SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. 1)

 

 

Filed by the Registrant  x                             Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

     
x   Preliminary Proxy Statement
   
¨   Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   
¨   Definitive Proxy Statement
   
¨   Definitive Additional Materials
   
¨   Soliciting Material Under Rule 14a-12

 

DRAPER OAKWOOD TECHNOLOGY ACQUISITION, INC.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

         
¨   No fee required.
   
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
     
    (1)  

Title of each class of securities to which transaction applies:

 

    (2)  

Aggregate number of securities to which transaction applies:

    

    (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

    (4)  

Proposed maximum aggregate value of transaction:

 

    (5)  

Total fee paid:

 

   
x   Fee paid previously with preliminary materials:
   
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
     
    (1)  

Amount previously paid:

 

 
    (2)  

Form, Schedule or Registration Statement No.:

 

 
    (3)  

Filing Party:

 

 
    (4)  

Date Filed:

 

 

  

 

 

 

 

 

PRELIMINARY PROXY STATEMENT

SUBJECT TO COMPLETION, DATED NOVEMBER 7, 2018

 

DRAPER OAKWOOD TECHNOLOGY ACQUISITION, INC.
c/o Draper Oakwood Investments, LLC
55 East 3rd Ave.
San Mateo, CA 94401

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ______, 2018

 

TO THE STOCKHOLDERS OF DRAPER OAKWOOD TECHNOLOGY ACQUISITION, INC.:

 

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Draper Oakwood Technology Acquisition, Inc., a Delaware corporation (“DOTA”), will be held at 10:00 a.m. eastern time, on _______, 2018, at the offices of Ellenoff Grossman & Schole LLP, 1345 Avenue of the Americas, 11th Floor, New York, NY 10105. You are cordially invited to attend the special meeting, which will be held for the following purposes:

 

(1)       to consider and vote upon a proposal to approve the Business Combination Agreement, dated as of September 4, 2018 (the “Business Combination Agreement”), by and among DOTA, DOTA Holdings Limited, a Cayman Islands exempted company (“Holdco”), DOTA Merger Subsidiary Inc., a Delaware corporation and a wholly owned subsidiary of Holdco (“Merger Sub”), Draper Oakwood Investments, LLC (solely in the capacity as the Purchaser Representative), Reebonz Limited, a Singapore corporation (“Reebonz”) and the shareholders of Reebonz named therein (the “Sellers”), which, among other things, provides for (a) the merger of Merger Sub with and into DOTA, with DOTA surviving the merger and the security holders of DOTA becoming security holders of Holdco, which will become a new public company, and (b) upon the effectiveness of such merger, the exchange of 100% of the outstanding share capital of Reebonz by the shareholders of Reebonz for ordinary shares of Holdco and the assumption by Holdco of outstanding Reebonz options and warrants (with equitable adjustments and additional amendments to the options) and (c) adoption of the amended and restated memorandum and articles of association, and to approve the business combination contemplated by such agreement – we refer to this proposal as the “business combination proposal” and a copy of the Business Combination Agreement and a copy of the amended and restated memorandum and articles of association of Holdco are attached to the accompanying proxy statement/prospectus as Annex A and Annex B, respectively;

 

(2)       to consider and vote upon proposals to approve the adoption of the 2018 Omnibus Equity Incentive Plan, the 2018 Reebonz Share Option Plan and the Management Performance Plan — we refer to these proposals as the “incentive compensation plan proposals” and a copy of each of these plans is attached to the accompanying proxy statement/prospectus as Annex C-1, C-2 and C-3, respectively;

 

(3)       to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of DOTA’s issued and outstanding common stock in financing transactions in connection with the proposed business combination - we refer to this as the “share issuance proposal”; and

 

(4)       to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, DOTA is not authorized to consummate the business combination — we refer to this proposal as the “adjournment proposal.”

 

These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of DOTA Common Stock at the close of business on ________, 2018 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting.

 

After careful consideration, DOTA’s board of directors has determined that the business combination proposal, the incentive compensation plan proposals, the share issuance proposal and the adjournment proposal are fair to and in the best interests of DOTA and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the incentive compensation plan proposals, “FOR” the share issuance proposal and “FOR” the adjournment proposal, if presented.

 

Under the Business Combination Agreement, the approvals of the business combination proposal and the approval of the incentive plan proposals are conditions to the consummation of the business combination. If the business combination or any of the incentive plan proposals is not approved by DOTA’s stockholders, the business combination will not be consummated. The approval of the business combination proposal is a condition to the submission of the other proposals included herein for stockholder approval.

 

 

 

 

All DOTA stockholders are cordially invited to attend the special meeting in person. To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a stockholder of record of DOTA Common Stock, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, it will have the same effect as voting against the business combination proposal and the incentive compensation plan proposals, but will have no effect on the other proposals.

 

A complete list of DOTA stockholders of record entitled to vote at the special meeting will be available for ten (10) days before the special meeting at the principal executive offices of DOTA for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors

 

______________

Roderick Perry

Executive Chairman

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS, AND YOU WILL NOT BE ELIGIBLE TO HAVE YOUR SHARES CONVERTED INTO CASH. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT DOTA CONVERT YOUR SHARES INTO CASH NO LATER THAN 5:00 P.M. EASTERN TIME ON _______ (TWO (2) BUSINESS DAYS PRIOR TO THE SPECIAL MEETING) BY (A) CHECKING THE BOX ON THE PROXY CARD, (B) DELIVERING A CONVERSION NOTICE TO DOTA’S TRANSFER AGENT AND (C) TENDERING YOUR STOCK TO DOTA’S TRANSFER AGENT. YOU MAY TENDER YOUR STOCK BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. YOU DO NOT NEED TO AFFIRMATIVELY VOTE EITHER FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL IN ORDER TO BE ELIGIBLE FOR EXERCISING REDEMPTION RIGHTS. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE CONVERTED INTO CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “SPECIAL MEETING OF DOTA STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS. 

 

This proxy statement/prospectus is dated ________, 2018 and is first being mailed to Draper Oakwood Technology Acquisition, Inc. stockholders on or about ________, 2018.

 

 

 

The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commissions is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED NOVEMBER 7, 2018

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS OF

 

DRAPER OAKWOOD TECHNOLOGY ACQUISITION, INC.

 

 

 

PROSPECTUS FOR UP TO 7,575,000 ORDINARY SHARES, 3,011,250 WARRANTS, 3,613,500 ORDINARY SHARES ISSUABLE UPON EXERCISE OF WARRANTS AND EXCHANGE OF RIGHTS, 500,000 UNIT PURCHASE OPTIONS, 500,000 UNITS, 550,000 ORDINARY SHARES AND 250,000 WARRANTS ISSUABLE UPON EXERCISE OF UNIT PURCHASE OPTIONS 

OF

DOTA HOLDINGS LIMITED

 

 

 

The board of directors of Draper Oakwood Technology Acquisition, Inc., a Delaware corporation (“DOTA”) has unanimously approved the Business Combination Agreement, dated as of September 4, 2018 (the “Business Combination Agreement”), by and among DOTA, DOTA Holdings Limited, a Cayman Islands exempted company (“Holdco”), DOTA Merger Subsidiary Inc., a Delaware corporation and a wholly owned subsidiary of Holdco (“Merger Sub”), Draper Oakwood Investments, LLC (solely in the capacity as the Purchaser Representative) and Reebonz Limited, a Singapore corporation (“Reebonz”) and the shareholders of Reebonz named therein (the “Sellers”), which, among other things, provides for (i) the merger of Merger Sub with and into DOTA, with DOTA surviving the merger and the security holders of DOTA becoming security holders of Holdco, (ii) upon the effectiveness of such merger, the exchange of 100% of the outstanding share capital of Reebonz by the shareholders of Reebonz for ordinary shares of Holdco and the assumption of Holdco of outstanding Reebonz options and warrants (with equitable adjustments and additional amendments to the options) (the “business combination”) and (iii) the adoption of Holdco’s amended and restated memorandum and articles of association. As a result of and upon consummation of the business combination, each of DOTA and Reebonz will become a wholly owned subsidiary of Holdco, and Holdco will change its name to “Reebonz Holding Limited.” as described in this proxy statement/prospectus and become a new public company owned by the prior stockholders of DOTA and the prior shareholders of Reebonz.

 

Pursuant to the Business Combination Agreement, upon the consummation of the business combination (i) each outstanding share of Class A common stock and each outstanding share of Class F common stock of DOTA will be converted into one ordinary share of Holdco, (ii) each outstanding warrant of DOTA will be converted into one warrant of Holdco that entitles the holder thereof to purchase one ordinary share of Holdco in lieu of one share of DOTA Class A common stock, and (iii) each outstanding right of DOTA will be exchanged for one-tenth of an ordinary share of Holdco. Accordingly, this prospectus covers the issuance by Holdco of an aggregate of 7,575,000 ordinary shares, 3,011,250 warrants and 3,613,500 ordinary shares issuable upon exercise of warrants or exchange of rights.

 

Additionally, the holders of an outstanding unit purchase options of DOTA which represents the right to acquire an aggregate of 500,000 shares of Class A common stock, 250,000 warrants and rights to purchase 50,000 shares of Class A common stock of DOTA will exchange such unit purchase options for unit purchase options of Holdco which represent the right to acquire an aggregate of 550,000 ordinary shares and 250,000 warrants of Holdco upon consummation of the Business Combination. Such unit purchase options and securities of Holdco underlying such unit purchase options are also covered by this prospectus.

 

As a result of the business combination, Holdco will become a new public company and each of DOTA and Reebonz will become a wholly-owned subsidiary of Holdco. The former security holders of DOTA and Reebonz will become security holders of Holdco. As a result of the business combination, assuming that no stockholders of DOTA elect to convert their public shares into cash in connection with therewith as permitted by DOTA’s amended and restated certificate of incorporation and based on the audited consolidated indebtedness and cash and cash equivalent of Reebonz and its subsidiaries and the redemption price for public stockholders using the balance of the trust account as of June 30, 2018, the Sellers and holders of the in-the-money Reebonz options (for such purpose only treating such options as if exercised on a net basis) will own approximately 71% of the ordinary shares of Holdco to be outstanding immediately after the business combination and the former DOTA stockholders will own approximately 29% of Holdco’s outstanding ordinary shares provided that such numbers also include 10% of the Holdco ordinary shares otherwise issuable to the Sellers at the closing of the business combination, which will not be issued at such time and will be reserved as holdback shares (the “Holdback Shares”) to serve as indemnification under the Business Combination Agreement and only issued on the first anniversary of the Closing to the extent not used for indemnification purposes and exclude any potential earnout shares issued pursuant to the Management Performance Plan. If 3,090,397 DOTA public shares (the maximum number of DOTA public shares that can be redeemed, such that at least $5,000,001 is available from the trust account after giving effect to payments that DOTA would be required to make to converting shareholders which meets the net tangible assets requirement in order to consummate the business combination) are converted into cash, such percentages will be approximately 80.2% and 19.8%, respectively.

 

Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the special meeting of stockholders of DOTA scheduled to be held on ________, 2018.

 

DOTA’s units, Class A common stock, warrants and rights are currently listed on the Nasdaq Capital Market under the symbols “DOTAU,” “DOTA,” “DOTAW” and “DOTAR,” respectively. Holdco will apply for listing, to be effective at the time of the business combination, of its ordinary shares and warrants on NASDAQ under the proposed symbols RBZ and RBZW, respectively. Holdco will not have units traded following consummation of the business combination.

 

Each of DOTA and Holdco is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.

 

 

 

 

This proxy statement/prospectus provides you with detailed information about the business combination and other matters to be considered at the special meeting of DOTA’s stockholders. We encourage you to carefully read this entire document and the documents incorporated by reference. You should also carefully consider the risk factors described in “Risk Factors.”

 

These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated _____, 2018, and is first being mailed to DOTA security holders on or about _______, 2018.

 

REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important business and financial information about DOTA and Holdco, respectively, that is not included in or delivered with this proxy statement/prospectus. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and through the SEC’s website at www.sec.gov.

 

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning DOTA or Holdco, without charge, by written request to Mr. Aamer Sarfraz, Draper Oakwood Technology Acquisition, Inc., 55 East 3rd Avenue, San Mateo, California 94410, or by telephone request at (713) 213-7061; or Morrow Sadali LLC, DOTA’s proxy solicitor, by calling (800) 662-5200 or (203) 658-9400 (for banks and brokers), or from the SEC through the SEC website at the address provided above.

 

In order for you to receive timely delivery of the documents in advance of the Special Meeting of DOTA Stockholders to be held on         , 2018, you must request the information no later than five business days prior to the date of the Special Meeting, by         , 2018. 

 

 

 

 

 

 

TABLE OF CONTENTS
 

FREQUENTLY USED TERMS 1
SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION 5
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS 7
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS 16
SELECTED HISTORICAL FINANCIAL INFORMATION 24
SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS 27
RISK FACTORS 29
FORWARD-LOOKING STATEMENTS 65
SPECIAL MEETING OF DOTA STOCKHOLDERS 66
THE BUSINESS COMBINATION PROPOSAL 70
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS 96
THE INCENTIVE COMPENSATION PLAN PROPOSALS 104
THE SHARE ISSUANCE  PROPOSAL 108
THE ADJOURNMENT PROPOSAL 109
INFORMATION RELATED TO HOLDCO 110
OTHER INFORMATION RELATED TO DOTA 111
MARKET OPPORTUNITY 124
BUSINESS OF REEBONZ 129
REEBONZ’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 164
MANAGEMENT OF HOLDCO FOLLOWING THE BUSINESS COMBINATION 185
EXECUTIVE COMPENSATION 189
BENEFICIAL OWNERSHIP OF SECURITIES 191
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS 195
DESCRIPTION OF HOLDCO SECURITIES 198
PRICE RANGE OF DOTA SECURITIES AND DIVIDENDS 201
APPRAISAL RIGHTS 202
STOCKHOLDER PROPOSALS 203
OTHER STOCKHOLDER COMMUNICATIONS 204
EXPERTS 205
DELIVERY OF DOCUMENTS TO STOCKHOLDERS 206
WHERE YOU CAN FIND MORE INFORMATION 207

 

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ANNEXES

 

Annex A: Business Combination Agreement

 

Annex B: Amended and Restated Memorandum and Articles of Association of Reebonz Holding Limited

 

Annex C-1: Form of Reebonz Holding Limited 2018 Omnibus Equity Incentive Plan

 

Annex C-2: Form of Reebonz Holding Limited 2018 Share Option Plan

 

Annex C-3: Form of Reebonz Holding Limited Management Performance Plan

 

Annex D: Form of Proxy for Draper Oakwood Technology Acquisition, Inc. Special Meeting of Stockholders

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or SEC, by Holdco (File No. 333-227379), constitutes a prospectus of Holdco under Section 5 of the U.S. Securities Act of 1933, as amended, or the Securities Act, with respect to the Holdco ordinary shares to be issued to DOTA stockholders and holders of rights, the warrants to acquire Holdco ordinary shares to be issued to DOTA warrant holders and the Holdco Ordinary Shares underlying such warrants as well as the unit purchase option to acquire Holdco securities to be issued to holders of DOTA unit purchase options and securities of Holdco underlying such unit purchase options, if the business combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to the special meeting of DOTA stockholders at which DOTA stockholders will be asked to consider and vote upon a proposal to approve the business combination by the approval and adoption of the Business Combination Agreement, among other matters.

 

CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS

 

In this proxy statement/prospectus, unless otherwise specified or the context otherwise requires:

 

“$,” “US$” and “U.S. dollar” each refers to the United States dollar; and

 

“S$,” “SGD” and “Singapore Dollar” each refers to the Singapore dollar, the official currency of Singapore.

 

IMPORTANT INFORMATION ABOUT IFRS AND NON-IFRS FINANCIAL MEASURES

 

Reebonz’s audited financial statements and interim financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and referred to in this proxy statement/prospectus as “IFRS.” Reebonz refers in various places within this proxy statement/prospectus to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, which are non-IFRS measures that are calculated as earnings before interest, tax and depreciation and amortization and more fully explained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Reebonz—Certain Non-IFRS Measures.” The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for Reebonz’s consolidated financial results prepared in accordance with IFRS.

 

INDUSTRY AND MARKET DATA

 

In this proxy statement/prospectus, Reebonz relies on and refers to industry data, information and statistics regarding the markets in which it competes from research as well as from publicly available information, industry and general publications and research and studies conducted by third parties such as data by International Monetary Fund, World Economic Outlook database and Bain & Company (“Bain”). Reebonz has supplemented this information where necessary with its own internal estimates and information obtained from discussions with Reebonz customers, taking into account publicly available information about other industry participants and Reebonz management’s best view as to information that is not publicly available. This information appears in “Prospectus Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Market Opportunity,” “Business of Reebonz” and other sections of this proxy statement/prospectus. We have taken such care as we consider reasonable in the extraction and reproduction of information from such data from third-party sources. 

 

Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.

 

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FREQUENTLY USED TERMS

 

Unless otherwise stated or unless the context otherwise requires, the terms the “Company” and “Reebonz” refer to Reebonz Limited, a Singapore company, and the term “DOTA” refers to Draper Oakwood Technology Acquisition, Inc., a Delaware corporation. “Holdco” refers to DOTA Holdings Limited, a newly incorporated Cayman Islands exempted company.

 

In this document:

 

“accumulated buyers” means, as of the end of the period specified, the number of total buyers on a cumulative basis since Reebonz’s inception.

 

“adjournment proposal” means a proposal to adjourn the special meeting of the stockholders of DOTA to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the business combination proposal.

 

“ateliers” means Reebonz’s team of appraisers, trained gemologists and watch technicians who provide certain services including authentication, valuation and grading services.

 

’‘AUD” means the legal currency of Australia.

 

“average GMV per user” represents online transacted GMV for the period divided by the number of total buyers who purchased online during the period (Reebonz currently does not track offline orders from buyers using their unique customer identification number), regardless of the order being returned or canceled or discounts and credits being applied.

 

“average order value” or ’‘AOV” represents online transacted GMV for the period divided by the number of online orders from buyers during the period (Reebonz currently does not track the number of offline orders), regardless of the order being returned or canceled or discounts and credits being applied.

 

“B2C” means “business to consumer” and refers to business or transactions conducted directly between a company and consumers who are the end-users of its products or services.

 

“B2C Merchandise Business” means Reebonz’s core merchandise sales business, which consists primarily of its B2C “e-tailing” business, through which Reebonz sells authentic new and pre-owned luxury goods to buyers through its platform.

 

“B2C Merchant’s Marketplace” means Reebonz B2C marketplace which was launched in Singapore in May 2015.

 

“broker non-vote” means the failure of a DOTA stockholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

 

“Business Combination Agreement” means the Business Combination Agreement, dated as of September 4, 2018, as may be amended, by and among DOTA, Merger Sub, Holdco, Reebonz, the Purchaser Representative, and the Sellers.

 

“Business Combination” or “Transactions” means the Merger and the Share Exchange, and other transactions contemplated by the Business Combination Agreement.

 

“business combination proposal” means a proposal to approve the Business Combination Agreement and transactions contemplated thereby.

 

“C2C” means “consumer to consumer” and refers to business or transactions conducted directly between consumers of certain products or services.

 

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“C2C Individual Seller’s Marketplace” means collectively, Reebonz’s C2C marketplaces, Reebonz Closets and White Glove Service.

 

“Closing” means the closing of the Transactions.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Companies Law” means the Companies Law (2018 Revision) of the Cayman Islands.

 

“Core Asia Pacific Market” means a region consisting solely of Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, Hong Kong, South Korea, Taiwan, Australia and New Zealand, and excluding among others, China, India and Japan.

 

“DGCL” means the Delaware General Corporation Law.

 

“DOTA” or “Purchaser” means Draper Oakwood Technology Acquisition, Inc., a Delaware corporation.

 

“DOTA Class A Common Stock” means DOTA’s Class A common stock, par value $0.0001 per share.

 

“DOTA Class F Common Stock” means DOTA’s Class F common stock, par value $0.0001 per share.

 

“DOTA Common Stock” means shares of DOTA Class A Common Stock and DOTA Class F Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Extended Period” means the time permitted for DOTA to consummate its initial business combination; if DOTA does not consummate its initial business combination by September 19, 2018, it may extend the period of time to consummate a business combination up to two times, each by an additional three months (or until March 19, 2019 to complete a business combination).

 

“€” means Euro, the legal currency of the European Union.

 

“Founder Shares” means shares of DOTA Class F common stock, 1,437,500 of which are currently outstanding and have been issued to the Initial Stockholder prior to the.

 

“GMV” for a specified period represents gross merchandise value and is an operating metric, which is the total value of online orders placed and offline merchandise sold through Reebonz’s Merchandise Business or its Marketplace Business that are generally initiated through our platform.

 

“HK$” means the legal currency of Hong Kong.

 

“Holdco” means DOTA Holdings Limited, a Cayman Islands exempted company.

 

“IDR” means the legal currency of Indonesia.

 

“IFRS” refers to International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

 

“incentive plan proposals” refer to proposals to approve the adoption of the 2018 Omnibus Equity Incentive Plan, the 2018 Reebonz Share Option Plan and the Management Performance Plan of Holdco.

 

“Initial Stockholder” means the holder of DOTA Class F Common Stock.

 

“IPO” means the initial public offering of units of DOTA, consummated on September 19, 2017.

 

“KRW” means the legal currency of South Korea.

 

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“Marketplace Business” or “marketplaces” means collectively, Reebonz’s C2C Individual Seller’s Marketplace and B2C Merchant’s Marketplace.

