We estimate that the net proceeds of this offering and the sale of the placement
warrants will be as set forth in the following table:
Without With
Over-Allotment Over-Allotment
Option Exercised Option Exercised
Gross proceeds
Gross proceeds from the offering $ 40,000,000 $ 43,600,000
Gross proceeds from the sale of the 3,375,000 3,375,000
placement warrants
Total gross proceeds $ 43,375,000 $ 46,975,000
Underwriting expenses:
Underwriting discount $ 720,000 $ 783,000
Total underwriting expenses $ 720,000 $ 783,000
Offering expenses:(2),(3)
Legal fees and expenses $ 350,000 $ 350,000
Printing and engraving expenses 35,000 35,000
Accounting fees and expenses 35,000 35,000
SEC and FINRA registration fees 26,831 26,831
NASDAQ initial listing application fees 50,000 50,000
Miscellaneous expenses (including Blue Sky 3,169 3,169
fees)
Total offering expenses $ 500,000 $ 500,000
Total underwriting and offering expenses: $ 1,220,000 $ 1,283,000
Net proceeds from the offering and the
sale of the placement warrants:
Held in trust $ 41,600,000 $ 45,137,000
Not held in trust 555,000 555,000
Total net proceeds $ 42,155,000 $ 45,692,000
Proceeds held in trust for the benefit of $ 41,600,000 $ 45,137,000
our public shareholders
Percentage of gross public offering 104.0 % 103.5 %
proceeds held in trust account
Working capital funded from net proceeds
not held in the trust account and Amount(5) Percentage of
interest earned on monies held in the Total
trust account(4)
Legal, accounting and other non-due
diligence expenses, $ 250,000 45.0 %
including structuring and negotiating an
acquisition transaction
Due diligence of prospective target
businesses by officers, directors, 200,000 36.0 %
and initial shareholders
Legal and accounting fees relating to SEC 75,000 13.5 %
reporting obligations
Reserve for liquidation expense 10,000 1.8 %
Working capital to cover miscellaneous
expenses, D&O insurance, 20,000 3.6 %
general corporate purposes, liquidation
obligations and reserves
Total $ 555,000 100.0 %
(1) The underwriters will receive an underwriting discount equal to 1.8% of the
gross proceeds from the sale of units in the firm commitment offering, and
1.75% of the gross proceeds from the sale of units pursuant to an exercise
of the over-allotment option.
(2) No discounts or commissions will be paid with respect to the sale of the
placement warrants. Excludes the payment of $100 from the underwriters for
the unit purchase option, $2,720 from the underwriters for the underwriter
shares, and the proceeds from the exercise of any warrants.
(3) These expenses are estimates only. Our actual expenditures for some or all
of these items may differ from the estimates set forth herein.
(4) The amount of proceeds not held in the trust account will remain constant at
$555,000 in the event the over allotment options is exercised. We estimate
that the amount of interest we will earn on the trust account will be
negligible (between $6,500 for 18 months and $8,000 for 21 months at current
interest rates), and will therefore not be a significant source of working
capital for us. For purposes of presentation, the full amount available to
us is shown as the total amount of net proceeds available to us.
(5) The amount available to us for expenses and working capital will be the same
regardless of whether the over-allotment option is exercised. In the event
that our operating expenses exceed the working capital available to us from
net proceeds not held in trust account and interest earned on monies held in
the trust account (any amounts in the trust account in excess of $10.40 per
share, or approximately $10.35 per share in the event the over-allotment
option is exercised in full), our founders may fund any working capital
requirements through loans to be paid back upon the consummation of an
acquisition transaction.
In addition to the offering of units by this prospectus, our founders and their
designees have committed to purchase the placement warrants from us for an
aggregate purchase price of $3,375,000. These purchases will take place on a
private placement basis immediately prior to the consummation of this offering.
We will not pay any discounts or commissions with respect to the purchase of the
placement warrants. All of the proceeds we receive from this purchase will be
placed in the trust account described below.
