ongoing conflicts,
resulting sanctions and any related market disruptions are impossible to predict, but could be substantial, particularly if current or
new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale.
Any such disruptions may also have the effect of heightening many of the other risks described in this section. If these disruptions or
other matters of global concern continue for an extensive period of time, our ability to consummate an initial Business Combination may
be materially adversely affected.
****
30
****
**If we are unable to consummate our initial
Business Combination within the Completion Window, our Public Shareholders may be forced to wait beyond such period before redemption
from our Trust Account.**
If we are unable to consummate our initial Business
Combination within the Completion Window, the proceeds then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account (which interest shall be net of amounts not previously released to us for permitted withdrawals and up to $100,000
of interest to pay liquidation expenses), will be used to fund the redemption of our Public Shares, as further described herein. Any redemption
of Public Shareholders from the Trust Account will be effected automatically by function of our Amended and Restated Memorandum and Articles
of Association prior to any voluntary winding up. If we are required to wind-up, liquidate the Trust Account and distribute such amount
therein, pro rata, to our Public Shareholders, as part of any liquidation process, such winding up, liquidation and distribution must
comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond the end of the completion
window before the redemption proceeds of our Trust Account become available to them, and they receive the return of their pro rata portion
of the proceeds from our Trust Account. 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
Public 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. Our Amended and Restated Memorandum and Articles of Association provides that, if we wind up for any
other reason prior to the consummation of our initial Business Combination, we will follow the foregoing procedures with respect to the
liquidation of the Trust Account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable
Cayman Islands law.
****
**Our shareholders may be held liable for
claims by third parties against us to the extent of distributions received by them upon redemption of their shares.**
If we are forced to enter into an insolvent liquidation,
any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date
on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result,
a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having
breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our Company
to claims, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that
claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted
any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course
of business would be guilty of an offense and may be liable to a fine of $18,293 and to imprisonment for five years in the Cayman Islands.
****
**We may not hold an annual general meeting
until after the consummation of our initial Business Combination, which could delay the opportunity for our Public Shareholders to discuss
company affairs with management, and the holders of our Class A ordinary shares will not have the right to vote on the appointment or
removal of directors or continuing the company in a jurisdiction outside the Cayman Islands until after the consummation of our initial
Business Combination.**
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual general meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. There is no requirement under the Companies Act for us to hold annual or extraordinary general meetings to appoint
directors. Until we hold an annual general meeting, Public Shareholders may not be afforded the opportunity to discuss company affairs
with management. In addition, as holders of our Class A ordinary shares, our Public Shareholders will not have the right to vote on the
appointment or removal of directors or continuing the company in a jurisdiction outside the Cayman Islands until after the consummation
of our initial Business Combination.
****
31
****
**The warrants may become exercisable and
redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security
at this time.**
In certain situations, including if we are not
the surviving entity in our initial Business Combination, the warrants may become exercisable for a security other than the Class A ordinary
shares. As a result, if the surviving company redeems your warrants for securities pursuant to the warrant agreement, you may receive
a security in a company of which you do not have information at this time. Pursuant to the warrant agreement, the surviving company will
be required to use commercially reasonable efforts to register the issuance of the security underlying the warrants within 20 business
days of the closing of an initial Business Combination.
****
**Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any target businesses with which to pursue our initial Business
Combination, you will be unable to ascertain the merits or risks of any particular target businesss operations.**
Our efforts to identify a prospective initial
Business Combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial
Business Combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify
and acquire a business or businesses that can benefit from our management teams established global relationships and operating
experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully
in a number of sectors. Our Amended and Restated Memorandum and Articles of Association prohibits us from effectuating a Business Combination
solely with another blank check company or similar company with nominal operations.
Because we have not yet selected any specific
target business with respect to a Business Combination, there is no basis to evaluate the possible merits or risks of any particular target
businesss operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete
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. In recent years,
a number of target businesses have underperformed financially post-Business Combination. There are no assurances that the target business
with which we consummate our initial Business Combination will perform as anticipated. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of
the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside
of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We also cannot assure you that an investment in our Units will ultimately prove to be more favorable to investors than a direct investment,
if such opportunity were available, in a Business Combination target. Accordingly, any shareholders who choose to remain shareholders
following the Business Combination could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a
remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers
or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation or tender offer materials, as applicable, relating to the Business Combination contained an actionable
material misstatement or material omission.
****
32
****
**We may seek Business Combination opportunities
in industries or sectors that may be outside of our managements areas of expertise.**
We will consider a Business Combination outside
of our managements areas of expertise if a Business Combination candidate is presented to us and we determine that such candidate
offers an attractive Business Combination opportunity for our Company. Although our management will endeavor to evaluate the risks inherent
in any particular Business Combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our Units will not ultimately prove to be less favorable to investors in
our Initial Public Offering than a direct investment, if an opportunity were available, in a Business Combination candidate. In the event
we elect to pursue a Business Combination outside of the areas of our managements expertise, our managements expertise may
not be directly applicable to its evaluation or operation, and the information contained in our Initial Public Offering registration statement
regarding the areas of our managements expertise would not be relevant to an understanding of the business that we elect to acquire.
As a result, our management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any shareholders
who choose to remain shareholders following our initial Business Combination could suffer a reduction in the value of their shares. Such
shareholders are unlikely to have a remedy for such reduction in value.
****
**Although we have 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 general 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 complete our initial Business Combination with a target that does not
meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of
our general criteria and guidelines. In addition, if we announce a prospective 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 shareholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain
shareholder approval for business or other 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 have not completed our initial Business Combination
within the Completion Window, our Public Shareholders may only receive their pro rata portion of the funds in the Trust Account that are
available for distribution to Public Shareholders, and our warrants will expire worthless.
****
**We are not required to obtain an opinion
from an independent accounting or investment banking firm or from an independent entity that commonly renders valuation opinions, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our shareholders
from a financial point of view.**
Unless we complete our initial Business Combination
with a company that is affiliated with our Sponsor, officers or directors (or their respective affiliates or related entities), we are
not required to obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent firm that commonly
renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting firm that our initial Business
Combination is fair to our Company from a financial point of view. If no opinion is obtained, our shareholders will be relying on the
judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community.
Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial Business
Combination; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
****
33
****
**We may issue additional Class A ordinary
shares or preference shares to complete our initial Business Combination or under an employee incentive plan after completion of our initial
Business Combination. We may also issue Class A ordinary shares upon the conversion of the Founder Shares at a ratio greater than one-to-one
at the time of our initial Business Combination as a result of the anti-dilution provisions contained therein. Any such issuances would
dilute the interest of our shareholders and likely present other risks.**
Our Amended and Restated Memorandum and Articles
of Association authorizes the issuance of up to 500,000,000 Class A ordinary shares, par value $0.0001 per share, 50,000,000 Class B ordinary
shares, par value $0.0001 per share, and 5,000,000 preference shares, par value $0.0001 per share. There are 482,750,000 and 44,250,000
authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount does not
take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B
ordinary shares. The Class B ordinary shares are automatically convertible into Class A ordinary shares (which such Class A ordinary shares
issued upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if we fail
to consummate an initial Business Combination) immediately prior to, concurrently with or immediately following the consummation of our
initial Business Combination or at any time prior thereto at the option of the holder, initially at a one-for-one ratio but subject to
adjustment as set forth herein and in our Amended and Restated Memorandum and Articles of Association, including in certain circumstances
in which we issue Class A ordinary shares or equity-linked securities related to our initial Business Combination. There are no preference
shares issued and outstanding.
We may issue a substantial number of additional
Class A ordinary shares or preference shares to complete our initial Business Combination or under an employee incentive plan after completion
of our initial Business Combination. We may also issue Class A ordinary shares upon conversion of the Class B ordinary shares at a ratio
greater than one-to-one at the time of our initial Business Combination as a result of the anti-dilution provisions as set forth therein.
Such issuance of additional ordinary or preference shares could involve costs to us and our shareholders that would not otherwise be incurred
in a traditional initial public offering, including but not limited to:
|
| significant dilution of the equity interest of investors, which dilution would increase if the anti-dilution
provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon
conversion of the Class B ordinary shares; | |
|
| subordination of the rights of holders of Class A ordinary shares if preference shares are issued with
rights senior to those afforded our Class A ordinary shares; | |
|
| additional costs involved in registering the resale of the securities being sold in any PIPE transactions
and potential additional downward pressure on our share price due to the ability of investors in such PIPE transactions being able to
sell their securities after registration; | |
|
| potential change in control if a substantial number of Class A ordinary shares are 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; | |
|
| potential delaying or preventing of a change of control of us by diluting the share ownership or voting
rights of a person seeking to obtain control of us; and | |
|
| adverse impact on prevailing market prices for our units, Class A ordinary shares and/or warrants. | |
In addition, issuances of additional ordinary
or preference shares may not result in adjustment to the exercise price of our warrants. Such issuances may be structured in a way intended
to provide a return on investment to the investors in return for funds facilitating the completion of the Business Combination or providing
additional liquidity to the post-Business Combination company.
****
34
**Unlike some other similarly structured special
purpose acquisition companies, our initial shareholders will receive additional Class A ordinary shares if we issue certain shares to
consummate an initial Business Combination in order to provide anti-dilution protection to our initial shareholders.**
The Founder Shares will automatically convert
into Class A ordinary shares (which such Class A ordinary shares issued upon conversion will not have any redemption rights or be entitled
to liquidating distributions from the Trust Account if we fail to consummate an initial Business Combination) immediately prior to, concurrently
with or immediately following the consummation of our initial Business Combination or at any time prior thereto at the option of the holder
on a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the
like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or any other equity-linked
securities, are issued or deemed issued in excess of the amounts sold in our Initial Public Offering and related to or in connection with
the closing of the initial Business Combination, the ratio at which Class B ordinary shares convert into Class A ordinary shares will
be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to
any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares
will equal, in the aggregate, 25% of the sum of (i) the total number of all ordinary shares outstanding (including any Class A ordinary
shares issued pursuant to the underwriters over-allotment option and excluding the Class A ordinary shares underlying the private
placement warrants issued to the Sponsor and the underwriters), plus (ii) all Class A ordinary shares and equity-linked securities issued
or deemed issued in connection with our initial Business Combination (excluding any shares or equity-linked securities issued, or to be
issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to our Sponsor or any of
its affiliates or to our officers and directors upon conversion of working capital loans) minus (iii) any redemptions of Class A ordinary
shares by Public Shareholders prior to or in connection with an initial Business Combination. The purpose of such adjustment to provide
anti-dilution protection to our initial shareholders.
****
**We may issue our shares to investors in
connection with our initial Business Combination at a price which is less than the prevailing market price of our shares at that time.**
In connection with our initial Business Combination,
we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a price of $10.00 per share or lower,
at a price that approximates the per-share amounts in our Trust Account at such time. The purpose of such issuances will be to enable
us to provide sufficient liquidity and capital to the post-Business Combination entity. The price of the shares we issue may therefore
be less, and potentially significantly less, than the market price for our shares at such time. Any such issuances of equity securities
could dilute the interests of our existing shareholders.
****
**Since only holders of our Class B ordinary
shares will have the right to vote on the appointment of directors, upon the listing of our shares on Nasdaq, Nasdaq will consider us
to be a controlled company within the meaning of Nasdaq rules and, as a result, we may qualify for exemptions from certain
corporate governance requirements.**
Prior to the consummation of a Business Combination,
only holders of our Class B ordinary shares will have the right to vote on the appointment of directors. As a result, Nasdaq will consider
us to be a controlled company within the meaning of Nasdaq corporate governance standards. Under Nasdaq corporate governance
standards, a company of which more than 50% of the voting power for the appointment of directors is held by an individual, group or another
company is a controlled company and may elect not to comply with certain corporate governance requirements, including the
requirements that:
|
| we have a board that includes a majority of independent directors, as defined under the
rules of Nasdaq; and | |
|
| we have a compensation committee of our board that is comprised entirely of independent directors with
a written charter addressing the committees purpose and responsibilities. | |
35
We currently do not intend to rely on the controlled
company exemption, but may do so in the future. Accordingly, if we choose to do so, you will not have the same protections afforded
to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
****
**Resources could be wasted in researching
Business Combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we are unable to complete our initial Business Combination, our Public Shareholders may only receive their pro
rata portion of the funds in the Trust Account that are available for distribution to Public Shareholders, and our warrants will expire
worthless.**
We anticipate that the investigation of each specific
target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to
complete a specific initial Business Combination, the costs incurred up to that point for the proposed transaction likely would not be
recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial Business
Combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs
incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable
to complete our initial Business Combination within the Completion Window, our Public Shareholders may only receive their pro rata portion
of the funds in the Trust Account that are available for distribution to Public Shareholders, and our warrants will expire worthless.
****
**We may engage in a Business Combination
with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers, directors
or existing holders which may raise potential conflicts of interest.**
In light of the involvement of our Sponsor, its
managing member, and our officers and directors with other entities, we may decide to acquire one or more businesses affiliated with or
competitive with our Sponsor, officers, directors and their respective affiliates or existing holders. Our directors also serve as officers
and/or board members for other entities. Our Sponsor, officers and directors may Sponsor, form or participate in other blank check companies
similar to ours during the period in which we are seeking an initial Business Combination. Such entities may compete with us for Business
Combination opportunities. Our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete
our initial Business Combination with any entities with which they are affiliated, and there have been no substantive 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 a Business
Combination as set forth in *Item 1. Business Effecting our Initial Business Combination Evaluation of a Target
Business and Structuring of our Initial Business Combination* and such transaction was approved by a majority of our independent
and disinterested directors. Despite our obligation to obtain an opinion from an independent investment banking firm or an independent
entity that commonly renders valuation opinions for the type of company we are seeking to acquire or from an independent accounting firm
regarding the fairness to our Company from a financial point of view of a Business Combination with one or more domestic or international
businesses affiliated with our Sponsor, officers or directors (or their respective affiliates or related entities), 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.
****
36
**Since our Sponsor, officers and directors,
any other holder of our Founder Shares, and the underwriters may lose their entire investment in us if our initial Business Combination
is not completed (other than with respect to Public Shares), a conflict of interest may arise in determining whether a particular Business
Combination target is appropriate for our initial Business Combination.**
On December 11, 2024, our Sponsor paid $25,000,
or approximately $0.004 per share, to cover certain of our offering costs in exchange for 5,750,000 Founder Shares. In January 2025, our
Sponsor transferred 25,000 Founder Shares to each of our independent directors (for an aggregate of 75,000 Founder Shares) and 10,000
Founder Shares to each of our advisors (for an aggregate of 40,000 Founder Shares) at the same per-share price that our Sponsor purchased
such shares, or approximately $0.004 per share, resulting in our Sponsor holding 5,635,000 Founder Shares.
Prior to the initial investment in the company
of $25,000 by the Sponsor, the Company had no assets, tangible or intangible. The purchase price of the Founder Shares was determined
by dividing the amount of cash contributed to the company by the number of Founder Shares issued. The number of Founder Shares outstanding
was determined based on the expectation that the total size of our Initial Public Offering would be a maximum of 17,250,000 Units if the
underwriters over-allotment option was exercised in full, and therefore that such Founder Shares would represent 25% of the outstanding
shares after the Initial Public Offering. The Founder Shares will be worthless if we do not complete an initial Business Combination,
except to the extent they receive liquidating distributions from assets outside of the Trust Account. In addition, our Sponsor and the
underwriters purchased an aggregate of 5,450,000 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at
$11.50 per share, at a price of $1.00 per warrant, or $5,450,000 in the aggregate, in a private placement that closed simultaneously with
the closing of the Initial Public Offering. Of those 5,450,000 Private Placement Warrants, our Sponsor purchased 3,725,000 Private Placement
Warrants and the Underwriters purchased an aggregate of 1,725,000 Private Placement Warrants consistent with their pro rata allocation
of the base offering. If we do not complete an initial Business Combination within the Completion Window, the Private Placement Warrants
will be worthless. The personal and financial interests of our officers and directors may influence their motivation in identifying and
selecting a target Business Combination, completing an initial Business Combination and influencing the operation of the business following
the initial Business Combination. This risk may become more acute as the end of the Completion Window nears, which is the deadline for
our completion of an initial Business Combination, unless such Completion Window is extended as described herein.
****
**We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a Business Combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our shareholders investment in us.**
Although we have no commitments as of the date
of this Form 10-K 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. The incurrence of debt could have a variety of negative effects, including:
|
| default and foreclosure on our assets if our operating revenues after an initial Business Combination
are insufficient to repay our debt obligations; | |
|
| 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; | |
|
| our immediate payment of all principal and accrued interest, if any, if the debt security is payable on
demand; | |
|
| 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; | |
|
| using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce
the funds available for expenses, capital expenditures, acquisitions and other general corporate purposes; | |
37
|
| limitations on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; | |
|
| increased vulnerability to adverse changes in general economic, industry and competitive conditions and
adverse changes in government regulation; and | |
|
| 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. | |
**We may only be able to complete one Business
Combination with the proceeds of our Initial Public Offering and the sale of the Private Placement Warrants, which will cause us to be
solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively
impact our operations and profitability. The net proceeds from our Initial Public Offering and the sale of the Private Placement Warrants
are expected to provide us with $165,600,000 that we may use to complete our initial Business Combination (after taking into account the
$6,900,000 of deferred underwriting commissions being held in the Trust Account).**
We may effectuate our initial Business Combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able
to effectuate our 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 completing 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:
|
| solely dependent upon the performance of a single business, property or asset, or | |
|
| dependent upon the development or market acceptance of a single or limited number of products, processes
or services. | |
This lack of diversification may subject us to
numerous economic, competitive and regulatory risks, 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 complete
Business Combinations with multiple prospective targets, which may hinder our ability to complete 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
our initial Business Combination. With multiple Business Combinations, we could also face additional risks, including additional burdens
and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional
risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating
business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
****
38
****
**We may attempt to complete our initial Business
Combination with a private company about which little information is available, which may result in a Business Combination with a company
that is not as profitable as we suspected, if at all.**
In pursuing our Business Combination strategy,
we may seek to effectuate our initial Business Combination with a privately held company. Very little public information generally exists
about private companies, and we could be required to make our decision on whether to pursue a potential initial Business Combination on
the basis of limited information, which may result in a Business Combination with a company that is not as profitable as we suspected,
if at all.
****
**We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial Business Combination with which
a substantial majority of our shareholders do not agree.**
Our Amended and Restated Memorandum and Articles
of Association will not provide a specified maximum redemption threshold. Our proposed initial Business Combination may impose a minimum
cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions. As a result, we may be able to complete our initial Business Combination
even though a substantial majority of our Public Shareholders do not agree with the transaction and have redeemed their shares. In the
event the aggregate cash consideration we would be required to pay for all Public Shares that are validly submitted for redemption plus
any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount
of cash available to us, we will not complete the Business Combination or redeem any shares, all Public Shares submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate Business Combination.
****
**In order to effectuate an initial Business
Combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing
instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our Amended and Restated Memorandum
and Articles of Association or governing instruments in a manner that will make it easier for us to complete our initial Business Combination
that our shareholders or warrant holders, as applicable, may not support.**
In order to effectuate a Business Combination,
special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments,
including their warrant agreements. For example, special purpose acquisition companies have extended the time to consummate an initial
Business Combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for
cash and/or other securities. Amending our Amended and Restated Memorandum and Articles of Association requires the approval of a special
resolution under Cayman Islands law, which requires the affirmative vote of at least two-thirds (or, with respect to the appointment or
removal of directors or continuing the company outside of the Cayman Islands, 90%) of the votes cast by such shareholders as, being entitled
to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company, and amending our warrant
agreement requires a vote of holders of at least 50% of the Public Warrants and, solely with respect to any amendment to the terms of
the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants (including, for
the avoidance of doubt, the forfeiture or cancellation of any Private Placement Warrants or working capital warrants), 50% of the then
outstanding Private Placement Warrants (including, the vote or written consent of the underwriters). In addition, our Amended and Restated
Memorandum and Articles of Association requires us to provide our Public Shareholders with the opportunity to redeem their Public Shares,
regardless of whether they abstain, vote for, or against, our initial Business Combination, for cash if we propose an amendment to our
Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete an initial Business Combination
within the Completion Window or (B) with respect to any other material provisions relating to shareholders rights or pre-initial
Business Combination activity. Many SPACs have faced delisting of their securities following redemptions of shares by Public Shareholders
in connection with proposed amendments to their corporate charters since, after redeeming a large number of publicly held shares, they
no longer meet the continued listing requirements of the stock exchange. To the extent any such amendments would be deemed to fundamentally
change the nature of the securities offered through this registration statement, we would register, or seek an exemption from registration
for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time
to consummate an initial Business Combination in order to effectuate our initial Business Combination.
****
39
****
**The provisions of our Amended and Restated
Memorandum and Articles of Association that relate to our pre-Business Combination activity (and corresponding provisions of the agreement
governing the release of funds from our Trust Account) may be amended with the approval of holders of not less than two-thirds of our
ordinary shares which are represented in person or by proxy and are voted at a general meeting of the company, which is a lower amendment
threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend our Amended and
Restated Memorandum and Articles of Association to facilitate the completion of an initial Business Combination that some of our shareholders
may not support.**
Our Amended and Restated Memorandum and Articles
of Association provide that any of its provisions related to pre-Business Combination activity (including the requirement to deposit proceeds
of our Initial Public Offering and the sale of the Private Placement Warrants into the Trust Account and not release such amounts except
in specified circumstances, and to provide redemption rights to Public Shareholders as described herein), and other than amendments relating
to the provisions regulating the appointment and removal of directors and continuing the company in a jurisdiction outside the Cayman
Islands, which require the approval of a special resolution passed by the affirmative vote of at least 90% (or, where such amendment is
proposed in respect of the consummation of our initial Business Combination, two-thirds) of the votes cast by such shareholders as, being
entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company) may be amended
if approved by special resolution under Cayman Islands law. Except as specified above with respect to matters requiring a 90% majority,
a special resolution requires the affirmative vote of at least two-thirds of the votes cast by such shareholders as, being entitled to
do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company. Corresponding provisions
of the trust agreement governing the release of funds from our Trust Account may be amended if approved by the affirmative vote of at
least two-thirds of our ordinary shares which are represented in person or by proxy and are voted at a general meeting of the company.
Our Sponsor, who beneficially owns 24.5% of our ordinary shares, will participate in any vote to amend our Amended and Restated Memorandum
and Articles of Association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may
be able to amend the provisions of our Amended and Restated Memorandum and Articles of Association which govern our pre-Business Combination
behavior more easily than some other special purpose acquisition companies, and this may increase our ability to complete a Business Combination
with which you do not agree.
Our Sponsor, officers, directors and director
nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our Amended and Restated Memorandum
and Articles of Association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial
Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Completion
Window or (B) with respect to any other material provisions relating to shareholders rights or pre-initial Business Combination
activity, in each case unless we provide our Public Shareholders with the opportunity to redeem their Public Shares upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest
earned on the funds held in the Trust Account (net of taxes paid or payable) and not previously released to us for permitted withdrawals,
divided by the number of then issued and outstanding Public Shares. Our shareholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, officers, directors or director
nominees for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder
derivative action, subject to applicable law.