 

“Merger” or “redomestication merger” means the merger of Merger Sub with and into DOTA, with DOTA surviving such merger. Pursuant to the Merger, prior security holders will receive securities of Holdco, and DOTA will become a wholly owned subsidiary of Holdco.

 

“Merger Sub” means DOTA Merger Subsidiaries Inc., a Delaware corporation.

 

“MYR” means the legal currency of Malaysia.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

“new buyer” means any unique buyer, as identified by his or her unique customer identification number in Reebonz’s system, who made his or her first online purchase in the specified period (Reebonz currently does not track offline orders from buyers using their unique customer identification number), regardless of the buyer returning or cancelling the order.

 

“NT$” means the legal currency of Taiwan.

 

“online sales” mean sales made through Reebonz’s online platform, including its websites and mobile application.

 

“ordinary shares” means the ordinary shares, par value $0.0001 per share, of Holdco.

 

“Prospectus” means the prospectus included in the Registration Statement on Form F-4 (Registration No. 333-227379) filed with the U.S. Securities and Exchange Commission.

 

“public shares” means shares of DOTA Class A Common Stock issued as part of the units sold in DOTA’s IPO.

 

“public stockholders” means the holders of DOTA Class A Common Stock.

 

“public warrants” means the warrants included in the units sold in DOTA’s IPO, each of which is exercisable for one share of DOTA Class A Common Stock, in accordance with its terms.

 

“Purchaser Representative” means Draper Oakwood Investments, LLC, a Delaware limited liability company.

 

“redemption” means the right of the holders of DOTA Class A Common Stock to have their shares redeemed in accordance with the procedures set forth in this proxy statement/prospectus.

 

“Reebonz Closets” means one of Reebonz’s C2C marketplaces, where individual members primarily use Reebonz’s mobile application to sell pre-owned luxury goods directly to other members in the same country.

 

“registered members” means the number of Reebonz accounts that have been registered as of the end of a period.

 

“repeat buyer” means any buyer, as identified by his or her unique customer identification number in Reebonz’s system, who made an online purchase in the specified period and had previously made one or more online purchase through its platform from Reebonz’s inception to the end of the specified period (Reebonz currently does not track offline orders from buyers using their unique customer identification number), regardless of the buyer returning or cancelling the order. A new buyer that makes his or her first purchase and then a repeat purchase during the same period would be considered a “repeat buyer” for such period and would also be considered a “new buyer” for such period.

 

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“rights” means the rights included in the units sold in the IPO and simultaneous private placements, each of which is exercisable for one tenth of one share of DOTA Class A Common Stock, in accordance with its terms.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Sellers” means the shareholders of Reebonz named as seller parties to the Business Combination Agreement.

 

“SGD,” “Singapore dollar” and “S$” mean the legal currency of Singapore.

 

“Share Exchange” means the exchange of 100% of share capital of Reebonz for ordinary shares of Holdco and assumption by Holdco of outstanding Reebonz options and warrants (with equitable adjustments and additional amendments to the options).

 

“share issuance proposal” means a proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of DOTA’s issued and outstanding common stock in financing transactions in connection with the Business Combination.

 

“Singapore” means the Republic of Singapore.

 

“SKUs” mean stock keeping units. For new products sold by Reebonz through its B2C Merchandise Business, a line of products has a single stock keeping unit, while for pre-owned goods sold by Reebonz, or goods sold through its Marketplace Business, each item available for sale has its own unique stock keeping unit. SKU data is presented for the period specified and not as of a specific date.

 

“Southeast Asia” means a region consisting solely of Singapore, Malaysia, Indonesia, Thailand, the Philippines and Vietnam.

 

“Special Meeting” means the special meeting of the stockholders of DOTA, to be held on _______, 2018 at ____ a.m. Eastern Time, at the offices of Ellenoff Grossman & Schole LLP, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105.

 

“Sponsor” means Draper Oakwood Investments, LLC, a Delaware limited liability company.

 

“THB” means the legal currency of Thailand.

 

“total buyers” for a specified period means, collectively, the unique buyers, as identified by his or her unique customer identification number in Reebonz’s system, who have made online purchases through our platform during the specified period (Reebonz currently do not track offline orders from buyers using their unique customer identification number), regardless of the buyer returning or cancelling the order.

 

“total orders” for a specified period means total online orders (Reebonz currently do not track the number of offline orders), regardless of the order being returned or cancelled.

 

“trust account” means the trust account that holds a portion of the proceeds of DOTA’s IPO and the concurrent sale of the private placement units.

 

“units” means units issued in the IPO, each consisting of one share of DOTA Class A Common Stock, one-half of one warrant of DOTA and one right.

 

“U.S.” means the United States of America.

 

“U.S. dollar,” “US$” and “$” mean the legal currency of the United States;

 

“U.S. GAAP” means United States generally accepted accounting principles.

 

“warrants” means a warrant to purchase DOTA Class A Common Stock issued in the IPO and simultaneous private placements. Each whole warrant entitles the holder thereof to purchase one share of DOTA Class A Common Stock at a price of $11.50 per share.

 

“White Glove Service” means one of Reebonz’s C2C marketplaces which primarily caters to premium individual sellers, where Reebonz takes pre-owned luxury goods on consignment from individuals and offer them for sale on its platform.

 

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SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION

 

The parties to the Business Combination Agreement are Draper Oakwood Technology Acquisition, Inc. (“DOTA”), DOTA Merger Sub Inc. (“Merger Sub”), DOTA Holdings Limited (“Holdco”), Draper Oakwood Investments, LLC, in its capacity as the Purchaser Representative thereunder (the “Purchaser Representative”), Reebonz Limited (‘Reebonz”), and the shareholders of Reebonz named as Sellers therein (the “Sellers”). Pursuant to the Business Combination Agreement, (1) Merger Sub will merge with and into DOTA, with DOTA surviving the merger, and each of the former security holders of DOTA receiving securities of Holdco (the “redomestication merger”) and (2) the outstanding share capital of Reebonz will be exchanged by the Sellers for ordinary shares of Holdco and the outstanding options and warrants of Reebonz will be assumed by Holdco (with equitable adjustments) (the “share exchange” and together with the redomestication merger and the other transactions contemplated by the Business Combination Agreement, the “business combination”). See the section in this summary entitled “The Business Combination Proposal.”

 

Reebonz believes it is a leading player in the online luxury market in its markets of Southeast Asia and Core Asia Pacific Market, based on GMV. Reebonz’s Core Asia Pacific Market consists of Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, Hong Kong, South Korea, Taiwan, Australia and New Zealand, collectively. Reebonz aims to makes luxury accessible to consumers through its internet platform, which includes localized versions of its website, www.reebonz.com, and its Reebonz mobile application, complemented by its offline channels. Through its core B2C Merchandise Business, Reebonz curates and sells authentic new and pre-owned luxury goods, including handbags, small leather goods and other accessories, shoes, watches and jewelry, from the world’s leading luxury brands. Reebonz also provides a marketplace for individuals to sell new and pre-owned luxury goods. Reebonz believes its buyer and seller promises, transaction fulfillment services, returns and refunds policies and product authentication capabilities have helped it build a trusted reputation that encourages buyers and sellers to use its platform. With the introduction of Reebonz Closets, a C2C marketplace, in February 2015, and the launch of B2C Merchant’s Marketplace in Singapore in May 2015, Reebonz expect to grow its Marketplace Business to complement its B2C Merchandise Business by enabling its buyers to become sellers, and sellers to become buyers, thereby transforming Reebonz’s business into an ecosystem for luxury goods that increases engagement and enhances the lifetime value of its customers. Reebonz provides buyers and sellers an omni-channel experience to buy and sell luxury goods through its integrated websites, mobile application and offline channels. See the section entitled “Business of Reebonz.”

 

Under the Business Combination Agreement, upon the consummation of the redomestication merger, each share of DOTA Class A common stock and Class F Common Stock, including those contained in units of DOTA, will be exchanged for one ordinary share of Holdco, except that holders, or “public stockholders,” of shares of DOTA’s common stock sold in its initial public offering, or “public shares,” shall be entitled to elect instead to receive a pro rata portion of DOTA’s trust account, as provided in DOTA’s constitutional documents. Additionally, each outstanding DOTA warrant will entitle the holder to purchase one ordinary share of Holdco in lieu of one share of DOTA Common Stock.

 

Under the Business Combination Agreement, upon consummation of the share exchange, the holders of Reebonz’s ordinary shares and vested in-the-money options will be entitled to receive, in their pro rata portion, a number of ordinary shares of Holdco and replacement in-the-money options of Holdco based on an enterprise value of US$252 million, as reduced for the consolidated indebtedness, net of cash and cash equivalents, of Reebonz (“Net Debt”) as of the date of the last auditor reviewed fiscal quarter prior to the closing of the business combination (the “Closing”), with each Holdco share valued at the price per share paid to public stockholders for each DOTA share in the redemption (the “Redemption Price”). Using the Net Debt as of June 30, 2018 and a Redemption Price of $10.27 per share (estimated redemption price as of November 30, 2018, the anticipated closing date), this would result in approximately 19.92 million ordinary shares of Holdco being issued to the Sellers and the holders of Reebonz in-the-money options at the Closing (treating the options for such calculations as if exercised on a cashless basis at such time, although they will not be and will be assumed by Holdco); provided, that 10% of the Holdco ordinary shares otherwise issuable to the Sellers at the Closing will not be issued at such time and will be reserved as holdback shares (the “Holdback Shares”) to serve as indemnification under the Business Combination Agreement and only issued on the first anniversary of the Closing to the extent not used for indemnification purposes. These calculations exclude any earnout shares under the business combination agreement and the Management Performance Plan and the awards under the 2018 Omnibus Equity Incentive Plan, as well as any out-of-the-money warrants of Reebonz that are assumed by Holdco pursuant to the Business Combination Agreement. In addition, after the Closing, the Sellers may receive up to an additional 1,000,000 Holdco ordinary shares as earnout shares under the Business Combination Agreement, and Holdco’s management may receive up to an additional 1,500,000 Holdco ordinary shares under the Management Performance Plan, in each case, if certain consolidated revenue and share price targets are achieved with respect to the 2019 and 2020 calendar years (with an additional lookback for the subsequent year with respect to the share price). Issuance of Holdco securities in connection with the share exchange with Reebonz security holders are exempt from registration under the Securities Act in reliance upon Section 4(a)(2) thereof because, among other things, the issuances are contractual obligations pursuant to a privately negotiated transaction and each of the holders of Reebonz shares executed the Business Combination Agreement and therefore is already contractually bound. Certain holders of Reebonz securities are not U.S. persons and that the issuance of the securities of Holdco to such persons would be extraterritorial and within the scope of Regulation S, and that those shareholders who are likely considered as U.S. persons under Regulation S are all accredited investors or qualified institutional buyers.

 

Pursuant to the Business Combination Agreement, prior to the consummation of the business combination, the board of directors and shareholders of Holdco will amend and restate Holdco’s memorandum and articles of association. The Amended and Restated Memorandum and Articles of Association of Holdco differ from DOTA’s amended and restated certificate of incorporation in multiple aspects, including: (i) the name of the new public entity will be “Reebonz Holding Limited” as opposed to “Draper Oakwood Technology Acquisition, Inc.”; (ii) Holdco has 200,000,000 authorized ordinary shares and 5,000,000 authorized preferred shares, as opposed to DOTA having 18,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; (iii) Holdco’s corporate existence is perpetual as opposed to DOTA’s corporate existence terminating if a business combination is not consummated by DOTA within a specified period of time; and (iv) Holdco’s charter does not include the various provisions applicable only to specified purpose acquisition corporations that DOTA’s amended and restated certificate of incorporation contains.

 

In addition to voting on the business combination, the stockholders of DOTA will consider and vote upon proposals to approve the adoption of the 2018 Omnibus Equity Incentive Plan, the 2018 Reebonz Share Option Plan and the Management Performance Plan — we refer to these proposals as the “incentive compensation plan proposals.” See the section entitled “The Incentive Compensation Plan Proposals.”

 

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The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons: (i) by mutual written consent of DOTA, Holdco and Reebonz; (ii) by written notice by either DOTA or Reebonz if the Closing has not occurred on or prior to December 19, 2018, (iii) by written notice by either DOTA or Reebonz if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the business combination, and such order or other action has become final and non-appealable; (iv) by written notice by Reebonz for DOTA’s, Holdco’s or Merger Sub’s uncured breach, such that the related closing condition would not be satisfied; (v) by written notice by DOTA or Holdco for Reebonz’s or any Seller’s uncured breach, such that the related closing condition would not be satisfied; (vi) by DOTA or Holdco if there has been an event constituting a “Material Adverse Effect” on Reebonz or any of its subsidiaries since the date of the Business Combination Agreement which is uncured and continuing; (vii) by written notice by either DOTA, Holdco or Reebonz if DOTA holds its stockholder meeting to approve the Business Combination Agreement and the business combination and such approval is not obtained; and (viii) by written notice by Sellers holding at least 50.1% of Reebonz’s shares (on an as-converted to ordinary share basis) if the Closing has not occurred on or prior to June 30, 2019. See the section entitled “The Business Combination Proposal - The Business Combination Agreement and Related Agreements — Termination.”

 

After the business combination, the directors of Holdco will be Samuel Lim, Chua Kee Lock, and Jeff Richards, who were designated by Reebonz, and Roderick Perry and Ali Erfan, who were designated by DOTA. Roderick Perry is currently the Executive Chairman and a director of DOTA, and Ali Erfan is currently the Vice Chairman and a director of DOTA. Neither Mr. Perry nor Mr. Erfan has received or will receive any compensation as an executive officer of DOTA. After the merger, Messrs. Perry, Erfan, Chua, and Richards will be considered independent directors under the rules of NASDAQ. See the section entitled “Management of Holdco Following the Business Combination.”

 

Upon completion of the business combination, the current officers of Reebonz will remain officers of Reebonz and will become officers of Holdco, holding the equivalent positions as those held with Reebonz. These officers are Samuel Lim, Daniel Lim, Benjamin Han, Torres Oey, Nupur Sadiwala, Cassie Mah, Lynn Ng, and Evelyn Lim. Each of these persons is currently an executive officer of Reebonz. See the section entitled “Management of Holdco Following the Business Combination.”


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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

Q. Why am I receiving this proxy statement/ prospectus?

  A.    DOTA and Reebonz have agreed to a business combination under the terms of the Business Combination Agreement, dated as of September 4, 2018, that is described in this proxy statement/prospectus and to approve the business combination contemplated by the Business Combination Agreement.  This agreement is referred to as the “Business Combination Agreement.”  The Business Combination Agreement provides for, among other things, (a) the merger of Merger Sub with and into DOTA, with DOTA surviving the merger, and each of the current security holders of DOTA receiving securities of Holdco, which we call the “redomestication merger,” (b) the exchange of 100% of the ordinary shares of Reebonz by holders thereof for ordinary shares of Holdco and the assumption by Holdco of outstanding Reebonz options and warrants (with equitable adjustments and additional amendments to the options), which we call the “share exchange,” and (c) the adoption of Holdco’s amended and restated memorandum and articles of association. This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting.  You should read this proxy statement/prospectus and its annexes carefully and in their entirety.  
     
Q.  What is being voted on at the Special Meeting?   A.    DOTA’s stockholders are being asked to vote to approve the Business Combination Agreement and transactions contemplated thereby.  See the section entitled “The Business Combination Proposal.”
     
    DOTA’s stockholders are also being asked to consider and vote upon proposals to approve the adoption of the 2018 Omnibus Equity Incentive Plan, the 2018 Reebonz Share Option Plan and the Management Performance Plan of Holdco.  See the section entitled “The Incentive Compensation Plan Proposals.”
     
   

In addition to the foregoing proposals, the stockholders are also asked to consider and vote upon a proposal to approve, for purposes of complying with applicable NASDAQ Stock Market LLC listing rules, the issuance of more than 20% of DOTA’s issued and outstanding common stock in financing transactions in connection with the proposed business combination. See the section entitled “The Share Issuance Proposal.”

 

The stockholders may also be asked to consider and vote upon a proposal to adjourn the meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, DOTA would not have been authorized to consummate the business combination. See the section entitled “The Adjournment Proposal.”

     
    DOTA will hold the special meeting of its stockholders to consider and vote upon these proposals.  This proxy statement/prospectus contains important information about the proposed business combination and the other matters to be acted upon at the special meeting.  Stockholders should read it carefully.
     
    The vote of stockholders is important.  Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
     
Q. Why is DOTA proposing the business combination?   A.    DOTA was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.
     
    DOTA completed its IPO of units on September 19, 2017, with each unit consisting of one share of its Class A common stock, one-half of one warrant to purchase one share of common stock at a price of $11.50 and one right, each entitling the holder thereof to receive one tenth of one share of DOTA Class A Common Stock upon DOTA’s completion of its initial business combination and also closed on the sale of the units subject to overallotment on September 27, 2017, raising total gross proceeds of $57,500,000. Since the IPO, DOTA’s activity has been limited to the evaluation of business combination candidates.

 

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    Although DOTA’s focus in searching for a target business was in technology sector, DOTA was not limited to that industry and was permitted to choose a target business in any industry or geographic region that it felt provided its stockholders with the greatest opportunity to participate in a company with significant growth potential.  Accordingly, it regularly analyzed investment opportunities that were outside the technology section in an effort to locate the best potential business combination opportunity for its stockholders.
     
    Reebonz operates an online luxury market in Southeast Asia and the Core Asia Pacific Market.  Based on its due diligence investigations of Reebonz and the industry in which it operates, including the financial and other information provided by Reebonz in the course of their negotiations, DOTA believes that Reebonz has an appealing growth profile and a compelling valuation.  As a result, DOTA believes that a business combination with Reebonz will provide DOTA stockholders with an opportunity to participate in a company with significant growth potential.  See the section entitled “The Business Combination Proposal — DOTA’s Board of Directors’ Reasons for Approval of the Business Combination.”
     

 

Q. Why is DOTA providing stockholders with the opportunity to vote on the Business Combination?

  A.    Under its amended and restated certificate of incorporation, DOTA must provide all holders of its public shares with the opportunity to have their public shares redeemed upon the consummation of DOTA’s initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, DOTA has elected to provide its stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, DOTA is seeking to obtain the approval of its stockholders of the Business Combination Proposal in order to allow its public stockholders to effectuate redemptions of their public shares in connection with the closing of the Business Combination.
     
Q. Are the proposals conditioned on one another?   A.    Unless the business combination proposal is approved, the incentive compensation plan proposals and the share issuance proposal will not be presented to the stockholders of DOTA at the Special Meeting. The adjournment proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the business combination proposal does not receive the requisite vote for approval, then DOTA will not consummate the Business Combination. If DOTA does not consummate the Business Combination and fails to complete an initial business combination by December 19, 2018 (or, if applicable, the Extended Period), DOTA will be required to dissolve and liquidate its trust account by returning the then remaining funds in such account to its public stockholders.
     
Q. What will happen in the Business Combination?   A.    At the Closing, Merger Sub will merge with and into DOTA, with DOTA surviving such merger. Upon consummation of the merger, DOTA will become a wholly-owned subsidiary of Holdco and security holders of DOTA securities will exchange their DOTA securities for securities of Holdco. In particular, each outstanding share of DOTA Class A Common Stock and each outstanding share of DOTA Class F Common Stock will be converted into one ordinary share of Holdco, (ii) each outstanding warrant of DOTA shall be converted into one warrant of Holdco that entitles the holder thereof to purchase one ordinary share of Holdco in lieu of one share of DOTA Class A common stock, and (iii) each outstanding right of DOTA will be exchanged for one-tenth of an ordinary share of Holdco.  In connection with the share exchange, shareholders of Reebonz will exchange their Reebonz shares for of Holdco and Holdco will assume all Reebonz options and warrants (with equitable adjustments and additional amendments to the options), as a result of which, Reebonz will become a wholly-owned subsidiary of Holdco. The cash held in the trust account and the proceeds from the financing transactions in connection with the Business Combination will be used by Holdco for working capital and general corporate purposes following the consummation of the Business Combination. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. For Holdco’s organizational structure chart upon consummation of the Business Combination, please see “The Business Combination Agreement — Transaction and Organizational Structures Prior to and Following consummation of the Business Combination.”

 

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Q. What conditions must be satisfied to complete the Business Combination?  

A.    There are a number of closing conditions to the Business Combination, including, but not limited to, the following:

 

    ●  the approval of the Business Combination Agreement and the transactions contemplated thereby and related matters by the requisite vote of DOTA’s stockholders;
       
    expiration of any waiting period under applicable antitrust laws;
       
    receipt of requisite regulatory approvals and specified third party consents;
       
    no law or order preventing or prohibiting the transactions contemplated by the Business Combination Agreement;
       
    no pending litigation to enjoin or restrict the consummation of the Business Combination;
       
    DOTA having at least $5,000,001 in net tangible assets as of the consummation of the Business Combination, after giving effect to public stockholders’ exercise of their redemption rights;
       
    the election or appointment of members to Holdco’s board of directors as described herein;
       
    the effectiveness of this registration statement; and
       
    the assumption by Holdco of the Reebonz options, warrants and other convertible securities.
       
    For a summary of all of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “Business Combination Proposal – Business Combination Agreement and Related Agreements.”

 

Q. Did the DOTA board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination?   A.    DOTA’s board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the business combination with Reebonz.  The officers and directors of DOTA have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of DOTA’s financial advisors, enabled them to make the necessary analyses and determinations regarding the business combination with Reebonz.  In addition, DOTA’s officers and directors and its advisors have substantial experience with mergers and acquisitions.  Accordingly, investors will be relying solely on the judgment of DOTA’s board of directors in valuing Reebonz’s business, and assuming the risk that the board of directors may not have properly valued such business.
     