A total of approximately $41,600,000 (or approximately $45,137,000 if the
underwriters’ over-allotment option is exercised in full) of the net proceeds
from this offering and the sale of the placement warrants described in this
prospectus will be placed in a trust account at J.P. Morgan with American Stock
Transfer & Trust Company as trustee. We expect that the trust assets will be
held in an account located outside of the United States. Net proceeds of this
offering in the amount of $555,000 will not be held in the trust account. We
believe the proceeds of this offering initially available to us outside of the
trust account, together with the interest income on the balance of the trust
account (any amounts in the trust account in excess of $10.40 per share, or
approximately $10.35 per share in the event the over-allotment option is
exercised in full) to be released to us from time to time for working capital
requirements, will be sufficient to allow us to operate for at least the next 21
months, assuming an acquisition transaction is not completed during that time.
The per unit amount in trust will be greater than approximately $10.35 in the
event the underwriters do not exercise the over-allotment option in full because
the underwriter’s discount is based on a percentage of the aggregate offering
price, while other offering costs and the proceeds from the sale of the
placement warrants are fixed regardless of whether the over-allotment option is
exercised.
Except for any amounts paid to redeeming shareholders in connection with our
initial acquisition transaction, the proceeds held in the trust account will not
be released from the trust account until (i) the consolidation of each class of
our ordinary shares into one class of ordinary shares after consummation of an
acquisition transaction or a post-acquisition tender offer, (ii) our liquidation
of the trust account in the event we do not consummate an acquisition
transaction prior to 18 months (or 21 months pursuant to the automatic period
extension) following the consummation of this offering or (iii) our liquidation
of the trust account in the event we do not commence a post-acquisition tender
offer within 30 days of consummation of the acquisition transaction or
consummate the post-acquisition tender offer within the earlier of 6 months of
consummating the acquisition transaction or 21 months of consummation of this
offering. All amounts held in the trust account that are not:
• distributed to shareholders who exercise redemption rights;
• released to us for working capital purposes and general corporate
requirements (any amount in the trust account in excess of $10.40 per
public share, or approximately $10.35 per share in the event the
over-allotment option is exercised in full);
• released to us to pay taxes; or
• a pro rata share of the trust account that may be released to us for each
callable Class A Share (excluding the founders’ shares) converted to a
Class C Share upon completion of an acquisition transaction;
will be released to us upon the consolidation of each class of ordinary shares
into one class of ordinary shares after consummation of an initial acquisition
transaction or, post-acquisition tender offer, as the case may be.
The proceeds held in the trust account may be used as consideration to pay the
sellers of a target business with which we complete an acquisition transaction.
Any amounts not paid as consideration to the sellers of the target business may
be used to finance operations of the target business.
Our initial acquisition transaction must be with one or more target businesses
whose fair market value, individually or collectively, is equal to at least 80%
of the balance held in our trust account (excluding taxes payable) at the time
of such acquisition. The fair market value of the target will be determined by
our board of directors based upon an analysis conducted by them (which may
include an analysis of actual and potential sales, earnings, cash flow and/or
book value). We anticipate structuring an acquisition transaction to acquire
100% of the equity interests or assets of the target business. We may, however,
structure an acquisition transaction to acquire less than 100% of such interests
or assets of the target business, but we will not acquire less than a
controlling interest and will in all instances be the controlling shareholder of
the target company. The key factors that we will rely on in determining
controlling shareholder status would be our acquisition of more than 50% of the
voting rights of the target company and control of the majority of any governing
body of the target company. Our Amended and Restated Memorandum and Articles of
Association require that we acquire a controlling interest in a target business
in connection with an acquisition transaction. We will not consider any
transaction that does not meet such criteria.
Upon release of funds from the trust account, and after payment of the
redemption price to any shareholders who exercise their redemption rights, the
remaining funds will be released to us and can be used to pay all or a portion
of the purchase price of the business or businesses with which our initial
acquisition transaction occurs. If the initial acquisition transaction is paid
for using equity or debt securities or additional funds from a private offering
of debt or equity securities or borrowings, we may apply the cash released to us
from the trust account for general corporate purposes, including for maintenance
or expansion of operations of the acquired business or businesses, the payment
of principal or interest due on indebtedness incurred in consummating our
initial acquisition transaction, to fund the purchase of other companies, or for
working capital.