****
40
****
**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.**
We have not selected any specific Business Combination
target but intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of our Initial
Public Offering and the sale of the Private Placement Warrants. As a result, if the cash portion of the purchase price exceeds the amount
available from the Trust Account, net of amounts needed to satisfy any redemption by Public Shareholders, we may be required to seek additional
financing to complete such proposed initial Business Combination. We cannot assure you that such financing will be available on acceptable
terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial Business Combination,
we would be compelled to either restructure the transaction or abandon that particular Business Combination and seek an alternative target
business candidate. Further, we may be required to obtain additional financing in connection with the closing of our initial Business
Combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the
payment of principal or interest due on indebtedness incurred in completing our initial Business Combination, or to fund the purchase
of other companies. If we are unable to complete our initial Business Combination, our Public Shareholders may only receive their pro
rata portion of the funds in the Trust Account that are available for distribution to Public Shareholders, and our warrants will expire
worthless. In addition, even if we do not need additional financing to complete 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 Sponsor will control the appointment
of our board of directors until consummation of our initial Business Combination and will hold a substantial interest in us. As a result,
it will appoint all of our directors prior to the consummation of our initial Business Combination and may exert a substantial influence
on actions requiring a shareholder vote, potentially in a manner that you do not support.**
Our Sponsor owns 24.5% 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 you do not support, including amendments to our Amended and Restated Memorandum and Articles of Association. This potential concentration
of influence could be disadvantageous to other shareholders with interests different from those of our Sponsor. In addition, the Founder
Shares, all of which are held by our Sponsor, will entitle the holders to appoint all of our directors prior to the consummation of our
initial Business Combination. Holders of our Public Shares will have no right to vote on the appointment or removal of directors during
such time. Further, prior to the closing of our initial Business Combination, only holders of our Class B ordinary shares will be entitled
to vote on continuing our Company in a jurisdiction outside the Cayman Islands (including any special resolution required to amend our
constitutional documents or to adopt new constitutional documents, in each case, as a result of our approving a transfer by way of continuation
in a jurisdiction outside the Cayman Islands). In addition, our board of directors is and will be divided into three classes, each of
which will generally serve for a term for three years with only one class of directors being appointed in each year. These provisions
of our Amended and Restated Memorandum and Articles of Association may only be amended if approved by a special resolution passed by the
affirmative vote of at least 90% (or, where such amendment is proposed in respect of the consummation of our initial Business Combination,
two-thirds) of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy
at the applicable general meeting of the company. As a result, you will not have any influence over the appointment or removal of directors
prior to our initial Business Combination or any influence over our continuation in a jurisdiction outside the Cayman Islands prior to
our initial Business Combination. If our Sponsor purchases any additional Class A ordinary shares in the aftermarket or in privately negotiated
transactions, this would increase its control. Neither our Sponsor nor, to our knowledge, any of our officers or directors, have any current
intention to purchase additional securities, other than as disclosed in this Form 10-K. Factors that would be considered in making such
additional purchases would include consideration of the current trading price of our Class A ordinary shares. We may not hold an annual
or extraordinary general meeting to appoint new directors prior to the completion of our initial Business Combination, in which case all
of the current directors will continue in office until at least the completion of the Business Combination. In addition, since only holders
of our Class B ordinary shares will have the right to vote on directors prior to our initial Business Combination, our initial shareholders
will continue to exert control at least until the completion of our initial Business Combination. Accordingly, our Sponsor will continue
to exert control at least until the completion of our initial Business Combination.
****
41
****
**We may not be able to complete an initial
Business Combination because such initial Business Combination may be subject to regulatory review and approval requirements, including
foreign investment regulations and review by government entities such as the Committee on Foreign Investment in the United States (CFIUS),
or may be ultimately prohibited.**
Our initial Business Combination may be subject
to regulatory review and approval requirements by governmental entities, or ultimately prohibited. For example, CFIUS has authority to
review direct or indirect foreign investments in U.S. companies. Among other things, CFIUS is empowered to require certain foreign investors
to make mandatory filings, to charge filing fees related to such filings, and to self-initiate national security reviews of foreign direct
and indirect investments in U.S. companies if the parties to that investment choose not to file voluntarily. In the case that CFIUS determines
an investment to be a threat to national security, CFIUS has the power to unwind or place restrictions on the investment. Whether CFIUS
has jurisdiction to review an acquisition or investment transaction depends on among other factors the nature and structure
of the transaction, including the level of beneficial ownership interest and the nature of any information or governance rights involved.
For example, investments that result in control of a U.S. business by a foreign person always are subject to CFIUS jurisdiction.
CFIUSs expanded jurisdiction under the Foreign Investment Risk Review Modernization Act of 2018 and implementing regulations that
became effective on February 13, 2020 further includes investments that do not result in control of a U.S. business by a foreign person
but afford certain foreign investors certain information or governance rights in a U.S. business that has a nexus to critical technologies,
critical infrastructure and/or sensitive personal data.
If a particular proposed initial Business Combination
with a U.S. business falls within CFIUSs jurisdiction, we may determine that we are required to make a mandatory filing or that
we will submit to CFIUS review on a voluntary basis, or to proceed with the transaction without submitting to CFIUS and risk CFIUS intervention,
before or after closing the transaction. CFIUS may decide to block or delay our proposed initial Business Combination, impose conditions
with respect to such initial Business Combination or request the President of the United States to order us to divest all or a portion
of the U.S. target business of our initial Business Combination that we acquired without first obtaining CFIUS approval, which may limit
the attractiveness of, delay or prevent us from pursuing certain target companies that we believe would otherwise be beneficial to us
and our shareholders. As a result, the pool of potential targets with which we could complete an initial Business Combination may be limited
and we may be adversely affected in terms of competing with other special purpose acquisition companies which do not have any foreign
ownership issues. In addition, certain federally licensed businesses may be subject to rules or regulations that limit foreign ownership.
42
The process of government review, whether by CFIUS
or otherwise, could be lengthy. Because we have only a limited time to complete our initial Business Combination, our failure to obtain
any required approvals within the requisite time period may require us to liquidate. If we are unable to consummate our initial Business
Combination within the applicable time period required under our Amended and Restated Memorandum and Articles of Association, including
as a result of extended regulatory review of a potential initial Business Combination, we will as promptly as reasonably possible but
not more than ten business days thereafter (and subject to lawfully available funds therefor), redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account (which interest shall be net of amounts not previously released to us for permitted withdrawals and up to $100,000
of interest to pay liquidation expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely
extinguish Public Shareholders rights as shareholders (including the right to receive further liquidating distributions, if any),
subject to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In
such event, our shareholders will miss the opportunity to benefit from an investment in a target company and the appreciation in value
of such investment. Additionally, our warrants may be worthless.
****
**Due to the number of special purpose acquisition
companies evaluating targets, attractive targets may become more scarce and there may be more competition for attractive targets or such
attractive targets may not be interested in consummating a Business Combination with a SPAC due to a negative public perception of mergers
involving SPACs. This could increase the cost of our initial Business Combination and could even result in our inability to find a target
or to consummate an initial Business Combination.**
The number of special purpose acquisition companies
that have been formed has increased substantially. Many potential targets for special purpose acquisition companies have already entered
into an initial business combination, and there are still many special purpose acquisition companies preparing for an initial public offering,
as well as many such companies currently in registration. As a result, at times, fewer attractive targets may be available to consummate
an initial Business Combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive
deals could also become more scarce for other reasons, such as economic or industry sector downturns (including a negative public perception
of mergers involving SPACs), geopolitical tensions, or increases in the cost of additional capital needed to close business combinations
or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability
to find and consummate an initial Business Combination and may result in our inability to consummate an initial Business Combination on
terms favorable to our investors altogether.
****
43
**Adverse developments affecting the financial
services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions, could adversely
affect our business, financial condition or results of operations, or our prospects.**
The funds in our operating account and our Trust
Account will initially be held in banks or other financial institutions and will be invested only in U.S. government treasury obligations
with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act
which invest only in direct U.S. government treasury obligations; the holding of these assets in this form is intended to be temporary
and for the sole purpose of facilitating the intended Business Combination. To mitigate the risk that we might be deemed to be an investment
company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we
may, at any time (based on our management teams ongoing assessment of all factors related to our potential status under the Investment
Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account
in cash or in an interest-bearing demand deposit account at a bank. Our cash held in these accounts may exceed any applicable Federal
Deposit Insurance Corporation (FDIC) insurance limits. Should events, including limited liquidity, defaults, non-performance
or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial
institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks,
the value of the assets in our Trust Account could be impaired, which could have a material impact on our operating results, liquidity,
financial condition and prospects. For example, on March 10, 2023, the FDIC announced that Silicon Valley Bank had been closed by the
California Department of Financial Protection and Innovation. We cannot guarantee that the banks or other financial institutions that
will hold our funds will not experience similar issues.
****
**Because we must furnish our shareholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial Business Combination
with some prospective target businesses.**
The federal proxy rules require that a proxy statement
with respect to a vote on an initial Business Combination meeting certain financial significance tests include historical and pro forma
financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents,
whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America (GAAP) or international
financial reporting standards as issued by the International Accounting Standards Board (IFRS) depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (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 financial statements in time for us to disclose such financial statements
in accordance with federal proxy rules and complete our initial Business Combination within the prescribed time frame.
****
**Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial Business Combination, require substantial financial and management resources,
and increase the time and costs of completing an initial Business Combination**
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December
31, 2026. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging
growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal
control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with
the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that
we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target business with which we seek to complete our initial Business Combination may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of
any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such Business
Combination.
****
44
****
**Risks Relating to the Post-Business Combination
Company**
****
**Subsequent to our completion of our initial
Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you
to lose some or all of your investment.**
Even if we conduct due diligence on a target business
with which we combine, we cannot assure you that this diligence will identify all material issues that may be present within a particular
target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors
outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize
in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and 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 debt financing to partially finance the initial
Business Combination or thereafter. Accordingly, any shareholders who choose to remain shareholders following the Business Combination
could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value
unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or
other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation
or tender offer materials, as applicable, relating to the Business Combination contained an actionable material misstatement or material
omission.
****
**The officers and directors of an acquisition
candidate may resign upon completion of our initial Business Combination. The loss of a Business Combination targets key personnel
could negatively impact the operations and profitability of our post-combination business.**
The role of an acquisition candidates key
personnel upon the completion of our initial Business Combination cannot be ascertained at this time. Although we contemplate that certain
members of an acquisition candidates management team will remain associated with the acquisition candidate following our initial
Business Combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The
departure of an acquisition candidates key personnel could negatively impact the operations and profitability of our post-combination
business.
****
**Our management may not be able to maintain
control of a target business after our initial Business Combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.**
We may structure our initial Business Combination
so that the post-transaction company in which our Public Shareholders own shares will own less than 100% of the equity interests or assets
of a target business, but we will only complete such Business Combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or is otherwise not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more
of the voting securities of the target, our shareholders prior to our initial 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. For example,
we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding
capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction
could own less than a majority of our issued and outstanding Class A ordinary 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 companys
shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control
of the target business.
****
45
****
**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 businesss management may
be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target businesss management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target
businesss management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and
profitability of the post-combination business may be negatively impacted. Accordingly, any shareholders who choose to remain shareholders
following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy
for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws
that the proxy solicitation or tender offer materials, as applicable, relating to the Business Combination contained an actionable material
misstatement or material omission.
****
**We may seek Business Combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.**
We may seek Business Combination opportunities
with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements,
to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the Business Combination may not be as
successful as we anticipate.
To the extent we complete our initial Business
Combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent
in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our
management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to
properly ascertain or assess all of the significant risk factors until we complete our Business Combination. If we are not able to achieve
our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that
we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control
or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful
as a combination with a smaller, less complex organization.
****
**Transactions in connection with or in anticipation
of our initial Business Combination and our structure thereafter may not be tax-efficient to our shareholders and warrant holders. As
a result of our Business Combination, our tax obligations may be more complex, burdensome and/or uncertain.**
Although we will attempt to structure the transactions
in connection with our initial Business Combination in a tax-efficient manner, tax structuring considerations are complex, the relevant
facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations. For example,
in anticipation of or in connection with our initial Business Combination and subject to any requisite shareholder approval, we may: enter
into one or more transactions that require or structure our Business Combination in a manner that requires shareholders and/or warrant
holders to recognize gain or income for tax purposes or otherwise increase their tax burden; effect a Business Combination with a target
company in another jurisdiction; or reincorporate in a different jurisdiction (including, but not limited to, the jurisdiction in which
the target company or business is located). We do not intend to make any cash distributions to shareholders or warrant holders to pay
taxes in connection with our Business Combination or thereafter. Accordingly, a shareholder or a warrant holder may need to satisfy any
liability resulting from our initial Business Combination with cash from its own funds or by selling all or a portion of the shares or
warrants received.
46
In addition, we may effect a Business Combination
with a target company that has business operations outside of the United States, and possibly, business operations in multiple jurisdictions.
If we effect such a Business Combination, we could be subject to significant income, withholding and other tax obligations in a number
of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions. Due to the complexity of tax obligations
and filings in other jurisdictions, we may have a heightened risk related to audits or examinations by U.S. federal, state, local and
non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our after-tax profitability and financial
condition. In addition, shareholders and warrant holders may be subject to additional income, withholding or other taxes with respect
to their ownership of us after any such transaction.
****
**Risks Relating to Acquiring and Operating a
Business in Foreign Countries**
****
**If we effect our initial Business Combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.**
If we pursue a target company with operations
or opportunities outside of the United States for our initial Business Combination, we may face additional burdens in connection with
investigating, agreeing to and completing such initial Business Combination, and if we effect such initial Business Combination, we would
be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target company with operations
or opportunities outside of the United States for our initial Business Combination, we would be subject to risks associated with cross-border
Business Combinations, including in connection with investigating, agreeing to and completing our initial Business Combination, conducting
due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes
in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial Business Combination
with such a company, we would be subject to any special considerations or risks associated with companies operating in an international
setting, including any of the following:
|
| costs and difficulties inherent in executing cross-border transactions, managing cross-border business
operations and complying with different commercial and legal requirements of overseas market; | |
|
| rules and regulations regarding currency redemption; | |
|
| complex corporate withholding taxes on individuals; | |
|
| laws governing the manner in which future Business Combinations may be effected; | |
|
| exchange listing and/or delisting requirements; | |
|
| tariffs and trade barriers; | |
|
| regulations related to customs and import/export matters; | |
|
| local or regional economic policies and market conditions; | |
|
| unexpected changes in regulatory requirements; | |
|
| challenges in managing and staffing international operations; | |
|
| longer payment cycles; | |
|
| tax issues, such as tax law changes and variations in tax laws as compared to the United States; | |
47
|
| currency fluctuations and exchange controls; | |
|
| rates of inflation; | |
|
| challenges in collecting accounts receivable; | |
|
| cultural and language differences; | |
|
| employment regulations; | |
|
| underdeveloped or unpredictable legal or regulatory systems; | |
|
| corruption; | |
|
| protection of intellectual property; | |
|
| social unrest, crime, strikes, riots and civil disturbances; | |
|
| regime changes and political upheaval; | |
|
| terrorist attacks, natural disasters, widespread health emergencies and wars; and | |
|
| deterioration of political relations with the United States. | |
We may not be able to adequately address these
additional risks. If we were unable to do so, we may be unable to complete such initial Business Combination, or, if we complete such
initial Business Combination, our operations might suffer, either of which may adversely impact our business, financial condition and
results of operations.
****
**We may reincorporate in or transfer by way
of continuation to another jurisdiction in connection with our Business Combination, and such reincorporation may result in taxes imposed
on shareholders or warrant holders.**
We may, in connection with our initial Business
Combination or otherwise and, to the extent applicable, subject to requisite shareholder approval by special resolution under the Companies
Act (with respect to which only holders of Class B ordinary shares will be entitled to vote prior to our initial Business Combination),
reincorporate in or transfer by way of continuation to the jurisdiction in which the target company or business is located or in another
jurisdiction. The transaction may require a shareholder or warrant holder to recognize taxable income in the jurisdiction in which the
shareholder or warrant holder is a tax resident or in which its members are resident if it is a tax transparent entity (or may otherwise
result in adverse tax consequences). We do not intend to make any cash distributions to shareholders or warrant holders to pay such taxes.
Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership of our Class A ordinary
shares or warrants after the reincorporation.
In particular, although we may attempt to structure
any change in our jurisdiction of incorporation (if any) in a tax-efficient manner (including, if possible, in a manner that is tax-deferred
for U.S. federal income tax purposes), tax structuring considerations are complex, the relevant facts and law may be uncertain and may
change, we may prioritize commercial and other considerations over tax considerations, and we may prioritize company-level tax considerations
over the tax considerations of our shareholders and warrant holders. As a result, the change in our jurisdiction of incorporation may
have adverse tax consequences to us or to our shareholders and warrant holders, including the recognition of substantial gain for U.S.
federal income tax purposes, and because you may not have prior notice of our change in jurisdiction, you may not be able to avoid such
consequences. For example, under certain circumstances, including if we are treated as a PFIC, a U.S. Holder may be subject to U.S. federal
income tax on gain or a deemed dividend upon the exchange of our ordinary shares or warrants for our successors shares or warrants,
and such taxes may be substantial. For a more detailed discussion of the PFIC rules and the related tax considerations for U.S. investors,
see the section of the Initial Public Offering registration statement captioned *Certain Income Tax Considerations Material
United States Federal Income Tax Considerations U.S. Holders Passive Foreign Investment Company Rules.*
48
In addition to the immediate consequences of a
change in our jurisdiction of incorporation, holding our successors shares or warrants following a change in our jurisdiction of
incorporation could have different, potentially adverse, consequences as compared to those of holding our shares or warrants prior to
any such change. For example, if we were to change our jurisdiction of incorporation from the Cayman Islands to Delaware, this could have
a number of adverse consequences to Non-U.S. Holders who own our successors shares or warrants by exposing them to U.S. taxation
and reporting obligations, such as the taxation of dividends from our successor or the taxation of dispositions of our successors
shares or warrants. Because such persons may not have prior notice of our change in jurisdiction, they may not be able to change the manner
in which they hold our shares or warrants or dispose of our shares or warrants prior to any such change in our jurisdiction of incorporation,
and therefore such persons may not be able to avoid any adverse consequences of holding our successors shares or warrants after
such change.
Further, it is possible that we would change our
jurisdiction of incorporation in anticipation of consummating a specific Business Combination but not complete that Business Combination
for any number of reasons. If we are unable to consummate a Business Combination with a specific Business Combination target following
such a change in our jurisdiction of incorporation, our new jurisdiction of incorporation could have disadvantages to us or our shareholders
and/or warrant holders, particularly if we subsequently pursue a Business Combination with a target that is incorporated in a different
jurisdiction. In such circumstances, we may not be as competitive with other special purpose acquisition companies incorporated in the
Cayman Islands when pursuing certain target companies, the consummation of our initial Business Combination could be more complex, or
it may be more difficult to structure such an initial Business Combination in a tax-efficient manner. For example, we may change our jurisdiction
of incorporation to the United States in anticipation of a Business Combination with a U.S. target company but ultimately effect our initial
Business Combination with a non-U.S. target company. In such a case, we may be unable to structure our initial Business Combination in
a tax-deferred manner, and our shareholders and/or warrant holders may be required to pay substantial U.S. federal income or other taxes
in connection with the consummation of the initial Business Combination. In addition, the initial Business Combination may result in tax
inefficiencies for the post-Business Combination company, including that, if the post-Business Combination company is organized outside
of the United States, it may nevertheless be treated as a U.S. corporation for U.S. federal income tax purposes, which treatment may result
in substantial tax inefficiencies for both the post-Business Combination company and for our shareholders and/or warrant holders.
We cannot assure you when or whether we will change
our jurisdiction of incorporation or, if we do change our jurisdiction of incorporation, the jurisdiction in which we will ultimately
be incorporated. Accordingly, there is significant uncertainty as to the legal, tax and other considerations that may be applicable to
us or to our shareholders and warrant holders, and we cannot provide you with specific or comprehensive examples of such potential consequences.
The rules governing a change in our jurisdiction of incorporation and the transactions that may occur in connection with our initial Business
Combination are complex, and the consequences arising from such rules or transactions will depend on a holders particular circumstances
and on the circumstances surrounding our change in jurisdiction and initial Business Combination. All investors are urged to consult with
and rely solely upon their own legal and tax advisors regarding the potential consequences to them of any change in our jurisdiction of
incorporation.
****
**We may reincorporate in or transfer by way
of continuation to another jurisdiction in connection with our initial Business Combination, and the laws of such jurisdiction may govern
some or all of our future 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 Cayman Islands to another jurisdiction. If we determine to do this, the
laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing
laws in such jurisdiction may not 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.
****
49
****
**We are subject to changing law and regulations
regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.**
We are subject to rules and regulations by various
governing bodies, including, for example, the Securities and Exchange Commission, which are charged with the protection of investors and
the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our
efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general
and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
Moreover, because these laws, regulations and
standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions
to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may
be subject to penalty and our business may be harmed.
****
**If our management following our initial
Business Combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with
such laws, which could lead to various regulatory issues.**
Following our initial Business Combination, our
management may resign from their positions as officers or directors of the company and the management of the target business at the time
of the Business Combination will remain in place. Management of the target business may not be familiar with United States securities
laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar
with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our
operations.
****
**Exchange rate fluctuations and currency
policies may cause a target business ability to succeed in the international markets to be diminished.**
In the event we acquire a non-U.S. target, all
revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if
any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate
and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency
against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial Business
Combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior
to the consummation of our initial Business Combination, the cost of a target business as measured in dollars will increase, which may
make it less likely that we are able to consummate such transaction.
****
50
**After our initial Business Combination,
substantially all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations
in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political
and legal policies, developments and conditions in the country in which we operate.**
The economic, political and social conditions,
as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be
uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future
such countrys economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in
certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find
an attractive target business with which to consummate our initial Business Combination and if we effect our initial Business Combination,
the ability of that target business to become profitable.
****
**Risks Relating to our Sponsor and Management
Team**
****
**A change of ownership or control of our
Sponsor could adversely affect our ability to consummate our initial Business Combination.**
There are no restrictions on our Sponsors
managing members ability to transfer equity interests in our Sponsor held by the managing member or otherwise consent to a transfer
of such equity interests by another member of our Sponsor. Transfers of equity interests in the Sponsor or its direct or indirect parent
entities may result in a change of ownership or control of our Sponsor. Such change of ownership or control of our Sponsor could adversely
affect our ability to consummate our initial Business Combination, as there can be no assurances that a new Sponsor will possess the requisite
skills, investor relationships and expertise to select an appropriate target business, obtain the necessary financing and consummate the
initial Business Combination.
****
**We are dependent upon our officers and directors
and their loss, or a reduction in the amount of time they can dedicate to our initial Business Combination, 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 completed 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
their time among various business activities, including identifying potential Business Combinations and monitoring the related due diligence.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss
of the services of one or more of our directors or officers could have a detrimental effect on us.