Q. How many votes do I have at the Special Meeting?   A.    DOTA stockholders are entitled to one vote at the Special Meeting for each share of DOTA Common Stock held of record as of ________, 2018, the record date for the Special Meeting (the “Record Date”). As of the close of business on the Record Date, there were 7,575,000 shares of DOTA Common Stock outstanding.  

 

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Q. What vote is required to approve the proposals presented at the Special Meeting?

  A.    The approval of each of the business combination proposal, the incentive compensation plan proposals, the share issuance proposal and the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of DOTA Common Stock entitled to vote and represented in person or by proxy at the Special Meeting. Assuming a quorum is established, a stockholder’s failure to vote by proxy or to vote in person at the Special Meeting will have the same effect as voted “against” each of the foregoing proposals. DOTA’s Sponsor, directors and officers have agreed to vote their shares in favor of the business combination proposal. As of the date of this proxy statement/prospectus, DOTA’s Sponsor, directors and officers beneficially owned an aggregate of 1,655,500 shares of DOTA Common Stock.
     
Q. What constitutes a quorum at the Special Meeting?   A.    Holders of a majority in voting power of DOTA Common Stock issued and outstanding and entitled to vote at the Special Meeting constitute a quorum. In the absence of a quorum, the chairman of the meeting has power to adjourn the Special Meeting. As of the Record Date, 3,787,500 shares of DOTA Common Stock would be required to achieve a quorum.
     
Q. How do the insiders of DOTA intend to vote on the proposals?   A.    DOTA’s Sponsor, officers and directors beneficially own and are entitled to vote an aggregate of approximately 21.8% of the outstanding shares of DOTA’s common stock.  These parties have agreed to vote their securities in favor of the business combination proposal.  The DOTA’s Sponsor, officers and directors have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting.
     
Q.  Do I have redemption rights?   A.    Pursuant to DOTA’s amended and restated certificate of incorporation, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with DOTA’s Charter. As of the date of this proxy statement/prospectus, based on funds in the trust account of approximately $59.01 million, this would have amounted to approximately $10.26 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of DOTA Common Stock for cash. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to DOTA’s transfer agent prior to the Special Meeting. See the section titled “Special Meeting of DOTA Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.
     
Q.   Will how I vote affect my ability to exercise redemption rights?   A.    No. You may exercise your redemption rights whether or not you affirmatively vote your shares of DOTA Common Stock “FOR” or “AGAINST” the Business Combination Proposal or abstain from voting on the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Business Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of NASDAQ.
     

 

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Q. How do I exercise my redemption rights?   A.    If you are a holder of public shares and wish to exercise your redemption rights, you must demand that DOTA convert your shares into cash no later than 5:00 p.m. Eastern Time on ________ (two (2) business days prior to the vote on the business combination proposal) by (A) checking the box on the proxy card, (B) submitting your request in writing to Mark Zimkind of Continental Stock Transfer & Trust Company, at the address listed at the end of this section and (C) delivering your stock to DOTA’s transfer agent physically or electronically using The Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System.  You do not need to affirmatively vote either for or against the business combination proposal in order to be eligible for exercise your redemption rights.  Any holder of public shares voting for or against the business combination proposal will be entitled to demand that his shares be converted for a full pro rata portion of the amount then in the trust account (which was $_____, or $___ per share, as of                                , the record date).  Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the business combination.  There are currently no owed but unpaid income taxes on the funds in the trust account.  However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of DOTA’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the business combination proposal.  Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims.  Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
     
    If you wish to exercise your redemption rights but initially do not check the box on the proxy card providing for the exercise of your redemption rights and do not send a written request to DOTA to exercise your redemption rights, you may request DOTA to send you another proxy card on which you may indicate your intended vote or your intention to exercise your redemption rights.  You may make such request by contacting DOTA at the phone number or address listed at the end of this section.
     
    Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the special meeting.  If you deliver your shares for redemption to DOTA’s transfer agent and later decide prior to the special meeting not to elect conversion, you may request that DOTA’s transfer agent return the shares (physically or electronically).  You may make such request by contacting DOTA’s transfer agent at the phone number or address listed at the end of this section.
     
   

Any corrected or changed proxy card or written demand of redemption rights must be received by DOTA’s secretary prior to the vote taken on the business combination proposal at the special meeting.  No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to DOTA’s transfer agent at least two (2) business days prior to the vote at the meeting.

     
    If a holder of public shares properly makes a demand for redemption as described above, then, if the business combination is not consummated, DOTA will convert these shares into a pro rata portion of funds deposited in the trust account.  If you exercise your redemption rights, then you will be exchanging your shares of DOTA Common Stock for cash and will not be entitled to Holdco ordinary shares upon consummation of the Business Combination.  If the business combination is not approved or completed for any reason, then holders of public shares who elected to exercise their redemption rights would not be entitled to convert their shares for the applicable pro rata share of the trust account.  In such case, DOTA will promptly return any shares delivered by public holders and such holders may only share in the assets of the trust account upon the liquidation of DOTA.  This may result in holders receiving less than they would have received if the business combination was completed and they exercised redemption rights in connection therewith due to potential claims of creditors.
     
    If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any DOTA warrants that you may hold.  Your warrants will become exercisable to purchase one ordinary share of Holdco in lieu of one share of DOTA Common Stock for a purchase price of $11.50 upon consummation of the business combination.
     

 

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Q.   If I am a Warrant or Right holder, can I exercise redemption rights with respect to my warrants or rights?   A.    No. The holders of warrants and rights have no redemption rights with respect to such securities.  
     
Q. If I am a Unit holder, can I exercise redemption rights with respect to my Units?  

A.    No. Holders of outstanding Units must separate the underlying shares of common stock, warrants and rights prior to exercising redemption rights with respect to the public shares.

 

If you hold units registered in your own name, you must deliver the certificate for such units to Continental Stock Transfer & Trust Company, DOTA’s transfer agent, with written instructions to separate such units into public shares, rights and warrants. This must be completed far enough in advance to permit the mailing of the public share certificates back to you so that you may then exercise your redemption rights upon the separation of the public shares from the units. See “how do I exercise my redemption rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below.

 

If a broker, dealer, commercial bank, trust company or other nominee holds your units, you must instruct such nominee to separate your units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, DOTA’s transfer agent. Such written instructions must include the number of units to be split and the nominee holding such units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (DWAC) system, a withdrawal of the relevant units and a deposit of an equal number of public shares, rights and warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the public shares from the units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your public shares to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

     
Q. Do I have appraisal rights if I object to the proposed business combination?   A.    No. Neither DOTA stockholders nor its unit holders, warrant holders or rights holders have appraisal rights in connection with the business combination under the General Corporation Law of the State of Delaware (“DGCL”).
     
Q. I am a DOTA warrant holder.  Why am I receiving this proxy statement/prospectus?   A.    As a holder of DOTA warrants, you will be entitled to purchase one ordinary share of Holdco in lieu of one share of DOTA Common Stock at a purchase price of $11.50 upon consummation of the business combination, in lieu of one share of common stock of DOTA.  This proxy statement/prospectus includes important information about Holdco and the business of Holdco and its subsidiaries following consummation of the business combination.  Since holders of DOTA warrants will become holders of warrants of Holdco and may become holders of Holdco ordinary shares upon consummation of the business combination, we urge you to read the information contained in this proxy statement/prospectus carefully.

 

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Q. What happens to the funds deposited in the trust account after consummation of the business combination?   A.    Of the net proceeds of DOTA’s initial public offering (including underwriters’ exercise of over-allotment option) and simultaneous private placements, a total of $57,500,000 were placed in the trust account immediately following the initial public offering.  After consummation of the business combination, the funds in the trust account will be released to Holdco and used by Holdco to pay holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the business combination with Reebonz (including fees of an aggregate of approximately $5.025 million to certain underwriters and finders in connection with the business combination), for expenses related to prior proposed business combinations that were not consummated and for working capital and general corporate purposes of Holdco.
     
Q. What happens if a substantial number of public stockholders vote in favor of the business combination proposal and exercise their redemption rights?  

A.    Unlike other blank check companies which require public stockholders to vote against a business combination in order to exercise their redemption rights, DOTA’s public stockholders may vote in favor of the business combination and exercise their redemption rights.  Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemption by public stockholders.  However, the business combination will not be consummated if, immediately prior to the business combination, DOTA does not have at least $5,000,001 net tangible assets after giving effect to payment of amounts that DOTA will be required to pay to converting stockholders upon consummation of the merger.  As a result, based on the current expected DOTA cash, expenses and liabilities at Closing, holders of no more than 5,256,391 public shares of DOTA (or approximately 69.3% of the total outstanding shares of DOTA Common Stock) could seek redemption of their shares without triggering Reebonz’s right to terminate the business combination agreement. Also, with fewer public shares and public stockholders, the trading market for Holdco’s ordinary shares may be less liquid than the market for DOTA’s shares of common stock were prior to the merger and Holdco may not be able to meet the listing standards for Nasdaq or another national securities exchange.  In addition, with fewer funds available from the trust account, the working capital infusion from the trust account into Reebonz’s business will be reduced.

     
Q. What happens if the business combination is not consummated?   A.    If DOTA does not complete the business combination with Reebonz or another business combination by December 19, 2018 (or, if applicable, the Extended Period), DOTA must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the trust account (currently anticipated to be approximately $10.27 per share as of November 30, 2018, the anticipated closing date).
     
Q. When do you expect the business combination to be completed?   A.    It is currently anticipated that the business combination will be consummated promptly following the DOTA special meeting which is set for _______; however, such meeting could be adjourned, as described above.  For a description of the conditions for the completion of the business combination, see the section entitled “The Business Combination Agreement — Conditions to the Closing of the Business Combination.”
     
Q. What do I need to do now?   A.    DOTA urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the business combination will affect you as a stockholder and/or warrant holder of DOTA.  Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.
     

 

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Q. How do I vote?   A.    If you are a holder of record of DOTA Common Stock on the record date, you may vote in person at the special meeting or by submitting a proxy for the special meeting.  You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope.  If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.  In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker, bank or nominee.
     
Q. If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?   A.    As disclosed in this proxy statement/prospectus, your broker, bank or nominee cannot vote your shares on the business combination proposal or the incentive plan proposals unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.
     
Q. May I change my vote after I have mailed my signed proxy card?   A.    Yes.  Stockholders may send a later-dated, signed proxy card to DOTA’s secretary at the address set forth below so that it is received by DOTA’s Chief Executive Officer prior to the vote at the special meeting or attend the special meeting in person and vote.  Stockholders also may revoke their proxy by sending a notice of revocation to DOTA’s Chief Executive Officer, which must be received by DOTA’s Chief Executive Officer prior to the vote at the special meeting.
     
Q. What happens if I fail to take any action with respect to the meeting?   A.    If you fail to take any action with respect to the meeting and the business combination is approved by stockholders and consummated, you will become a shareholder of Holdco.  If you fail to take any action with respect to the meeting and the business combination is not approved, you will continue to be a stockholder and/or warrant holder of DOTA.
     
Q. What should I do with my stock and/or warrants certificates?  

A.    DOTA warrant holders should not submit their warrant certificates now and those stockholders who do not elect to have their DOTA shares converted into the pro rata share of the trust account should not submit their share certificates now.  After the consummation of the business combination, Holdco’s transfer agent will send instructions to DOTA security holders regarding the exchange of their DOTA securities for Holdco securities.  DOTA stockholders who exercise their redemption rights must deliver their stock certificates to DOTA’s transfer agent (either physically or electronically) at least two (2) business days prior to the vote at the special meeting.

     
Q. What should I do if I receive more than one set of voting materials?   A.    Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards.  For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares.  If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card.  Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your DOTA shares.
     

 

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Q. Who can help answer my questions?  

A.    If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

 

Aamer Sarfraz

Draper Oakwood Technology Acquisition, Inc.

55 East 3rd Ave.

San Mateo, CA 94401

Email: aamer@draperoakwood.com

     
    Or:
     
   

Morrow Sodali LLC

470 West Avenue

Stamford, CT 06902

Tel: (800) 662-5200 or (203) 658-9400 (for banks and brokers)

Email: DOTA.info@morrowsodali.com

     
    You may also obtain additional information about DOTA from documents filed with the Securities and Exchange Commission (“SEC”) by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your stock (either physically or electronically) to DOTA’s transfer agent at the address below at least two (2) business days prior to the vote at the special meeting.  If you have questions regarding the certification of your position or delivery of your stock, please contact:
     
    Mr. Mark Zimkind
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the business combination, you should read this entire document carefully, including the business combination agreement attached as Annex A to this proxy statement/prospectus. The business combination agreement is the legal document that governs the merger and share exchange and the other transactions that will be undertaken in connection with the business combination. It is also described in detail in this proxy statement/prospectus in the section entitled “The Business Combination Agreement.”

 

The Parties

 

DOTA

 

DOTA is a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. DOTA was incorporated under the laws of Delaware on April 27, 2017.

 

On September 19, 2017, DOTA closed its initial public offering of 5,000,000 units, with each unit consisting of one share of its common stock, one-half of one warrant to purchase one share of its common stock at a purchase price of $11.50 upon consummation of an initial business combination and one right entitling the holder thereof to receive one-tenth (1/10) of one share of Common Stock upon the consummation of an initial business combination. On September 27, 2017, DOTA consummated the sale of an additional 750,000 units which were subject to an over-allotment option granted to the underwriters of its initial public offering. The units from the initial public offering (including the over-allotment option) were sold at an offering price of $10.00 per unit, generating total gross proceeds of $7,500,000. Simultaneously with the consummation of the initial public offering and the exercise of the underwriters’ over-allotment option, DOTA consummated the private sale of 272,500 units to its initial stockholders, in each case at $10.00 per unit for an aggregate purchase price of $2,725,000. A total of $57,500,000 was deposited into the trust account and the remaining proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The initial public offering was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-220180) that became effective on September 14, 2018. As of the date of this proxy statement/prospectus, there was approximately $59.01 million held in the trust account.

 

After consummation of the business combination, the funds in the trust account will be released to Holdco and used by Holdco to pay holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the business combination with Reebonz (including fees of an aggregate of approximately $5.025 million to various underwriters and finders in connection with the business combination), for expenses related to prior proposed business combinations that were not consummated and for working capital and general corporate purposes.

 

EBC, in its role as investment banker to DOTA, has provided DOTA with advice and assistance in reviewing potential targets with which to consummate a business combination and arranging meetings with and preparing materials for investors in connection with the consummation of the business combination, as well as providing general advice with respect to special purpose acquisition company transactions.

 

EBC and other holders of DOTA’s unit purchase options representing the right to acquire up to 500,000 shares of common stock of DOTA and 250,000 warrants of DOTA will receive 550,000 ordinary shares and 250,000 warrants in exchange for such unit purchase options upon the consummation of the business combination.

 

DOTA units, common stock, warrants and rights are listed on NASDAQ under the symbols “DOTAU,” “DOTA,” “DOTAW,” and “DOTAR,” respectively.

 

The mailing address of DOTA’s principal executive office is 55 East 3rd Ave., San Mateo, CA. After the consummation of the business combination, it will become a wholly owned subsidiary of Holdco.

 

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Holdco

 

Holdco was incorporated in July 2018 solely for the purpose of effectuating the redomestication merger described herein. Holdco was incorporated under the laws of the Cayman Islands as an exempted company on July 27, 2018. Holdco owns no material assets and does not operate any business.

 

Prior to the consummation of the business combination, the sole directors and shareholders of Holdco are Roderick Perry and Aamer Sarfraz, who are currently Executive Chairman and Chief Executive Officer, respectively, of DOTA.

 

The mailing address of Holdco’s registered office is PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. After the consummation of the business combination, its principal executive office will be that of Reebonz, located at 5 Tampines North Drive 5, #07-00, Singapore 528548 and its telephone number is (+65) 6499 9469.

 

Holdco will be renamed “Reebonz Holding Limited” upon consummation of the Business Combination.

 

Reebonz

 

Reebonz is a leading specialist online luxury retailer in our Core Asia Pacific Market. Its Core Asia Pacific Market consists of Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, Hong Kong, South Korea, Taiwan, Australia and New Zealand, collectively. Reebonz makes luxury accessible to consumers through its internet platform, which includes localized versions of its website, www.reebonz.com, and the Reebonz mobile application, complemented by its offline channels. Through its core Merchandise Business, Reebonz curates and sells authentic new and pre-owned luxury goods, including handbags, small leather goods and other accessories, shoes, watches and jewelry, from the world’s leading luxury brands. Reebonz also provides a marketplace for individuals to sell new and pre-owned luxury goods. Reebonz believes its buyer and seller promises, transaction fulfillment services, returns and refunds policies and product authentication capabilities have helped it build a trusted reputation that encourages buyers and sellers to use its platform.

 

The mailing address of Reebonz’s principal executive office is 5 Tampines North Drive 5, #07-00, Singapore 528548 and its telephone number is (+65) 6499 9469.

 

The Business Combination Proposal

 

The business combination agreement provides for a business combination transaction by means of (i) the merger of Merger Sub with and into DOTA, with DOTA surviving and each of the former security holders of DOTA receiving securities of Holdco, with Holdco becoming a new public company and (ii) the exchange of 100% of the outstanding share capital of Reebonz by the Reebonz shareholders for ordinary shares of Holdco and assumption by Holdco of outstanding Reebonz options and warrants (with equitable adjustments and additional amendments to the options).

 

On September 4, 2018, DOTA entered into the Business Combination Agreement with Holdco, Merger Sub, Reebonz, Draper Oakwood Investments, LLC, a Delaware limited liability company, in the capacity as the Purchaser Representative thereunder, and the shareholders of Reebonz named therein.

 

Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement, Merger Sub will merge with and into DOTA, with DOTA continuing as the surviving entity and with holders of DOTA securities receiving securities of Holdco, and Holdco will acquire all of the issued and outstanding capital shares of Reebonz from existing shareholders of Reebonz in exchange for ordinary shares of Holdco, with Reebonz becoming a wholly-owned subsidiary of Holdco and Holdco will assume Reebonz’s outstanding options, warrants and other securities convertible into or that have the right to acquire Reebonz shares (the “Share Exchange”).

 

The total consideration to be provided at the closing of the Business Combination by Holdco to shareholders of Reebonz and the holders of in-the-money convertible securities Reebonz that are assumed by Holdco will be based on an enterprise value of Reebonz of (i) US$252 million, less (ii) the aggregate amount of any outstanding indebtedness, net of cash and cash equivalents, of Reebonz and its subsidiaries as of the end of the last fiscal quarter for which there are auditor-reviewed financial statements as of the closing of the Business Combination, with the price per share of Reebonz shares determined on a fully diluted basis using such valuation. However, ten percent (10%) of the ordinary shares of Holdco otherwise issuable to shareholders of Reebonz at the closing of the Business Combination will be held back and not issued until twelve (12) months after the closing to the extent that such shares are not used to satisfy the indemnification obligations of Reebonz’s shareholders under the Business Combination Agreement. In addition, after the Closing, the Sellers may receive up to an additional 1,000,000 Holdco ordinary shares as earnout shares under the Business Combination Agreement, and Holdco’s management may receive up to an additional 1,500,000 Holdco ordinary shares under the Management Performance Plan, in each case, if certain consolidated revenue and share price targets are achieved with respect to the 2019 and 2020 calendar years (with an additional lookback for the subsequent year with respect to the share price).

 

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In addition to the approval of the Business Combination Proposal, unless waived by the parties to the Business Combination Agreement, in accordance with applicable law, the closing of the Business Combination is subject to a number of conditions set forth in the Business Combination Agreement including, among others, receipt of the requisite stockholder approval contemplated by this proxy statement/prospectus. For more information about the closing conditions to the Business Combination, see the section titled “Business Combination Proposal—Conditions to Closing of the Business Combination.”

 

Pursuant to the Business Combination Agreement, prior to the consummation of the Business Combination, the board of directors and shareholders of Holdco will amend and restate Holdco’s memorandum and articles of association. The Amended and Restated Memorandum and Articles of Association will differ from DOTA’s amended and restated certificate of incorporation in multiple aspects, including: (i) the name of the new public entity will be ” Reebonz Holding Limited” as opposed to “Draper Oakwood Technology Acquisition, Inc.”; (ii) Holdco has 200,000,000 authorized ordinary shares and 5,000,000 authorized preferred shares, as opposed to DOTA having 18,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; (iii) Holdco’s corporate existence is perpetual as opposed to DOTA’s corporate existence terminating if a business combination is not consummated by DOTA within a specified period of time; and (iv) Holdco’s constitutional documents do not include the various provisions applicable only to special purpose acquisition companies that DOTA’s amended and restated certificate of incorporation contains. For more information about Holdco’s Amended and Restated Memorandum and Articles of Association, please see the section entitled “The Business Combination Proposal – Holdco’s Amended and Restated Memorandum and Articles of Association” and a copy of the Amended and Restated Memorandum and Articles of Association of Holdco is attached hereto as Annex B.

 

The Incentive Compensation Plan Proposals

 

The stockholders of DOTA will vote on the adoption of three equity compensation plans: (i) the 2018 Omnibus Equity Incentive Plan, which permits the grant of various types of equity awards to such employees (including officers), non-employee consultants and non-employee directors and subject to such terms as the compensation committee may from time to time determine; (ii) the 2018 Share Option Plan which provides for the grant of options to replace vested and unvested options in the Reebonz Limited option plan which are outstanding at the time of the termination of the Reebonz Limited option plan upon closing of the Business Combination, and (iii) the Management Performance Plan which provides for equity awards to management employees based upon the achievement of Company performance targets for 2019 and 2020. For more information about each of the foregoing compensation plans, please see the section titled “The Incentive Compensation Plan Proposals” and annexes C-1, C-2 and C-3 of this proxy statement/prospectus.