Intercarbo Holding AG, an entity controlled by one of our founders, Taras
Vazhnov, has loaned us a total of $402,155, which amount was used to pay a
portion of the expenses of this offering referenced in the line items above
related to the SEC registration fee, the FINRA filing fee and a portion of the
legal and audit fees and expenses. Of this amount, $180,155 is due promptly
after the consummation of this offering, $52,000 is due on the earlier of April
30, 2013 or the date of consummation of this offering, and $170,000 is due on
the earlier of July 16, 2013 or the date of consummation of this offering. These
loans do not bear any interest. The loans will be repaid out of the proceeds of
this offering not placed in the trust account.
We have agreed to pay to CIS Acquisition Holding Co. Ltd. a total of $7,500 per
month for office space, administrative services and secretarial support for a
period commencing on the date of this prospectus and ending on the earlier of
our consummation of an acquisition transaction or our liquidation. Payment of
such fees shall begin to accrue immediately after this offering and shall be
paid at the time of an acquisition transaction, or in the event of our
liquidation, only out of interest earned on the trust account or assets not held
in trust, if any. CIS Acquisition Holding Co. Ltd. is an affiliate of Anatoly
Danilitskiy, our Chairman and Chief Executive Officer, and Taras Vazhnov, our
director. This arrangement was agreed to by our Board of Directors for our
benefit and is not intended to provide Messrs. Danilitskiy or Vazhnov
compensation in lieu of a management fee or other remuneration because it is
anticipated that the expenses to be paid by CIS Acquisition Holding Co. Ltd.
will approximate the amount of accrued reimbursement. Upon consummation of an
acquisition transaction or our liquidation, we will cease to accrue these
monthly fees.
We believe that amounts not held in the trust account and the interest income
that may be released to us (all amounts in the trust account in excess of $10.40
per public share, or approximately $10.35 per share in the event the
over-allotment option is exercised in full) and will be sufficient to
pay the costs and expenses to which such proceeds are allocated for up to 21
months. Our estimates are based on the fact that in-depth due diligence will be
undertaken only after we have negotiated and signed a letter of intent or other
preliminary agreement that addresses the terms of an acquisition transaction.
However, if our estimate of the costs of undertaking in-depth due diligence and
negotiating an acquisition transaction is lower than the actual amount necessary
to do so, or in the event the amounts not held in the trust account is
insufficient to pay our costs and expenses, we may be required to raise
additional capital, the amount, availability and cost of which is currently
unascertainable, through loans or additional investments from our founders or
our officers and directors. None of our founders, officers or directors is under
any obligation to advance funds to, or invest in, us.
The net proceeds from this offering and the private placement of the placement
warrants that are not immediately required for the purposes set forth above will
be invested only in U.S. “government securities” (as such term is defined in the
Investment Company Act) and/or one or more money market funds, selected by us,
which invest principally in either short-term securities issued or guaranteed by
the United States having a rating in the highest investment category granted
thereby by a recognized credit rating agency at the time of acquisition or
short-term municipal bonds issued by governmental entities located within the
United States, so that we are not deemed to be an investment company under the
Investment Company Act.
Other than the fee for office space and administrative and secretarial services
described above, we will not pay fees of any kind (including finder’s and
consulting fees) to any of our officers, or directors, or any of their
affiliates, for services rendered to us prior to or in connection with the
consummation of the acquisition transaction. However, our officers and directors
and their respective affiliates will receive reimbursement for any reasonable
out-of-pocket expenses incurred by them in connection with identifying,
investigating and consummating a potential acquisition transaction with one or
more target businesses. There are no limitations on the amount of expenses for
which they can seek reimbursement, provided such expenses were incurred for our
benefit. We expect that due diligence of prospective target businesses will be
monitored or performed by Anatoly Danilitskiy, our Chief Executive Officer and
Chairman, and Kyle Shostak, our Chief Financial Officer, Secretary and a
director. In addition to our management team, our special advisor, Alexey
Chuykin, and our regional mergers and acquisitions consultant, Alex Lyamport,
will advise and assist us from time to time in identifying a target business and
consummating an acquisition transaction. Additionally, we may engage market
research firms and/or third-party consultants. Our board of directors will have
the responsibility of reviewing and approving all expense reimbursements made to
our founders, officers or directors, and their respective affiliates, with any
interested director or directors abstaining from such review and approval. To
the extent that such expenses exceed the available proceeds not deposited in the
trust account, such out-of-pocket expenses would not be reimbursed by us unless
we consummate an acquisition transaction. These expenses would be a liability of
the post-combination business and would be treated in a manner similar to any
other account payable of the combined business. Our officers and directors may,
as part of any such acquisition transaction, negotiate the repayment of some or
all of any such expenses. If the target business’ owners do not agree to such
repayment, this could cause our directors to view such potential acquisition
transaction unfavorably and result in a conflict of interest. Although we
currently expect that the members of our management team will become a part of
the management team of the combined entity, since the actual role of each
present member of management after an acquisition transaction is uncertain, we
have no current ability to determine what remuneration, if any, will be paid to
those persons after an acquisition transaction.