****
**Our ability to successfully effect our initial
Business Combination and to be successful thereafter will be 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, we cannot assure you
that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating
a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
****
51
**Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular Business Combination, and a particular Business Combination
may be conditioned on the retention or resignation of such key personnel. 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 our
company after the completion 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 completion of the Business Combination. Such negotiations also could make such key personnels retention
or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business, subject to their fiduciary duties under Cayman Islands law.
****
**Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial Business Combination.**
Our officers and directors are not required to,
and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations
and our search for a Business Combination and their other businesses. We do not intend to have any full-time employees prior to the completion
of our initial Business Combination. Each of our officers is engaged in other business endeavors for which he may be entitled to substantial
compensation, and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors
also serve as officers and board members for other entities. If our officers and directors other business affairs require
them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability
to devote time to our affairs which may have a negative impact on our ability to complete our initial Business Combination. Any such companies,
businesses or investments may present additional conflicts of interest in pursuing an initial Business Combination target. In particular,
we are one of two special purpose acquisition companies seeking an initial Business Combination simultaneously, the other being Real Asset
Acquisition Corp. (RAAQ). Certain of our officers and directors are also officers and directors of RAAQ. Like us, RAAQ may
pursue initial Business Combination targets in any businesses or industries. Any such companies, businesses or investments may present
additional conflicts of interest in pursuing an initial Business Combination. However, because RAAQ is focused on seeking a Business Combination
target in the mining and metals and real assets industries, and we are focused on seeking a Business Combination target in the cryptocurrency
and digital assets industries, we do not believe that such duties or obligations will materially affect our ability to complete our initial
Business Combination. Furthermore, in our post-IPO discussions with any potential targets our management team and our Sponsor will ensure
that the target has a clear understanding that it will transact with DAAQ and with no other special purpose acquisition company that may
be Sponsored by our management team.
****
**Our officers and directors presently have,
and any of them in the future may have additional, fiduciary or contractual obligations to other entities, including other blank check
companies, and, accordingly, may have conflicts of interest in allocating their time and in determining to which entity a particular business
opportunity should be presented.**
Until we consummate our initial Business Combination,
we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsor, its managing member, and our
officers and directors are, or may in the future become, affiliated with entities (such as operating companies or investment vehicles)
that are engaged in a similar business. We do not have employment contracts with our officers and directors that will limit their ability
to work at other businesses. In addition, our Sponsor, officers and directors may participate in the formation of, or become an officer
or director of, any other blank check company prior to completion of our initial Business Combination. As a result, our Sponsor, officers
and directors could have conflicts of interest in determining whether to present Business Combination opportunities to us or to any other
blank check company with which they may become involved. Our Sponsor, officers and directors have complete discretion, subject to applicable
fiduciary duties, as to which blank check company they choose to pursue a Business Combination and the order in which they pursue Business
Combinations for any of their existing or future blank check companies. As a result, our Sponsor, officers and directors may pursue Business
Combinations for blank check companies that it has Sponsored in any order, which could result in its more recent blank check companies
completing Business Combinations prior to its blank check companies that were launched earlier. Each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities
pursuant to which such officer or director is or will be required to present a Business Combination opportunity to such entities. Accordingly,
if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for an entity to which he or
she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present
such Business Combination opportunity to such other entity, subject to their fiduciary duties under Cayman Islands law. Our Amended and
Restated Memorandum and Articles of Association provide that, to the fullest extent permitted by law: (i) no individual serving as a director
or an officer, among other persons, shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging
directly or indirectly in the same or similar business activities or lines of business as us, and (ii) we renounce any interest or expectancy
in, or in being offered an opportunity to participate in, any potential transaction or matter which (a) may be a corporate opportunity
for any director or officer, on the one hand, and us, on the other or (b) the presentation of which would breach an existing legal obligation
of a director or officer to any other entity.
****
52
****
**Our officers, directors, advisors, 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, advisors, 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 a Business Combination with a target business that is affiliated with our Sponsor, our directors or officers, although we do
not intend to do so. Nor do we have a policy that expressly prohibits any such persons 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. Any
such companies, businesses or investments may present additional conflicts of interest in pursuing an initial Business Combination target.
In particular, we are one of two special purpose acquisition companies seeking an initial Business Combination simultaneously, the other
being RAAQ. Certain of our officers and directors are also officers and directors of RAAQ. Like us, RAAQ may pursue initial Business Combination
targets in any businesses or industries. Any such companies, businesses or investments may present additional conflicts of interest in
pursuing an initial Business Combination. However, because RAAQ is focused on seeking a Business Combination target in the mining and
metals and real assets industries, and we are focused on seeking a Business Combination target in the cryptocurrency and digital assets
industries, we do not believe that such duties or obligations will materially affect our ability to complete our initial Business Combination.
Furthermore, our management team and our Sponsor will ensure that the target has a clear understanding that it will transact with DAAQ
and with no other special purpose acquisition company that may be Sponsored by our management team.
The personal and financial interests of our directors
and officers may influence their motivation in timely identifying and selecting a target business and completing a Business Combination.
Consequently, our 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 best interest. If this were the case, it may be a breach of their fiduciary duties to us as a matter of Cayman Islands law
and claims against such individuals may arise for a breach of such duties. However, we might not ultimately be successful in any claim
we may make against them for such reason.
****
**Members of our management team and board
of directors have significant experience as founders, board members, officers, executives or employees of other companies. Certain of
those persons have been, are currently, or may become, involved in litigation, investigations or other proceedings, including related
to those companies or otherwise. This may have an adverse effect on us, which may impede our ability to consummate an initial Business
Combination.**
During the course of their careers, members of
our management team and board of directors have had significant experience as founders, board members, officers, executives or employees
of other companies including SPACs. Certain of those persons have been, are currently and may in the future become involved in litigation,
investigations or other proceedings, including but not limited to issues relating to breach of fiduciary duty and/or the business affairs
of such companies, including SPACs; transactions entered into by such companies, including SPACs; or otherwise. Any such litigation, investigations
or other proceedings may divert the attention and resources of our management team and board of directors away from identifying and selecting
a target business or businesses for our initial Business Combination and may result in findings, orders, or other determinations adverse
to members of our management team and board of directors or otherwise negatively affect our reputation, which may impede our ability to
complete an initial Business Combination.
****
53
****
**Members of our management team and affiliated
companies may have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business.**
Members of our management team have been (and
intend to be) involved in a wide variety of businesses. Such involvement has, and may lead to, media coverage and public awareness. As
a result, members of our management team and affiliated companies may have been, and may in the future be, involved in civil disputes
or governmental investigations unrelated to our business. Any such claims or investigations may be detrimental to our reputation and could
negatively affect our ability to identify and complete an initial Business Combination and may have an adverse effect on the price of
our securities.
****
**Our letter agreement with our Sponsor, officers
and directors may be amended without shareholder approval.**
Our letter agreement with our Sponsor, officers
and directors contain provisions relating to transfer restrictions of our Founder Shares and Private Placement Warrants, indemnification
of the Trust Account, waiver of redemption rights and participation in liquidating distributions from the Trust Account. The letter agreement
may be amended without shareholder approval (although releasing the parties from the restriction not to transfer the Founder Shares for
180 days following the date of our Initial Public Offering will require the prior written consent of the Underwriters). While we do not
expect our board to approve any amendment to the letter agreement prior to our initial Business Combination, it may be possible that our
board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to the letter
agreement. Any such amendments to the letter agreement would not require approval from our shareholders and may have an adverse effect
on the value of an investment in our securities.
****
**Risks Relating to our Securities**
****
**You will not have any rights or interests
in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced
to sell your Public Shares or warrants, potentially at a loss.**
Our Public Shareholders will be entitled to receive
funds from the Trust Account only upon the earliest to occur of: (i) our completion of an initial Business Combination, and then only
in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations and on
the conditions described herein, (ii) the redemption of any Public Shares properly submitted in connection with a shareholder vote to
amend our Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing of our obligation to allow
redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial
Business Combination within the Completion Window or (B) with respect to any other material provisions relating to shareholders
rights or pre-initial Business Combination activity, and (iii) the redemption of our Public Shares if we are unable to complete an initial
Business Combination within the Completion Window, subject to applicable law and as further described herein. In no other circumstances
will a Public Shareholder have any right or interest of any kind in the Trust Account. Holders of warrants will not have any right to
the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to
sell your Public Shares or warrants, potentially at a loss.
****
54
****
**Nasdaq may delist our securities from trading
on its exchange, which could limit investors ability to make transactions in our securities and subject us to additional trading
restrictions.**
Our Units, Class A Ordinary Shares and Public
Warrants on listed on Nasdaq. We cannot assure you that our securities will continue to be listed on Nasdaq in the future or prior to
our initial Business Combination. In order to continue listing our securities on Nasdaq prior to our initial Business Combination, we
must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum market value of listed securities
(generally $50,000,000) and a minimum number of holders of our securities (generally 400 public holders). Additionally, in connection
with our initial Business Combination, we will be required to demonstrate compliance with Nasdaqs initial listing requirements,
which are more rigorous than Nasdaqs continued listing requirements, in order to continue to maintain the listing of our securities
on Nasdaq. For instance, unless we decide to list on a different Nasdaq tier such as the Nasdaq Capital Market which has different initial
listing requirements, our share price would generally be required to be at least $4.00 per share and we would be required to have a minimum
of 400 round lot holders of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that
time.
If Nasdaq delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be
quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
|
| a limited availability of market quotations for our securities; | |
|
| reduced liquidity for our securities; | |
|
| a determination that our Class A ordinary shares are a penny stock which will require brokers
trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in
the secondary trading market for our securities; | |
|
| a limited amount of news and analyst coverage; and | |
|
| a decreased ability to issue additional securities or obtain additional financing in the future. | |
The National Securities Markets Improvement Act
of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred
to as covered securities. Because we expect that our Units and eventually our Class A ordinary shares and warrants will
be listed on Nasdaq, our Units, Class A ordinary shares and warrants will qualify as covered securities under the statute. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if
there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities
issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably
and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would
be subject to regulation in each state in which we offer our securities.
****
55
****
**Our Sponsor paid an aggregate of $25,000,
or approximately $0.004, per Founder Share and, accordingly, you will experience immediate and substantial dilution from the purchase
of our Class A ordinary shares.**
The difference between the public offering price
per share (allocating all of the Unit purchase price to the Class A ordinary shares and none to the warrant included in the Unit) and
the pro forma net tangible book value per share of our Class A ordinary shares after our Initial Public Offering constitutes the dilution
to you and the other investors. Our Sponsor acquired the Founder Shares at a nominal price of $25,000, or approximately $0.004 per share,
significantly contributing to this dilution.
Generally, the dilution that our Public Shareholders
will experience increases the more Public Shares are redeemed. The issuance of additional ordinary or preference shares may also significantly
dilute the equity interest of investors, which dilution would even further increase if the anti-dilution provisions in the Class B ordinary
shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary
shares. In addition, because of the anti-dilution protection in the Class B ordinary shares, any equity or equity-linked securities issued
in connection with our initial Business Combination would be disproportionately dilutive to our Class A ordinary shares.
Our Public Shareholders will experience dilution
even if no Public Shares are redeemed in connection with an initial Business Combination or another redemption event, for instance in
connection with an amendment to our Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing
of our obligation to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we
have not consummated an initial Business Combination within the Completion Window or (B) with respect to any other material provisions
relating to shareholders rights or pre-initial Business Combination activity.
However, while our Public Shareholders will experience
dilution even if none of our Public Shares are redeemed, the dilution they will experience will decrease the more of our Public Shares
remain issued and outstanding following a redemption event. For instance, if we seek shareholder approval of our initial Business Combination
and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our Sponsor,
directors, officers, advisors or their affiliates may purchase Units, Public Shares or equity-linked securities in privately negotiated
transactions or in the open market either prior to or following the completion of our initial Business Combination, although they are
under no obligation to do so. In the event of any such purchases of our shares prior to the completion of our initial Business Combination
or if we enter into non-redemption agreements with certain of our shareholders, the number of Class A ordinary shares subject to redemption
will be reduced by the amount of any such purchases or shares subject to non-redemption agreements, increasing the pro forma net tangible
book value per share. See *Proposed Business Effecting Our Initial Business Combination Permitted Purchases of
Our Securities*.
****
**The nominal purchase price paid by our Sponsor
for the Founder Shares may result in significant dilution to the implied value of your Public Shares upon the consummation of our initial
Business Combination, and our Sponsor is likely to make a substantial profit on its investment in us in the event we consummate an initial
Business Combination, even if the Business Combination causes the trading price of our ordinary shares to materially decline.**
Prior to our Initial Public Offering, our Sponsor
paid a nominal aggregate purchase price of $25,000 for the Founder Shares, or approximately $0.004 per share. As a result, the value of
your Public Shares may be significantly diluted upon the consummation of our initial Business Combination, when the Founder Shares are
converted into Public Shares.
56
The following table shows the Public Shareholders
and our Sponsors investment per share and how these compare to the implied value of one Class A ordinary share upon the completion
of our initial Business Combination. The following table assumes that (i) our valuation is $65,000,000 (which is the amount we would have
in the Trust Account for our initial Business Combination following payment of the maximum deferred underwriting commissions), (ii) no
interest is earned on the funds held in the Trust Account, (iii) no Public Shares are redeemed in connection with our initial Business
Combination and (iv) all Founder Shares are held by our initial shareholders upon completion of our initial Business Combination, and
does not take into account other potential impacts on our valuation at the time of the initial Business Combination, such as (i) the value
of our Public Warrants and Private Placement Warrants, (ii) the trading price of our Class A ordinary shares, (iii) the initial Business
Combination transaction costs (other than the payment of up to $6,900,000 of deferred underwriting commissions), (iv) any equity issued
or cash paid to the targets sellers, (v) any equity issued to other third party investors, or (vi) the targets business
itself.
|
Public Shares: | |
| 17,250,000 | | |
|
Founder Shares: | |
| 5,750,000 | | |
|
Total shares: | |
| 23,000,000 | | |
|
Total funds in trust available for initial Business Combination: | |
$ | 165,000,000.0 | | |
|
Public Shareholders investment per ClassA ordinary share(1): | |
$ | 10.00 | | |
|
Sponsors investment per ClassB ordinary share(2): | |
$ | 0.61 | | |
|
Initial implied value per Public Share: | |
$ | 10.00 | | |
|
Implied value per share upon consummation of initial Business Combination(3): | |
$ | 7.17 | | |
****
|
(1) | While the Public Shareholders investment is in both
the Public Shares and the Public Warrants, for purposes of this table the full investment amount is ascribed to the Public Shares only. |
|
|
(2) | The total investment in the equity of the company by the
Sponsor is $3,525,000, consisting of (i) $25,000 paid by the Sponsor for the Founder Shares and (ii) $3,500,000 paid by the Sponsor for
3,500,000 Private Placement Warrants. For purposes of this table, the full investment amount is ascribed to the Founder Shares only. |
|
|
(3) | All Founder Shares would automatically convert into Class
A ordinary shares upon completion of our initial Business Combination, or at any time prior thereto at the option of the holders thereof,
on a one-for-one basis, subject to adjustment, as described therein. |
|
Based on these assumptions, each Class A ordinary
share would have an implied value of $7.17 per share upon completion of our initial Business Combination, representing an approximately
28% decrease from the initial implied value of $10.00 per Public Share. While the implied value of $7.20 per Class A ordinary share upon
completion of our initial Business Combination would represent a dilution to our Public Shareholders, this would represent a significant
increase in value for our Sponsor relative to the price it paid for each Founder Share. At $7.17 per Class A ordinary share, the 5,635,000
Class A ordinary shares that the Sponsor would own upon completion of our initial Business Combination (after automatic conversion of
the Founder Shares) would have an aggregate implied value of $40,474,650. As a result, even if the trading price of our Class A ordinary
shares significantly declines, the value of the Founder Shares held by our Sponsor will be significantly greater than the amount our Sponsor
paid to purchase such shares. In addition, our Sponsor could potentially recoup its entire investment in our company even if the trading
price of our Class A ordinary shares after the initial Business Combination is as low as $0.61 per share. As a result, our Sponsor is
likely to earn a substantial profit on its investment in us upon disposition of its Class A ordinary shares even if the trading price
of our Class A ordinary shares declines after we complete our initial Business Combination.
57
Our Sponsor may therefore be economically incentivized
to complete an initial Business Combination with a riskier, weaker-performing or less-established target business than would be the case
if our Sponsor had paid the same per share price for the Founder Shares as our Public Shareholders paid for their Public Shares.
This dilution would increase to the extent that
the anti-dilution provisions of the Founder Shares result in the issuance of Class A ordinary shares on a greater than one-to-one basis
upon conversion of the Founder Shares at the time of our initial Business Combination and would become exacerbated to the extent that
Public Shareholders seek redemptions from the trust for their Public Shares. In addition, because of the anti-dilution protection in the
Founder Shares, any equity or equity-linked securities issued in connection with our initial Business Combination would be disproportionately
dilutive to our Class A ordinary shares.
****
**The value of the Founder Shares following
completion of our initial Business Combination is likely to be substantially higher than the nominal price paid for them, even if the
trading price of our ordinary shares at such time is substantially less than $10.00 per Public Share.**
Our Sponsor has invested an aggregate of $3,525,000,
comprised of the $25,000 purchase price for the Founder Shares and the $3,500,000 purchase price for the Private Placement Warrants. Assuming
a trading price of $10.00 per Public Share upon consummation of our initial Business Combination, the 5,635,000 Founder Shares would have
an aggregate implied value of $7.17. Even if the trading price of our ordinary shares were as low as $0.61 per share, and the Private
Placement Warrants are worthless, the value of the Founder Shares would be equal to our Sponsors aggregate initial investment in
us. As a result, our Sponsor is likely to be able to make a substantial profit on its investment in us at a time when our Public Shares
have lost significant value. Accordingly, members of our management team, who own interests in our Sponsor, may be more willing to pursue
a Business Combination with a riskier or less-established target business than would be the case if our Sponsor had paid the same per
share price for the Founder Shares as our Public Shareholders paid for their Public Shares.
****
**There is currently no market for our securities
and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.**
There is currently no market for our securities.
Shareholders therefore have no access to information about prior market history on which to base their investment decision. The price
of our securities may vary significantly due to one or more potential Business Combinations and general market or economic conditions,
including as a result of geopolitical events like the conflicts in Ukraine, the Middle East and Southwest Asia and economic impacts such
as inflation. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You
may be unable to sell your securities unless a market can be established and sustained.
****
**Because we are incorporated under the laws
of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S.
federal courts may be limited.**
We are an exempted company incorporated under
the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon
our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
58
Our corporate affairs are governed by our Amended
and Restated Memorandum and Articles of Association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman
Islands. We will also be subject to the federal securities laws of the United States. The rights of shareholders to take action against
the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are
to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively
limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority,
but are not binding on a court in the Cayman Islands.
The rights of our shareholders and the fiduciary
responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent
in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the
United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law.
In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United
States.
We have been advised by Conyers Dill & Pearman
LLP, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments
of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any
state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability
provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are
penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the
United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction
without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an
obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced
in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine
or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained
in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards
of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings
if concurrent proceedings are being brought elsewhere.
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 United States company.
****
**After our initial Business Combination,
it is possible 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, investors may not be able to enforce federal securities laws or their other legal rights.**
It is possible that after our initial Business
Combination, a majority of our directors and officers will reside outside of the United States and all 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 investors 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.
****
**Provisions in our Amended and Restated Memorandum
and Articles of Association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our Class A ordinary shares and could entrench management.**
Our Amended and Restated Memorandum and Articles
of Association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best
interests. These provisions include the ability of the board of directors to designate the terms of and issue new series of preference
shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities.
****
59
****
**Our Amended and Restated Memorandum and
Articles of Association provide that the courts of the Cayman Islands will be the exclusive forums for certain disputes between us and
our shareholders, which could limit our shareholders ability to obtain a favorable judicial forum for complaints against us or
our directors, officers or employees.**
Our Amended and Restated Memorandum and Articles
of Association provide that unless we consent in writing to the selection of an alternative forum, the courts of the Cayman Islands shall
have exclusive jurisdiction over any claim or dispute arising out of or in connection with our Amended and Restated Memorandum and Articles
of Association or otherwise related in any way to each shareholders shareholding in us, including but not limited to (i) any derivative
action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of any fiduciary or other duty owed by any of
our current or former directors, officers or other employees to us or our shareholders, (iii) any action asserting a claim arising pursuant
to any provision of the Companies Act or our Amended and Restated Memorandum and Articles of Association, or (iv) any action asserting
a claim against us governed by the internal affairs doctrine (as such concept is recognized under the laws of the United States of America)
and that each shareholder irrevocably submits to the exclusive jurisdiction of the courts of the Cayman Islands over all such claims or
disputes. The forum selection provision in our Amended and Restated Memorandum and Articles of Association will not apply to actions or
suits brought to enforce any liability or duty created by the Securities Act, Exchange Act or any claim for which the federal district
courts of the United States of America are, as a matter of the laws of the United States of America, the sole and exclusive forum for
determination of such a claim.
Our Amended and Restated Memorandum and Articles
of Association also provide that, without prejudice to any other rights or remedies that we may have, each of our shareholders acknowledges
that damages alone would not be an adequate remedy for any breach of the selection of the courts of the Cayman Islands as exclusive forum
and that accordingly we shall be entitled, without proof of special damages, to the remedies of injunction, specific performance or other
equitable relief for any threatened or actual breach of the selection of the courts of the Cayman Islands as exclusive forum.
This choice of forum provision may increase a
shareholders cost and limit the shareholders ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other
employees. Any person or entity purchasing or otherwise acquiring any of our shares or other securities, whether by transfer, sale, operation
of law or otherwise, shall be deemed to have notice of and have irrevocably agreed and consented to these provisions. There is uncertainty
as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies
charter documents has been challenged in legal proceedings. It is possible that a court could find this type of provisions to be inapplicable
or unenforceable, and if a court were to find this provision in our Amended and Restated Memorandum and Articles of Association to be
inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions,
which could have an adverse effect on our business and financial performance.
****
**Economic substance legislation of the Cayman
Islands may adversely impact us or our operations.**
The Cayman Islands, together with several other
non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Organisation for Economic Co-operation
and Developments Base Erosion and Profit Shifting initiative as to offshore structures engaged in certain activities which attract
profits without real economic activity. The International Tax Co-operation (Economic Substance) Act, (As Revised) (the Economic
Substance Act) contains economic substance requirements for in-scope Cayman Islands entities which are engaged in certain relevant
activities. As we are a Cayman Islands company, our compliance obligations will include filing an annual notification, which need
to state whether we are carrying out any relevant activities and if so, whether we have satisfied economic substance tests to the extent
required under the Economic Substance Act. If the Cayman Islands Tax Information Authority determines that the Company or any of its Cayman
Islands subsidiaries has failed to meet the requirements imposed by the Economic Substance Act the Company may face significant financial
penalties, restriction on the regulation of its business activities and/or may be struck off as a registered entity in the Cayman Islands.