 

The Share Issuance Proposal

 

NASDAQ listing rules require that its listed companies obtain shareholder approval for issuances of securities in excess of 20% of its issued and outstanding voting stock prior to the issuance. In connection with the approval of the Business Combination Proposal, DOTA’s stockholders will be asked to consider and vote upon a proposal to approve, for purposes of complying with applicable NASDAQ listing rules, the issuance of securities in excess of 20% of DOTA’s issued and outstanding common stock, including the shares of DOTA Common Stock issuable upon the exchange of such securities. Please see the section entitled “The Share Issuance Proposal.”

 

The Adjournment Proposal

 

If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting to authorize DOTA to consummate the business combination (because the business combination proposal is not approved or DOTA would have less than $5,000,001 of net tangible assets immediately prior to Closing after taking into account the holders of the public shares that have properly elected to redeem their public shares), DOTA’s board of directors may submit a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies. Please see the section entitled “The Adjournment Proposal.”

 

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DOTA Initial Stockholder

 

As of _________, the record date for the Special Meeting, DOTA’s initial stockholder/its sponsor beneficially owned and were entitled to vote an aggregate of 1,437,500 initial shares that were issued prior to DOTA’s initial public offering. The sponsor also purchased an aggregate of 218,000 private units simultaneously with the consummation of DOTA’s IPO. The initial shares and shares underlying the private units currently constitute approximately 21.8% of the outstanding shares of DOTA Common Stock.

 

In connection with the initial public offering, each of DOTA’s Sponsor, officers and directors agreed to vote the initial shares, the shares included in the private units, as well as any shares of common stock acquired in the aftermarket, in favor of the business combination proposal. DOTA’s Sponsor, officers and directors have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. The Founder Shares and shares included in the private units have no redemption rights in the event a business combination is not effected in the required time period and will be worthless if no business combination is effected by DOTA. In connection with the IPO, the DOTA initial stockholder entered into an escrow agreement pursuant to which their initial shares are held in escrow and may not be transferred (subject to limited exceptions) until with respect to 50% of the initial shares, the earlier of one year after the date of the consummation of an initial business combination and the date on which the closing price of DOTA’s common stock exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of an initial business combination and, with respect to the remaining 50% of the initial shares, one year after the date of the consummation of an initial business combination, or earlier in each case if, subsequent to DOTA’s initial business combination, it consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of its stockholders having the right to exchange their shares of common stock for cash, securities or other property (which escrow arrangements will be transferred to Holdco at the closing of the Business Combination).

 

Date, Time and Place of Special Meeting of DOTA’s Stockholders

 

The special meeting of the stockholders of DOTA will be held at 10:00 a.m., Eastern time, on ________, 2018, at the offices of Ellenoff Grossman & Schole LLP, DOTA’s counsel, at 1345 Avenue of the Americas, 11th Floor, New York, NY 10105, to consider and vote upon the business combination proposal, the incentive compensation plan proposals, the share issuance proposal and/or if necessary, the adjournment proposal to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, DOTA is not authorized to consummate the business combination.

 

Voting Power; Record Date

 

Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of DOTA Common Stock at the close of business on ________, 2018, which is the record date for the special meeting. Stockholders will have one vote for each share of DOTA Common Stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. DOTA warrants do not have voting rights. On the record date, there were 7,575,000 shares of DOTA Common Stock outstanding, of which 5,750,000 were public shares with the rest being held by the DOTA initial stockholder and EBC.

 

Quorum and Vote of DOTA Stockholders

 

A quorum of DOTA stockholders is necessary to hold a valid meeting. A quorum will be present at the DOTA special meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The DOTA Initial Stockholder holds approximately 21.8% of the outstanding shares of DOTA Common Stock. Such shares, as well as any shares of common stock acquired in the aftermarket by the DOTA Initial Stockholder, will be voted in favor of the proposals presented at the special meeting. The proposals presented at the special meeting will require the following votes:

 

Pursuant to DOTA’s amended and restated certificate of incorporation, the approval of the business combination proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of DOTA Common Stock present and entitled to vote at the meeting. There are currently 7,575,000 shares of DOTA Common Stock outstanding, of which 5,750,000 are public shares.

 

The approval of the incentive compensation plan proposals will require the affirmative vote of the holders of a majority of the then outstanding shares of DOTA Common Stock present and entitled to vote at the meeting.

 

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The approval of the share issuance proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of DOTA Common Stock present and entitled to vote at the meeting.

 

The approval of the adjournment proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of DOTA Common Stock present and entitled to vote at the meeting.

 

Abstentions will have the same effect as a vote “against” on each of the above proposals. Broker non-votes will have no effect on the business combination proposal and the incentive compensation plan proposals.

 

Under the business combination agreement, the approval of the incentive compensation plan proposals is a condition to the adoption of the business combination proposal. In addition, if the business combination proposal is not approved, the other proposals (other than the adjournment proposal) will not be presented to the stockholders for a vote.

 

Redemption Rights

 

Pursuant to DOTA’s amended and restated certificate of incorporation, a holder of public shares may demand that DOTA convert such shares into cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that DOTA convert their shares into cash no later than 5:00 p.m. Eastern Time on _______ (two (2) business days prior to the vote at the special meeting) by (A) either checking the box on the proxy card or by submitting your request in writing to Mark Zimkind of Continental Stock Transfer & Trust Company and (B) delivering their stock to DOTA’s transfer agent physically or electronically using the Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System. If you fail to affirmatively vote either for or against the business combination proposal, including as a result of an abstention or broker non-vote, you will not be permitted to exercise your redemption rights. If the business combination is not completed, these shares will not be converted into cash. In such case, DOTA will promptly return any shares delivered by public holders for redemption and such holders may only share in the assets of the trust account upon the liquidation of DOTA. This may result in holders receiving less than they would have received if the business combination was completed and they had exercised their redemption rights in connection therewith due to potential claims of creditors. If a holder of public shares properly demands redemption, DOTA will convert each public share into a full pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the business combination. As of _______, the record date, this would amount to approximately $______ per share. If a holder of public shares exercises its redemption rights, then it will be exchanging its shares of DOTA Common Stock for cash and will no longer own the shares. See the section entitled “Special Meeting of DOTA Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.

 

The Business Combination will not be consummated if DOTA has net tangible assets of less than $5,000,001 after taking into account holders of public shares that have properly demanded redemption of their shares into cash.

 

Holders of DOTA warrants and rights will not have redemption rights with respect to such securities.

 

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Appraisal Rights

 

DOTA stockholders (including the initial stockholder) and holders of other DOTA securities do not have appraisal rights in connection with the merger under the DGCL.

 

Proxy Solicitation

 

Proxies may be solicited by mail, telephone or in person. DOTA has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

 

If a stockholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of DOTA Stockholders — Revoking Your Proxy.”

 

Interests of DOTA’s Directors and Officers in the Business Combination

 

When you consider the recommendation of DOTA’s board of directors in favor of approval of the business combination proposal, you should keep in mind that DOTA’s initial stockholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to, your interests as a stockholder, warrant holder or rights holder. These interests include, among other things:

 

If the business combination with Reebonz or another business combination is not consummated by December 19, 2018 (or, if applicable, the Extended Period), DOTA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 1,437,500 initial shares held by DOTA’s initial stockholders, including its directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to DOTA’s initial public offering, would be worthless because DOTA’s initial stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $______ based upon the closing price of $____ per share on NASDAQ on _________, the record date.

 

DOTA’s initial stockholder and EBC purchased an aggregate of 272,500 private units from DOTA for an aggregate purchase price of $2,725,000 (or $10.00 per unit). These purchases took place on a private placement basis simultaneously with the consummation of the initial public offering. All of the proceeds DOTA received from these purchases were placed in the trust account. Such units had an aggregate market value of $________ based upon the closing price of $____ per unit on NASDAQ on _______, the record date. The purchasers of the private units waived the right to participate in any redemption or liquidation distribution with respect to such private units. Accordingly, the DOTA shares and warrants underlying the private units will become worthless if DOTA does not consummate a business combination by December 19, 2018 (or, if applicable, the Extended Period)(as will the DOTA warrants held by public stockholders).

 

The market value of each of the DOTA directors’ current equity ownership in DOTA Common Stock and units, based on the closing price of $____ per share of common stock and $______ per unit on the NASDAQ as of _______, the record date, is $______.

 

The business combination agreement provides that Roderick Perry and Ali Erfan, current directors of DOTA, will be directors of Holdco after the closing of the business combination. As such, in the future each will receive any cash fees, stock options or stock awards that the Holdco board of directors determines to pay to its non-executive directors.

 

If Holdco is unable to complete a business combination within the required time period, the Initial Stockholder will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by DOTA for services rendered or contracted for or products sold to DOTA, but only if such a vendor or target business has not executed such a waiver.

 

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  DOTA’s initial stockholders, including its officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on DOTA’s behalf, such as identifying and investigating possible business targets and business combinations. However, if DOTA fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, DOTA may not be able to reimburse these expenses if the business combination with Reebonz or another business combination, is not completed by December 19, 2018 (or, if applicable, the Extended Period). As of the date of this proxy statement/prospectus, there are no unpaid reimbursable expenses.

 

  Since its inception, the Sponsor has made loans from time to time to DOTA to fund certain capital requirements. As of the date of this proxy statement/prospectus, an aggregate of $710,000 principal amount of these loans is outstanding. These loans are evidenced by non-interest bearing notes that are convertible at the Sponsor’s election upon the consummation of an initial business combination into units of DOTA, at a price of $10.00 per unit.

  

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding DOTA or its securities, the DOTA initial stockholders, or Reebonz’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of DOTA’s common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the shares present and entitled to vote at the special meeting to approve the business combination proposal vote in its favor and that DOTA have in excess of the required amount to consummate the business combination under the business combination agreement, where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or warrants owned by the DOTA initial stockholders for nominal value.

 

Entering into any such arrangements may have a depressive effect on DOTA’s common stock. For example, as a result of these arrangements, an investor or holder may have to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

 

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the business combination proposal and other proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that DOTA will have in excess of the required amount of cash available to consummate the business combination as described above.

 

As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. DOTA will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Recommendation to Stockholders

 

DOTA’s board of directors believes that the business combination proposal and the other proposals to be presented at the special meeting are fair to and in the best interest of DOTA’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” each of the incentive compensation plan proposals, “FOR” the share issuance proposal and “FOR” the adjournment proposal, if presented.

 

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Conditions to the Closing of the Business Combination

 

The obligations of each party to consummate the Business Combination are subject to the satisfaction or waiver of customary conditions and Closing deliverables, including (1) the Registration Statement having been declared and remain effective, (2) DOTA’s stockholders having approved each of the proposals set forth herein at the Special Meeting in accordance with the Registration Statement, (3) all consents required to be obtained from or made with any governmental authority in order to consummate the transactions contemplated by the Business Combination Agreement shall have been obtained or made, and any waiting periods (an any extension thereof) applicable to the consummation of transactions contemplated by the Business Combination Agreement under any antitrust laws shall have expired or been terminated; (4) the consents required to be obtained or made from any third party (other than a governmental authority) in order to consummate the transactions contemplated by the Business Combination Agreement, that are set forth in a schedule thereto, shall have been obtained or made; (5) no governmental authority having enacted any law or order which has the effect of making the transactions or agreements contemplated by the Business Combination Agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by the Business Combination Agreement, (6) there shall be no pending action brought by a third party non-affiliate to enjoin or otherwise restrict the consummation of the Closing, (7) upon the Closing, after giving effect to the completion of DOTA’s redemption of its public stockholders in connection with the Merger, DOTA shall have net tangible assets of at least $5,000,001, (8) the parties’ respective representations and warranties shall be true and correct as of the closing date (subject to certain materiality qualifiers), (9) each of the parties shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Business Combination Agreement to be performed or complied with by it on or prior to the Closing Date, and (10) no event having occurred since the date of the Business Combination Agreement resulting in a material adverse effect upon the business, assets, liabilities, results of operations, prospects or condition of the other party and its subsidiaries, taken as a whole, or the other party’s ability to consummate the transactions contemplated by the Business Combination Agreement and ancillary documents on a timely basis (subject in each case to customary exceptions) (a “Material Adverse Effect”), which is continuing and uncured. The obligation of DOTA, Holdco and Merger Sub to consummate the Transactions is also subject to the satisfaction or waiver or certain additional conditions, including the receipt of certain employment agreements, terminations of certain agreements and resignations of Reebonz officers and directors prior to Closing. In addition, each party shall have received duly executed copies of the various related agreements (as described below) in the forms attached to the Business Combination Agreement.

 

Anticipated Accounting Treatment

 

The business combination will be accounted for as a reverse merger in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board (“IFRS”). Under this method of accounting, DOTA will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Reebonz’s existing operations will comprise the ongoing operations of the combined company, Reebonz’s senior management will comprise the senior management of the combined company, and the former owners and management of Reebonz will have control of the board of directors after the merger by virtue of being able to appoint a majority of the directors of the combined company. In accordance with guidance applicable to these circumstances, the merger will be treated as the equivalent of Reebonz issuing shares for the net assets of DOTA, accompanied by a recapitalization. The net assets of DOTA will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the merger will be those of Reebonz.

 

Regulatory Matters

 

The business combination agreement and the transactions contemplated by the business combination agreement are not subject to any additional federal or state regulatory requirement or approval, except for filings with the Registrar of Companies of the Cayman Islands and the Secretary of State of the State of Delaware necessary to effectuate the transactions contemplated by the business combination agreement.

 

Risk Factors

 

In evaluating the proposals to be presented at the special meeting, a stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.”

 

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SELECTED HISTORICAL FINANCIAL INFORMATION

 

In this section, references to “Reebonz” are intended to refer to Reebonz Limited and its subsidiaries, unless the context clearly indicates otherwise.

 

DOTA

 

DOTA is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the merger.

 

DOTA’s balance sheet data as of June 30, 2018 and statement of operations data for the six months ended June 30, 2018 are derived from DOTA’s unaudited financial statements included elsewhere in this proxy statement/prospectus. The financial statements of DOTA are stated in US dollars (US$).

 

DOTA’s balance sheet data as of December 31, 2017, statement of operations data for the period from April 27, 2017 (inception) to December 31, 2017 are derived from DOTA’s audited financial statements included elsewhere in this proxy statement/prospectus. The consolidated financial statements of DOTA are stated in US dollars (US$).

 

The information in this section is only a summary and should be read in conjunction with each of DOTA’s financial statements and related notes and “Other Information Related to DOTA — DOTA’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of DOTA.

 

Selected Financial Information – DOTA

  

    Six Months Ended June 30, 2018     Period from April 27, 2017 (inception) through December 31, 2017  
Income Statement Data:            
Formation and operating costs   $ 423,108     $ 253,792  
Interest income     442,067       164,443  
Net income (loss)     19,221       (86,279 )
Net loss per share – basic and diluted     (0.16 )     (0.14 )
Weighted average shares outstanding excluding shares subject to possible redemption – basic and diluted     2,301,204       1,666,791  

 

    As of
June 30,
2018
    As of December 31,
2017
 
Balance Sheet Data:            
Working capital (deficit)   $ (82,451 )   $ 296,912  
Trust Account     58,066,097       57,667,513  
Total assets     58,137,278       58,050,010  
Total liabilities     153,632       85,585  
Common stock subject to redemption     52,983,645       52,964,424  
Total stockholders’ equity     5,000,001       5,000,001  

 

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Reebonz

 

Reebonz’s consolidated statements of financial position as of June 30, 2017 and 2018 and consolidated statements of profit and loss for the six months ended June 30, 2017 and 2018 are derived from Reebonz’s unaudited financial statements included elsewhere in this proxy statement/prospectus.

 

Reebonz’s consolidated statements of financial position as of December 31, 2016 and 2017 and consolidated statements of profit and loss for the years ended December 31, 2016 and 2017 are derived from Reebonz’s audited financial statements included elsewhere in this proxy statement/prospectus.

 

The consolidated financial statements of Reebonz are stated in thousands of Singapore dollars (S$). However, solely for the convenience of the readers, the consolidated statement of financial position as of December 31, 2017 and as of June 30, 2018, the consolidated statement of profit or loss and other comprehensive income, and consolidated statement of cash flows for the year ended December 31, 2017 and for the six months ended June 30, 2018 were translated into U.S. dollars at the exchange rate of the buying rate of US$1.00 to S$1.3667 on September 30, 2018 in the City of New York for cable transfers of S$ as certified customs purposes by the Federal Reserve Bank of New York. These convenience translations should be treated as supplementary information and has not been prepared in compliance with IFRS.

 

The noon buying rate on December 29, 2017 in New York City for cable transfers in Singapore dollars (S$) for U.S. dollars (US$), provided in the H.10 weekly statistical release of the Federal Reserve Board of the United States as certified for customs purposes by the Federal Reserve Bank of New York, was S$1.3363 to US$1.00. On August 24, 2018, the noon buying rate was S$1.3651 to US$1.00. DOTA, Holdco and Reebonz make no representation that any Singapore dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars, as the case may be, at any particular rate or at all.

 

The information in this section is only a summary and should be read in conjunction with each of Reebonz’s consolidated financial statements and related notes and “Reebonz’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Reebonz.

 

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Selected Financial Information — Reebonz
(in thousands)

 

Consolidated statements of profit and loss:

 

                     

6 months ended June 30,

 
    2016     2017     2017     2017     2018     2018  
    SGD ’000     SGD ’000     USD ’000     SGD ’000     SGD ’000     USD ’000  
                                     
Revenue     176,478       149,606       109,465       80,468       58,821       43,039  
Cost of revenue     (131,294 )     (107,793 )     (78,871 )     (58,865 )     (43,565 )     (31,876 )
Gross profit     45,184       41,813       30,594       21,603       15,256       11,163  
Fulfillment expenses     (26,033 )     (25,238 )     (18,466 )     (12,890 )     (10,168 )     (7,440 )
Marketing expenses     (13,430 )     (10,515 )     (7,694 )     (5,426 )     (3,491 )     (2,554 )
Technology and content expenses     (7,240 )     (6,680 )     (4,888 )     (3,691 )     (2,553 )     (1,868 )
General and administrative expenses     (22,023 )     (15,354 )     (11,234 )     (8,453 )     (6,406 )     (4,687 )
Government grant     399       232       170       127       182       133  
Operating loss     (23,143 )     (15,742 )     (11,518 )     (8,730 )     (7,180 )     (5,253 )
Other income     759       577       422       78       296       216  
Other expenses     (1,594 )     (1,282 )     (938 )     (997 )     (435 )     (318 )
Finance costs     (2,477 )     (4,512 )     (3,301 )     (2,103 )     (2,380 )     (1,741 )
Finance income     48       20       15       17       5       4  
      (26,407 )     (20,939 )     (15,320 )     (11,735 )     (9,694 )     (7,092 )
Change in fair value of :                                                
 - convertible preference shares     81,664       97,289       71,185       7,084       (18,860 )     (13,800 )
Profit/(Loss) before tax     55,257       76,350       55,865       (4,651 )     (28,554 )     (20,892 )
Income tax expense     (14 )     (105 )     (77 )     (11 )     (86 )     (63 )
Profit/(Loss) for the year     55,243       76,245       55,788       (4,662 )     (28,640 )     (20,955 )
                                                 
Attributable to :                                                
Owners of the Company     56,049       76,879       56,252       (4,414 )     (28,480 )     (20,838 )
Non-controlling interests     (806 )     (634 )     (464 )     (248 )     (160 )     (117 )
Profit/(Loss) for the year     55,243       76,245       55,788       (4,662 )     (28,640 )     (20,955 )
                                                 
Selected Non-IFRS Financial Data                                                
Adjusted EBITDA     (14,089 )     (10,683 )     (7,817 )     (6,200 )     (4,514 )     (3,302 )
Adjusted EBITDA margin     -8.0 %     -7.1 %     -7.1 %     -7.7 %     -7.7 %     -7.7 %
                                                 
Profit/(Loss) per share ($)                                                
Basic, profit/(loss) for the year/period attributable to ordinary equity holders of the parent     5.31       7.16       5.24       (0.41 )     (2.65 )     (1.94 )
Diluted, profit/(loss) for the year/period attributable to ordinary equity holders of the parent     (0.78 )     (0.63 )     (0.46 )     (0.41 )     (2.65 )     (1.94 )

 

Consolidated statements of financial position:

 

                      6 months ended June 30,  
    2016     2017     2017     2018     2018  
    SGD ’000     SGD ’000     USD ’000     SGD ’000     USD ’000  
                               
Non-current assets     38,957       50,440       36,906       49,036       35,879  
Current assets     63,901       50,976       37,299       47,954       35,086  
Cash and cash equivalents     16,822       9,886       7,233       7,106       5,198  
Total assets     102,858       101,416       74,205       96,990       70,965  
                                         
Current liabilities     54,862       60,587       44,331       80,667       59,022  
Non-current liabilities     213,377       118,872       86,977       112,864       89,897  
Convertible preference shares     174,161       76,872       56,246       95,732       70,046  
Total liabilities     268,239       179,459       131,308       203,531       148,919  

 

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SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

 

DOTA is providing the following selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the transactions.