A public shareholder will be entitled to receive funds from the trust account
only (i) upon our automatic voluntary trust account liquidation if we fail to
consummate our initial acquisition transaction within the allotted time, (ii)
upon our liquidation of our trust account if we fail to commence or complete our
post-acquisition tender offer within the allotted time, or (iii) if the public
shareholder seeks to have us redeem their shares for cash in connection with an
acquisition transaction that was actually consummated. In no other circumstances
will a public shareholder have any right or interest of any kind in or to the
funds in the trust account.
acquisition
company, or IPACSM, formed to acquire, through a merger, share exchange, asset
acquisition, share purchase or similar acquisition transaction, one or more
operating businesses. An IPAC is a blank check company that permits the company
to return funds from the trust account to redeeming shareholders after the
acquisition transaction is completed, as described further below, which is
different from most other blank check companies that are required to return
funds from the trust account prior to, or at the time, the acquisition
transaction is completed. “IPAC” is a service mark of Loeb & Loeb LLP.
Although our Amended and Restated Memorandum and Articles of Association do not
limit us to a particular geographic region or industry, we intend to focus on
operating businesses with primary operations in Russia and Eastern Europe. We do
not have any specific acquisition transaction under consideration or
contemplation, and we have not, nor has anyone on our behalf, contacted any
prospective target business or had any discussions, formal or otherwise, with
respect to such a transaction. We have not, in any capacity (nor has any of our
agents or affiliates) been approached by, any candidates (or representative of
any candidates), with respect to a possible acquisition transaction with our
company. Additionally, we have not, nor has anyone on our behalf, taken any
measure, directly or indirectly, to identify or locate any suitable acquisition
candidate, nor have we engaged or retained any agent or other representative to
identify or locate any such acquisition candidate.
The foregoing notwithstanding, in the course of their other business activities,
our management team has had contact with or gained familiarity with many
businesses that may meet our investment criteria and, therefore, could be a
target business. However, any such discussions were in the ordinary course of
the business activities of the members of our management team, and no
discussions of any kind have taken place with any such business, whether
directly or indirectly, regarding the potential for a transaction between us and
such business.
We are an emerging growth company, as defined in the Jumpstart Our Business
Startups Act, or the JOBS Act, and will continue to be an emerging growth
company until: (i) the last day of our fiscal year following the fifth
anniversary of the date of this prospectus, (ii) the date on which we become a
large accelerated filer, or (iii) the date on which we have issued an aggregate
of $1 billion in non-convertible debt during the preceding 3 years. As an
emerging growth company, we are entitled to rely on certain scaled disclosure
requirements and other exemptions, including an exemption from the requirement
to provide an auditor attestation to management’s assessment of its internal
controls as required by Section 404(b) of the Sarbanes-Oxley Act of 2002. We
have elected to use the extended transition period for complying with new or
revised accounting standards under Section 7(a)(2)(B) of the Securities Act of
1933, as amended, or the Securities Act, and we may continue to utilize such
extended transition period for as long as we qualify as an emerging growth
company, or until such time as we affirmatively and irrevocably “opt out” of
such extended transition period. As a result of this election, our financial
statements may not be comparable to companies that comply with public company
effective dates.
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Our executive offices are located at 89 Udaltsova Street, Suite 84, Moscow,
Russia 119607, and our dedicated U.S. telephone number is (917) 514-1310.