60
As it is still a relatively new regime, it is
anticipated that the Economic Substance Act and associated guidance will evolve and may be subject to further clarification and amendments.
We may need to allocate additional resources to keep updated with these developments, and may have to make changes to our operations in
order to comply with all requirements under the Economic Substance Act. Failure to satisfy these requirements may subject us to penalties
under the Economic Substance Act.
In addition, in order to comply with legislation,
regulations and guidance aimed at the prevention of money laundering, terrorist financing and proliferation financing, and sanctions legislation
the Company may be required to adopt and maintain anti-money laundering procedures, and may require subscribers and their beneficial owners,
controllers or authorized persons (where applicable) (Related Persons) to provide evidence to verify their identity. Where
permitted, and subject to certain conditions, the Company may also rely on, or delegate to, a suitable person the maintenance of our anti-money
laundering procedures (including the acquisition of due diligence information).
The Company reserves the right to request such
information as is necessary to verify the identity of a subscriber or their Related Persons. In the event of delay or failure on the part
of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case
any funds received will be returned without interest to the account from which they were originally debited.
The Company also reserves the right to refuse
to make any redemption payment to a shareholder if directors or officers suspect or are advised that the payment of redemption proceeds
to such shareholder might result in a breach of applicable anti-money laundering, sanctions or other laws or regulations by any person
in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure compliance with any such laws or regulations
in any applicable jurisdiction.
If any person in the Cayman Islands knows or suspects,
or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering, or is involved
with terrorism or terrorist financing and property, and the information for that knowledge or suspicion came to their attention in the
course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report
such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands (FRA), pursuant to the Proceeds
of Crime Act (As Revised) of the Cayman Islands, if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer
of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (As Revised) of the Cayman Islands, if the disclosure relates
to involvement with terrorism or terrorist financing and property.
61
**An investment in our securities, may result
in uncertain or adverse U.S. federal income tax consequences.**
An investment in our securities, may result in
uncertain or adverse U.S. federal income tax consequences. For instance, because there are no authorities that directly address the U.S.
federal income tax implications of instruments similar to the Units, the allocation an investor makes with respect to the purchase price
of a Unit between the Class A ordinary share and the one-half of a warrant to purchase one Class A ordinary share included in each Unit
could be challenged by the U.S. Internal Revenue Service (IRS) or courts. In addition, the U.S. federal income tax consequences
of a cashless exercise of warrants included in the Units is unclear under current law. Finally, it is unclear whether the redemption
rights with respect to our Class A ordinary shares suspend the running of a U.S. Holders (as defined in section titled *Certain
Income Tax Considerations* *Material United States Federal Income Tax Considerations* *U.S. Holders*
in our Initial Public Offering registration statement) holding period for purposes of determining whether any gain or loss realized by
such holder on the sale or exchange of Class A ordinary shares is long-term capital gain or loss and for determining whether any dividend
we pay would be considered qualified dividend income for U.S. federal income tax purposes. See the section titled *Certain
Income Tax Considerations* *Material United States Federal Income Tax Considerations* in our Initial Public Offering
registration statement for a summary of certain material U.S. federal income tax considerations of an investment in our securities. Prospective
investors are urged to consult their tax advisors with respect to these and other tax consequences when acquiring, owning or disposing
of our securities.
****
**The U.S. federal income tax consequences
to a shareholder of a redemption of Class A ordinary shares will depend on such investors particular facts and circumstances.**
The U.S. federal income tax treatment of a redemption
of Class A ordinary shares to a shareholder will depend on whether the redemption qualifies as a sale of such Class A ordinary shares
under Section 302(a) of the Internal Revenue Code of 1986, as amended (the Code), which will depend largely on the total
number of our shares treated as held by the shareholder electing to redeem Class A ordinary shares (including any shares constructively
owned by the holder as a result of owning private placement warrants or public warrants or otherwise) relative to all of our shares outstanding
both before and after the redemption. If such redemption is not treated as a sale of Class A ordinary shares for U.S. federal income
tax purposes, the redemption will instead be treated as a corporate distribution of cash from us. For more information about the U.S.
federal income tax treatment of the redemption of Class A ordinary shares, see the sections entitled *Certain Income Tax Considerations
Material United States Federal Income Tax Considerations U.S. Holders Redemption of Class A Ordinary Shares*
or *Certain Income Tax Considerations Material United States Federal Income Tax Considerations Non-U.S. Holders*,
in our Initial Public Offering registration statement, as applicable.
****
**We may amend the terms of the warrants
in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the then outstanding
Public Warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened, the number
of Class A ordinary shares purchasable upon exercise of a warrant could be decreased.**
Our warrants are issued in registered form under
a warrant agreement between Efficiency, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be
amended without the consent of any holder for the purpose of (i) curing any ambiguity or to correct any defective provision or mistake,
including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement
set forth in herein, (ii) adjusting the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance
with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant
agreement as the parties to the warrant agreement may deem necessary or desirable, provided that the approval by the holders of at least
50% of the then issued and outstanding Public Warrants is required to make any such change. Accordingly, we may amend the terms of the
Public Warrants in a manner adverse to a holder of Public Warrants if holders of at least 50% of the then outstanding Public Warrants
approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then
outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise
price of the Public Warrants, convert the warrants into cash or shares, shorten the exercise period, decrease the number of Class A ordinary
shares purchasable upon exercise of a warrant.
****
62
****
**Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.**
Our warrant agreement provides that, subject
to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. With respect to any complaint asserting a cause of action arising under the Securities Act or the rules and regulations
promulgated thereunder, we note, however, that there is uncertainty as to whether a court would enforce this provision and that investors
cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates
concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement,
is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New
York (a foreign action) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x)
the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any
such court to enforce the forum provisions (an enforcement action), and (y) having service of process made upon such warrant
holder in any such enforcement action by service upon such warrant holders counsel in the foreign action as agent for such warrant
holder. This choice-of-forum provision may limit a warrant holders ability to bring a claim in a judicial forum that it finds
favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of
our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we
may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect
our business, financial condition and results of operations and result in a diversion of the time and resources of our management and
board of directors.
****
**A provision of our warrant agreement may
make it more difficult for us to consummate an initial Business Combination.**
If (i) we issue additional ordinary shares or
equity-linked securities for capital raising purposes in connection with the closing of our initial Business Combination at a Newly Issued
Price of less than $9.20 per Class A ordinary share, (ii) the aggregate gross proceeds from such issuances represent more than 60% of
the total equity proceeds, and interest thereon, available for the funding of our initial Business Combination, and (iii) the Market
Value of our Class A ordinary shares is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This may make
it more difficult for us to consummate an initial Business Combination with a target business.
****
63
****
**We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.**
We have the ability to redeem outstanding warrants
at any time prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A ordinary shares
equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price
of a warrant) for any 20 trading days within a 30 trading-day period commencing at least 30 days after completion of our initial Business
Combination and ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrants holders
and provided certain other conditions are met. We will not redeem the warrants as described above unless a registration statement under
the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and
a current prospectus relating to those Class A ordinary shares is available throughout the measurement period. If and when the warrants
become redeemable by us, we may not exercise our redemption right if the issuance of ordinary shares upon exercise of the warrants is
not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.
We will use our best efforts to register or qualify such ordinary shares under the blue sky laws of the state of residence in those states
in which the warrants were offered by us. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay
the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding
warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
****
**Our warrants may have an adverse effect
on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial Business Combination.**
We issued warrants to purchase 8,625,000 Class
A ordinary shares as part of the Units offered in our Initial Public Offering and, simultaneously with the closing of our Initial Public
Offering, we issued a private placement an aggregate of 5, 450,000 Private Placement Warrants at $1.00 per warrant. In addition, if the
Sponsor makes any working capital loans, it may convert those loans into up to an additional 1,500,000 Private Placement Warrants, at
the price of $1.00 per warrant. To the extent we issue ordinary shares to effectuate a business transaction, the potential for the issuance
of a substantial number of additional Class A 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 Class A ordinary shares
and reduce the value of the Class A ordinary shares issued to complete the business transaction. Therefore, our warrants may make it
more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
****
**Holders of Class A ordinary shares will
not be entitled to vote on continuing the company in a jurisdiction outside of the Cayman Islands.**
As holders of our Class A ordinary shares, our
Public Shareholders will not have the right to vote on the appointment of directors and continuing our company in a jurisdiction outside
the Cayman Islands (including any special resolution required to amend our constitutional documents or to adopt new constitutional documents,
in each case, as a result of our approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands). In addition,
prior to our initial Business Combination, holders of a majority of our Founder Shares may remove a member of the board of directors
for any reason. Accordingly, you will not have any say in the management of our company prior to the consummation of an initial Business
Combination.
****
**You will not be permitted to exercise your
warrants unless we register and qualify the underlying Class A ordinary shares or certain exemptions are available.**
If the issuance of the Class A ordinary shares
upon exercise of the warrants is not registered, qualified or exempt from registration or qualification under the Securities Act and
applicable state securities laws, holders of warrants will not be entitled to exercise such warrants and such warrants may have no value
and expire worthless. In such event, holders who acquired their warrants as part of a purchase of Units will have paid the full Unit
purchase price solely for the Class A ordinary shares included in the Units.
64
We registered the Class A ordinary shares issuable
upon exercise of the warrants in the registration statement for our Initial Public Offering because the warrants will become exercisable
30 days after the completion of our initial Business Combination, which may be within one year of our Initial Public Offering. However,
because the warrants will be exercisable until their expiration date of up to five years after the completion of our initial Business
Combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our initial
Business Combination, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than
20 business days, after the closing of our initial Business Combination, we will use our commercially reasonable efforts to file with
the SEC a post-effective amendment to the registration statement of our Initial Public Offering or a new registration statement covering
the registration under the Securities Act of the Class A ordinary shares issuable upon exercise of the warrants and thereafter will use
our commercially reasonable efforts to cause the same to become effective within 60 business days following our initial Business Combination
and to maintain a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants until the expiration
of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for
example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or
prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop
order.
If the Class A ordinary shares issuable upon
exercise of the warrants are not registered under the Securities Act, under the terms of the warrant agreement, holders of warrants who
seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis in
accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants 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,
or an exemption from registration or qualification is available.
If our Class A ordinary shares are at the time
of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of covered securities
under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek to exercise their warrants
to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in
the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares
underlying the warrants under applicable state securities laws, and in the event we do not so elect, we will use our commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle
any warrant, or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state
securities laws.
****
**You may only be able to exercise your public
warrants on a cashless basis under certain circumstances, and if you do so, you will receive fewer Class A ordinary shares
from such exercise than if you were to exercise such warrants for cash.**
The warrant agreement provides that in the following
circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead, be required
to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the Class A ordinary shares issuable upon
exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we
have so elected and the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange
such that they satisfy the definition of covered securities under Section 18(b)(1) of the Securities Act; and (iii) if
we have so elected and we call the public warrants for redemption.
If you exercise your public warrants on a cashless
basis, you would pay the warrant exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the
quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess
of the fair market value of our Class A ordinary shares (as defined in the next sentence) over the exercise price of the
warrants by (y) the fair market value. The fair market value is the average reported closing price of the Class A ordinary
shares for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant
agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer Class
A ordinary shares from such exercise than if you were to exercise such warrants for cash.
****
65
****
**The grant of registration rights to our
Sponsor, the underwriters and other holders of our Private Placement Warrants may make it more difficult to complete our initial Business
Combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.**
Pursuant to an agreement entered into concurrently
with the issuance and sale of the securities in our Initial Public Offering, our Sponsor, the underwriters, and their permitted transferees
can demand that we register the Class A ordinary shares into which Founder Shares are convertible, holders of our Private Placement Warrants
and their permitted transferees can demand that we register the Private Placement Warrants and the Class A ordinary shares issuable upon
exercise of the Private Placement Warrants or holders of securities that may be issued upon conversion of working capital loans and their
permitted transferees may demand that we register such Units, shares, warrants or the Class A ordinary shares issuable upon exercise
of such warrants and any other securities of the company acquired by them prior to the consummation of our initial Business Combination.
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 Class A 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 Class A ordinary shares that is expected when the ordinary shares owned by our initial shareholders,
holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered.
****
**General Risk Factors**
****
**We are a blank check company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.**
We are a blank check company incorporated under
the laws of the Cayman Islands with no operating results. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial Business Combination. We have no plans, arrangements or understandings
with any prospective target business concerning a Business Combination and may be unable to complete our initial Business Combination
. If we fail to complete our initial Business Combination , we will never generate any operating revenues.
****
**Past performance by our management team,
our advisors and their respective affiliates, including investments and transactions in which they have participated and businesses with
which they have been associated, may not be indicative of future performance of an investment in the company.**
****
Information regarding our management team, our
advisors and their respective affiliates, including investments and transactions in which they have participated and businesses with
which they have been associated, is presented for informational purposes only. Any past experience and performance by our management
team, our advisors and their respective affiliates and the businesses with which they have been associated, is not a guarantee that we
will be able to successfully identify a suitable candidate for our initial Business Combination, that we will be able to provide positive
returns to our shareholders, or of any results with respect to any initial Business Combination we may consummate. You should not rely
on the historical experiences of our management team, our advisors and their respective affiliates, including investments and transactions
in which they have participated and businesses with which they have been associated, as indicative of the future performance of an investment
in us or as indicative of every prior investment by each of the members of our management team, our advisors or their respective affiliates.
The market price of our securities may be influenced by numerous factors, many of which are beyond our control, and our shareholders
may experience losses on their investment in our securities.
****
66
****
**Cyber incidents or attacks directed at
us could result in information theft, data corruption, operational disruption and/or financial loss.**
We depend on digital technologies, including
information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated
and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties
or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data.
As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such
occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to,
cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business
and lead to financial loss.
****
**We may be a passive foreign investment
company, or PFIC, which could result in adverse United States federal income tax consequences to U.S. investors.**
****
If we are 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 our Initial Public Offering registration statement captioned Certain
Income Tax Considerations Material United States Federal Income Tax Considerations U.S Holders) of our Class A
ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional
reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up
exception (see the section of our Initial Public Offering registration statement captioned Certain Income Tax Considerations Material United States Federal
Income Tax Considerations U.S. Holders Passive Foreign Investment Company Rules). Depending on the particular
circumstances the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will
qualify for the start-up exception. Our actual PFIC status for any taxable year, however, will not be determinable until after the end
of such taxable year (and, in the case of the start-up exception, potentially not until after the two taxable years following our current
taxable year). Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent
taxable year. Moreover, if we determine that we are a PFIC for any taxable year, upon written request, 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 qualified electing fund election, but there can be no assurance that we will timely provide such
required information, and under current law such election would be unavailable with respect to our warrants. We urge U.S. investors to
consult their own tax advisors regarding the possible application of the PFIC rules in general, and in particular to our warrants. For
a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of our Initial Public Offering registration statement captioned
Certain Income Tax Considerations Material United States Federal Income Tax Considerations U.S. Holders
Passive Foreign Investment Company Rules.
****
**The Excise Tax could be imposed on redemptions
of our ordinary shares if we were to become a covered corporation in the future.**
****
The Inflation Reduction Act of 2022, among other
things, generally imposes the Excise Tax on certain repurchases of stock by covered corporations (which include publicly
traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign (i.e., non-U.S.) corporations)
occurring on or after January 1, 2023. The Excise Tax is imposed on the repurchasing corporation itself, not its stockholders from which
the stock is repurchased. The amount of the Excise Tax is generally 1% of the fair market value of the shares repurchased at the time
of the repurchase. However, for purposes of calculating the Excise Tax, repurchasing corporations are permitted to net the fair market
value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year (the netting
rule). In addition, certain exceptions apply to the Excise Tax. The U.S. Department of the Treasury (the Treasury)
has authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the Excise Tax. On April
9, 2024, the Treasury issued proposed regulations on which taxpayers may rely until final Treasury regulations addressing the Excise
Tax are published, which generally adopt (but in some respects expand or modify) the rules and guidance set forth in IRS Notice 2023-2,
published on January 17, 2023, providing initial guidance regarding the application of the Excise Tax. On June 28, 2024, the Treasury
finalized certain of the proposed regulations (those relating to procedures for reporting and paying the Excise Tax). Although IRS Notice
2023-2 and proposed Treasury regulations clarify certain aspects of the Excise Tax, the interpretation and operation of certain other
aspects of the Excise Tax remain unclear. There can be no assurance that final Treasury regulations will not adversely affect the accuracy
of the below description of the Excise Tax considerations that may be applicable to us if we were to become a covered corporation
in the future.
67
We are currently not a covered corporation
for purposes of the Excise Tax. Accordingly, we generally would not be subject to the Excise Tax on a redemption of our stock, whether
in connection with the consummation of our initial Business Combination or otherwise. If we were to become a covered corporation
in the future, whether in connection with the consummation of our initial Business Combination with a U.S. company (including if we were
to redomicile as a U.S. corporation in connection therewith) or otherwise, whether and to what extent we would be subject to the Excise
Tax on a redemption of our stock would depend on a number of factors, including (i) whether the redemption is treated as a repurchase
of stock for purposes of the Excise Tax, (ii) the fair market value of the redemption treated as a repurchase of stock, (iii) the structure
of our initial Business Combination, (iv) the nature and amount of any PIPE or other equity issuances (whether in connection
with our initial business combination or otherwise) issued within the same taxable year of a redemption treated as a repurchase of stock
and (v) the content of forthcoming regulations and other guidance from the Treasury. As noted above, the Excise Tax would be payable by
the repurchasing corporation, and not by the redeeming holder. The imposition of the Excise Tax on us as a result of redemptions by us
could, however, reduce the amount of cash available to the target business in connection with our initial Business Combination, which
could cause investors in our securities who do not redeem or the other shareholders of the combined company to economically bear the impact
of such Excise Tax. However, we will not use the proceeds placed in the trust account, or the interest earned on the proceeds placed in
the Trust Account, to pay for possible Excise Tax or any other fees or taxes that may be levied on us on any redemptions or stock buybacks
by us pursuant to any current, pending or further rules or laws, including without limitation any Excise Tax, prior to release of such
funds from the Trust Account following our initial Business Combination.
****
**Our management concluded that there is substantial
doubt about our ability to continue as a going concern.**
****
Our management has determined that the liquidity
condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial
doubt about our ability to continue as a going concern for a period of time within one year after the date that the financial statements
are issued. Our management plans to address this uncertainty through the completion of the initial Business Combination. However, there
is no assurance that our plans to consummate the initial Business Combination will be successful or successful prior to the Completion
Window.
****
**We are an emerging growth company and a
smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.**
****
We are an emerging growth company
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not
being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our
Class A ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30, in which case we would no longer be an emerging
growth company as of December 31 in the same year. We cannot predict whether investors will find our securities less attractive because
we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions,
the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when
a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
68
Additionally, we are a smaller reporting
company as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates is equal to
or exceeds $250 million as of the prior June 30, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal
year and the market value of our ordinary shares held by non-affiliates is equal to or exceeds $700 million as of the prior June 30.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with
other public companies difficult or impossible.
****
**Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial Business Combination.**
****
The market for directors and officers liability
insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance companies
are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and
the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased availability
of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial Business Combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company,
the post-Business Combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to
obtain adequate directors and officers liability insurance could have an adverse impact on the post-Business Combinations ability
to attract and retain qualified officers and directors.
In addition, even after we were to complete an
initial Business Combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial Business Combination. As a result, in order to protect our directors and officers, the post-Business
Combination entity may need to purchase additional insurance with respect to any such claims (run-off insurance). The need
for run-off insurance would be an added expense for the post-Business Combination entity, and could interfere with or frustrate our ability
to consummate an initial Business Combination on terms favorable to our investors.
****
**Recent increases in inflation in the United
States and elsewhere could make it more difficult for us to complete our initial Business Combination.**
****
Recent increases in inflation in the United States
and elsewhere may lead to increased price volatility for publicly traded securities, including ours, or other national, regional or international
economic disruptions, any of which could make it more difficult for us to complete our initial Business Combination.
****
69
****
**ITEM 1B. UNRESOLVED STAFF COMMENTS.**
None.
**ITEM 1C. CYBERSECURITY.**
As a blank check company, we have no operations
and therefore do not have any operations of our own that face cybersecurity threats. However, we do depend on the digital technologies
of third parties, and as noted in *Item 1A. Risk Factors* of this Form 10-K, any sophisticated and deliberate attacks
on, or security breaches in, systems or infrastructure or the cloud that we utilize, including those of third parties, could lead to
corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. Because of our reliance on
the technologies of third parties, we also depend upon the personnel and the processes of third parties to protect against cybersecurity
threats, and we have no personnel or processes of our own for this purpose. Our board of directors oversees risk for our Company, and
prior to filings with the SEC, our board of directors reviews our risk factors, including the descriptions of the risks we face from
cybersecurity threats, as described in *Item 1A. Risk Factors* of this Form 10-K.
**ITEM 2. PROPERTIES.**
Our executive offices are located at 174 Nassau
Street, Suite 2100, Princeton, New Jersey, 08542. Our executive offices are provided to us by our Sponsor, and we have agreed to pay
our Sponsor $25,000 per month for office space, utilities and secretarial and administrative support. We consider our current office
space adequate for our current operations.
****
**ITEM 3. LEGAL PROCEEDINGS.**
There is no material litigation, arbitration or governmental proceeding
currently pending against us or any members of our management team in their capacity as such.
**ITEM 4. MINE SAFETY DISCLOSURES.**
Not applicable.
70
**PART II**
**ITEM 5. MARKET FOR REGISTRANTS COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.**
****
**Market Information**
Our Units, Class A Ordinary Shares, and Public
Warrants are listed on Nasdaq under the symbols DAAQU, DAAQ and DAAQW, respectively.
**Holders**
As of December 31, 2025, there was one holder
of record of our Units, one holder of record of our Class A Ordinary Shares, eight holders of record of our Class B ordinary shares, and
four holders of record of our warrants.
**Dividends**
We
have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of an
initial Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital
requirements and general financial conditions subsequent to completion of an initial Business Combination. The payment of any
cash dividends subsequent to an initial Business Combination will be within the discretion of our board of directors at such time. Further,
if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection
therewith.
**Securities Authorized for Issuance under Equity
Compensation Plans**
None.
**Recent Sales of Unregistered Securities and
Use of Proceeds from Registered Offerings**
None.
****
**ITEM 6. [RESERVED]**
**ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.**
References in this report (the Annual
Report) to we, us or the Company refer to Digital Asset Acquisition Corp. References
to our management or our management team refer to our officers and directors, and references to the Sponsor
refer to DAAQ Sponsor LLC. The following discussion and analysis of the Companys financial condition and results of operations
should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Annual Report. Certain
information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
****
71
****
**Special Note Regarding Forward-Looking Statements**
This Annual Report includes forward-looking
statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of historical fact included in this Annual Report including,
without limitation, statements in this Managements Discussion and Analysis of Financial Condition and Results of Operations
regarding the Companys financial position, business strategy and the plans and objectives of management for future operations,
are forward-looking statements. Words such as expect, believe, anticipate, intend,
estimate, seek and variations and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future performance, but reflect managements current beliefs,
based on information currently available. A number of factors could cause actual events, performance or results to differ materially
from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors
section of the Companys final prospectus for its Initial Public Offering (as defined below) filed with the U.S. Securities and
Exchange Commission (the SEC). The Companys securities filings can be accessed on the EDGAR section of the SECs
website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
****
**Overview**
We are a blank check company incorporated in
Cayman Islands on December 9, 2024 formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses (a Business Combination). We have not selected
any Business Combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly,
with any Business Combination target. We intend to effectuate our initial Business Combination using cash from the proceeds of our initial
public offering (the Initial Public Offering) and the sale of the Private Placement Warrants (as defined below), the proceeds
of the sale of our shares in connection with our initial Business Combination pursuant to the forward purchase agreements (or backstop
agreements we may enter into or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners
of the target, or a combination of the foregoing or other sources.