 

The following selected unaudited pro forma condensed combined statement of position combines the audited historical balance sheet of DOTA as of June 30, 2018 with the audited condensed consolidated historical statement of financial position of Reebonz as of June 30, 2018, giving effect to the transactions as if they had been consummated as of that date.

 

The following selected unaudited pro forma condensed combined statement of profit or loss for the six months ended June 30, 2018 combines the unaudited consolidated statement of profit or loss of Reebonz for the six months ended June 30, 2018 with the unaudited statement of operations of DOTA for the six months ended June 30, 2018, giving effect to the transactions as if they had occurred as of the earliest period presented.

 

The following selected unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2017 combines the audited consolidated statement of profit or loss of Reebonz for the year ended December 31, 2017 with the audited statement of operations of DOTA for the period from April 27, 2017 (inception) through December 31, 2017, giving effect to the transactions as if they had occurred as of the earliest period presented.

 

The selected unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption of DOTA common stock into cash:

 

Assuming No Redemption:  This presentation assumes that no DOTA stockholders exercise redemption rights with respect to their common stock upon consummation of the transactions; and

 

  Assuming Maximum Redemption:  This presentation assumes that DOTA stockholders exercise their redemption rights with respect to 3,234,603 shares of common stock upon consummation of the transactions at a redemption price of approximately $10.20 per share. The maximum redemption amount is derived on the basis that the combined entity will be required to have $5,000,001 minimum net tangible assets following the transactions, after giving effect to payments to redeeming stockholders.

 

The historical financial information has been adjusted to give effect to the expected events that are related and/or directly attributable to the transactions, are factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented in the selected unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the transactions.

 

The historical financial statements of DOTA have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The historical financial statements of Reebonz have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the International Accounting Standards Board. The historical financial information of DOTA has been adjusted to give effect to the differences between US GAAP and IFRS as issued by the IASB for the purposes of the selected unaudited pro forma condensed combined financial information. No adjustments were required to convert DOTA’s financial statements from US GAAP to IFRS for purposes of the selected unaudited pro forma condensed combined financial information, except to classify DOTA’s common stock subject to redemption as non-current liabilities under IFRS.

 

The historical financial information of DOTA was derived from the historical unaudited financial statements of DOTA for the six months ended June 30, 2018, which are included elsewhere in this proxy statement. The historical financial information of DOTA was derived from the historical audited financial statements of DOTA for the period from April 27, 2017 (inception) through December 31, 2017, which are included elsewhere in this proxy statement.

 

The historical financial information of Reebonz was derived from the historical unaudited consolidated financial statements of Reebonz for the six months ended June 30, 2018 and 2017 which have been translated into United States dollars for the purposes of convenience translation included elsewhere in this proxy statement. The historical financial information of Reebonz was derived from the historical audited consolidated financial statements of Reebonz for the years ended December 31, 2017 and 2016 which have been translated into United States dollars for the purposes of convenience translation included elsewhere in this proxy statement. This information should be read together with DOTA’s and Reebonz’s financial statements and related notes, “Other Information Related to DOTA - DOTA’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Reebonz’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement.

 

The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only. Such information is only a summary and should be read in conjunction with the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The financial results may have been different had the companies always been combined. You should not rely on the selected unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience.

 

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Selected Unaudited Pro Forma Financial Information
(dollars in thousands except share and per share amounts)

 

    Reebonz     DOTA    

Pro Forma
Combined

Scenario 1
Assuming No

Redemptions into Cash

   

Pro Forma
Combined

Scenario 2
Assuming
Maximum
Redemptions into Cash

 
Statement of Operations Data – Six Months Ended June 30, 2018                        
Revenues   $ 43,039     $     $ 43,039     $ 43,039  
Operating loss   $ (5,253 )   $ (423 )   $ (4,948 )   $ (4,948 )
Net income (loss) attributable to the Company’s shareholders   $ (20,838 )   $ 19     $ (6,670 )   $ (6,670 )
Net loss per ordinary share – basic and diluted   $ (1.94 )   $ (0.16 )   $ (0.24 )   $ (0.27 )
                                 
Balance Sheet Data – As of June 30, 2018                                
Total current assets   $ 35,086     $ 71     $ 82,915     $ 49,927  
Total assets   $ 70,965     $ 58,137     $ 118,794     $ 85,806  
Total current liabilities   $ 59,022     $ 153     $ 58,139     $ 58,139  
Total liabilities   $ 148,919     $ 53,137     $ 77,990     $ 77,990  
Total shareholders’ (deficit)/equity   $ (77,954 )   $ 5,000     $ 40,804     $ 7,816  

 

    Reebonz     DOTA    

Pro Forma
Combined

Scenario 1
Assuming No

Redemptions into Cash

   

Pro Forma
Combined

Scenario 2
Assuming
Maximum
Redemptions into Cash

 
Statement of Operations Data – Year Ended December 31, 2017 (Reebonz) and For the Period from April 27, 2017 (inception) through December 31, 2017 (DOTA)                        
Revenues   $ 109,465     $     $ 109,465     $ 109,465  
Operating loss   $ (11,518 )   $ (253 )   $ (11,771 )   $ (11,771 )
Net income/(loss) attributable to the Company’s shareholders   $ 56,252     $ (86 )   $ (15,109 )   $ (15,109 )
Net profit (loss) per ordinary share – basic and diluted   $ 5.24     $ (0.14 )   $ (0.54 )   $ (0.54 )

  

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RISK FACTORS

 

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus.

 

Risks Relating to the Business Combination

 

Reebonz operates in a sector which is outside of DOTA’s management’s area of expertise.

 

Although DOTA’s management has endeavored to evaluate the risks inherent in the Business Combination, there is no assurance that DOTA has adequately ascertained or assessed all of the significant risks. There is no assurance that an investment in securities in DOTA will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in Reebonz. DOTA management’s expertise may not be directly applicable to the evaluation or operation of Reebonz’s business, and the information contained in this proxy statement regarding the areas of DOTA management’s expertise would not be relevant to an understanding of Reebonz.

 

DOTA has a limited ability to assess the management of Reebonz’s business and, as a result, cannot assure you that Reebonz’s management has all the skills, qualifications or abilities to manage a public company.

 

DOTA’s ability to assess Reebonz’s business’s management may be limited due to a lack of time, resources or information. DOTA’s assessment of the capabilities of Reebonz’s management, therefore, may prove to be incorrect and Reebonz management may lack the skills, qualifications or abilities that DOTA believed Reebonz management had. Should Reebonz’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of Holdco or Reebonz post-Business Combination may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares. Such stockholders 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 DOTA’s 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 proxy statement materials relating to the Business Combination contained an actionable material misstatement or material omission.

 

The fact that Reebonz is a private company and the bulk of its operations is conducted outside of the United States limits DOTA’s access to all information that may be relevant to the Business Combination. This may result in a Business Combination that is not as profitable as DOTA suspects.

 

By definition, very little public information exists about private companies and companies that operate outside of the United States, and DOTA has been required to make decisions on whether to pursue the Business Combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as DOTA suspected, if at all.

 

DOTA’s Sponsor, officers and directors have agreed to vote their shares in favor of the Business Combination, regardless of how DOTA’s public stockholders vote.

 

In connection with the Business Combination, our Sponsor, officers and directors have agreed to vote their Founder Shares and all shares of Common Stock acquired by DOTA’s Sponsor during or after its initial public offering in favor of the Business Combination. Currently, DOTA’s Sponsor, officers and directors collectively own approximately 21.8% of its outstanding shares of DOTA Common Stock. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if DOTA’s Sponsor, officers and directors agreed to vote their shares in accordance with the majority of the votes cast by DOTA’s public stockholders.

 

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DOTA may not be able to complete the Business Combination or any other business combination within the prescribed time frame, in which case DOTA would cease all operations except for the purpose of winding up and DOTA would redeem DOTA’s public shares and liquidate.

 

DOTA must complete an initial business combination by December 19, 2018 (or, if applicable, the Extended Period). DOTA may not be able to consummate the Business Combination or any other business combination by such date. If DOTA has not completed any initial business combination by such date, it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, 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 (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of DOTA remaining stockholders and board of directors, dissolve and liquidate, subject in each case to DOTA’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

 

Subsequent to our completion of the 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 stock price post-Business Combination, which could cause you to lose some or all of your investment.

 

Even though we have conducted extensive due diligence on Reebonz, we cannot assure you that this diligence will surface all material issues that may be present, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our or Reebonz’s 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 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. The fact that we report charges of this nature could contribute to negative market perceptions about our securities post-Business Combination. Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares. Such stockholders 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 DOTA 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 this proxy statement contained an actionable material misstatement or material omission.

 

DOTA stockholders may be held liable for claims by third parties against DOTA to the extent of distributions received by them upon redemption of their shares.

 

Under the Delaware General Corporation Law, or DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of DOTA’s trust account distributed to DOTA’s public stockholders upon the redemption of DOTA’s public shares in the event DOTA does not complete an initial business combination by December 19, 2018 (or, if applicable, the Extended Period) may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

 

Because DOTA may not be complying with Section 280, Section 281(b) of the DGCL requires DOTA to adopt a plan, based on facts known to DOTA at such time that will provide for DOTA’s payment of all existing and pending claims or claims that may be potentially brought against DOTA within the 10 years following DOTA’s dissolution. However, because DOTA is a blank check company, rather than an operating company, and DOTA’s operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from DOTA’s vendors (such as lawyers, investment bankers and auditors) or prospective target businesses. If DOTA’s plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. DOTA cannot assure you that it will properly assess all claims that may be potentially brought against it. As such, DOTA stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of DOTA stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to DOTA’s public stockholders upon the redemption of its public shares in the event DOTA does not complete an initial business combination by December 19, 2018 (or, if applicable, the Extended Period) is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

 

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DOTA did not obtain an opinion from an independent investment banking or accounting firm, and consequently, you have no assurance from an independent source that the price DOTA is paying for the business is fair to DOTA from a financial point of view.

 

DOTA is not required to obtain an opinion from an independent investment banking or accounting firm that the price DOTA is paying for the Business Combination is fair to DOTA from a financial point of view. DOTA’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Its officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have concluded that their experience and backgrounds, together with the experience and sector expertise of its financial advisors enabled them to make the necessary analyses and determinations regarding the business combination with Reebonz. In addition, DOTA’s officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of DOTA’s board of directors in valuing Reebonz’s business, and assuming the risk that the board of directors may not have properly valued such business.

 

The grant and future exercise of registration rights may adversely affect the market price of DOTA Class A Common Stock and ordinary shares of Holdco upon consummation of the Business Combination.

 

Pursuant to the existing registration rights agreement with DOTA Sponsor and the registration rights agreement to be entered into in connection with the Business Combination and which are described elsewhere in this proxy statement, DOTA’s Sponsor and certain shareholders of Reebonz can demand that Holdco register their registrable securities under certain circumstances and will also have piggyback registration rights for these securities in connection with certain registrations of securities that Holdco undertakes. Following the consummation of the Business Combination, Holdco intend to file and maintain an effective registration statement under the Securities Act covering such securities.

 

The registration of these securities will permit the public resale of such 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 Holdco’s ordinary shares post-Business Combination.

 

DOTA’s ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of DOTA’s key personnel, some of whom may join Holdco following the Business Combination. The loss of key personnel could negatively impact the operations and profitability of Reebonz.

 

DOTA’s ability to successfully effect the Business Combination is dependent upon the efforts of its key personnel. The role of DOTA’s key personnel in Holdco, however, cannot presently be ascertained. Although certain of DOTA’s directors intend to serve on Holdco’s board of directors following the Business Combination, most of the management of Reebonz will remain in place. While DOTA intends to closely scrutinize any individuals the Reebonz management intends to engage after the Business Combination, the impact of the DOTA directors would have on selecting Holdco’s management subsequent to the Closing can be limited since DOTA’s directors will not constitute a majority of Holdco’s board and the terms of their directorship are subject to various factors such as Holdco’s decision on approving their re-election, approval of re-election by Holdco’s shareholders and voluntary resignations of such individuals due to conflicting obligations. As a result, DOTA cannot assure you that the Reebonz management’s 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 Reebonz to have to expend significant time and resources helping them become familiar with such requirements.

 

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Sales of a substantial number of Holdco securities in the public market following this Business Combination could adversely affect the market price of our Common Stock.

 

1,437,500 Founder Shares and 218,000 units that DOTA Sponsor currently holds will be exchangeable for ordinary shares and warrants of Holdco and continue to be held by DOTA Sponsor following the Business Combination. Such Holdco securities will be subject to an one year lock up restriction following the Closing. After the lock-up agreements expire, these ordinary shares will become eligible for future sale in the public market. Sales of a significant number of these ordinary shares of Holdco in the public market, or the perception that such sales could occur, could reduce the market price of ordinary shares of Holdco.

 

If the adjournment proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the business combination, DOTA’s board of directors will not have the ability to adjourn the special meeting to a later date in order to solicit further votes, and, therefore, the business combination will not be approved.

 

DOTA’s board of directors is seeking approval to adjourn the Special Meeting to a later date or dates if, at the Special Meeting, based upon the tabulated votes, there are insufficient votes to approve the consummation of the business combination. If the adjournment proposal is not approved, DOTA’s board will not have the ability to adjourn the special meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the business combination. In such event, the business combination would not be completed.

 

Risks Relating to Redemptions and Certain Outstanding Securities of DOTA

 

The ability of DOTA’s public stockholders to redeem their shares for cash may make DOTA’s financial condition unattractive to Reebonz, which may affect Reebonz’s ability to close the Business Combination.

 

Pursuant to the Business Combination Agreement, DOTA would need to have a minimum amount of $5,000,001 in the Trust Account as a closing condition to the Business Combination. Therefore, DOTA will need to reserve a portion of the cash in the Trust Account to meet such requirements, or, if such amounts are not available after taking into account all redemptions, arrange for third party debt or equity financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. If too many public stockholders exercise their redemption rights, DOTA would not be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination unless this condition is waived. Furthermore, in no event will DOTA redeem its public shares in an amount that would cause DOTA’s net tangible assets to be less than $5,000,001 immediately prior to the closing of the Business Combination (so that DOTA is not subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement which may be contained in the agreement relating to DOTA’s initial business combination. Consequently, if accepting all properly submitted redemption requests would cause DOTA’s net tangible assets to be less than $5,000,001, DOTA would not proceed with the Business Combination and may instead search for an alternate business combination.

 

The ability of DOTA’s public stockholders to exercise redemption rights with respect to a large number of DOTA’s shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.

 

The Business Combination Agreement requires DOTA to have net tangible assets of at least $5.0 million immediately prior to the closing. Therefore the probability that the Business Combination will be unsuccessful is increased by the amount of stockholder redemptions. If the Business Combination is unsuccessful and DOTA is not able to consummate another business combination before December 19, 2018 (or, if applicable, the Extended Period), DOTA’s public shareholders will not receive their pro rata portion of the trust account until DOTA liquidates the Trust Account. If DOTA’s public shareholders are in need of immediate liquidity, they could attempt to sell their stock in the open market; however, at such time DOTA’s stock may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, DOTA public shareholders may suffer a material loss on their investment or lose the benefit of funds expected in connection with DOTA’s redemption until DOTA liquidates or they are able to sell their stock in the open market.

 

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If DOTA stockholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled to redeem their shares of DOTA Common Stock for a pro rata portion of the funds held in the Trust Account.

 

In order to exercise their redemption rights, public stockholders of DOTA are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent at least two business days prior to the special meeting. Stockholders electing to redeem their shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. See the section entitled “Special Meeting of DOTA Stockholders — Redemption Rights” for additional information on how to exercise your redemption rights.

 

You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.

 

DOTA’s public stockholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) DOTA’s completion of the Business Combination, and then only in connection with those shares of DOTA Common Stock that such stockholder properly elected to redeem, subject to the limitations described herein, and (ii) the redemption of DOTA’s public shares if DOTA is unable to complete its business combination by December 19, 2018 (or, if applicable, the Extended Period), subject to applicable law and as further described herein. In addition, if DOTA plans to redeem its public shares if DOTA is unable to complete a business combination by December 19, 2018 (or, if applicable, the Extended Period), for any reason, compliance with Delaware law may require that DOTA submits a plan of dissolution to DOTA’s then-existing stockholders for approval prior to the distribution of the proceeds held in DOTA’s trust account. In that case, public stockholders may be forced to wait beyond December 19, 2018 (or, if applicable, the Extended Period), before they receive funds from the Trust Account. In no other circumstances will a public stockholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.

 

Future resales of the ordinary shares of Holdco issued to the Reebonz shareholders may cause the market price of Holdco’s securities to drop significantly, even if Holdco’s business is doing well.

 

Under the business combination agreement, the Reebonz shareholders will receive, among other things, a significant amount of ordinary shares of Holdco. Pursuant to the Business Combination Agreement and related agreements, the Reebonz shareholders will be restricted from selling any of the Holdco shares that they receive as a result of the share exchange during the twelve month period after the closing date of the Business Combination, subject to certain exceptions, and the Reebonz shareholders will be required to enter into lock-up agreements to such effect. See the section entitled “The Business Combination Proposal — The Business Combination Agreement and Related Agreements – Lock-up Agreement.”

 

The Reebonz shareholders may sell Holdco shares pursuant to Rule 144 under the Securities Act, if available. In these cases, the resales must meet the criteria and conform to the requirements of that rule, including, because DOTA and Holdco are currently shell companies, waiting until one year after Holdco’s filing with the SEC of a Current Report on Form 8-K containing Form 10 type information reflecting the merger with Reebonz.

 

Upon expiration of the applicable lock-up periods, and upon effectiveness of the registration statement Holdco files pursuant to the registration rights agreement or upon satisfaction of the requirements of Rule 144 under the Securities Act, the Reebonz shareholders may sell large amounts of Holdco shares in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in Holdco’s stock price or putting significant downward pressure on the price of Holdco’s stock.

 

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If DOTA stockholders fail to properly demand redemption rights, they will not be entitled to convert their shares of common stock of DOTA into a pro rata portion of the trust account.

 

DOTA stockholders holding public shares may demand that DOTA convert their shares into a pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the business combination. DOTA stockholders who seek to exercise this redemption right must deliver their stock (either physically or electronically) to DOTA’s transfer agent prior to the vote at the meeting. Any DOTA stockholder who fails to properly demand redemption rights will not be entitled to convert his or her shares into a pro rata portion of the trust account for redemption of his shares. See the section entitled “Special Meeting of DOTA Stockholders — Redemption Rights” for the procedures to be followed if you wish to convert your shares to cash.

 

NASDAQ may not list Holdco’s securities on its exchange, which could limit investors’ Reebonz to make transactions in Holdco’s securities and subject Holdco to additional trading restrictions.

 

Holdco intends to apply to have its securities listed on NASDAQ upon consummation of the business combination. Holdco will be required to meet the initial listing requirements to be listed. Holdco may not be able to meet those initial listing requirements. Even if Holdco’s securities are so listed, Holdco may be unable to maintain the listing of its securities in the future.

 

If Holdco fails to meet the initial listing requirements and NASDAQ does not list its securities on its exchange, Holdco could face significant material adverse consequences, including:

 

a limited availability of market quotations for its securities;
   
a limited amount of news and analyst coverage for the company; and
   

a decreased ability to issue additional securities or obtain additional financing in the future.

 

Holdco’s ability to request indemnification from Reebonz shareholders for damages arising out of the Business Combination are limited in certain instances and is also limited to the shares held back.

 

At the closing of the business combination, 10% of the ordinary shares of Holdco issuable to the Reebonz shareholders will be held back from issuance to provide a fund for payment to Holdco with respect to its post-closing rights to indemnification under the business combination agreement for breaches of representations and warranties and covenants by Reebonz and its shareholders, and for certain other indemnifiable matters. Claims for indemnification may only be asserted by Holdco for (a) the breach of any of representations relating to organization and standing, authorization and binding effect, capitalization, subsidiaries, ownership of the Reebonz shares, and finders and brokers (the “Fundamental Reps”), (b) fraud claims, (c) the breach of any of Reebonz’s or its selling shareholders’ respective covenants or Purchaser’s or Holdco’s post-closing covenants, or (d) any actions by persons who were holders of equity securities (including options, warrants, convertible securities or other rights) of Reebonz or its subsidiaries prior to the closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities. Accordingly, it is possible that Holdco will not be entitled to indemnification even if Reebonz is found to have breached certain of its representations and warranties and covenants contained in the business combination agreement if such breaches were not breaches of the Fundamental Reps. Also, the aggregate liability for damages is limited to the shares held back, which will only be until one year from the Closing. At such time, 100% of the shares held back will be released from the escrow to the selling shareholders of Reebonz, less amounts previously applied in satisfaction of or reserved with respect to indemnification claims, if any that are made prior to that date. Under the terms of the business combination agreement, there is no right to seek indemnification with respect to the action described herein under “Business of Reebonz — Legal Proceedings.”

 

DOTA’s current directors and executive officers beneficially own shares of DOTA common stock and warrants that will be worthless and have made loans and incurred reimbursable expenses that may not be reimbursed or repaid if the business combination is not approved. Such interests may have influenced their decision to approve the business combination with Reebonz.