****
**Results of Operations**
We have neither engaged in any operations nor
generated any revenues to date. Our only activities for the year ended December 31, 2025, were organizational activities, those necessary
to prepare for our Initial Public Offering, as described below, and identifying a target company for our Business Combination. We do not expect to generate any operating revenues until after the completion
of our initial Business Combination. We generate non-operating income in the form of interest income on assets held in our Trust
Account (defined below) and on our cash equivalents. We incur expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence expenses.
72
For the year ended December 31, 2025, we had
net income of $4,244,525, which resulted from earnings and realized gain on marketable securities held in Trust Account of $4,606,744
and investment earnings on cash equivalents held in the Operating Account of $16,940 offset by general and administrative expenses
of $379,159.
For the year ended December 31, 2024, we had
a net loss of $5,112, which resulted from general and administrative expenses.
Through December31, 2025, our efforts have
been limited to organizational activities, activities relating to the Initial Public Offering, and activities relating to identifying a target company for our Business Combination.
****
**Liquidity, Capital Resources and Going Concern**
For the year ended December 31, 2025, net cash
used in operating activities was $2,183. Net income of $4,244,525 was adjusted for earnings on marketable securities in our Trust Account
of $4,624,457, operating expenses paid via promissory note - related party of $112,848, and operating expenses paid by Sponsor from proceeds
withdrawn from Trust Account of $267,836. Changes in operating assets and liabilities totaled $2,935, primarily driven by increases in
prepaid insurance as well as prepaid expenses and other current assets, offset by increases in accrued expenses and due to related party.
For the year ended December 31, 2024, net
cash used in operating activities was $0. The net loss of $5,112 was
fully offset by $5,112 due to operating assets and liabilities, primarily driven by increases in accrued expenses and amounts due
to related party.
For the year ended December 31, 2025, net cash
used in investing activities was $172,500,000 and affected by cash deposited in Trust Account.
For the year ended December 31, 2024, net cash
used in investing activities was $0.
For the year ended December 31, 2025, net cash
provided by financing activities was $173,563,104, which was due to proceeds from the sale of Units (as defined below), Private Placement
Warrants (as defined below) and public warrants issued as part of the Units.
For the year ended December 31, 2024, net cash
provided by financing activities was $0.
The Companys Initial Public Offering was
declared effective on April28, 2025. On April 30, 2025, the Company consummated the Initial Public Offering of 17,250,000 units,
(the Units and, with respect to the shares of Class A ordinary shares included in the Units sold, the Public Shares),
including 2,250,000 Units issued pursuant to the exercise of the Underwriters (as defined below) over-allotment option in full,
generating gross proceeds of $172,500,000. Each Unit consists of one Class A ordinary share and one-half of one redeemable warrant of
the Company (the Public Warrants), with each whole warrant entitling the holder thereof to purchase one Class A ordinary
share at $11.50 per share.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 5,450,000 warrants at a price of $1.00 per warrant (the Private Placement
Warrants), generating gross proceeds of $5,450,000. Of the 5,450,000 Private Placement Warrants, (i) Cohen & Company Capital
Markets, a division of Cohen & Company Securities, LLC (the Representative), purchased 1,466,250 Private Placement
Warrants, (ii) Clear Street LLC (Clear Street and together with the Representative, the Underwriters) purchased
258,750 Private Placement Warrants and (iii) the Sponsor purchased 3,725,000 Private Placement Warrants.
73
Following the closing of the Initial Public Offering
on April 30, 2025, an amount of $172,500,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants was placed in a trust account located in the United States (the Trust Account).
We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on the funds held in the Trust Account and not previously
released to us to pay our taxes (which interest shall be net of taxes paid or payable and excluding deferred underwriting commissions)
to complete our initial Business Combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will
depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest earned on the
amount in the Trust Account will be sufficient to pay our taxes. We expect the only taxes payable by us out of the funds in the Trust
Account will be income and franchise taxes, if any. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration
to complete 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.
After taking into consideration the consummation
of the Initial Public Offering, we do not believe we will need to raise additional funds in order to meet the expenditures required for
operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and
negotiating an initial Business Combination are less than the actual amount necessary to do so, 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 complete
our initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of
our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
In connection withour assessment of going
concern considerations in accordancewith Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 205-40, Presentation ofFinancial Statements - Going Concern,we have determined that
the mandatory liquidation raisessubstantial doubt about our ability tocontinue as a going concern. Management continues to
seek to complete the Business Combination prior to the mandatoryliquidationdate. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after October30, 2026 (or January30, 2027).
****
**Off-Balance Sheet Arrangements**
As of December31, 2025, we did not have
any off-balance sheet arrangements.
****
**Contractual Obligations**
**
*Registration Rights*
The holders of the (i) Class B ordinary shares,
which were issued in a private placement prior to the closing of the Initial Public Offering (the Founder Shares), (ii)
Private Placement Warrants and the Class A ordinary shares underlying such Private Placement Warrants and (iii) Private Placement Warrants
that may be issued upon conversion of working capital loans will have registration rights to require the Company to register a sale of
any of the Companys securities held by them and any other securities of the Company acquired by them prior to the consummation
of the Companys initial Business Combination pursuant to a registration rights agreement signed on the effective date of the Initial
Public Offering. Pursuant to the registration rights agreement and assuming $1,500,000 of working capital loans are converted into warrants,
the Company will be obligated to register up to 12,700,000 Class A ordinary shares and 6,950,000 warrants. The number of Class A ordinary
shares includes (i) 5,750,000 Class A ordinary shares to be issued upon conversion of the Founder Shares, (ii) 5,450,000 Class A ordinary
shares underlying the Private Placement Warrants and (iii) 1,500,000 Class A ordinary shares underlying the warrants that may be issued
upon conversion of working capital loans. The number of warrants includes up to 5,450,000 Private Placement Warrants and 1,500,000 warrants
that may be issued upon the conversion of working capital loans. The holders of these securities are entitled to make up to three demands,
excluding short form demands, that the Company registers such securities. In addition, the holders have certain piggyback
registration rights with respect to registration statements filed subsequent to the Companys completion of the Companys
initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
**
74
**
*Promissory Notes - Related Party*
On December 11, 2024, the Sponsor agreed to loan
the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the
Promissory Note). The Promissory Note is non-interest bearing and payable on the earlier of December 31, 2025 or the date
on which the Company consummates the Initial Public Offering of its securities. During the year ended December 31, 2025, the balance
of the Promissory Note was paid in full and borrowings under the note are no longer available.
**
*Underwriting Agreement*
The Company granted the Underwriters a 45-day
option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting
commissions. Simultaneously with the closing of the Initial Public Offering, the Underwriters elected to fully exercise the over-allotment
option to purchase the additional 2,250,000 Units at a price of $10.00 per Unit.
The Underwriters were entitled to (1) an underwriting
discount of $0.20 per Unit, or $3,450,000 in the aggregate, of which (i) $0.10 per Unit was paid to the Underwriters in cash at the closing
of the Initial Public Offering and (ii) $0.10 per Unit was used by the Underwriters to purchase Private Placement Warrants, and (2) a
deferred fee of $0.40 per Unit, or $6,900,000. The deferred fee will become payable to the Underwriters from the amounts held in the
Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement,
and will be based on the amount of funds remaining in the Trust Account after shareholder redemptions of Public Shares in connection
with the consummation of a Business Combination.
****
**Critical Accounting Estimates**
The preparation of financial statements and
related disclosures in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could
materially differ from those estimates. We have not identified any critical accounting estimates.
*Recent Accounting Standards*
In November 2023, the FASB issued Accounting
Standards Update (ASU) 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*(ASU
2023-07). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that
are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items
included in the reported measure of segment profit or loss.
The ASU requires that a public entity disclose
the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing
segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently
required by ASC Topic 280, *Segment Reporting* (ASC 280) in interim periods, and entities with a single reportable
segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in ASC 280.
The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December
15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on December 9, 2024, the date of its incorporation.
The Companys management does not believe
that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect
on the accompanying financial statements.
**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.**
We are a smaller reporting company as defined
by Rule 12b-2 of the Exchange Act of 1934, as amended, and are not required to provide the information otherwise required under this
item.
75
****
**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.**
**Table of Contents**
| Report of Independent Registered Public Accounting Firm (PCAOB ID 100) | | F-2 | |
| | | | |
| Balance Sheets as of December 31, 2025 and 2024 | | F-3 | |
| | | | |
| Statements of Operations for the Year Ended December 31, 2025 and for the Period from December 9, 2024 (inception) through December 31, 2024 | | F-4 | |
| | | | |
| Statements of Changes in Stockholders Equity (Deficit) for the Year Ended December 31, 2025 and for the Period from December 9, 2024 (inception) through December 31, 2024 | | F-5 | |
| | | | |
| Statements of Cash Flows for the Year Ended December 31, 2025 and for the Period from December 9, 2024 (inception) through December 31, 2024 | | F-6 | |
| | | | |
| Notes to the Financial Statements | | F-7 | |
F-1
**Report
of Independent Registered Public Accounting Firm**
To the Board of Directors and Shareholders of
Digital Asset Acquisition Corp.
**Opinion on the Financial Statements**
****
We have audited the accompanying balance sheets
of Digital Asset Acquisition Corp. as of December 31, 2025 and 2024, and the related statements of operations, changes in shareholders
deficit, and cash flows for the year ended December 31, 2025, and for the period from December 9, 2024 (inception) through December 31,
2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly,
in all material respects, the financial position of Digital Asset Acquisition Corp. as of December 31, 2025 and 2024, and the results
of its operations and its cash flows for the year ended December 31, 2025, and for the period from December 9, 2024 (inception) through
December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
**Going Concern**
****
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, if the Company
is unable to complete a business combination by October 30, 2026, (or January 30, 2027, if the Company has executed a definitive agreement
for an initial business combination within 18 months of the Initial Public Offering), then the Company will cease all operations except
for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial
doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
**Basis for Opinion**
****
These financial statements are the responsibility
of the entitys management. Our responsibility is to express an opinion on the entitys financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to Digital Asset Acquisition Corp. in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. Digital Asset Acquisition Corp. is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of
the entitys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as Digital Asset Acquisition Corp.'s auditor since 2025.
New York, NY
March 2, 2026
PCAOB ID Number 100
F-2
**DIGITAL ASSET ACQUISITION CORP.**
**BALANCE SHEETS**
|
| |
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
ASSETS | |
| | |
| | |
|
Current assets: | |
| | |
| | |
|
Cash and cash equivalents | |
$ | 1,060,921 | | |
$ | | | |
|
Prepaid insurance | |
| 65,625 | | |
| | | |
|
Prepaid expenses and other current assets | |
| 20,000 | | |
| | | |
|
Total current assets | |
| 1,146,546 | | |
| | | |
|
Deferred offering costs | |
| | | |
| 25,000 | | |
|
Marketable securities held in Trust Account | |
| 177,124,457 | | |
| | | |
|
Long-term prepaid insurance | |
| 21,734 | | |
| | | |
|
TOTAL ASSETS | |
$ | 178,292,737 | | |
$ | 25,000 | | |
|
| |
| | | |
| | | |
|
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION,
AND SHAREHOLDERS EQUITY (DEFICIT) | |
| | | |
| | | |
|
Current liabilities: | |
| | | |
| | | |
|
Accrued expenses | |
$ | 102,889 | | |
$ | 4,791 | | |
|
Due to related party | |
| 6,647 | | |
| 321 | | |
|
Total current liabilities | |
| 109,536 | | |
| 5,112 | | |
|
Deferred underwriting fee payable | |
| 6,900,000 | | |
| | | |
|
Total Liabilities | |
| 7,009,536 | | |
| 5,112 | | |
|
| |
| | | |
| | | |
|
Commitments and Contingencies (Note 7) | |
| | | |
| | | |
|
Class A ordinary shares subject to possible redemption, 17,250,000 and 0 shares at redemption value of $10.27 and $0 per share at December 31, 2025 and 2024, respectively | |
| 177,124,457 | | |
| | | |
|
| |
| | | |
| | | |
|
Shareholders Equity (Deficit) | |
| | | |
| | | |
|
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding at December 31, 2025 and 2024 | |
| | | |
| | | |
|
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none issued or outstanding at December 31, 2025 and 2024 (excluding 17,250,000 Class A ordinary shares subject to possible redemption) | |
| | | |
| | | |
|
Class B ordinary shares, $0.0001 par value, 50,000,000 shares authorized, 5,750,000 shares issued and outstanding at December 31, 2025 and 2024 (1) | |
| 575 | | |
| 575 | | |
|
Additional paid-in capital | |
| | | |
| 24,425 | | |
|
Accumulated deficit | |
| (5,841,831 | ) | |
| (5,112 | ) | |
|
Total Shareholders Equity (Deficit) | |
| (5,841,256 | ) | |
| 19,888 | | |
|
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION,
AND SHAREHOLDERS EQUITY (DEFICIT) | |
$ | 178,292,737 | | |
$ | 25,000 | | |
|
(1) | At December 31, 2024, included 750,000 Class B ordinary shares
that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the Underwriters (Note 6). On April
30, 2025, the Underwriters over-allotment option was exercised in full simultaneously with the Initial Public Offering, and the
750,000 Class B ordinary shares were no longer subject to forfeiture. |
|
*The accompanying notes
are an integral part of these financial statements.*
F-3
**DIGITAL ASSET ACQUISITION CORP.
STATEMENTS OF OPERATIONS**
****
|
| |
For the Year Ended December31, 2025 | | |
For the Period from December9, 2024 (inception)
through December31, 2024 | | |
|
General and administrative expenses | |
$ | 379,159 | | |
$ | 5,112 | | |
|
Loss from operations | |
$ | (379,159 | ) | |
$ | (5,112 | ) | |
|
| |
| | | |
| | | |
|
Other income: | |
| | | |
| | | |
|
Net earnings on marketable securities held in Trust Account | |
| 4,606,744 | | |
| | | |
|
Net earnings on cash equivalents held in Operating Account | |
| 16,940 | | |
| | | |
|
Net income (loss) | |
$ | 4,244,525 | | |
$ | (5,112 | ) | |
|
| |
| | | |
| | | |
|
Weighted average shares outstanding, Class A ordinary shares | |
| 11,626,027 | | |
| | | |
|
Basic and diluted net income (loss) per Class A ordinary share | |
$ | 0.25 | | |
$ | 0.00 | | |
|
| |
| | | |
| | | |
|
Basic weighted average shares outstanding, Class B ordinary shares(1) | |
| 5,505,479 | | |
| 5,000,000 | | |
|
Basic net income (loss) per Class B ordinary share | |
$ | 0.25 | | |
$ | 0.00 | | |
|
| |
| | | |
| | | |
|
Diluted weighted average shares outstanding, Class B ordinary shares(1) | |
| 5,565,068 | | |
| 5,000,000 | | |
|
Diluted net income (loss) per Class B ordinary share | |
$ | 0.25 | | |
$ | (0.00 | ) | |
|
(1) | The calculation of basic and diluted net income (loss) per
ordinary share for the year ended December 31, 2025 and for the period from December 9, 2024 (inception) through December 31, 2024 excluded
up to 750,000 Class B ordinary shares that were subject to forfeiture if the over-allotment option was not exercised in full or in part
by the Underwriters (Note 6). On April 30, 2025, the Underwriters over-allotment option was exercised in full simultaneously with
the Initial Public Offering, and the 750,000 Class B ordinary shares were no longer subject to forfeiture. |
|
*The accompanying notes
are an integral part of these financial statements.*
F-4
****
**DIGITAL ASSET ACQUISITION CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (DEFICIT)**
****
**FOR THE YEAR ENDED DECEMBER 31, 2025**
****
|
| |
Class B Ordinary Shares(1) | | |
Additional
Paid-in | | |
Accumulated | | |
Total Shareholders
Equity | | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | (Deficit) | | |
|
Balance at January 1, 2025 | |
| 5,750,000 | | |
$ | 575 | | |
$ | 24,425 | | |
$ | (5,112 | ) | |
$ | 19,888 | | |
|
Proceeds from sale of Private Placement Warrants, less issuance costs | |
| | | |
| | | |
| 5,432,215 | | |
| | | |
| 5,432,215 | | |
|
Proceeds from sale of Public Warrants, less issuance costs | |
| | | |
| | | |
| 468,608 | | |
| | | |
| 468,608 | | |
|
Accretion of Class A ordinary shares subject to possible redemption to redemption value | |
| | | |
| | | |
| (5,925,248 | ) | |
| (10,081,244 | ) | |
| (16,006,492 | ) | |
|
Net income | |
| | | |
| | | |
| | | |
| 4,244,525 | | |
| 4,244,525 | | |
|
Balance at December 31, 2025 | |
| 5,750,000 | | |
$ | 575 | | |
$ | | | |
$ | (5,841,831 | ) | |
$ | (5,841,256 | ) | |
**FOR THE PERIOD FROM DECEMBER 9, 2024 (INCEPTION) THROUGH DECEMBER
31, 2024**
|
| |
Class B Ordinary Shares(1) | | |
Additional
Paid-in | | |
Accumulated | | |
Total Shareholders
Equity | | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(Deficit) | | |
|
Balance at December 9, 2024 (inception) | |
| | | |
$ | | | |
$ | | | |
$ | | | |
$ | | | |
|
Issuance of Class B ordinary shares to Sponsor | |
| 5,750,000 | | |
| 575 | | |
| 24,425 | | |
| | | |
| 25,000 | | |
|
Net loss | |
| | | |
| | | |
| | | |
| (5,112 | ) | |
| (5,112 | ) | |
|
Balance at December 31, 2024 | |
| 5,750,000 | | |
| 575 | | |
| 24,425 | | |
| (5,112 | ) | |
| 19,888 | | |
|
(1) | Upon the issuance of Class B Ordinary Shares and at January
1, 2025, included up to 750,000 Class B ordinary shares that were subject to forfeiture if the over-allotment option was not exercised
in full or in part by the Underwriters (Note 6). On April 30, 2025, the Underwriters over-allotment option was exercised in full
simultaneously with the Initial Public Offering, and the 750,000 Class B ordinary shares were no longer subject to forfeiture. |
|
*The accompanying notes
are an integral part of these financial statements.*
F-5
****
**DIGITAL ASSET ACQUISITION CORP.
STATEMENTS OF CASH FLOWS**
****
|
| |
For the Year Ended
December 31,
2025 | | |
For the
Period from
December 9,
2024
(inception) through
December31,
2024 | | |
|
Cash Flows from Operating Activities: | |
| | |
| | |
|
Net income (loss) | |
$ | 4,244,525 | | |
$ | (5,112 | ) | |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | | |
|
Earnings on marketable securities held in Trust Account | |
| (4,624,457 | ) | |
| | | |
|
Operating expenses paid via promissory note - related party | |
| 112,848 | | |
| | | |
|
Operating costs paid by Sponsor from proceeds | |
| 267,836 | | |
| | | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Prepaid insurance | |
| (87,359 | ) | |
| 4,791 | | |
|
Prepaid expenses and other current assets | |
| (20,000 | ) | |
| 321 | | |
|
Accrued expenses | |
| 98,098 | | |
| | | |
|
Due to related party | |
| 6,326 | | |
| | | |
|
Net cash used in operating activities | |
| (2,183 | ) | |
| | | |
|
| |
| | | |
| | | |
|
Cash Flows from Investing Activities: | |
| | | |
| | | |
|
Cash deposited into Trust Account | |
| (172,500,000 | ) | |
| | | |
|
Net cash used in investing activities | |
| (172,500,000 | ) | |
| | | |
|
| |
| | | |
| | | |
|
Cash Flows from Financing Activities: | |
| | | |
| | | |
|
Proceeds from sale of Units, net of underwriting discounts paid | |
| 167,662,281 | | |
| | | |
|
Proceeds from Private Placement Warrants, less issuance costs | |
| 5,432,215 | | |
| | | |
|
Proceeds from Public Warrants, less issuance costs | |
| 468,608 | | |
| | | |
|
Net cash provided by financing activities | |
| 173,563,104 | | |
| | | |
|
| |
| | | |
| | | |
|
Net Change in Cash and Cash Equivalents | |
| 1,060,921 | | |
| | | |
|
Cash and Cash Equivalents - Beginning of year | |
| | | |
| | | |
|
Cash and Cash Equivalents- End of year | |
$ | 1,060,921 | | |
$ | | | |
|
| |
| | | |
| | | |
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |
| | | |
| | | |
|
Deferred offering cost paid by Sponsor in exchange for issuance of Class B ordinary shares | |
$ | | | |
$ | (25,000 | ) | |
|
Deferred underwriting fee payable charged to Class A ordinary share issuance costs | |
$ | 6,900,000 | | |
$ | | | |
|
Underwriting fees paid via the issuance of Private Placement Warrants | |
$ | 1,725,000 | | |
$ | | | |
|
Repayment of promissory note - related party via funds held by Sponsor | |
$ | 112,848 | | |
$ | | | |
*The accompanying notes
are an integral part of these financial statements.*
F-6
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
**NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS
OPERATIONS AND GOING CONCERN**
Digital Asset Acquisition Corp. (the Company)
is a blank check company incorporated on December 9, 2024 as a Cayman Islands exempted company. The Company was formed for the purpose
of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses (a Business Combination). The Company is not limited to a particular industry or geographic region for
purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company
is subject to all of the risks associated with early stage and emerging growth companies.
As of December31, 2025, the Company had not commenced any operations.
All activity for the period from December 9, 2024 (inception) through December 31, 2025 relates to the Companys formation,initial
public offering (Initial Public Offering), and identifying a target for the Business Combination (defined below). The Company
will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income on marketable securities from the proceeds derived from the Initial Public Offering
and sale of Private Placement Warrants (defined below), as well as cash equivalents held in the Operating account. The Company has selected
December 31 as its fiscal year end.
The registration statement for the Companys
Initial Public Offering was declared effective on April28, 2025. On April 30, 2025, the Company consummated the Initial Public
Offering of 17,250,000 units (the Units and, with respect to the Class A ordinary shares included in the Units sold, the
Public Shares), including 2,250,000 Units issued pursuant to the exercise of the Underwriters (as defined below)
over-allotment option in full, generating gross proceeds of $172,500,000 (see Note 3). Each Unit consists of one Class A ordinary share
and one-half of one redeemable warrant (the Public Warrants). Each whole Public Warrant entitles the holder thereof to
purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 5,450,000 warrants at a price of $1.00 per warrant (the Private Placement
Warrants), generating gross proceeds of $5,450,000. Of the 5,450,000 Private Placement Warrants, (i) Cohen & Company Capital
Markets, a division of Cohen & Company Securities, LLC (the Representative), purchased 1,466,250 Private Placement
Warrants, (ii) Clear Street LLC (Clear Street and together with the Representative, the Underwriters) purchased
258,750 Private Placement Warrants and (iii) DAAQ Sponsor LLC, a Delaware limited liability company (the Sponsor), purchased
3,725,000 Private Placement Warrants.
Following the closing of the Initial Public Offering
on April 30, 2025, an amount of $172,500,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the sale
of the Private Placement Warrants was placed in a trust account (the Trust Account), to be invested only in U.S. government
treasury obligations with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act of 1940, as amended (the Investment Company Act), which invest only in direct U.S. government treasury
obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust
Account, as described below.
Transaction costs related to the issuances described
above amounted to $10,931,212, consisting of $1,725,000 of cash underwriting fees, $1,725,000 of underwriting fees paid via the issuance
of Private Placement Warrants, $6,900,000 of deferred underwriting fees and $581,212 of other offering costs.
F-7
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The Companys management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination
with one or more target businesses that together have an aggregate fair market value of at least 80% of the Trust Account (excluding
the amount of deferred underwriting discounts held in the Trust Account and taxes paid or payable on the income earned on the Trust Account)
at the time of the agreement to enter into the initial Business Combination. The Company will only complete a Business Combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a
controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act. Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in
the Initial Public Offering, including the proceeds from the sale of the Private Placement Warrants, will be held in the Trust Account.
The Company will provide its holders of the outstanding
Public Shares (the Public Shareholders) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then held in the Trust Account, plus any interest income earned thereon (initially anticipated
to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to
the Company to pay its tax obligations). There will be no redemption rights upon completion of a Business Combination with respect to
the Companys warrants. The Public Shares subject to redemption will be recorded at redemption value and classified as temporary
equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 480, *Distinguishing Liabilities from Equity*(ASC 480).
The Company will proceed with a Business Combination
only if a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and
the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its amended and restated
memorandum and articles of association (the Amended and Restated Memorandum and Articles of Association), conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (SEC) and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or
the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval
in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6) and any Public Shares
purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder
may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or whether they do
not vote or abstain from voting on the proposed transaction, or whether they were a Public Shares on the record date for the general
meeting held to approve the proposed transaction.
Notwithstanding the above, if the Company
seeks shareholder approval of a Business Combination and the Company does not conduct redemptions pursuant to the tender offer
rules, the Amended and Restated 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 Securities Exchange Act of 1934, as amended (the Exchange
Act)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public
Shares, without the prior consent of the Company.
The Sponsor has agreed to waive redemption rights
with respect to any Founder Shares held and any Public Shares they may have acquired during or after the Initial Public Offering in connection
with the completion of a Business Combination, except that Public Shares held by the initial shareholders will be subject to mandatory
redemption upon any diminution of the Trust Account in connection with an extension, and such shares will be entitled to redemption at
a price equal to the per share redemption value then held in the Trust Account in connection therewith.
F-8
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The Company will have until October30,
2026 (or January30, 2027), 18 months from the closing of the Initial Public Offering (or 21 months from the closing of the Initial
Public Offering if the Company has executed a definitive agreement for an initial Business Combination within 18 months of the Initial
Public Offering) to complete a Business Combination (the Completion Period). However, if the Company anticipates that it
may not be able to consummate a Business Combination within the Completion Period, the Company may, but is not obligated to, by resolution
of the board if requested by the initial shareholders, extend the period of time to consummate a Business Combination by seeking shareholder
approval to amend the Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must consummate
the initial Business Combination. If the Company seeks shareholder approval for an extension, holders of Public Shares will be offered
an opportunity to redeem their shares, regardless of whether they abstain, vote for, or against, the Companys 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
earned thereon (which interest shall be net of amounts not previously released to the Company pursuant to permitted withdrawals), divided
by the number of then issued and outstanding Public Shares, subject to applicable law. For the avoidance of doubt, the time to complete
a Business Combination shall not be extended beyond 18 months (or 21 months as discussed above) without a shareholder vote. The Underwriters
have agreed to waive their rights to their deferred underwriting commission held in the Trust Account in the event the Company does not
complete a Business Combination within the Completion Period and, in such event, such amounts will be included with the other funds held
in the Trust Account that will be available to fund the redemption of the Public Shares.
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent,
confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the
liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the Trust Account assets, in
each case less taxes payable and up to $100,000 of interest to pay liquidation expenses, provided that such liability will not apply
to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust
Account (whether or not such waiver is enforceable) nor will it apply to any claims under the indemnity of the Underwriters of the Initial
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the Securities
Act).
****
**Liquidity, Capital Resources and Going Concern**
As of December31, 2025, the Company had
a working capital surplus of $1,037,010. Prior to the completion of the Initial Public Offering, the Company lacked the liquidity it
needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial
statements. The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in the
Trust Account and/or used to fund offering expenses will be available to the Company for general working capital purposes. At the closing
of the Initial Public Offering on April 30, 2025, $1,602,224 of the proceeds was due to the Company to be held by the Sponsor outside
of the Trust Account for working capital purposes. On August 14, 2025, the Company received the outstanding balance due from Sponsor,
totaling $1,221,540. The amount received reflects the gross balance due, net of general and administrative expenses paid directly by
the Sponsor on behalf of the Company.
F-9
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The Company has evaluated whether there are certain
conditions and events, considered in the aggregate, that raise substantial doubt about the Companys ability to continue as a going
concern within one year after the date that the financial statements are issued. The Company will have until the end of the Completion
Period to consummate a Business Combination. If a Business Combination is not consummated by the end of the Completion Period, there
will be a mandatory liquidation and subsequent dissolution of the Company. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after October30, 2026 (or January30, 2027). The Company intends
to complete the initial Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company
will be able to consummate any Business Combination by October30, 2026 (or January30, 2027). Therefore, the Company has concluded
that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these financial
statements are issued.
**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES**
****
**Basis of Presentation**
The Companys financial statements have
been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP),
and pursuant to the rules and regulations of the SEC.
****
**Emerging Growth Company**
The Company is an emerging growth company,
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act)
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies but
not to emerging growth companies including, but not limited to, the independent registered public accounting firm attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and
proxy statements, and the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make
comparison of the Companys financial statements with another public company that is neither an emerging growth company nor an
emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
****
**Use of Estimates**
The preparation of financial statements in conformity
with U.S. GAAP requires the Companys management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of expenses and disclosure of contingent assets and liabilities
during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements,
which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
actual results could differ from those estimates.
****
F-10
****
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**Cash and Cash Equivalents**
The Company considers all short-term investments,
other than those held in the Trust Account, with an original maturity of three months or less when purchased to be cash equivalents.
The Company had cash and cash equivalents of $1,060,921 as of December31, 2025 and $0 as of December31, 2024.
****
**Marketable Securities Held in Trust Account**
As of December31, 2025, marketable securities
held in the Trust Account are comprised of U.S. government treasury bills maturing within three months amounting to $177,124,457. As
of December31, 2024, the Company did not hold marketable securities held in the Trust Account.
****
**Class A Ordinary Shares Subject to Possible Redemption**
The Companys Class A ordinary shares that
were sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public
Shares in connection with the Companys liquidation, if there is a shareholder vote or tender offer in connection with the Business
Combination and in connection with certain amendments to the Companys Amended and Restated Memorandum and Articles of Association.
In accordance with ASC 480, conditionally redeemable Class A ordinary shares (including Class A ordinary shares that have redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Companys control) are classified as temporary equity. Ordinary liquidation events, which involve the redemption and liquidation
of all of the entitys equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a
maximum redemption threshold, its charter provides that currently, the Company will only redeem its Public Shares. However, the threshold
in its Amended and Restated Memorandum and Articles of Association would not change the nature of the underlying shares as redeemable
and thus the Public Shares are required to be presented outside of permanent equity. The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value ($10.27 per share
as of December31, 2025) at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the
absence of additional paid-in capital, in accumulated deficit.
As of December31, 2025, the Class A ordinary shares reflected
in the balance sheet are reconciled in the following table:
|
Gross proceeds | |
$ | 172,500,000 | | |
|
Less: | |
| | | |
|
Proceeds allocated to Public Warrants | |
| (500,250 | ) | |
|
Issuance costs allocated to Class A ordinary shares | |
| (10,881,785 | ) | |
|
Plus: | |
| | | |
|
Accretion of carrying value to redemption value | |
| 16,006,492 | | |
|
Class A ordinary shares subject to possible redemption | |
$ | 177,124,457 | | |
****
F-11
****
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**Offering Costs Associated with the Initial
Public Offering**
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A, *Expenses of Offering*. Offering costs consist principally of professional
and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly
attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for
equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting
to $10,931,212, consisting of $1,725,000 of cash underwriting fees, $1,725,000 of underwriting fees paid via the issuance of Private
Placement Warrants, $6,900,000 of deferred underwriting fees and $581,212 of other offering costs. As such, the Company recorded $10,881,785
of offering costs as a reduction of temporary equity and $49,427 of offering costs as a reduction of permanent equity.
****
**Income Taxes**
The Company follows the asset and liability method
of accounting for income taxes under ASC Topic 740, Income Taxes (ASC 740). Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of December 31, 2025 or 2024. The Company is currently not aware of
any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands, and the Company believes it is presently not subject to income taxes or income tax filing requirements
in the United States. As such, the Companys tax provision was zero for the periods presented.
**Concentration of Credit Risk**
Financial instruments that potentially subject
the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal
Deposit Insurance Corporation of $250,000. The Company has not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.
****
**Net Income (Loss) per Ordinary Share**
Net income (loss) per ordinary share is computed
by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. At December 31, 2025,
the calculation of diluted net income per Class A Ordinary Share does not consider the effect of the Public Warrants issued in connection
with the Initial Public Offering and the Private Placement Warrants to purchase an aggregate of 14,075,000 Class A Ordinary Shares, because
their exercise is contingent upon future events. As a result, diluted income per Class A ordinary share is the same as basic income per
Class A ordinary share.
The Company has two classes of ordinary shares, which are
referred to as redeemable Class A ordinary shares and Class B ordinary shares. Accretion associated with the redeemable shares of Class
A ordinary shares is excluded from income (loss) per ordinary share as the redemption value approximates fair value.
F-12
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The following tables reflect the calculation
of basic and diluted net income (loss) per share:
|
| |
For the Year Ended
December 31,
2025 | | |
For the Period from
December 9, 2024
(inception) through December 31,
2024 | | |
|
| |
Class A | | |
Class B(1) | | |
Class A | | |
Class B(1) | | |
|
Basic net income (loss) per share: | |
| | |
| | |
| | |
| | |
|
Numerator: | |
| | |
| | |
| | |
| | |
|
Net income (loss) | |
$ | 2,880,480 | | |
$ | 1,364,045 | | |
$ | | | |
$ | (5,112 | ) | |
|
Denominator: | |
| | | |
| | | |
| | | |
| | | |
|
Weighted Average Ordinary Shares | |
| 11,626,027 | | |
| 5,505,479 | | |
| | | |
| 5,000,000 | | |
|
Basic net income (loss) per ordinary share | |
$ | 0.25 | | |
$ | 0.25 | | |
$ | 0.00 | | |
$ | (0.00 | ) | |
|
| |
For the Year Ended
December 31,
2025 | | |
For the Period from
December 9, 2024
(inception) through December 31,
2024 | | |
|
| |
Class A | | |
Class B(1) | | |
Class A | | |
Class B(1) | | |
|
Diluted net income (loss) per share: | |
| | |
| | |
| | |
| | |
|
Numerator: | |
| | |
| | |
| | |
| | |
|
Net income (loss) | |
$ | 2,870,496 | | |
$ | 1,374,029 | | |
$ | | | |
$ | (5,112 | ) | |
|
Denominator: | |
| | | |
| | | |
| | | |
| | | |
|
Weighted Average Ordinary Shares | |
| 11,626,027 | | |
| 5,565,068 | | |
| | | |
| 5,000,000 | | |
|
Diluted net income (loss) per ordinary share | |
$ | 0.25 | | |
$ | 0.25 | | |
$ | 0.00 | | |
$ | (0.00 | ) | |
|
(1) | Excludes up to 750,000 Class B ordinary shares that were
subject to forfeiture if the over-allotment option was not exercised in full or in part by the Underwriters (Note 6). On April 30, 2025,
the Underwriters over-allotment option was exercised in full simultaneously with the Initial Public Offering, and the 750,000
Class B ordinary shares were no longer subject to forfeiture. |
|
****
F-13
****
**DIGITAL ASSET ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**Fair Value of Financial Instruments**
The fair value of the Companys assets
and liabilities, which qualify as financial instruments under ASC Topic 820, *Fair Value Measurement*, approximates the carrying
amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
****
**Warrants**
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrants specific terms and applicable authoritative guidance
in ASC 480 and ASC Topic 815, *Derivatives and Hedging* (ASC 815). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Companys
own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment,
is conducted at the time of warrant issuance and as of each subsequent period end date while the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required
to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in
the estimated fair value of the warrants are recognized as a non-cash gain or loss in the statements of operations.
The Public Warrants and Private Placement Warrants
are not precluded from equity classification and were accounted for as such on the date of issuance.
****
**Share-Based Compensation**
The Company records share-based compensation
in accordance with ASC Topic 718, *Compensation-Share Compensation* (ASC 718). ASC 718 defines a fair value-based
method of accounting for an employee share option or similar equity instrument. The Company recognizes all forms of share-based payments
at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based
payments are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services
rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are
amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted,
but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.
Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the
statements of operations.
****
**Recently Adopted Accounting Standards**
In November 2023, the FASB issued Accounting
Standards Update (ASU) 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*(ASU
2023-07). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that
are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items
included in the reported measure of segment profit or loss.
The ASU requires that a public entity disclose
the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing
segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently
required by ASC Topic 280, *Segment Reporting* (ASC 280), in interim periods, and entities with a single reportable
segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in ASC 280.
The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December
15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on December 9, 2024, the date of its incorporation. The adoption did not have a material impact on the consolidated financial statements, refer to Note 5, Segment
Information.
No other recently issued accounting pronouncements are expected to
have a material impact on the Company.
F-14
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
**NOTE 3. INITIAL PUBLIC OFFERING**
The registration statement for the Companys Initial
Public Offering was declared effective on April 28, 2025. On April 30, 2025, the Company consummated the Initial Public Offering of 17,250,000
Units, including 2,250,000 Units issued pursuant to the exercise of the Underwriters over-allotment option in full, generating gross
proceeds of $172,500,000. Each Unit consisted of one Class A ordinary share and one-half of one Public Warrant. Each whole Public Warrant
entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share, subject to adjustment (see
Note 8).
**NOTE 4. PRIVATE PLACEMENT**
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 5,450,000 Private Placement Warrants at a price of $1.00 per warrant generating gross
proceeds of $5,450,000. Of the 5,450,000 Private Placement Warrants, the Underwriters purchased an aggregate of 1,725,000 Private Placement
Warrants and the Sponsor purchased 3,725,000 Private Placement Warrants. The proceeds from the sale of the Private Placement Warrants
were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business
Combination within the Completion Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will
be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants
will expire worthless.
**NOTE 5. SEGMENT INFORMATION**
ASC 280 establishes standards for companies to
report, in their financial statements, information about operating segments, products, services, geographic areas, and major customers.
Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues
and incur expenses, and for which separate financial information is available that is regularly evaluated by the Companys CODM
in deciding how to allocate resources and assess performance.
The Companys CODM has been identified as
the Chief Financial Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources
and assessing financial performance. Management has determined that the Company only has one reportable segment.
The CODM assesses performance for the single segment
and decides how to allocate resources based on net income or loss that also is reported on the statements of operations as net income
or loss. The measure of segment assets is reported on the balance sheets as total assets. When evaluating the Companys performance
and making key decisions regarding resource allocation, the CODM reviews several key metrics, which include the following:
|
| |
For the
Year Ended
December 31,
2025 | | |
For the
Period from
December9, 2024
(inception) through
December31,
2024 | | |
|
Total assets | |
$ | 178,292,737 | | |
$ | 25,000 | | |
|
| |
For the
Year Ended
December31,
2025 | | |
For the
Period from
December 9, 2024
(inception) through
December31,
2024 | | |
|
General and administrative expenses | |
$ | 379,159 | | |
$ | 5,112 | | |
|
Net earnings on marketable securities held in Trust Account | |
| 4,606,744 | | |
| - | | |
|
Net income (loss) | |
$ | 4,244,525 | | |
$ | (5,112 | ) | |
F-15
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
General and administrative expenses are reviewed
and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination or similar
transaction within the Completion Period. The CODM also reviews general and administrative expenses to manage, maintain and enforce all
contractual agreements to ensure costs are aligned with all agreements and budget. General and administrative expenses, as reported on
the statements of operations, are the significant segment expenses provided to the CODM on a regular basis.
The CODM will review net earnings on marketable securities held in Trust Account to measure and monitor shareholder value while maintaining
compliance with the trust agreement. All other segment items included in net income or loss are reported
on the statements of operations and described within their respective disclosures.
**NOTE 6. RELATED PARTY TRANSACTIONS**
****
**Founder Shares**
On December 11, 2024, the Sponsor was issued 5,750,000
Class B ordinary shares (the Founder Shares) for an aggregate price of $25,000 paid to cover certain expenses on behalf
of the Company. The Founder Shares included an aggregate of up to 750,000 Class B ordinary shares subject to forfeiture by the Sponsor
to the extent that the Underwriters over-allotment option was not exercised in full or in part, so that the Sponsor would own,
on an as-converted basis, 25% of the Companys issued and outstanding shares after the Initial Public Offering (assuming the Sponsor
does not purchase any Public Shares in the Initial Public Offering). On April 30, 2025, the Underwriters exercised their over-allotment
option in full as part of the closing of the Initial Public Offering. As such, the 750,000 Founder Shares are no longer subject to forfeiture.
In January 2025, the Sponsor transferred 25,000
Founder Shares to each of our independent directors (for an aggregate of 75,000 Class B ordinary shares) and 10,000 Founder Shares to
each of our advisors (for an aggregate of 40,000 Class B ordinary shares) at the same price that the Sponsor had purchased such
shares or approximately $0.004 per share. The Class B ordinary shares will automatically convert into Class A ordinary shares immediately
prior to, concurrently with or immediately following the consummation of the initial Business Combination, or at any time prior thereto
at the option of the holder thereof, on a one-for-one basis.
The transfer of the Founder Shares to the Companys
advisors and directors is in the scope of ASC 718. Under ASC 718, stock-based compensation associated with equity-classified awards is
measured at fair value upon the grant date. The Company determined the conversion of such Class B ordinary shares into Class A ordinary
shares upon consummation of the initial Business Combination represents a performance obligation. Compensation expense related to the
Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature.
The condition of the consummation of an initial Business Combination is considered not to be probable and, as such, the Company has not
recognized the expense related to the issuance of these shares.
The Founder Shares are designated as Class B ordinary
shares and, except as described below, are identical to the Class A ordinary shares included in the Units sold in the Initial Public Offering,
and holders of Founder Shares have the same shareholder rights as Public Shareholders, except that (i) the Founder Shares are subject
to certain transfer restrictions, as described in more detail below, (ii) the Founder Shares are entitled to registration rights, (iii)
the Companys Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have
agreed to (A) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of
the Companys initial Business Combination, (B) waive their redemption rights with respect to their Founder Shares and Public Shares
in connection with a shareholder vote to approve an amendment to the Companys Amended and Restated Memorandum and Articles of Association
(1) to modify the substance or timing of the Companys obligation to allow redemption in connection with the Companys initial
Business Combination or to redeem 100% of the Companys Public Shares if the Company has not consummated an initial Business Combination
within the Completion Period, (2) with respect to any other material provisions relating to shareholders rights or pre-initial
Business Combination activity, (3) waive their rights to liquidating distributions from the Trust Account with respect to their Founder
Shares if the Company fails to complete the Companys initial Business Combination within the Completion Period, although they will
be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete
the initial Business Combination within such time period and to liquidating distributions from assets outside the Trust Account and (4)
vote any Founder Shares held by them and any Public Shares purchased during or after the Initial Public Offering (including in open market
and privately negotiated transactions) in favor of the initial Business Combination (including any proposals recommended by the Companys
board of directors in connection with such Business Combination) (except with respect to any Public Shares which may not be voted in favor
of approving the Business Combination transaction in accordance with the requirements of Rule 14e-5 under the Exchange Act and any SEC
interpretations or guidance relating thereto), (iv) the Founder Shares are automatically convertible into Class A ordinary shares immediately
prior to, concurrently with or immediately following the consummation of the Companys initial Business Combination or at any time
prior thereto at the option of the holder on a one-for-one basis, subject to adjustment as described herein and in the Amended and Restated
Memorandum and Articles of Association, and (v) prior to the closing of the Companys initial Business Combination, only holders
of Class B ordinary shares will be entitled to vote on the appointment and removal of directors or continuing in a jurisdiction outside
the Cayman Islands (including any special resolution required to amend the constitutional documents or to adopt new constitutional documents,
in each case, as a result of approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands).
F-16
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
The Founder Shares will automatically convert
into Class A ordinary shares immediately prior to, concurrently with or immediately following the consummation of the initial Business
Combination or at any time prior thereto at the option of the holder on a one-for-one basis, subject to adjustment for share subdivisions,
share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case
that additional Class A ordinary shares, or any other equity-linked securities, are issued or deemed issued in excess of the amounts sold
in the Initial Public Offering and related to or in connection with the closing of the initial Business Combination, the ratio at which
Class B ordinary shares convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class
B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary
shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, 25% of the sum of (i) the total number of
all Class A ordinary shares outstanding upon the completion of the Initial Public Offering (including any Class A ordinary shares issued
pursuant to the Underwriters over-allotment option and excluding the Class A ordinary shares underlying the Private Placement Warrants
issued to the Sponsor and the Underwriters), plus (ii) all Class A ordinary shares and equity-linked securities issued or deemed issued
in connection with the Companys initial Business Combination (excluding any shares or equity-linked securities issued, or to be
issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to the Companys
Sponsor or any of its affiliates or to the Companys officers and directors upon conversion of working capital loans) minus (iii)
any redemptions of Class A ordinary shares by Public Shareholders in connection with an initial Business Combination; provided that such
conversion of Founder Shares will never occur on a less than one-for-one basis.
With certain limited exceptions, the Founder Shares
are not transferable, assignable or saleable (except to the Companys officers and directors and other persons or entities affiliated
with the Companys Sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after
the completion of the Companys initial Business Combination or earlier if, subsequent to the Companys initial Business Combination,
the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days
after the Companys initial Business Combination, and (B) the date following the completion of the Companys initial Business
Combination on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the
Companys shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
****
**Promissory Note - Related Party**
On December 11, 2024, the Sponsor agreed to loan the Company an aggregate
of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the Promissory Note).