 

DOTA’s officers and directors and/or their affiliates beneficially own or have a pecuniary interest in insider shares and private units that they purchased prior to, or simultaneously with, DOTA’s IPO. DOTA’s executive officers and directors and their affiliates have no redemption rights with respect to these securities in the event a business combination is not effected in the required time period. Therefore, if the business combination with Reebonz or another business combination is not approved within the required time period, such securities held by such persons will be worthless. Such securities had an aggregate market value of $______ based upon the closing prices of the shares and units on NASDAQ on ______, the record date. Furthermore, DOTA’s officers and directors have loaned DOTA an aggregate of $710,000 as of the record date and DOTA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on DOTA’s behalf, such as identifying and investigating possible business targets and business combinations. These loans and expenses will be repaid upon completion of the business combination with Reebonz. However, if DOTA fails to consummate the business combination, they will not have any claim against the trust account for repayment or reimbursement. Accordingly, DOTA may not be able to repay or reimburse these amounts if the business combination is not completed. See the section entitled “The Business combination proposal — Interests of DOTA’s Directors and Officers in the Business Combination.”

 

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These financial interests may have influenced the decision of DOTA’s directors to approve the business combination with Reebonz and to continue to pursue such business combination. In considering the recommendations of DOTA’s board of directors to vote for the business combination proposal and other proposals, its stockholders should consider these interests.

 

DOTA’s executive officers are liable to ensure that proceeds of the trust are not reduced by vendor claims in the event the business combination is not consummated. Such liability may have influenced their decision to approve the business combination with Reebonz.

 

If the business combination with Reebonz or another business combination is not consummated by DOTA within the required time period, DOTA’s executive officers will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by DOTA for services rendered or contracted for or products sold to DOTA, but only if such a vendor or target business has not executed a waiver agreement. If DOTA consummates a business combination, on the other hand, DOTA will be liable for all such claims. Neither DOTA nor the executive officers have any reason to believe that the executive officers will not be able to fulfill their indemnity obligations to DOTA. See the section entitled “Other Information Related to DOTA — Financial Condition and Liquidity” for further information.

 

These personal obligations of the executive officers may have influenced DOTA’s board of director’s decision to approve the business combination with Reebonz and to continue to pursue such business combination. In considering the recommendations of DOTA’s board of directors to vote for the business combination proposal and other proposals, DOTA’s stockholders should consider these interests.

 

The exercise of DOTA’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the business combination may result in a conflict of interest when determining whether such changes to the terms of the business combination or waivers of conditions are appropriate and in DOTA’s stockholders’ best interest.

 

In the period leading up to the closing of the business combination, events may occur that, pursuant to the business combination agreement, would require DOTA to agree to amend the business combination agreement, to consent to certain actions taken by Reebonz or to waive rights that DOTA is entitled to under the business combination agreement. Such events have arisen and could continue to arise because of changes in the course of Reebonz’s business, a request by Reebonz to undertake actions that would otherwise be prohibited by the terms of the business combination agreement or the occurrence of other events that would have a material adverse effect on Reebonz’s business and would entitle DOTA to terminate the business combination agreement. In any of such circumstances, it would be at DOTA’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for DOTA and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, DOTA does not believe there will be any changes or waivers that DOTA’s directors and officers would be likely to make after stockholder approval of the business combination proposal has been obtained. While certain changes could be made without further stockholder approval, DOTA will circulate a new or amended proxy statement/prospectus and resolicit DOTA’s stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the business combination proposal.

 

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If DOTA is unable to complete the business combination with Reebonz or another business combination by December 19, 2018 (or, if applicable, the Extended Period), DOTA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against DOTA and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

 

Under the terms of DOTA’s amended and restated certificate of incorporation, DOTA must complete the business combination with Reebonz or another business combination by December 19, 2018 (or, if applicable, the Extended Period), or DOTA must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against DOTA. Although DOTA has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of DOTA’s public stockholders. If DOTA is unable to complete a business combination within the required time period, the executive officers have agreed they will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by DOTA for services rendered or contracted for or products sold to DOTA, but only if such a vendor or prospective target business does not execute such a waiver. However, he may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than $10.00 due to such claims.

 

Additionally, if DOTA is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if DOTA otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the trust account, DOTA may not be able to return to its public stockholders at least $10.00 per share.

 

DOTA’s stockholders may be held liable for claims by third parties against DOTA to the extent of distributions received by them.

 

If DOTA is unable to complete the business combination with Reebonz or another business combination within the required time period, DOTA will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. DOTA cannot assure you that it will properly assess all claims that may be potentially brought against DOTA. As such, DOTA’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, DOTA cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by DOTA.

 

If DOTA is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/ creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by DOTA’s stockholders. Furthermore, because DOTA intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, DOTA’s board may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. DOTA cannot assure you that claims will not be brought against it for these reasons.

 

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Activities taken by existing DOTA stockholders to increase the likelihood of approval of the business combination proposal and other proposals could have a depressive effect on DOTA’s stock.

 

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding DOTA or its securities, DOTA’s initial stockholders, officers, directors, Reebonz or Reebonz’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of DOTA Common Stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the business combination where it appears that such requirements would otherwise not be met. Entering into any such arrangements may have a depressive effect on DOTA Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

 

Risks Related to Holdco’s Business and Operations Following the Business Combination with Reebonz

 

The value of your investment in Holdco following consummation of the business combination will be subject to the significant risks affecting Holdco and Reebonz and inherent in the industry in which Reebonz operates. You should carefully consider the risks and uncertainties described below and other information included in this proxy statement/prospectus. If any of the events described below occur, the post-acquisition business and financial results could be adversely affected in a material way. This could cause the trading price of its ordinary shares to decline, perhaps significantly, and you therefore may lose all or part of your investment. As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to Reebonz unless the context clearly indicates otherwise.

 

Following the consummation of the Business Combination, Holdco’s only significant asset will be its ownership of Reebonz and affiliates and such ownership may not be sufficient to pay dividends or make distributions or loans to enable Holdco to pay any dividends on its ordinary shares or satisfy other financial obligations.

 

Following the consummation of the Business Combination, Holdco will be a holding company and will not directly own any operating assets other than its ownership of interests in Reebonz. Holdco will depend on Reebonz for distributions, loans and other payments to generate the funds necessary to meet its financial obligations, including its expenses as a publicly traded company and to pay any dividends. The earnings from, or other available assets of, Reebonz may not be sufficient to make distributions or pay dividends, pay expenses or satisfy Holdco’s other financial obligations.

 

Fluctuations in operating results, quarter to quarter earnings and other factors, including incidents involving Reebonz’s customers and negative media coverage, may result in significant decreases in the price of Holdco securities post-Business Combination.

 

The stock markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of Holdco ordinary shares post-Business Combination and, as a result, there may be significant volatility in the market price of Holdco ordinary shares post-Business Combination. If Reebonz is unable to operate profitably as investors expect, the market price of Holdco ordinary shares post-Business Combination will likely decline when it becomes apparent that the market expectations may not be realized. In addition to operating results, many economic and seasonal factors outside of Holdco or Reebonz’s control could have an adverse effect on the price of Holdco ordinary shares post-Business Combination and increase fluctuations in its quarterly earnings. These factors include certain of the risks discussed herein, operating results of other companies in the same industry, changes in financial estimates or recommendations of securities analysts post-Business Combination, speculation in the press or investment community, negative media coverage or risk of proceedings or government investigation, the possible effects of war, terrorist and other hostilities, adverse weather conditions, changes in general conditions in the economy or the financial markets or other developments affecting the luxury goods retail industry.

 

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Holdco will incur higher costs post-Business Combination as a result of being a public company.

 

Holdco will incur significant additional legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements following completion of the Business Combination. Holdco will incur higher costs associated with complying with the requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and related rules implemented by the SEC and NASDAQ. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. Holdco expects these laws and regulations to increase its legal and financial compliance costs after the Business Combination and to render some activities more time-consuming and costly, although Holdco is currently unable to estimate these costs with any degree of certainty. Holdco may need to hire more employees post-Business Combination or engage outside consultants to comply with these requirements, which will increase its post-Business Combination costs and expenses. These laws and regulations could make it more difficult or costly for Holdco to obtain certain types of insurance, including director and officer liability insurance, and Holdco may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on Holdco board of directors, board committees or as executive officers. Furthermore, if Holdco is unable to satisfy its obligations as a public company, it could be subject to delisting of its ordinary shares, fines, sanctions and other regulatory action and potentially civil litigation.

 

The earnout provisions of the Business Combination Agreement and the Management Performance Plan may affect management decisions and incentives.

 

Under the Business Combination Agreement and the Management Performance Plan, the Sellers and Holdco management will receive up to an additional 2.5 million ordinary shares upon achieving certain consolidated revenue targets and share price targets for the calendar years 2019 and 2020 (with a share price lookback in each subsequent year).  As a result, Holdco management may focus on increasing the consolidated revenue of Holdco and its subsidiaries for such years rather than on the net income during such period, and may be incentivized to incur additional expenses to increase revenues without increasing net income during such periods.  Additionally, the share price target can be achieved at any time during the applicable year, and the share price targets could be achieved early in the year and the revenues targets could be achieved, but the share price could fall later in the applicable year and the earnout shares would still be required to be delivered.

 

Holdco does not anticipate paying any cash dividends in the foreseeable future.

 

Following confirmation of the Business Combination, Holdco intends to retain future earnings, if any, for use in the business or for other corporate purposes and do not anticipate that cash dividends with respect to its ordinary shares will be paid in the foreseeable future. Any decision as to the future payment of dividends will depend on its results of operations, financial position and such other factors as its board of directors, in its discretion, deems relevant. As a result, capital appreciation, if any, of Holdco’s ordinary shares will be a shareholder’s sole source of gain for the foreseeable future.

 

A market for Holdco’s securities may not develop, which would adversely affect the liquidity and price of Holdco’s securities.

 

The price of Holdco’s securities may vary significantly due to general market or economic conditions. Furthermore, an active trading market for the post-Business Combination company 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.

 

The price of Holdco ordinary shares may be volatile.

 

The price of Holdco ordinary shares may fluctuate due to a variety of factors, including:

 

actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in industry;
   

mergers and strategic alliances in the e-commerce and luxury retail industries;

   

market prices and conditions in the e-commerce and luxury retail markets;

   
changes in government regulation;
   
potential or actual military conflicts or acts of terrorism;
   
the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts;
   
announcements concerning us or our competitors; and
   
the general state of the securities markets.

 

These market and industry factors may materially reduce the market price of our ordinary shares, regardless of our operating performance.

 

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Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common shares.

 

We currently expect that securities research analysts will establish and publish their own periodic projections for our business. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. While we expect research analyst coverage, if no analysts commence coverage of us, the trading price and volume for our common shares could be adversely affected.

 

Holdco may issue additional ordinary shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of Holdco’s ordinary shares.

 

Holdco may issue additional ordinary shares or other equity securities of equal or senior rank in the future in connection with, among other things, future vessel acquisitions, repayment of outstanding indebtedness or our equity incentive plan, without shareholder approval, in a number of circumstances.

 

Holdco’s issuance of additional ordinary shares or other equity securities of equal or senior rank would have the following effects:

 

Holdco’s existing shareholders’ proportionate ownership interest in Holdco will decrease;
   
the amount of cash available per share, including for payment of dividends in the future, may decrease;
   
the relative voting strength of each previously outstanding common share may be diminished; and
   
the market price of Holdco’s common shares may decline.

 

HoldCo is a Cayman Islands exempted company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law.

 

Holdco’s corporate affairs will be governed by its amended and restated memorandum and articles of association, the Cayman Islands Companies Law, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by noncontrolling shareholders and the fiduciary responsibilities of Holdco’s directors to Holdco 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, which has persuasive, but not binding, authority on a court in the Cayman Islands. Your rights as a shareholders and the fiduciary responsibilities of Holdco’s directors under Cayman Islands law are different from under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws from the United States and may provide significantly less protection to investors. In addition, some U.S. states, such as Delaware, have different bodies of corporate law than the Cayman Islands.

 

Holdco has been advised by its Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against Holdco judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Holdco predicated upon the civil liability provisions of the 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, and 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. There is recent Privy Council authority (which is binding on the Cayman Islands Court) in the context of a reorganization plan approved by the New York Bankruptcy Court which suggests that due to the universal nature of bankruptcy/insolvency proceedings, foreign money judgments obtained in foreign bankruptcy/insolvency proceedings may be enforced without applying the principles outlined above. However, a more recent English Supreme Court authority (which is highly persuasive but not binding on the Cayman Islands Court), has expressly rejected that approach in the context of a default judgment obtained in an adversary proceeding brought in the New York Bankruptcy Court by the receivers of the bankruptcy debtor against a third party, and which would not have been enforceable upon the application of the traditional common law principles summarized above and held that foreign money judgments obtained in bankruptcy/insolvency proceedings should be enforced by applying the principles set out above, and not by the simple exercise of the Courts’ discretion. Those cases have now been considered by the Cayman Islands Court. The Cayman Islands Court was not asked to consider the specific question of whether a judgment of a bankruptcy court in an adversary proceeding would be enforceable in the Cayman Islands, but it did endorse the need for active assistance of overseas bankruptcy proceedings. Holdco understands that the Cayman Islands Court’s decision in that case has been appealed and it remains the case that the law regarding the enforcement of bankruptcy/insolvency related judgments is still in a state of uncertainty.

 

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You will have limited ability to bring an action against Holdco or against its directors and officers, or to enforce a judgment against Holdco or them, because Holdco is incorporated in the Cayman Islands, because Holdco conducts a majority of its operations in Singapore and because a majority of Holdco’s directors and officers reside outside the United States.

 

Holdco is incorporated in the Cayman Islands and following the Business Combination, would conduct a majority of its operations through its subsidiary, Reebonz, in Singapore. All of Holdco’s assets are located outside the United States. A majority of Holdco’s officers and directors reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against Holdco or against these individuals in the Cayman Islands or in Singapore in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Singapore could render you unable to enforce a judgment against Holdco’s assets or the assets of Holdco’s directors and officers.

 

Shareholders of Cayman Islands exempted companies such as Holdco have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. Holdco’s directors have discretion under Cayman Islands law to determine whether or not, and under what conditions, Holdco corporate records could be inspected by Holdco’s shareholders, but are not obliged to make them available to Holdco’s shareholders. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

 

As a result of all of the above, public shareholders might 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 U.S. company.

 

Provisions in Holdco’s 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 Holdco’s securities and could entrench management.

 

Holdco’s amended and restated memorandum and articles of association will contain provisions that may discourage unsolicited takeover proposals that shareholders of Holdco may consider to be in their best interests. Among other provisions, the staggered board of directors may make it more difficult for Holdco’s shareholders to remove incumbent management and accordingly discourage transactions that otherwise could involve payment of a premium over prevailing market prices for Holdco’s securities. Other anti-takeover provisions in Holdco’s amended and restated memorandum and articles of association include the ability of Holdco’s board of directors to issue preferred shares with preferences and voting rights determined by the board without shareholder approval, the indemnification of Holdco’s officers and directors, the requirement that directors may only be removed from Holdco’s board of directors for cause and the requirement for the affirmative vote of holders of at least two-thirds of the voting power to amend provisions therein that affect shareholder rights. These provisions could also make it difficult for Holdco shareholders to take certain actions and limit the price investors might be willing to pay for Holdco’s securities.

 

As a “foreign private issuer” under the rules and regulations of the SEC, Holdco is permitted to, and will, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and will follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.

 

Holdco is, and will be after the consummation of the Transaction, considered a “foreign private issuer” under the Exchange Act and is therefore exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover, Holdco is not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. Holdco currently prepares its financial statements in accordance with IFRS. Holdco will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as its financial statements are prepared in accordance with IFRS as issued by the International Accounting Standards Board. Holdco is not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, Holdco’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Holdco’s securities. Accordingly, after the Transaction, if you continue to hold Holdco’s securities, you may receive less or different information about Holdco than you currently receive about Reebonz.

 

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In addition, as a “foreign private issuer” whose ordinary shares will be listed on the NASDAQ, Holdco is permitted to follow certain home country corporate governance practices in lieu of certain NASDAQ requirements. A foreign private issuer must disclose in its Annual Reports filed with the Securities and Exchange Commission, or the SEC, each NASDAQ requirement with which it does not comply followed by a description of its applicable home country practice. Holdco currently intends to follow the corporate governance requirements of NASDAQ. However, Holdco cannot make any assurances that it will continue to follow such corporate governance requirements in the future, and may therefore in the future, rely on available NASDAQ exemptions that would allow Holdco to follow its home country practice. Unlike the requirements of the NASDAQ, the corporate governance practice and requirements in the Cayman Islands do not require Holdco to have a majority of its board of directors to be independent; do not require Holdco to establish a nominations committee; and do not require Holdco to hold regular executive sessions where only independent directors shall be present. Such Cayman Islands home country practices may afford less protection to holders of Holdco’s Ordinary Shares.

 

Holdco could lose its status as a “foreign private issuer” under current SEC rules and regulations if more than 50% of Holdco’s outstanding voting securities become directly or indirectly held of record by U.S. holders and one of the following is true: (i) the majority of Holdco’s directors or executive officers are U.S. citizens or residents; (ii) more than 50% of Holdco’s assets are located in the United States; or (iii) Holdco’s business is administered principally in the United States. If Holdco loses its status as a foreign private issuer in the future, it will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if it were a company incorporated in the United States. If this were to happen, Holdco would likely incur substantial costs in fulfilling these additional regulatory requirements and members of Holdco’s management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.

 

Risks Related to Reebonz

 

Any harm to Reebonz’s brand or reputation may materially and adversely affect its business and results of operations.

 

Brand recognition and reputation are invaluable assets in the luxury goods market. Reebonz believes that the recognition and reputation of the Reebonz brand among buyers of luxury goods, its suppliers, marketplace merchants and individual sellers have contributed significantly to the growth and success of its business. Maintaining and enhancing such brand recognition and reputation are critical to Reebonz’s business and competitiveness. Many factors, including those beyond Reebonz’s control, are important to maintaining and enhancing its brand. These factors include Reebonz’s ability to:

 

provide a compelling online buying and selling experience to customers;
   
maintain the authenticity, quality and diversity of the products it offers in sufficient quantities;
   
maintain the efficiency, reliability and security of its fulfillment services and payment systems;
   
maintain or improve buyer satisfaction with its after-sale services;
   
enhance brand awareness through marketing and brand promotion activities;
   
preserve its reputation and goodwill in the event of any negative publicity involving its product authenticity and quality, customer service, cybersecurity, data protection, authorization to sell products or other issues affecting it; and
   
maintain positive relationships with its suppliers, marketplace merchants, individual sellers and other service providers.

 

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Any public perception (i) that counterfeit goods, pre-owned goods that are in a worse-than-described condition or unauthorized or stolen goods are sold on Reebonz’s website, (ii) that Reebonz, or its third-party service providers, do not provide satisfactory customer service or (iii) that Reebonz infringes upon any brand owners’ intellectual property rights could damage its reputation, diminish its brand value, undermine its credibility and adversely impact its business. If Reebonz is unable to maintain its reputation, enhance its brand recognition or increase positive awareness of its website, products and services, it may be difficult to maintain and grow its customer base, and its business and growth prospects may be materially and adversely affected.

 

If Reebonz is unable to manage its growth or execute its strategies effectively, its business and prospects may be materially and adversely affected.

 

Reebonz’s business has grown substantially since its inception in 2009. We continue to introduce new lines of business and plan to continue to grow our business. Specifically, we launched our Reebonz Closets, a C2C marketplace, in February 2015, our Merchant’s Marketplace, a B2C marketplace, in May 2015, and introduced the “Sell Back” feature in May 2017. In addition, in the past few years, Reebonz has expanded into new markets and increased its product offerings. Expanding its business has entailed and will continue to entail significant risks as Reebonz works with new suppliers, expands into new markets and offers new products. As the business grows and its product offerings increase, Reebonz will need to continue to work with a large number of merchants and an even larger number of individual sellers efficiently and establish and maintain mutually beneficial relationships with them. It will also need to perform sufficient due diligence and other checks to prevent the sale of counterfeit or unauthorized goods on its platform. To support its growth, Reebonz also plans to implement a variety of new and upgraded managerial, operating, financial and human resource systems, procedures and controls. All of these efforts will require significant financial, managerial and human resources. In addition, Reebonz’s number of employees has increased since its inception, and may continue to increase in the future. Reebonz cannot assure you that it will be able to effectively manage its growth or to implement desired systems, procedures and controls successfully, particularly as the size of its organization grows, or that its system will perform as expected or that its new business initiatives will be successful. If Reebonz is not able to manage its growth or execute its strategies effectively, its growth may be interrupted and its business and prospects may be materially and adversely affected.

 

Reebonz’s limited operating history makes it difficult to evaluate its business and prospects, and it may not be able to sustain its historical growth rates.

 

Reebonz commenced business in May 2009 and has a limited operating history. Since our inception, we have experienced rapid growth in our business. Our revenue was S$149.6 million (US$109.5 million) in 2017. Reebonz has incurred losses every year since its inception. Its business has undergone significant changes each year since its inception, including through acquisitions and the introduction of new products and services, and therefore Reebonz’s historical growth rate may not be indicative of its future performance. Reebonz cannot assure you that it will be able to achieve similar results or grow at a similar rate as it did in the past. Growth may slow, revenue may decline and losses may increase for a number of possible reasons, some of which are beyond Reebonz’s control, including decreased consumer spending, greater competition, slower growth of the luxury goods market in the Asia Pacific region, negative perceptions about product quality or authenticity, fulfillment bottlenecks, sourcing difficulties, emergence of alternative business models, changes in government policies, tax policies or general economic conditions. It is difficult to evaluate Reebonz’s prospects, as it may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If Reebonz’s growth rate declines, investors’ perceptions of its business and business prospects may be adversely affected and the market price of its securities could decline. You should consider Reebonz’s prospects in light of the risks and uncertainties that fast-growing companies with a limited operating history may encounter.