This Promissory Note is non-interest bearing and payable on the earlier of December 31, 2025 or the date on which the Company consummates
the Initial Public Offering of its securities. During the year ended December 31, 2025, the balance of the Promissory Note was paid in
full to a related entity of the Sponsor, and borrowings under the note are no longer available.
****
**Due to Related Party**
The Companys
Sponsor has agreed to initially fund operating expenses related to the Initial Public Offering. These include legal fees, mailing, and
shipping expenses. As of December 31, 2025 and 2024, the Company had a total of $6,647 and $321,
respectively, outstanding that was due to related party.
****
F-17
****
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
****
**Administrative Support Agreement**
The Sponsor has agreed, commencing from April 30, 2025, the date of
the Initial Public Offering, through the earlier of the Companys consummation of a Business Combination and its liquidation, to
make available to the Company certain general and administrative services, including office space and administrative services, as the
Company may require from time to time. The Company has agreed to pay to the Sponsor up to $20,000 per month for these services during
the Completion Period. For the year ended December 31, 2025 and the period from December 9, 2024 (inception) through December 31, 2024,
the Company incurred $160,000 and $0, respectively, due to the Sponsor for these services, which are included in general and administrative
expenses on the accompanying statements of operations. As of December 31, 2025 and 2024, the Company had a total of $20,000 and $0, respectively,
of prepayments for services under the administrative support agreement which are included in prepaid expenses and other current assets
on the accompanying balance sheets.
****
**Working Capital Loans**
In order to finance transaction costs in connection
with the initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Companys officers and directors
may, but are not obligated to, loan the Company funds as may be required on a non-interest bearing basis. If the Company completes the
initial Business Combination, the Company will repay such loaned amounts. In the event that the initial Business Combination does not
close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds
from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of
$1.00 per warrant at the option of the lender, upon consummation of the initial Business Combination. The warrants would be identical
to the Private Placement Warrants. Other than as set forth above, the terms of such loans by the Companys officers and directors,
if any, have not been determined and no written agreements exist with respect to such loans. There are no such outstanding working capital
loans as of December31, 2025 and 2024.
**NOTE 7. COMMITMENTS AND CONTINGENCIES**
****
**Registration and Shareholder Rights Agreement**
The holders of the (i) Founder Shares, which were
issued in a private placement prior to the closing of the Initial Public Offering, (ii) Private Placement Warrants and the Class A ordinary
shares underlying such Private Placement Warrants and (iii) Private Placement Warrants that may be issued upon conversion of working capital
loans will have registration rights to require the Company to register a sale of any of the Companys securities held by them and
any other securities of the Company acquired by them prior to the consummation of the Companys initial Business Combination pursuant
to a registration rights agreement signed on the effective date of the Initial Public Offering. Pursuant to the registration rights agreement
and assuming $1,500,000 of working capital loans are converted into warrants, the Company will be obligated to register up to 12,700,000
Class A ordinary shares and 6,950,000 warrants. The number of Class A ordinary shares includes (i) 5,750,000 Class A ordinary shares to
be issued upon conversion of the Founder Shares, (ii) 5,450,000 Class A ordinary shares underlying the Private Placement Warrants and
(iii) 1,500,000 Class A ordinary shares underlying the warrants that may be issued upon conversion of working capital loans. The number
of warrants includes up to 5,450,000 Private Placement Warrants and 1,500,000 warrants that may be issued upon the conversion of working
capital loans. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company
registers such securities. In addition, the holders have certain piggyback registration rights with respect to registration
statements filed subsequent to the Companys completion of the Companys initial Business Combination. The Company will bear
the expenses incurred in connection with the filing of any such registration statements.
****
**Underwriting Agreement**
Pursuant to the underwriting agreement, the Sponsor
and the executive officers and directors have agreed that, for a period of 180 days from the date of the Initial Public Offering, they
will not, without the prior written consent of the Representative, offer, sell, contract to sell, pledge, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any units, warrants, ordinary shares or any other securities convertible into, or exercisable or exchangeable
for, any units, ordinary shares, Founder Shares or warrants, subject to certain exceptions. The Representative in its discretion may release
any of the securities subject to these lock-up agreements at any time without notice, other than in the case of the officers and directors,
which shall be with notice. The Sponsor, officers and directors are also subject to separate transfer restrictions on their Founder Shares
and Private Placement Warrants pursuant to the letter agreement described herein.
F-18
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
The Company granted the Underwriters a 45-day
option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting
commissions. On April 30, 2025, simultaneously with the closing of the Initial Public Offering, the Underwriters elected to fully exercise
the over-allotment option to purchase the additional 2,250,000 Units at a price of $10.00 per Unit.
The Underwriters were entitled to (1) an underwriting
discount of $0.20 per Unit, or $3,450,000 in the aggregate, of which (i) $0.10 per Unit was paid to the Underwriters in cash at the closing
of the Initial Public Offering and (ii) $0.10 per Unit was used by the Underwriters to purchase Private Placement Warrants, and (2) a
deferred fee of $0.40 per Unit, or $6,900,000. The deferred fee will become payable to the Underwriters from the amounts held in the Trust
Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement, and
will be based on the amount of funds remaining in the Trust Account after shareholder redemptions of Public Shares in connection with
the consummation of a Business Combination.
**NOTE 8. SHAREHOLDERS EQUITY (DEFICIT)**
****
**Preference shares** The Company
is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share with such designations, voting and other rights
and preferences as may be determined from time to time by the Companys board of directors. As of December31, 2025 and 2024,
there were no preference shares issued or outstanding.
****
**Class A ordinary shares **The
Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of the Companys Class
A ordinary shares are entitled to one vote for each share. As of December31, 2025, there were 17,250,000 Class A ordinary shares
issued and outstanding, including 17,250,000 Class A ordinary shares subject to possible redemption and classified as temporary equity.
As of December31, 2024, there were no shares of Class A ordinary shares issued and outstanding.
****
**Class B ordinary shares **The
Company is authorized to issue 50,000,000 shares of Class B ordinary shares with a par value of $0.0001 per share. Holders of Class B
ordinary shares are entitled to one vote for each share. As of December31, 2025 and 2024, there were 5,750,000 Class B ordinary
shares issued and outstanding.
Ordinary shareholders of record are entitled to
one vote for each share held on all matters to be voted on by shareholders. Except as described below, holders of Class A ordinary shares
and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Companys
shareholders except as required by law. Prior to the closing of the initial Business Combination, only holders of Class B ordinary shares
(i) will have the right to appoint and remove directors prior to or in connection with the completion of the initial Business Combination
and (ii) will be entitled to vote on continuing the Company in a jurisdiction outside the Cayman Islands (including any special resolution
required to amend constitutional documents or to adopt new constitutional documents, in each case, as a result of approving a transfer
by way of continuation in a jurisdiction outside the Cayman Islands). On any other matters submitted to a vote of shareholders prior to
or in connection with the completion of the initial Business Combination, holders of the Class B ordinary shares and holders of the Class
A ordinary shares will vote together as a single class, except as required by law.
The Founder Shares will automatically convert
into Class A ordinary shares immediately prior to, concurrently with or immediately following the consummation of a Business Combination,
and may be converted at any time prior to the Business Combination, at the option of the holder, on a one-for-one basis (unless otherwise
provided in the Business Combination agreement), subject to adjustment for share subdivisions, share dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked
securities are issued or deemed issued in connection with the Business Combination, the number of Class A ordinary shares issuable upon
conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, approximately 25% of the total number of Class
A ordinary shares outstanding after such conversion (not including the Class A ordinary shares underlying the Private Placement Warrants),
including the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the Business Combination,
excluding any Class A ordinary shares or equity-linked securities or rights exercisable for or convertible into Class A ordinary shares
issued, or to be issued, to any seller in the Business Combination and any Private Placement Warrants issued to the Sponsor, officers
or directors upon conversion of working capital loans, provided that such conversion of Founder Shares will never occur on a less than
one-for-one basis.
****
F-19
****
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
**Warrants **As of December31,
2025, there were 14,075,000 warrants issued including 8,625,000 Public Warrants, issued as part of the Units and 5,450,000 Private Placement
Warrants. Each whole Public Warrant entitles the registered holder to purchase one Class A ordinary share at a price of $11.50 per share,
subject to adjustment as discussed below, at any time commencing 30 days after the completion of the initial Business Combination. Pursuant
to the warrant agreement, a warrant holder may exercise its Public Warrants only for a whole number of Class A ordinary shares. No fractional
Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will expire
five years after the completion of the initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company has agreed that as soon as practicable,
but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use commercially reasonable
efforts to file with the SEC a post-effective amendment to an existing registration statement or a new registration statement covering
the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants and thereafter will
use the Companys commercially reasonable efforts to cause the same to become effective within 60 business days following the initial
Business Combination and to maintain a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants,
until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering
the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60) business day after the closing
of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any
period when the Company will have failed to maintain an effective registration statement, exercise warrants on a cashless basis
in accordance with Section 3(a)(9) of the Securities Act or another exemption.
Once the warrants become exercisable, the Company
may call the warrants for redemption for cash:
|
| in whole and not in part at a price of $0.01 per warrant; | |
|
| upon a minimum of 30 days prior written notice of redemption; and | |
|
| if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as
adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described below) for any
20 trading days within a 30-trading day period commencing at least 30 days after completion of the Companys initial Business Combination
and ending three business days before the Company sends the notice of redemption to the warrant holders. | |
If and when the warrants become redeemable by
the Company for cash, the Company may exercise the redemption right even if the Company is unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
In addition, if (x) the Company issues additional
Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business
Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary shares (with such issue price or effective
issue price to be determined in good faith by the Companys board of directors and, in the case of any such issuance to the initial
shareholders or their affiliates, without taking into account any Founder Shares held by the initial shareholders or such affiliates,
as applicable, prior to such issuance) (the Newly Issued Price), (y) the aggregate gross proceeds from such issuances represent
more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the
date of the consummation of the initial Business Combination (net of redemptions), and the volume weighted average trading price of the
Class A ordinary shares during the 20 trading day period starting on the trading day after the day on which the Company consummates the
initial Business Combination (such price, the Market Value) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00
per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price.
The Private Placement Warrants (including the
Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until
30 days after the completion of the initial Business Combination. The Private Placement Warrants have terms and provisions that are identical
to those of the Public Warrants sold as part of the Units in the Initial Public Offering.
F-20
**DIGITAL ASSET ACQUISITION CORP.**
**NOTES TO FINANCIAL STATEMENTS**
**DECEMBER 31, 2025**
The Company accounts for the 14,075,000 warrants
issued in connection with the Initial Public Offering (including 8,625,000 Public Warrants and 5,450,000 Private Placement Warrants) in
accordance with the guidance contained in ASC 815-40. Such guidance provides that the warrants described above are not precluded from
equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair
value are not recognized as long as the contracts continue to be classified in equity.
The fair value of the Public Warrants and Private
Placement Warrants at issuance was estimated using the Black-Scholes option pricing model, with the following assumptions:
| Risk-free interest rate | | | 3.6 | % | |
| Expected term (years) | | | 2.52 | | |
| Expected volatility | | | 7.9 | % | |
| Stock price on valuation date | | $ | 10.21 | | |
| Exercise price | | $ | 11.50 | | |
| Expected dividend | | | | % | |
| Market pricing adjustment | | | 15.0 | % | |
**NOTE 9. FAIR VALUE MEASUREMENTS**
The fair value of the Companys financial
assets and liabilities reflects managements estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level
1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level
2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets
or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level
3: Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about
the Companys assets that are measured at fair value as of December31, 2025 and 2024 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
|
| |
Level | | |
December 31, 2025 | | |
December 31, 2024 | | |
|
Marketable securities held in Trust Account | |
| 1 | | |
$ | 177,124,457 | | |
$ | | | |
The Company does not have any liabilities that are measured at fair
value on a recurring basis.
**NOTE 10. SUBSEQUENT EVENTS**
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review and other
than the below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial
statements.
On January 13, 2026 the Company and Old Glory
Banks Bank Holding Company (Old Glory Bank), entered into a definitive business combination agreement to create OGB
Financial Company, a Texas corporation to be listed on Nasdaq under the reserved ticker symbol OGB. Old Glory Bank is a
digital-first financial institution focused on personal and small-business banking services.
The transaction is expected to be funded by a
combination of the Companys Trust Account and expected proceeds from a public investment in private equity (PIPE). Existing
Old Glory Bank investors will rollover 100% of their equity as part of the transaction. The closing of the transaction is expected to
occur in the second quarter of 2026 and is subject to approval by the shareholders of the parties and other customary closing conditions,
including regulatory approval.
F-21
**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.**
None.
**ITEM 9A. CONTROLS AND PROCEDURES.**
Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities
Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and
communicated to our management, including our Principal Executive Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
**
*Evaluation of Disclosure Controls and Procedures*
As required by Rules 13a-15 and 15d-15 under the
Exchange Act, our Principal Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures as of December31, 2025, under the supervision and with the participation
of management. Based upon their evaluation, our Principal Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
**
*Managements Report on Internal Controls
Over Financial Reporting*
This Annual Report on Form 10-K does not include
a report of managements assessment regarding internal control over financial reporting or an attestation report of our independent
registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
**
*Changes in Internal Control Over Financial
Reporting*
During the most recently completed fiscal quarter,
there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
**ITEM 9B. OTHER INFORMATION.**
****
**Insider Trading Arrangements**
No director or officer of the Company adopted
or terminated any contract, instruction or written plan for the purchase or sale of securities of the registrant intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c); or (ii) any non-Rule 10b5-1 trading arrangement as defined in paragraph
(c) of Item 408 of Regulation S-K.
**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.**
Not applicable.
77
****
**PART III**
**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.**
Our executive officers and directors are as follows:
|
NAME | |
AGE | |
POSITION | |
|
Peter Ort | |
55 | |
Principal Executive Officer and Co-Chairman | |
|
Jeff Tuder | |
52 | |
Chief Financial Officer and Co-Chairman | |
|
Kristin Smith | |
44 | |
Director | |
|
Rebecca Rettig | |
46 | |
Director | |
|
Thomas Trowbridge | |
51 | |
Director | |
****
**Peter Ort**,55, has served as
our Principal Executive Officer and as Co-Chairmanof our board of directors since December2024. Mr.Ort has been a General
Partner at Cambium Capital Management LP, a venture capital firm focused on early-stageinvestments in the advanced computing sector,
since January2020. Prior to that, he was the Co-Founderof CurAlea Associates LLC, a customized software and advisory firm
to wealth and asset managers, from 2010 to 2022. Mr.Ort began his career at Goldman Sachs in 1996 and most recently was Managing
Director and co-headof the Investment Management Divisions Hedge Fund Strategies Group until 2009. Mr.Ort also served
on the board of directors of the Concord Acquisition Corp, Concord Acquisition CorpII and Concord Acquisition CorpIII (collectively,
the Concord SPACs) from 2021 to 2022, 2022 to present, and 2022 to 2024, respectively, and has served as the chair of the
audit committee for each of the Concord SPACs. Mr.Ort is also a member of the board or advisory board of a number of privately held
technology companies and is an active investor in early-stagecompanies and venture capital funds in the digital asset and other
sectors. Mr.Ort graduated from Duke University, obtained J.D. and M.B.A. degrees from NewYork University, and was a Fulbright
Scholar in Japan. We believe Mr.Ort is qualified to serve on our board of directors because of his extensive business and investment
experience.
****
**Jeff Tuder**,52, has served
as our Chief Financial Officer and as Co-Chairmanof our board of directors since December2024. Mr.Tuder founded Tremson
Capital Management, LLC in January2015 to invest in undervalued public equities and to make private equity and credit investments
in partnership with a number of family offices. In addition, Mr.Tuder was the chief executive officer of each of Concord Acquisition
Corp, Concord Acquisition CorpII and Concord Acquisition CorpIII from 2021 to 2022, 2022 to present, and 2022 to 2024, respectively.
In addition, Mr.Tuder has served on the board of directors of Inseego Corporation (NYSE:INSG), since April2017, where
he is Chairman of the Audit and Compensation committees. Mr.Tuder has also served on the board of directors of SeaChange International,
Inc. from March 2019 to May 2021. Mr.Tuder has also served on the board of directors of GCT Semiconductor (NYSE:GCTS) since
March2023 where he serves on the compensation committee. Mr.Tuder held various investment positions at JHL Capital Group,
KSA Capital Management, and CapitalSource Finance. Mr.Tuder began his career as a private equity professional at Fortress Investment
Group, Nassau Capital, and ABS Capital Partners. Mr.Tuder is currently an Operating Partner at Atlas Merchant Capital. Mr.Tuder
received a B.A. in English Literature from Yale College. We believe Mr.Tuder is qualified to serve on our board of directors because
of his extensive business experience.
****
**Kristin Smith**,44, has served on our board of directors since April 28, 2025. Ms. Smith has been President of Solana Policy Institute since May 2025. Prior
to that she was the chief executive officer of the Blockchain Association from 2018 to 2025. Ms. Smith has also served on the board of
directors and also as an audit committee member of Skybridge Opportunity and GII Funds since January 2022. Some of Ms. Smiths achievements
include being named the Washingtonians Most Influential People in 2023 and 2024 and named as Fortunes 40 Under 40 in Government
and Politics in 2020. We believe Ms. Smith is qualified to serve on our board of directors because of her extensive cryptocurrency experience.
****
78
****
**Rebecca Rettig**,46, has served
on our board of directors since April28, 2025. Ms. Rettig is a legal veteran in the digital asset space, having transitioned to
the industry in 2017, after a number ofyears as a litigator at Cravath, Swaine& Moore LLP.Rebecca has worked on
legal and policy issues in the digital asset space for a number ofyears, first as a partner at a number of AmLaw firms and then
as in house counsel at some of the largest software developers in the space, including but not limited to the Aave Companies (now Avara)
(from March2021 to March2024), Polygon Labs (from January2023 to January2025) and now at Jito Labs (since January2025),
where she oversee the global legal, policy and compliance work. Rebecca currently serves as a member of the U.S.Commodity Futures
and Trade Commissions Global Markets Advisory Committee Subcommittee on Digital Assets as well as the NewYork Department
of Financial Services Virtual Currency Advisory Board. She also serves as an advisor to a number of prominent digital asset companies
across various parts of the industry. Rebecca has pioneered legal and regulatory solutions in permissionless and decentralized software
systems and has worked with global regulators and policymakers on developing sound laws and regulations for the digital asset industry
that both protect consumers and allow for continued innovation. We believe Ms. Rettig is qualified to serve on our board of directors
because of her digital asset policy experience.
****
**Thomas Trowbridge**,51, has
served on our board of directors since April28, 2025. Mr.Trowbridge has served as the chief executive officer of Cloudless
Labs since September2019. Mr.Trowbridge has also served on the board of directors of Stronghold Digital Mining (Nasdaq: SDIG)
since October2021 and sits on its compensation committee. We believe Mr.Trowbridge is qualified to serve on our board of directors
because of his cryptocurrency experience.
****
**Family Relationships**
****
There are no family relationships among any of
our executive officers or directors.
**Number and Terms of Office of Officers and
Directors**
****
Our board of directors consists of five members.
Prior to the closing of our initial Business Combination, only holders of our Class B ordinary shares will be entitled to vote on the
appointment and removal of directors or continuing our company in a jurisdiction outside the Cayman Islands (including any special resolution
required to amend our constitutional documents or to adopt new constitutional documents, in each case, as a result of our approving a
transfer by way of continuation in a jurisdiction outside the Cayman Islands). Holders of our Public Shares will not be entitled to vote
on such matters during such time. These provisions of our Amended and Restated Memorandum and Articles of Association relating to these
rights of holders of Class B ordinary shares may be amended by a special resolution passed by the affirmative vote of at least 90% (or,
where such amendment is proposed in respect of the consummation of our initial Business Combination, two-thirds) of the votes cast by
such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting
of the company. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until
one year after our first fiscal year end following our listing on Nasdaq.
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 officers as it deems appropriate pursuant to our Amended and Restated Memorandum and Articles of Association.
**Director Independence**
****
Nasdaq rules require that a majority of our board
of directors be independent within one year of our Initial Public Offering. An independent director is defined generally
as a person who, in the opinion of the companys board of directors, has no material relationship with the listed company (either
directly or as a partner, shareholder or officer of an organization that has a relationship with the company). We have three independent
directors as defined in Nasdaq rules and applicable SEC rules. Our board of directors consists of five members and is divided into
three classes with only one class of directors being appointed in each year, and with each class (except for those directors appointed
prior to our first annual general meeting) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we
are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on Nasdaq. The
term of office of the first class of directors, which consists of Kristin Smith, will expire at our first annual general meeting. The
term of office of the second class of directors, which consists of Rebecca Rettig and Thomas Trowbridge, will expire at the second annual
general meeting. The term of office of the third class of directors, which consists of Peter Ort and Jeff Tuder will expire at the third
annual general meeting. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
79
**Committees of the Board of Directors**
****
Our board of directors has established two standing
committees: an audit committee and a compensation committee. Subject to phase-in rules, the rules of Nasdaq and Rule 10A-3 of the Exchange
Act require that the audit committee of a listed company be comprised solely of independent directors. Each committee will operate under
a charter that will be approved by our board and will have the composition and responsibilities described below.
**Audit Committee**
****
Our board of directors has established an audit
committee of the board of directors. Thomas Trowbridge, Rebecca Rettig and Kristin Smith serve as the members of our audit committee.
Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom
must be independent. Mr. Trowbridge, Ms. Rettig and Ms. Smith are each independent.
Mr. Trowbridge serves as the chairman of the audit
committee. Each member of the audit committee is financially literate and our board of directors has determined that Mr. Trowbridge qualifies
as an audit committee financial expert as defined in applicable SEC rules.
We have adopted an audit committee charter, which
details the principal functions of the audit committee, including:
|
| assisting board oversight of (1) the integrity of our financial statements,
(2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firms qualifications
and independence, and (4) the performance of our internal audit function and independent registered public accounting firm; the appointment,
compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent
registered public accounting firm engaged by us; | |
|
| pre-approving all audit and non-audit services to be provided by the independent
registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies
and procedures; reviewing and discussing with the independent registered public accounting firm all relationships the independent registered
public accounting firm have with us in order to evaluate their continued independence; | |
|
| setting clear policies for audit partner rotation in compliance with applicable
laws and regulations; obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing
(1) the independent registered public accounting firms internal quality-control procedures and (2) any material issues raised by
the most recent internal quality-control review, or peer review, of the independent registered public accounting firm, or by any inquiry
or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits
carried out by the firm and any steps taken to deal with such issues; | |
|
| meeting to review and discuss our annual audited financial statements and
quarterly financial statements with management and the independent registered public accounting firm, including reviewing our specific
disclosures under Managements Discussion and Analysis of Financial Condition and Results of Operations; reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior
to us entering into such transaction; and | |
|
| reviewing with management, the independent registered public accounting
firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators
or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements
or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards
Board, the SEC or other regulatory authorities. | |
80
**Compensation Committee**
****
Our board of directors has established a compensation
committee of our board of directors. The members of our compensation committee are Thomas Trowbridge and Rebecca Rettig. Mr. Trowbridge
serves as chair of the compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have a
compensation committee of at least two members, all of whom must be independent. Mr. Trowbridge and Ms. Rettig are each independent. We
have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
|
| reviewing and approving on an annual basis the corporate goals and objectives
relevant to our principal executive officers compensation, evaluating our principal executive officers performance in light
of such goals and objectives and determining and approving the remuneration (if any) of our principal executive officers based
on such evaluation; | |
|
| reviewing and making recommendations to our board of directors with respect
to the compensation, and any incentive compensation and equity based plans that are subject to board approval of all of our other officers; | |
|
| reviewing our executive compensation policies and plans; | |
|
| implementing and administering our incentive compensation equity-based remuneration
plans; | |
|
| assisting management in complying with our proxy statement and annual report
disclosure requirements; | |
|
| approving all special perquisites, special cash payments and other special
compensation and benefit arrangements for our executive officers and employees; | |
|
| producing a report on executive compensation to be included in our annual
proxy statement; and | |
|
| reviewing, evaluating and recommending changes, if appropriate, to the remuneration
for directors. | |
The charter also provides that the compensation
committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will
be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence
of each such adviser, including the factors required by Nasdaq and the SEC.