 

Reebonz has limited control over sellers in its Reebonz Closets and B2C Merchant’s Marketplace platform.

 

In 2015, Reebonz started Reebonz Closets, a C2C marketplace, and B2C Merchant’s Marketplace in Singapore. In its Marketplace Business, Reebonz does not source goods itself and instead provides a platform for sellers and buyers to directly buy and sell goods using its platform. Reebonz has limited control over the actions of sellers in its marketplaces and its interactions with buyers. Many of the buyers in its Marketplace Business are existing Reebonz customers and any negative experience buying through its marketplaces could adversely impact their trust in the Reebonz brand. For example, sometimes sellers advertising a product on Reebonz’s platform may no longer have the product available for sale. A significant percentage of sellers using Reebonz’s marketplace platform may identify buyers and then transact with them outside its platform, thereby avoiding the payment of its commissions, which would result in lower revenue and GMV.

 

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Furthermore, if any seller on its platform does not control the quality of the goods that it sells, does not deliver the goods on time or at all, delivers goods that are materially different from its description of them, sells counterfeit, unlicensed or stolen goods on its platforms, or sells certain goods in violation of relevant laws and regulations or in violation of brand owners’ distribution restrictions, the reputation of Reebonz’s online marketplaces and its brand may be materially and adversely affected, and it could face claims that it should be held liable for any losses. Any perception that counterfeit goods are sold on Reebonz’s platform could severely harm its brand and reputation. Third-party sellers may offer certain goods that are the same as, or similar to, the products that Reebonz directly offers for sale, thereby competing with its B2C Merchandise Business. In addition, expanding into these new businesses has required, and will continue to require, significant management attention and other resources. In order for Reebonz’s online marketplace to be successful, it must also continue to identify and attract third-party sellers, and it may not be successful in this regard. While every item sold through Reebonz’s C2C Individual Seller’s Marketplace is authenticated by its ateliers, it may still fail to detect some counterfeit goods and Reebonz is generally unable to detect stolen goods as there is typically no way to ascertain this.

 

Reebonz has a history of losses, operating losses and negative cash flow from operating activities, and it may continue to incur losses and operating losses, and experience negative cash flow from operating activities, in the future.

 

Reebonz has incurred significant losses and negative cash flow from operating activities since its inception. In 2016 and 2017, Reebonz had negative cash flow from operating activities of S$19.5 million and S$11.4 million (US$8.4 million), respectively. Reebonz’s profit for the year in in 2017 included a gain of S$97.3 million (US$71.4 million), resulting from changes in fair value of convertible preferences shares due to the decrease in the fair value of Series A, B, C and D convertible preference shares. Reebonz cannot assure you that it will be able to generate profits, operating profits or positive cash flow from operating activities in the future or that it will be able to continue to obtain financing (and in particular trust receipt financing, which is Reebonz’s primary source of financing for inventory purchases) on acceptable terms or at all. Reebonz’s ability to achieve profitability and positive cash flow from operating activities will depend on a mix of factors, some of which are beyond its control, including its ability to grow and retain its buyer and seller base, its ability to secure favorable commercial terms from suppliers, its ability to spot trends in the luxury goods market and manage its product mix accordingly and its ability to expand its new lines of business and offer value-added services with higher profit margins. In addition, Reebonz intends to continue to invest heavily in the foreseeable future in order to grow its business in the Asia Pacific online luxury goods market. As a result, Reebonz believes that it may continue to incur losses for some time in the future.

 

Reebonz does not have direct contractual or business relationships with luxury brand owners except in limited circumstances, and as a result it may face legal risks from potential liability for goods sold by the company, or individuals or merchants in its marketplaces, outside brand owners’ authorized distribution channels and potential claims related to ’‘parallel import’’ activities, and it may also face commercial risks from actions by luxury brand owners.

 

Reebonz does not have direct contractual or business relationships with luxury brand owners except in limited circumstances. Instead, Reebonz sources new luxury goods in its B2C Merchandise Business primarily from authorized distributors and luxury wholesalers in various countries. The contractual arrangements between some luxury brand owners and certain of its suppliers could contain restrictions on the price, geographic region and manner in which goods may be resold. Reebonz also sources luxury goods through distribution channels outside the control of brand owners, which are often referred to as ’‘parallel imports.’’ Reebonz believes that the import and sale of parallel import goods is generally permitted under the laws and regulations of the primary jurisdictions in which Reebonz operates, subject to certain exceptions. If Reebonz’s sourcing from any supplier is in violation of contractual arrangements with brand owners or legal restrictions on parallel import activities, it could be subject to claims of intellectual property rights infringement, tortious interference or inducement of contract breach, among others, and face significant liabilities. Any such perception that Reebonz is a parallel importer may undermine its reputation among buyers and sellers of luxury goods.

 

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Reebonz is also subject to the commercial risks that brand owners may instruct its suppliers not to sell goods to us or may cease selling goods to its suppliers completely or in sufficient quantities to meet its sourcing needs. In particular, brand owners may object to Reebonz’s pricing practices, especially the discounts to the retail prices fixed or suggested by brand owners. If Reebonz is successful in increasing the scale of its business and becomes more prominent in the luxury goods industry, the risk that brand owners may take legal or commercial action against Reebonz or its suppliers may increase. Any such actions could harm Reebonz’s reputation and adversely impact its product offerings, which could have a material and adverse effect on its results of operations and growth prospects.

 

Authorized distributors and luxury wholesalers have entered into framework supply agreements with us, which contain representations that they are not restricted from selling such goods to Reebonz and indemnities for losses Reebonz suffers or costs it incurs in connection with the agreement. Reebonz is actively seeking to enter into such agreements with all of its suppliers from which it sources new luxury items, but there can be no assurance that such suppliers will agree to the proposed terms. In addition, there can be no assurance that the representations made by Reebonz’s suppliers are accurate, and it may not be able to successfully enforce its contractual rights, including any indemnities, and may need to initiate costly and lengthy legal proceedings to protect its rights. Enforcing Reebonz’s contractual rights under those agreements may require Reebonz to incur significant costs and effort, and may divert its management’s attention from day-to-day operations. With Reebonz’s other suppliers that have not entered into any framework supply agreements, it places spot purchase orders, and any contractual rights or other recourse Reebonz may have against them in the event their sales to it are in violation of the rights of brand owners are highly limited and unlikely to provide sufficient compensation for any losses Reebonz suffers or costs it incurs.

 

With respect to Reebonz’s online Marketplace Business, although Reebonz plans to implement standard terms and conditions requiring individual sellers and merchants to confirm to it that, among other things, their sale of luxury goods on Reebonz’s platforms is not in violation of any distribution agreements and does not infringe the intellectual property rights of brand owners, there can be no assurance that these confirmations will be accurate, and Reebonz may not be able to successfully enforce any contractual rights or other recourse it may have against them in the event such confirmations are not accurate.

 

Reebonz has in the past received and may continue to receive claims alleging that sales of luxury goods by it, or individuals or merchants in its marketplaces, are not through brand owners’ authorized distribution channels. In March 2013, November 2015 and in March 2016, Reebonz received letters from a brand owner demanding that it cease selling its products and claiming Reebonz is not part of its authorized distribution network. Although such allegations and claims have not had a material adverse impact on Reebonz’s business, it might be required to allocate significant resources and incur material expenses to address such claims in the future. Irrespective of the validity of such claims, Reebonz could incur significant costs and effort in either defending or settling such claims, which could divert Reebonz’s management’s attention from day-to-day operations. If a successful claim is made against Reebonz, it might be required to pay substantial damages or refrain from further sale of the relevant products. Regardless of whether Reebonz successfully defends against such claims, it could suffer negative publicity, its reputation could be severely damaged and its product offerings could be significantly reduced. Any of these events could have a material and adverse effect on Reebonz’s business, results of operations or financial condition.

 

If Reebonz fails to manage and expand its relationships with suppliers of luxury goods, or otherwise fails to procure products on favorable terms, its business and growth prospects may be materially and adversely affected.

 

For Reebonz’s B2C Merchandise Business, it sources substantially all new luxury items from authorized distributors and luxury wholesalers, and it sources pre-owned items from individuals, pre-owned luxury goods dealers and auction houses. Maintaining strong relationships with these suppliers is important to the growth of Reebonz’s business. In particular, Reebonz depends on its ability to procure products from authorized distributors and luxury wholesalers and, to a lesser extent, brand owners, on favorable pricing terms. In the past, Reebonz typically entered into spot purchase orders and did not have long-term arrangements for the supply of products. Reebonz is actively seeking to enter into framework supply agreements with all of the authorized distributors and wholesalers that it sources new luxury items from. In addition, there is no assurance that all of Reebonz’s relevant suppliers will enter into Reebonz’s standard supply agreements with it or that Reebonz’s efforts to enter into such agreements will not adversely affect Reebonz’s relationships with its suppliers. Reebonz may also choose to discontinue its relationship with a supplier that declines to enter into such agreements, which would reduce the pool of suppliers that it sources luxury goods from and could materially and adversely affect its business and growth prospects. Reebonz cannot assure you that its current suppliers will continue to sell products to it on commercially acceptable terms, if at all. Even if it maintains good relations with its suppliers, their ability to supply products to Reebonz in sufficient quantity and at competitive prices may be adversely affected by changes in their relationship with brand owners, economic conditions, labor unrest, regulatory or legal decisions, natural disasters or other contingencies. In addition, it is possible that its Marketplace Business will not be able to retain existing sellers or to attract sufficient new sellers in the future. In the event that Reebonz is not able to source luxury goods at favorable prices, its revenue and cost of revenue may be materially and adversely affected. If Reebonz is unable to develop and maintain good relationships with suppliers that would allow it to obtain a sufficient amount and variety of luxury merchandise on commercially acceptable terms, it may inhibit Reebonz’s ability to offer sufficient products sought by luxury goods buyers, or to offer these products at competitive prices. Any adverse developments in Reebonz’s relationships with its suppliers, as well as with merchants and individual sellers on its marketplaces, could materially and adversely affect its business and growth prospects.

 

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If counterfeit products are inadvertently sold by Reebonz or through its platform, Reebonz may be subject to legal claims from brand owners, and its reputation and results of operations could be materially and adversely affected.

 

Reebonz is subject to the risk that counterfeit goods could be sold through its platform. Although Reebonz conducts due diligence on most of its suppliers and has quality control procedures in place to ensure that new luxury goods sold through its B2C Merchandise Business are authentic, Reebonz does not authenticate each item that it takes in its inventory and sells and therefore relies on suppliers to sell it authentic luxury goods. Although Reebonz authenticates pre-owned luxury goods sold by it or through its C2C Individual Seller’s Marketplace (consisting of Reebonz Closets and its White Glove Service), Reebonz’s authentication procedures may not be effective in all circumstances. In addition, Reebonz does not authenticate products sold through its B2C Merchant’s Marketplace. Any sale of counterfeit goods through its platform could significantly harm Reebonz’s reputation and could result in brand owners making legal claims against it for infringement of trademark, copyright or other intellectual property rights. From time to time in the ordinary course of its business, buyers, brand owners or other third parties have alleged and may allege that counterfeit products have been sold by Reebonz or through its platform. Any perception that Reebonz’s platform may contain counterfeit goods, even without merit, could have a material and adverse impact on its reputation.

 

When Reebonz receives complaints or allegations regarding infringement or counterfeit goods, Reebonz typically verifies the nature of the complaint and the relevant facts. Reebonz’s procedures could result in delays in de-listing products. In the event that alleged counterfeit or infringing products are listed or sold through its platform, Reebonz could face claims relating thereto for alleged failure to act in a timely or effective manner or to otherwise restrict or limit such sales or infringement. Reebonz may implement further measures in an effort to strengthen its protection against these potential liabilities, which could require it to spend substantial resources or discontinue certain service offerings. In addition, these changes may reduce the attractiveness of its marketplaces and other services to buyers, sellers or other users. A seller whose content is removed or whose services are suspended or terminated by Reebonz, regardless of its compliance with the applicable laws, rules and regulations, may dispute Reebonz’s actions and commence action against it for damages based on breach of contract or other causes of action or make public complaints or allegations. Any costs incurred as a result of liability or asserted liability relating to the sale of unlawful goods or other infringement could harm Reebonz’s business.

 

Companies that operate merchandise sales and online marketplace businesses, particularly those in the Asia Pacific region, have been subject to claims regarding counterfeit goods, and Reebonz could be subject to such claims in the future. For example, in January 2015, China’s State Administration for Industry and Commerce accused a major e-commerce company of failing to implement adequate procedures to prevent the sale of counterfeit goods on its platforms, and in May 2015, Kering, owner of Gucci and other luxury brands, filed a claim in U.S. federal court against this major e-commerce company alleging that it profited from the sale of counterfeit goods on its online marketplaces. Manufacturers and distributors of counterfeit goods are also increasingly sophisticated, making their products increasingly difficult to detect as counterfeits. If Reebonz were to be held to have sold or facilitated the sale of counterfeit goods, potential legal sanctions may include injunctions to cease infringing activities, rectification, compensation, administrative penalties and even criminal liability, depending on the governing law and the seriousness of the misconduct.

 

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Reebonz may be subject to intellectual property infringement claims, especially claims alleging unauthorized use of brand names or trademarks, which may be expensive to defend and may disrupt its business and operations.

 

Reebonz cannot be certain that its operations or any aspects of its business do not, or will not, infringe upon or otherwise violate trademarks, patents, copyrights or other intellectual property rights held by third parties. Reebonz may be subject to legal proceedings and claims relating to the intellectual property rights of others, especially those relating to luxury brand owners’ brand names, logos and trademarks. Although Reebonz’s practice is not to display those brand names, logos and trademarks on its website (except in product photos), it has received complaints in the past that it has displayed certain brand names and trademarks without authorization or in a misleading manner, including from brand owners whose goods have accounted for a significant percentage of its revenues.

 

For example, Reebonz received a letter of complaint in June 2012 from the legal counsel of a luxury brand, alleging that it had displayed certain trademarks on its website without authorization and demanding that it cease the sale of its products. Reebonz also received a letter of complaint in February 2013 from the legal counsel of a luxury brand alleging that one of its promotional events used certain trademarks without authorization and conveyed a false impression that such event had its endorsement. Based on advice from Reebonz’s intellectual property law counsel, Reebonz generally believes that its actions referred to in those letters have not infringed on the brand owners’ rights, and it has responded as such to those letters through its legal counsel. Reebonz also has intellectual property rights policies and take-down procedures in place to deal with claims that it believes have merit. However, Reebonz cannot assure you that its policies and practices will be successful in averting similar complaints in the future, or that its legal interpretation or other defenses against claims that it believes are without merit will be upheld in a court of law or otherwise successful. Even if none of the claims are successful, defending its rights against such claims could involve significant costs and effort and divert Reebonz’s management’s attention from day-to-day operations. Actively defending against such claims could also lead brand owners to take commercial or other actions against it, such as instructing its suppliers not to sell goods to it or ceasing to sell goods to its suppliers completely or in sufficient quantities to meet its sourcing needs.

 

In addition, other third-party intellectual property may be infringed by Reebonz’s products, services or other aspects of its business. Holders of patents purportedly relating to some aspect of Reebonz’s technology platform or business, if any such holders exist, may seek to enforce such patents against Reebonz in the United States or any other jurisdictions. Further, the application and interpretation of patent laws and the procedures and standards for granting patents in certain jurisdictions in which Reebonz operates are still evolving and are uncertain, and Reebonz cannot assure you that the courts or regulatory authorities would agree with its analysis.

 

If Reebonz is found to have violated the intellectual property rights of others, it may be subject to liability for its infringement activities or may be prohibited from using such intellectual property, and Reebonz may incur licensing fees or be forced to develop alternatives of its own. For instance, Reebonz was alerted in September 2012 by Getty Images, the copyright licensee of certain images Reebonz had used on its website, that those images were used without proper licensing and it subsequently paid licensing fees to Getty Images. In addition, Reebonz may incur significant expenses, and may be forced to divert management’s time and other resources from its business and operations to defend against these third-party infringement claims. Any ensuing negative publicity may severely damage its brand and reputation, regardless of the merits of the claims. Successful infringement or licensing claims made against Reebonz may result in significant monetary liabilities and may materially disrupt its business and operations by restricting or prohibiting its use of the intellectual property in question.

 

Finally, Reebonz uses open source software in connection with its products and services. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code to such software and make available any derivative works of the open source code on unfavorable terms or at no cost. Any requirement to disclose Reebonz’s source code or pay damages for breach of contract could be harmful to its business, results of operations and financial condition.

 

Reebonz may not be able to secure trademark registrations, which could adversely affect its ability to operate its business.

 

Reebonz files trademark applications with the proper authorities in each country in which it operates and will continue to do so if and when it expands into other jurisdictions. Trademark applications where Reebonz may file may not be allowed registration, and Reebonz may not be able to maintain or enforce our registered trademarks. If there are trademark registration proceedings, Reebonz may receive rejections. Although trademark applicants are given an opportunity to respond to those rejections, Reebonz may be unable to overcome such rejections. In addition, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against Reebonz’s applications and/or registrations, and its applications and/or registrations may not survive such proceedings. Failure to secure such trademark registrations could adversely affect Reebonz’s ability to operate its business in a specific jurisdiction.

 

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Failure to safeguard private and confidential information of Reebonz’s buyers and sellers and protect its network against security breaches could damage its reputation and brand and substantially harm Reebonz’s business and results of operations.

 

An important challenge to the online retail industry in general, and the online luxury retail market in particular, is the safekeeping and secure transmission of private and confidential information. Through third-party cloud computing service providers, Reebonz maintains a large database of confidential and private information as a result of buyers of luxury goods placing orders and inputting payment and contact information online, and sellers listing products and accepting payments, all through its website and its mobile application. In addition, Reebonz accepts a variety of payment methods such as major credit cards networks, bank transfers and third party payment service providers, and online payments are settled through third-party online payment services. Reebonz also shares certain personal information about its customers with contracted third-party couriers, such as their names, addresses, phone numbers and transaction records in order to facilitate pickups and deliveries. Maintaining complete security for the storage and transmission of confidential information in its system presents Reebonz with significant challenges.

 

Given the high monetary value of the luxury goods Reebonz carries and the relatively high average net worth of its buyers, safeguarding consumer privacy is essential to maintaining customer confidence. Advances in technology and the sophistication of cyber-attackers, new discoveries in cryptography or other developments could result in a compromise or breach of the technology that Reebonz uses to protect confidential information, which could lead to third parties illegally obtaining private and confidential information Reebonz holds as a result of its customers’ visits to its website and use of its mobile application, which could significantly affect consumer confidence in Reebonz’s platform and harm its business. In a Facebook post in November 2014, a satirical group, SMRT Ltd (Feedback), claimed that the personal data of 400,000 customers from Zalora, 440,000 customers from Reebonz and 650,000 records from deal.com.sg, were being peddled. Although Reebonz and other retailers have refuted this claim, such report or any similar reports in the future, whether factual or not, could negatively impact consumer perceptions of the safety and security of Reebonz’s platform or online shopping generally as well as Reebonz’s relationships with third parties, such as payment platforms. In addition to external threats, leaks of private and confidential information may result from operational errors. For instance, there have been instances where Reebonz’s staff have inadvertently sent e-mails with information regarding particular customers to the wrong customer. There can be no assurance that similar instances will not occur in the future.

 

In addition, Reebonz has limited control or influence over the security policies or measures adopted by third-party providers of online payment services through which Reebonz’s customers may elect to make or accept payments. Any negative publicity on Reebonz’s website’s or mobile application’s safety or privacy protection mechanisms and policies, and any claims asserted against Reebonz or fines imposed upon it as a result of actual or perceived failures, could have a material and adverse effect on its public image, reputation, financial condition and results of operations. Any compromise of its information security, or the information security measures of its contracted third-party couriers or third-party online payment service providers, could have a material and adverse effect on Reebonz’s reputation, business, prospects, financial condition and results of operations.

 

Practices regarding the collection, use, storage and transmission of personal information by companies operating over the internet and mobile platforms have recently come under increased public scrutiny in the various jurisdictions in which Reebonz and its subsidiaries operate. In addition to already existing stringent laws and regulations in such jurisdictions applicable to the solicitation, collection, processing, sharing or use of personal or consumer information, Reebonz may become subject to newly enacted laws and regulations that could affect how it stores, processes and shares data with its customers, suppliers and third-party sellers. Compliance with any additional laws could be expensive, and may place restrictions on the conduct of its business and the manner in which it interacts with its customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against Reebonz.

 

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Significant capital, managerial resources and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with Reebonz’s privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by cyber-attackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by Reebonz to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause Reebonz’s customers to lose trust in it and could expose it to legal claims. Any perception by the public that e-commerce or the privacy of customer information is becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online luxury retail and other online services generally, which could have a material and adverse effect on Reebonz’s financial condition and results of operations.

 

If Reebonz fails to manage its inventory effectively, Reebonz’s results of operations, financial condition and liquidity may be materially and adversely affected.

 

Reebonz takes inventory risk in its B2C Merchandise Business, which requires it to effectively manage a large volume of high-value inventory. Reebonz depends on its demand forecasts for various kinds of luxury items and the subjective judgments of its merchandising team regarding fashion and style trends to make sourcing decisions and to manage its inventory. Demand, however, can change unexpectedly between the time inventory is ordered and the time by which Reebonz intends to sell it. Demand may be affected by changes in consumer tastes, new product launches, changes in product cycles and pricing, product defects and many other factors, and luxury goods buyers may not order products in the quantities that Reebonz expects. In such circumstances, given that Reebonz does not typically have the right to return unsold items to its suppliers, Reebonz may decide to clear its inventory by reducing prices and making sales at a loss. In addition, when Reebonz begins selling a new product, it may be difficult to establish supplier relationships, determine appropriate product selection and accurately forecast demand. The acquisition of certain types of inventory may require significant lead time and prepayment that is typically nonrefundable. Reebonz is also subject to the risk that its inventory may be lost or damaged in storage or in transit, to the extent that such loss or damage is outside the coverage of its insurance.