**Clawback Policy**
****
We have adopted a compensation recovery policy
that is compliant with Nasdaq listing rules as required by the Dodd-Frank Act.
**Director Nominations**
****
We do not have a standing nominating committee
though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules. In accordance
with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by our
board of directors. Our board of directors believes that the independent directors can satisfactorily carry out the responsibility of
properly selecting or approving director nominees without the formation of a standing nominating committee. The directors who will participate
in the consideration and recommendation of director nominees are Thomas Trowbridge, Kristin Smith and Rebecca Rettig. In accordance with
Rule 5605(e)(1)(A) of the Nasdaq rules, all such directors are independent. As there is no standing nominating committee, we do not have
a nominating committee charter in place.
The board of directors will also consider director
candidates recommended for nomination by our shareholders during such times as they are seeking proposed nominees to stand for appointment
at the next annual general meeting (or, if applicable, an extraordinary general meeting). Our shareholders that wish to nominate a director
for appointment to our board of directors should follow the procedures set forth in our amended and restated memorandum and articles of
association.
We have not formally established any specific,
minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating
nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
Prior to our initial Business Combination, holders of our Public Shares will not have the right to recommend director candidates for nomination
to our board of directors.
81
**Compensation Committee Interlocks and Insider
Participation**
****
None of our executive officers currently serves,
or in the past year has served, as a member of the compensation committee of any entity that has one or more executive officers serving
on our board of directors.
**Code of Ethics**
****
We have adopted a Code of Ethics applicable to
our directors, officers and employees. We have a copy of our Code of Ethics as an exhibit to this Form 10-K. You will be able to review
this document by accessing our public filings at the SECs website at www.sec.gov. In addition, a copy of the Code of Ethics and
the charters of the committees of our board of directors will be provided without charge upon request from us. If we make any amendments
to our Code of Ethics other than technical, administrative or other non-substantive amendments, or grant any waiver, including any implicit
waiver, from a provision of the Code of Ethics applicable to our principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions requiring disclosure under applicable SEC or Nasdaq rules, we will disclose
the nature of such amendment or waiver on our website. The information included on our website is not incorporated by reference into this
Form S-1 or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual
references only.
**Limitation on Liability and Indemnification
of Officers and Directors**
****
Cayman Islands law does not limit the extent to
which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the
extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification
against willful default, willful neglect, actual fraud or the consequences of committing a crime. Our Amended and Restated Memorandum
and Articles of Association provides that our officers and directors will be indemnified by us to the fullest extent permitted by law,
as it now exists or may in the future be amended, including for any liability incurred in their capacities as such, except through their
own actual fraud, willful default or willful neglect. We expect to purchase a policy of directors and officers liability
insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances
and insures us against our obligations to indemnify our officers and directors.
Our officers and directors have agreed, and any
persons who may become officers or directors prior to the initial Business Combination will agree, to waive any right, title, interest
or claim of any kind in or to any monies in the Trust Account, and to waive any right, title, interest or claim of any kind they may have
in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the Trust Account for
any reason whatsoever (except to the extent they are entitled to funds from the Trust Account due to their ownership of Public Shares).
Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the Trust
Account or (ii) we consummate an initial Business Combination.
Our indemnification obligations may discourage
shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have
the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful,
might otherwise benefit us and our shareholders. Furthermore, a shareholders investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance
and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have
been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
82
**ITEM 11. EXECUTIVE COMPENSATION.**
None of our executive officers or directors have
received any cash compensation for services rendered. Other than quarterly audit committee review of such reimbursements or payments,
we do not expect to have any additional controls in place governing our reimbursement or payments to our directors and executive officers
for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating
an initial business combination.
We are not prohibited from paying any fees (including
advisory fees), reimbursements or cash payments to our Sponsor, officers or directors, or our or their affiliates, for services rendered
to us prior to or in connection with the completion of our initial Business Combination, including the following payments, all of which,
if made prior to the completion of our initial Business Combination, will be paid from funds held outside the Trust Account or pursuant
to permitted withdrawals:
|
| Repayment of up to an aggregate of $300,000 in loans made to us by our Sponsor to cover offering-related
and organizational expenses; | |
|
| Reimbursement for office space and administrative support services made available to us by our Sponsor,
in an amount up to $20,000 per month; | |
|
| Payment of consulting, success or finder fees to our officers, independent directors, officers, advisors,
consultants or their respective affiliates in connection with and prior to the consummation of our initial Business Combination; | |
|
| We may engage our Sponsor or an affiliate of our Sponsor as an advisor or otherwise in connection with
our initial Business Combination and certain other transactions and pay such person or entity a salary or fee in an amount that constitutes
a market standard for comparable transactions; | |
|
| Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing
an initial Business Combination; and | |
|
| Repayment of loans which may be made by our Sponsor or an affiliate of our Sponsor or certain of our officers
and directors to finance transaction costs in connection with an intended initial Business Combination. Up to $1,500,000 of such loans
may be convertible into private placement warrants of the post- Business Combination entity at a price of $1.00 per warrant at the option
of the lender. Such warrants would be identical to the Business Combination. Except for the foregoing, the terms of such loans, if any,
have not been determined and no written agreements exist with respect to such loans. | |
In addition, we have agreed, pursuant to the administrative
and indemnification services agreement with our Sponsor relating to the monthly payment for office space and administrative services described
above, that we will indemnify our Sponsor from any claims arising out of or relating to Initial Public Offering or the Companys
operations or conduct of the Companys business or any claim against our Sponsor alleging any expressed or implied management or
endorsement by our Sponsor of any of the Companys activities or any express or implied association between our Sponsor and the
Company or any of its affiliates, which agreement will provide that the indemnified parties cannot access the funds held in our Trust
Account.
After the completion of our initial Business Combination,
directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All
of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials
furnished to our shareholders in connection with a proposed initial Business Combination. We have not established any limit on the amount
of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation
will be known at the time of the proposed initial Business Combination, because the directors of the post-combination business will be
responsible for determining executive officer and director compensation.
Any compensation to be paid to our executive 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 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 officers and directors may negotiate employment or consulting arrangements to remain with us after
our initial Business Combination. The existence or terms of any such employment or consulting arrangements to retain their positions with
us may influence our managements 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 our 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 officers and directors that provide for
benefits upon termination of employment.
83
**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.**
The following table sets forth information regarding the beneficial
ownership of our ordinary shares as of March 2, 2026, by:
|
| each person known by us to be the beneficial owner of more than 5% of our
outstanding ordinary shares; | |
|
| each of our officers and directors; and | |
|
| all our officers and directors as a group. | |
Unless otherwise indicated, we believe that all
persons named in the table below have sole voting and investment power with respect to all ordinary shares beneficially owned by them.
The following table does not reflect beneficial ownership of the Public Warrants or Private Placement Warrants as these warrants are not
exercisable within 60 days of the date of this Form 10-K.
We have based our calculation of the percentage of beneficial ownership
on 17,250,000 Class A Ordinary Shares and 5,750,000 Class B ordinary shares issued and outstanding as of March 2, 2026.
|
| |
Class A | | |
Class B | | |
| | |
|
| |
Ordinary Shares | | |
Ordinary Shares | | |
Approximate | | |
|
| |
Numberof | | |
| | |
Numberof | | |
| | |
Percentageof | | |
|
| |
Shares | | |
Approximate | | |
Shares | | |
Approximate | | |
Outstanding | | |
|
| |
Beneficially | | |
Percentage | | |
Beneficially | | |
Percentage | | |
Ordinary | | |
|
Name and Address of Beneficial Owner(1) | |
Owned | | |
of Class | | |
Owned(2) | | |
of Class | | |
Shares | | |
|
Directors, Executive Officers and Founders | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Peter Ort(3) | |
| - | | |
| - | | |
| 5,635,000 | | |
| 98.0 | % | |
| 24.5 | % | |
|
Jeff Tuder(3) | |
| - | | |
| - | | |
| 5,635,000 | | |
| 98.0 | % | |
| 24.5 | % | |
|
Kristin Smith | |
| - | | |
| - | | |
| 25,000 | | |
| * | | |
| * | | |
|
Rebecca Rettig | |
| - | | |
| - | | |
| 25,000 | | |
| * | | |
| * | | |
|
Thomas Trowbridge | |
| - | | |
| - | | |
| 25,000 | | |
| * | | |
| * | | |
|
All executive officers, directors and director as a group (5 individuals) | |
| - | | |
| - | | |
| 5,710,000 | | |
| 99.2 | % | |
| 24.8 | % | |
|
Five Percent Holders | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
DAAQ Sponsor LLC(3) | |
| - | | |
| - | | |
| 5,635,000 | | |
| 98.0 | % | |
| 24.5 | % | |
|
Tenor Capital Management Company, L.P.(4) | |
| 1,250,000 | | |
| 7.2 | % | |
| - | | |
| - | | |
| 5.4 | % | |
|
Saba Capital Management, L.P.(5) | |
| 1,321,140 | | |
| 7.7 | % | |
| - | | |
| - | | |
| 5.7 | % | |
|
Harraden Circle Investments, LLC(6) | |
| 1,677,146 | | |
| 9.7 | % | |
| - | | |
| - | | |
| 7.3 | % | |
|
* | Less than 1% |
|
|
(1) | Unless otherwise
noted, the business address of each of the following entities or individuals is c/o Digital Asset Acquisition Corp., 174 Nassau Street,
Suite 2100, Princeton, New Jersey 08542. | |
|
(2) | Interests shown consist solely of Founder Shares, classified as Class B ordinary shares. Such shares will
automatically convert into Class A Ordinary Shares concurrently with or immediately following the consummation of our initial Business
Combination, or earlier at the option of the holders thereof, on a one-for-one basis, subject to adjustment. | |
|
(3) | DAAQ Sponsor LLC is the record holder of the shares. Peter Ort and Jeff Tuder are the managing members
of DAAQ Sponsor LLC and have voting and investment discretion over the securities held by DAAQ Sponsor LLC. | |
84
|
(4) | According to a Schedule 13G filed with the SEC on May 6, 2025 by Tenor Opportunity Master Fund, Ltd. (the
Master Fund), Tenor Capital Management Company, L.P. (Tenor Capital) and Robin Shah. Tenor Capital serves as the
investment manager to the Master Fund. Mr. Shah serves as the managing member of Tenor Management GP, LLC, the general partner of Tenor
Capital. By virtue of these relationships, Tenor Capital and Mr. Shah may be deemed to have shared voting and dispositive power with respect
to the shares owned directly by the Master Fund. The principal business address of the Master Fund, Tenor Capital and Mr. Shah is 810
Seventh Avenue, Suite 1905, New York, NY 10019. | |
|
(5) | According to a Schedule 13G/A filed with the SEC on August 14, 2025 filed by Saba Capital Management,
L.P., a Delaware limited partnership, Saba Capital Management GP, LLC, a Delaware limited liability company and Mr. Boaz R. Weinstein
(collectively, the Reporting Persons). The principal business address of the Reporting Persons is 405 Lexington Avenue,
58th Floor, New York, NY 10174. | |
|
(6) | According to a Schedule 13G filed with the SEC on November 14, 2025 on behalf of Harraden Circle Investments,
LLC (Harraden Adviser), Harraden Circle Investors GP, LP (Harraden GP), Harraden Circle Investors GP, LLC (Harraden
LLC), Harraden Circle Investors, LP (Harraden Fund), Harraden Circle Special Opportunities, LP (Harraden Special
Op Fund), Harraden Circle Strategic Investments, LP (Harraden Strategic Fund), Harraden Circle Concentrated, LP (Harraden
Concentrated Fund) and Frederick V. Fortmiller, Jr. (Mr. Fortmiller). Harraden GP is the general partner to Harraden
Fund, Harraden Special Op Fund, Harraden Strategic Fund, and Harraden Concentrated Fund, and Harraden LLC is the general partner of Harraden
GP. Harraden Adviser serves as investment manager to Harraden Fund, Harraden Special Op Fund, Harraden Strategic Fund, Harraden Concentrated
Fund, and other high net worth individuals. Mr. Fortmiller is the managing member of each of Harraden LLC and Harraden Adviser. In such
capacities, each of Harraden GP, Harraden LLC, Harraden Adviser and Mr. Fortmiller may be deemed to indirectly beneficially own the shares
directly beneficially owned by Harraden Fund, Harraden Special Op Fund, Harraden Strategic Fund, and Harraden Concentrated Fund. The principal
business offices of all of the entities is 855 Third Avenue, Suite 2600B, New York, NY 10022. | |
**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.**
**
*Founder Shares*
On December 11, 2024, our Sponsor purchased an
aggregate of 5,750,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In January 2025,
our Sponsor transferred 25,000 Founder Shares to each of our independent directors (for an aggregate of 75,000 Founder Shares) and 10,000
Founder Shares to each of our advisors (for an aggregate of 40,000 Founder Shares) at the same per-share price that our Sponsor purchased
such shares, or approximately $0.004 per share, resulting in our Sponsor holding 5,635,000 Founder Shares.
*Private Placement Warrants*
Simultaneously with the closing of the Initial
Public Offering, Cohen & Company Capital Markets, a division of Cohen & Company Securities, LLC (the Representative),
and Clear Street LLC (Clear Street and together with the Representative, the Underwriters) and the Sponsor
purchased an aggregate of 5,450,000 Private Placement Warrants for an aggregate purchase price of $5,450,000, or $1.00 per warrant. Of
those 5,450,000 Private Placement Warrants, our Sponsor purchased 3,725,000 Private Placement Warrants, the Representative purchased 1,466,250
Private Placement Warrants and Clear Street purchased 258,750 Private Placement Warrants. The Private Placement Warrants are identical
to the Public Warrants sold in the Initial Public Offering, except that, for so long as the Private Placement Warrants are held by the
Sponsor, the Underwriters or their permitted transferees, the Private Placement Warrants (i) may not (including the Class A Ordinary Shares
issuable upon exercise of the Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold until
30 days after the completion of the Companys initial Business Combination, (ii) are entitled to registration rights, and (iii)
with respect to the Private Placement Warrants held by the Underwriters and/or their designees, will not be exercisable more than five
years after the commencement of sales in the Initial Public Offering. If we do not complete our initial Business Combination within the
Completion Window, the Private Placement Warrants will expire worthless.
*Administrative Services Agreement*
We entered into an Administrative Services Agreement
with our Sponsor in connection with the Initial Public Offering. Pursuant to the terms of that agreement, we agreed to pay our Sponsor
$20,000 per month for office space, secretarial, administrative and support services provided to us and members of our management team.
Upon completion of our initial Business Combination or our liquidation, we will cease paying these monthly fees.
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No compensation of any kind, including finders
and consulting fees, will be paid by the Company to our Sponsor, executive officers and directors, or any of their respective affiliates,
for services rendered prior to or in connection with the completion of an initial Business Combination without shareholder approval. However,
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. Our audit committee will review on a quarterly
basis all payments that were made to our Sponsor, officers, directors or our or their affiliates.
*Promissory Note*
On December 11, 2024, the Sponsor agreed to loan
the Company up to $300,000 pursuant to a promissory note (the Note). The Note is non-interest bearing, unsecured and due
on the earlier of December 31, 2025 or the closing of the Initial Public Offering. At December 31, 2025, there are no amounts outstanding
and no further borrowings are permitted under the Note.
*Working Capital Loans*
In addition, in order to finance transaction costs
in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and
directors may, but are not obligated to, loan us funds as may be required on a non-interest basis. If we complete an initial Business
Combination, we would repay such loaned amounts. If we complete an initial Business Combination, we would repay such loaned amounts. In
the event that the initial Business Combination does not close, we may use amounts released to us pursuant to permitted withdrawals or
held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up
to $1,500,000 of such loans may be convertible into Private Placement Warrants of the post business combination entity at a price of $1.00
per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except as set forth above,
the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion
of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to
funds in our Trust Account. Except for the foregoing, the terms of such working capital loans, if any, have not been determined and no
written agreements exist with respect to such loans. As of December 31, 2025, the Company had no borrowings under the working capital
loans.
Any of the foregoing payments to our Sponsor,
repayments of loans from our Sponsor or repayments of working capital loans prior to our initial Business Combination will be made using
funds held outside the Trust Account.
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 proxy solicitation or tender offer 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.
*Registration Rights Agreement*
The holders of Founder Shares, Private Placement
Warrants, including from time to time the Public Shares, Private Placement Warrants that may be issued upon conversion of working capital
loans, any Class A Ordinary Shares issuable upon conversion of Founder Shares or upon exercise of warrants they may hold or acquire, and
any warrants, including Private Placement Warrants, that they may hold or acquire, will be entitled to registration rights pursuant to
a registration rights agreement signed upon the consummation of the Initial Public Offering. These holders will be entitled to certain
demand and piggyback registration rights. We will bear the expenses incurred in connection with the filing of any such registration
statements.
86
*Revenue Share Agreement*
Our Sponsor has entered into a Revenue Share Agreement
with Jiko Technologies, Inc. (Jiko). Jiko is expected to provide brokerage account services for us to invest the trust funds
in U.S. government treasury obligations. We expect to pay Jiko a customary monthly fee for its services. Under the Revenue Share Agreement
$7,500 per month of such fee will be paid to our Sponsor.
**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**
The firm of WithumSmith+Brown, PC (Withum)
acts as our independent registered public accounting firm. The following is a summary of fees paid to Withum for services rendered.
**Audit Fees**
Audit fees consist of fees for professional services
rendered for the audit of our year-end financial statements and services that are normally provided by Withum in connection with regulatory
filings. The aggregate fees of Withum for professional services rendered for the audit of our annual financial statements, review of
the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the year
ended December 31, 2025 totaled approximately $146,740.
The above amounts include interim procedures and audit fees.
**Audit-Related Fees**
Audit-related fees consist of fees billed for
assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not
reported under Audit Fees. These services include attest services that are not required by statute or regulation and consultations
concerning financial accounting and reporting standards. We did not pay Withum for any audit-related fees for the year ended December
31, 2025.
**Tax Fees**
Tax fees consist of fees billed for professional
services relating to tax compliance, tax planning and tax advice. The aggregate fees of Withum for tax services for the year
ended December 31, 2025 totaled $9,160.
**All Other Fees**
All other fees consist of fees billed for all
other services. We did not pay Withum for any other services for the year ended December 31, 2025.
**Pre-Approval Policy**
Our audit committee was formed upon the consummation
of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services
rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee,
and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services performed
and to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services
described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
****
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****
**PART IV**
****
**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.**
****
|
(a) | The following documents are included as part of this Annual
Report on Form 10-K: |
|
|
1. | Financial Statements-See Index to Financial
Statements in Item 8. Financial Statements and Supplementary Data herein. |
|
|
2. | Financial Statement Schedules: All financial statement schedules
are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required
or are not applicable. |
|
|
3. | Exhibits: The exhibits listed in the Exhibit Index below are
filed or incorporated by reference as part of this Form 10-K. |
|
|
Exhibit No. |
|
Description | |
|
3.1 |
|
Amended and Restated Memorandum and Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
|
4.1 |
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Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
|
4.2 |
|
Specimen Class A Ordinary Shares Certificate (incorporated by reference to Exhibit 4.2 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
|
4.3 |
|
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
|
4.4 |
|
Warrant Agreement, dated April 28, 2025, by and between the Registrant and Efficiency, as warrant agent (incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
|
4.5* |
|
Description of Securities. | |
|
10.1 |
|
Letter Agreement, dated April 28, 2025, by and among the Registrant, DAAQ Sponsor LLC and each of the executive officers and directors of Registrant (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
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10.2 |
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Investment Management Trust Agreement, dated April 28, 2025, by and between the Registrant and Efficiency, as trustee (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
|
10.3 |
|
Registration Rights Agreement, dated April 28, 2025, by and among the Registrant, DAAQ Sponsor LLC and the other holders party thereto (incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
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10.4 |
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Private Placement Warrants Purchase Agreement, dated April 28, 2025, by and between the Registrant and DAAQ Sponsor LLC (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
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10.5 |
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Private Placement Warrants Purchase Agreement, dated April 28, 2025, by and between the Company, the Representative and Clear Street (incorporated by reference to Exhibit 10.5 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
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10.6 |
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Form of Indemnity Agreement (incorporated by reference to Exhibit 10.6 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
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10.7 |
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Administrative Services Agreement, dated April 28, 2025, by and between the Company and DAAQ Sponsor LLC (incorporated by reference to Exhibit 10.6 to the Registrants Current Report on Form 8-K (File No. 001-42612), filed with the SEC on May 1, 2025). | |
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10.8 |
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Promissory Note, dated December 11, 2024, issued to DAAQ Sponsor LLC (incorporated by reference to Exhibit 10.7 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
88
|
10.9 |
|
Securities Subscription Agreement, dated December 11, 2024, between DAAQ Sponsor LLC and the Registrant (incorporated by reference to Exhibit 10.8 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
|
14.1 |
|
Form of Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrants Registration Statement on Form S-1 (File No. 333-284776), filed with the SEC on April 23, 2025). | |
|
19.1* |
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Insider Trading Policy. | |
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24.1* |
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Power of Attorney (included on the signature pages herein). | |
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31.1* |
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Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
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31.2* |
|
Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
32.1** |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
32.2** |
|
Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
97.1* |
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Policy Relating to the Recovery of Erroneously Awarded Compensation. | |
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101.INS* |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document | |
|
101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document | |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document | |
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101.LAB* |
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Inline XBRL Taxonomy Extension Labels Linkbase Document | |
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101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
|
104 |
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The cover page for the Companys Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101 | |
|
* | Filed herewith. |
|
|
** | Furnished. |
|
**ITEM 16. FORM 10-K SUMMARY.**
None.
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**SIGNATURES**
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
Digital Asset Acquisition Corp. | |
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| |
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Date: March 2, 2026 |
By: |
/s/ Peter Ort | |
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Name: |
Peter Ort | |
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Title: |
Principal Executive Officer and Co-Chairman | |
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Digital Asset Acquisition Corp. | |
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| |
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Date: March 2, 2026 |
By: |
/s/ Jeff Tuder | |
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Name: |
Jeff Tuder | |
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|
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Title: |
Chief Financial Officer and Co-Chairman | |
90