 

If Reebonz fails to manage its inventory effectively, Reebonz may face inventory obsolescence, a decline in inventory value and significant inventory write-downs or write-offs. Such decline in inventory value may be substantial, especially given the high monetary value of the luxury goods Reebonz sells. Reebonz may be required to lower sale prices or conduct additional marketing activities in order to reduce inventory levels, which may lead to lower margins. High inventory levels may also tie up substantial capital resources, preventing Reebonz from using that capital for other purposes. On the other hand, if Reebonz underestimates demand for its products, or if its suppliers fail to supply quality products in a timely manner, Reebonz may experience inventory shortages and as a result, lost sales and damage to its reputation. Any of the above may materially and adversely affect Reebonz’s results of operations and financial condition.

 

If Reebonz is unable to provide a high level of customer service, its business and reputation may be materially and adversely affected.

 

Reebonz’s ability to ensure an enjoyable, efficient and user-friendly buying and selling experience for customers is crucial to its success. The quality of its customer service depends on a variety of factors, including its ability to continue to offer a wide range of authentic luxury goods at affordable prices, source products to respond to ever-changing buyer demands and preferences, maintain the quality of its products and services, provide a secure and user-friendly website interface and mobile application for its buyers and sellers, and provide timely delivery and pick up and satisfactory after-sales service. If Reebonz’s customers are not satisfied with any aspect of its goods or services, or the prices it offers, or if its internet platform is interrupted or otherwise fails to meet its customers’ requests, Reebonz’s reputation and customer loyalty could be materially and adversely affected.

 

Reebonz depends on its customer service center and online customer service representatives to provide live assistance to its buyers and sellers. Each member of Reebonz’s loyalty programs with Reebonz Black or Reebonz Solitaire status, which are the two statuses achievable by members of its loyalty program being earned either by spending beyond certain thresholds, has access to its team of relationship managers and customer service representatives whom he or she can contact for any of his or her customer service needs. If Reebonz’s customer service representatives, including relationship managers, fail to provide satisfactory service, Reebonz’s brand and customer loyalty may be adversely affected. In addition, any negative publicity or poor feedback regarding Reebonz’s customer service may harm its brand and reputation and in turn cause it to lose customers and market share.

 

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Reebonz also relies on contracted third-party delivery service providers, including global logistics providers and smaller local logistics providers, to pick up and deliver various high-value luxury goods. Reebonz also relies on these and other third parties to act as collection locations for its C2C Individual Seller’s Marketplace. If product pick up or delivery is not on time, or if the product is damaged in transit or while held at a collection location, customers’ confidence in its fulfillment capabilities could be diminished, particularly given the high monetary value of the goods sold on its platform. Furthermore, the personnel of contracted third-party delivery service providers act on Reebonz’s behalf and interact with its customers personally. Any failure to provide high-quality services to its customers may negatively impact the experience of Reebonz’s customers, damage its reputation and cause it to lose customers.

 

As a result, if Reebonz is unable to continue to maintain its customer experience and provide high-quality customer service, Reebonz may not be able to retain existing customers or attract new customers, which will have a material and adverse effect on its business, financial condition and results of operations.

 

Reebonz uses third-party couriers to deliver orders, and relies heavily on them for its fulfillment services it provides to sellers and buyers in its online marketplace. Any failure on the part of these couriers to provide reliable services may materially and adversely affect Reebonz’s business and reputation.

 

Reebonz maintains arrangements with 16 third-party logistics providers, including multinational delivery companies and local couriers. Reebonz uses its services to deliver its products to buyers and pick up goods from individual sellers. In addition, Reebonz’s marketplaces, including both the B2C Merchant’s Marketplace and the C2C Individual Seller’s Marketplace, requires Reebonz to build and maintain a compelling platform, on which it provides fulfillment services to sellers and buyers. Reebonz relies heavily on the third-party couriers to provide pick-up and delivery services, which form an integral part of its fulfillment services.

 

Interruptions to, or failures of the delivery or collection services, could prevent the timely and successful pick-up and delivery of products. Reebonz may not be in a position to forestall or minimize the impact of these interruptions or failures, given that it is not in direct control of the third-party couriers. In addition, these interruptions or failures may be due to unforeseen events that are beyond Reebonz’s control or the control of the couriers, such as inclement weather, natural disasters or labor unrest.

 

Reebonz also encountered situations in the past where shipments were lost or stolen in transit and in certain cases it may choose not to utilize insurance coverage (such as where it believes paying the claim directly may be more beneficial than paying the deductible and electing to use insurance coverage) to cover losses or such losses may not be covered by insurance. Given the high monetary value of the luxury merchandise Reebonz handles, the reliability of third-party courier services and the quality of services they provide are crucial factors that merchants and individual sellers consider when determining whether to do business on Reebonz’s platform, and any mistake or interruption on the part of those couriers could severely dampen their confidence in its services and the Reebonz brand. Relatively small local couriers may be less reliable than long-established multinational delivery companies. For example, if Reebonz’s third-party couriers, especially those relatively small local couriers, fail to comply with applicable rules and regulations in their respective jurisdictions, Reebonz’s fulfillment services may be materially and adversely affected. Reebonz may not be able to find alternative delivery companies to provide pick-up and delivery services in a timely and reliable manner, if at all. Delivery of Reebonz’s products could also be affected or interrupted by merger, acquisition, insolvency or shut-down of the delivery companies it engages, especially those local companies with relatively small business scales. If Reebonz’s products are not delivered in proper condition or on a timely basis, or if Reebonz’s fulfillment services are disrupted by service failure of the third-party couriers, Reebonz’s business and reputation could be materially and adversely affected.

 

Reebonz’s delivery, return and warranty policies and those of luxury brand owners may adversely affect its results of operations.

 

Reebonz generally provides free three- to seven-business day shipping for luxury items it directly sells to buyers. Reebonz also has adopted buyer-friendly return policies that make it convenient for buyers to return the purchase and obtain a refund. Reebonz may also be required by law to adopt new or amend existing return and exchange policies from time to time. Reebonz’s return policy is even more generous for members of its loyalty programs, Reebonz Black and Reebonz Solitaire. In addition, luxury watches purchased from us come with a one-year warranty. These return, exchange and warranty policies could subject Reebonz to additional costs and expenses which may not be offset by increased revenue. Reebonz’s ability to handle a large volume of returns is unproven. If Reebonz’s return and exchange policy is abused by a significant number of buyers, its costs may increase significantly and its results of operations may be materially and adversely affected. If Reebonz revises these policies to reduce its costs and expenses, its customers may be dissatisfied, which may result in loss of existing customers or failure to acquire new customers at a desirable pace, which may materially and adversely affect its results of operations. Some of the new and pre-owned luxury goods it sells may not be covered by the relevant manufacturer’s or brand owner’s original warranty, and such manufacturers or brand owners may refuse to provide replacement, repair, cleaning or other services for goods purchased on its platform. Although Reebonz intends to improve its disclosure of this risk to its buyers, Reebonz may be subject to consumer claims under applicable consumer protection or other laws and regulations in connection with limitations on manufacturer’s or brand owner’s warranties.

 

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Reebonz’s independent registered public accounting firm has included an explanatory paragraph relating to Reebonz’s ability to continue as a going concern in its report on Reebonz’s audited consolidated financial statements included in this proxy statement/prospectus.

 

Reebonz’s audited consolidated financial statements were prepared assuming that it will continue as a going concern. However, the report of Reebonz’s independent registered public accounting firm included elsewhere in this proxy statement/prospectus contains an explanatory paragraph on its consolidated financial statements stating there is substantial doubt about Reebonz’s ability to continue as a going concern, meaning that Reebonz may not be able to continue in operation for the foreseeable future or be able to realize assets and discharge liabilities in the ordinary course of operations. Such an opinion could materially limit Reebonz’s ability to raise additional funds through the issuance of new debt or equity securities or otherwise. There is no assurance that sufficient financing will be available when needed to allow Reebonz to continue as a going concern. The perception that Reebonz may not be able to continue as a going concern may also make it more difficult to raise additional funds or operate its business due to concerns about its ability to meet our contractual obligations.

 

Based on current operating plans, assuming successful completion of this business combination, Reebonz believes that it has resources to fund its operations for at least the next twenty-four months, but will require further funds to finance its activities thereafter. In the event this business combination is not consummated as expected Reebonz will need to consider alternative arrangements and such arrangements could have a potentially significant negative impact on its ability to continue our operations.

 

If Reebonz fails to implement and maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results or prevent fraud. As a result, Holdco’s security holders could lose confidence in its financial and other public reporting, which would harm its business and the trading price of the HoldCo securities.

 

Prior to this proposed business combination, Reebonz is not a publicly listed company and it had limited accounting personnel and other resources with which to address its internal controls and procedures. Effective internal control over financial reporting is necessary for it to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Effective internal controls can be particularly important to preparing consolidated financial results for the company since Reebonz operates in multiple markets with varying financial reporting rules and standards, such that it may have to make adjustments to its subsidiaries’ financial results as part of the consolidation process. If in subsequent years Holdco is unable to assert that its internal control over financial reporting is effective, Holdco could lose investor confidence in the accuracy and completeness of its financial reports, which could have a material adverse effect on the price of the Holdco securities.

 

Reebonz’s internal controls relating to financial reporting have not kept pace with the expansion of its business. Reebonz’s financial reporting function and system of internal controls are less developed in certain respects than those of similar companies that operate in fewer or more developed markets and may not provide its management with as much or as accurate or timely information. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as “deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”

 

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In connection with the preparation and external audit of Reebonz’s consolidated financial statements as of and for the years ended December 31, 2016 and 2017, Reebonz and KPMG LLP, independent registered public accounting firm, noted a material weakness in Reebonz’s internal control over financial reporting. The material weakness identified was Reebonz’s insufficient accounting resources and processes necessary to comply with reporting and compliance requirements of IFRS and the SEC. As a result of the identification of this material weakness, Reebonz plans to take measures to remedy this control deficiency. However, Reebonz can give no assurance that its planned remediation will be properly implemented or will be sufficient to eliminate such material weakness or that material weaknesses or significant deficiencies in its internal control over financial reporting will not be identified in the future. Reebonz’s failure to implement and maintain effective internal controls over financial reporting could result in errors in its financial statements that could result in a restatement of its financial statements, cause it to fail to meet its reporting obligations and cause investors to lose confidence in its reported financial information, which may result in volatility in and a decline in the market price of Holdco securities.

 

Reebonz’s independent registered public accounting firm did not undertake an audit of the effectiveness of its internal controls over financial reporting. Reebonz’s independent registered public accounting firm will not be required to report on the effectiveness of its internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until its annual report on Form 20-F following the date on which it ceases to qualify as an ’‘emerging growth company,’’ which may be up to five full fiscal years following the date of this offering. The process of assessing the effectiveness of Reebonz’s internal control over financial reporting may require the investment of substantial time and resources, including by members of its senior management. As a result, this process may divert internal resources and take a significant amount of time and effort to complete. In addition, Reebonz cannot predict the outcome of this determination and whether it will need to implement remedial actions in order to implement effective control over financial reporting. If in subsequent years Reebonz is unable to assert that its internal control over financial reporting is effective, or if its auditors express an opinion that its internal control over financial reporting is ineffective, Reebonz could lose investor confidence in the accuracy and completeness of its financial reports, which could have a material adverse effect on the price of Holdco securities. Reebonz will be implementing a number of measures to address the material weakness including: (i) hiring a number of financial reporting and internal control with IFRS and SEC financial reporting expertise, (ii) conducting training for our personnel with respect to IFRS and SEC financial reporting requirements. Reebonz intends to remediate this material weakness in its internal control over financial reporting by the end of the second full year after the completion of this transaction.

 

Reebonz is an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, its common stock may be less attractive to investors.

 

Reebonz is an “emerging growth company,” as defined in the JOBS Act, and it intends 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 its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Reebonz cannot predict if investors will find its common stock less attractive because Reebonz will rely on these exemptions. If some investors find Reebonz’s common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may be more volatile. Reebonz may take advantage of these reporting exemptions until it is no longer an emerging growth company. Reebonz 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 this offering, (b) in which it has total annual gross revenue of at least $1.07 billion, or (c) in which it is deemed to be a large accelerated filer, which means the market value of Reebonz’s common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which it has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

 

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Reebonz relies on online sale of luxury handbags for a major portion of its revenue.

 

Online sales of luxury handbags have historically accounted for a majority of Reebonz’s revenue. Substantially all of these handbags are designed for and marketed to women, which limits its demographic reach. Reebonz’s business depends, to a certain extent, on the fashion trends and desirability of luxury handbags. Reebonz expects that sales of these products will continue to represent a significant portion of its revenue in the near future. Reebonz has increased its offerings to include other product categories, such as a wide array of luxury watches, small leather goods and shoes. Reebonz expects to continue to expand its product offerings to diversify its revenue sources in the future. However, Reebonz’s sales of these new products may not reach a level that would substantially reduce its dependence on the sales of handbags. Sales of luxury handbags accounted for more than 70% of Reebonz’s revenue in each of 2016 and 2017. Any event that results in a reduction in Reebonz’s sales of luxury handbags could materially and adversely affect its ability to maintain or increase its current level of revenue and maintain or improve its business prospects.

 

A substantial portion of Reebonz’s revenue is derived from luxury goods manufactured by three luxury conglomerates.

 

In 2016 and 2017, Reebonz derived an aggregate of 50% to 60% of its revenue from brands owned by three major luxury conglomerates. Each conglomerate consists of multiple brand owners, and these three conglomerates in aggregate account for more than forty brands. Reebonz sources luxury goods made by these brand owners primarily from luxury wholesalers and authorized distributors in Europe. Reebonz does not have direct relationships with any of these brand owners and therefore does not have explicit permission from these conglomerates or their brand owners to resell their goods. Although none of these conglomerates have taken any action at the conglomerate or parent company level seeking to stop it from selling their products, certain of the individual brand owners within these conglomerates have issued letters alleging intellectual property infringement or asking Reebonz to stop selling their products. For example, in March 2013, November 2015, and March 2016 Reebonz received letters from a brand owner demanding that Reebonz cease selling its products. Although Reebonz believes these letters have not affected its ability to source these brands from luxury wholesalers and authorized distributors, if for any reason it were to experience reduced supply of luxury goods produced by the brand owners which are part of these three major conglomerates, or if any of such conglomerates or their brand owners were to take any action to prevent Reebonz from acquiring or selling their products, or if demand for the brands produced by these brand owners falls, its business, financial condition and results of operations would be materially and adversely affected.

 

Fluctuations in exchange rates between and among the Singapore dollar, the Australian dollar, the Euro, the Hong Kong dollar, the Malaysian ringgit, the Indonesian rupiah, the Korean won, the New Taiwan dollar, the Thai baht and the U.S. dollar, as well as other currencies in which Reebonz does business, may adversely affect its operating results.

 

Reebonz operates in various countries in the Asia Pacific region, including Singapore, Australia, Malaysia and Indonesia, among other countries. Reebonz makes inventory purchases primarily in Euros and U.S. dollars, incurs employee compensation expenses and administrative expenses primarily in Singapore dollars, and incur certain other expenses in various other currencies. Reebonz derives a significant portion of its revenue from sales denominated in Singapore dollars as well as in various local currencies other than the Singapore dollar.

 

Recently, currency exchange rates in Asia Pacific and Southeast Asia in particular have experienced volatility, including as a result of volatility in the Chinese Renminbi. For example, the exchange rate for the Chinese Renminbi to the U.S. dollar as of December 31, 2016 was 6.94470, and was 6.506 as of December 31, 2015. The Singapore dollar has generally weakened compared to the U.S. dollar in recent years, and in particular in 2015 and 2016. The exchange rate for the Singapore dollar to the U.S. dollar as of December 31, 2016 was 1.4473 and as of December 31, 2017 was 1.337.

 

Reebonz’s margins may be affected and it may otherwise be affected by foreign exchange differences in connection with fluctuations in the value of currencies against the Singapore dollar and managing multiple currency exposures. For example, Reebonz must pay fees to convert proceeds in foreign currencies to Singapore dollars. In addition, foreign exchange controls may restrict Reebonz from repatriating income earned in certain foreign countries to Singapore. Any such delay in revenue repatriation may cause Reebonz to incur losses due to the volatility of these currencies compared to the Singapore dollar. Because Reebonz reports its results in Singapore dollars, the difference in exchange rates in one period compared to another directly impacts period-to-period comparisons of its operating results. Because currency exchange rates have been especially volatile in the recent past, these currency fluctuations may make it difficult for Reebonz to predict its results.

 

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Currently, Reebonz has not implemented any comprehensive strategy to mitigate risks related to the impact of fluctuations in currency exchange rates. Implementing hedging strategies can prove costly. Even if Reebonz were to implement hedging strategies, not every exposure is or can be hedged, and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts which may vary or which may later prove to have been inaccurate. Failure to hedge successfully or anticipate fluctuations in the value of currencies and other currency risks accurately could adversely affect Reebonz’s operating results.

 

As Reebonz expands its business internationally, it will face additional business, political, regulatory, operational, financial and economic risks, any of which could increase its costs and hinder its growth.

 

Reebonz expects to continue to devote significant resources to international expansion in the Asia Pacific region through organic growth. Expanding its business internationally will require considerable management attention and resources and is subject to the particular challenges of operating a rapidly growing business in an environment of multiple languages, cultures, customs and legal and regulatory systems. Entering new international markets or expanding Reebonz’s operations in existing international markets will involve substantial cost, and Reebonz’s ability to gain market acceptance in any particular market is uncertain. There can be no assurance that Reebonz will be able to successfully grow its business internationally. For example, Reebonz may become subject to risks that it has not faced before or an increase in the risks that it currently faces, including risks associated with:

 

localizing its operations and platform, and gaining customer acceptance;
   
recruiting and retaining talented and capable management and employees in various countries;
   
language barrier and cultural differences;
   
negotiating agreements that are economically beneficial to it and protective of its rights, such as contracting with various third parties for the localization of its services;
   
competition from home-grown businesses with significant local market share and a better understanding of consumer preferences;
   
protecting and enforcing its intellectual property rights;
   
the inability to extend proprietary rights in its brand, content or technology into new jurisdictions;
   
complying with applicable foreign laws and regulations, such as those relating to intellectual property, privacy, consumer protection, e-commerce, customs and anti-money laundering;
   
currency exchange rate fluctuations, and foreign exchange controls that might restrict or prevent it from repatriating income earned in foreign countries;
   
challenges in maintaining internal controls and managing accounting personnel in the countries where it operates;
   
protectionist laws and business practices that favor local businesses in some countries;
   
various forms of online fraud, such as credit card fraud;
   
foreign and local tax consequences;
   
political, economic and social instability; and
   
higher costs associated with doing business internationally.

 

Any failure to meet the challenges associated with international expansion could materially and adversely affect Reebonz’s business, financial condition and results of operations.

 

Reebonz operates in a competitive environment and may lose market share and customers if it fails to compete effectively.

 

The online luxury goods industry in the Asia Pacific region is competitive. Reebonz competes for customers, third-party merchants and individual sellers. Reebonz’s current and potential competitors include other specialist online luxury retailers, general online retailers, fashion online retailers, luxury brand owners’ online stores, luxury department retailers’ online stores, as well as physical stores that sell luxury goods, including retail stores owned and operated by the brands that Reebonz carries. See “Business of Reebonz — Competition.” In addition, new technologies may increase or even transform the competitive landscape in the online luxury goods industry. New competitive business models may appear, such as business models based on new forms of social media, and Reebonz may not adapt quickly enough, or at all, to changing industry trends.

 

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Increased competition may reduce Reebonz’s margins, market share and brand recognition, or result in significant losses. For example, when Reebonz sets prices, it considers how competitors have set prices for the same or similar products. When they cut prices or offer additional incentives to compete with it, Reebonz may have to lower its own prices or offer comparable incentives or risk losing market share. When Reebonz has products that do not sell, it often reduce prices to clear inventory. Competitive price reduction on certain luxury items lowers prices and benefits buyers, but in the longer term may hurt the perceived prestige of those luxury goods and dampen consumer interest. In addition, third-party merchants are crucial in broadening its product listings, and Reebonz competes with other companies for these sellers.

 

Reebonz also competes on the basis of non-price terms. For example, in Reebonz’s B2C Merchandise Business, it offers free international shipping for orders above a certain minimum value and aim to make deliveries within three to seven business days depending on the country of delivery. Reebonz plans to employ a variety of strategies to shorten delivery times, such as increased monitoring of third-party courier performance and implementation of a “local sourcing and local sale” model. If these strategies do not succeed, and one or more of Reebonz’s significant competitors manage to shorten delivery times, it may lose any competitive advantage.

 

Some of Reebonz’s current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships and sourcing expertise, including direct relationships with brand owners, larger customer bases or greater financial, technical or marketing resources than Reebonz does. Those smaller companies or new entrants may be acquired by, receive investment from or enter into strategic relationships with well-established and well-financed companies or investors which would help enhance their competitive positions. Reebonz cannot assure you that it will be able to compete successfully against current or future competitors, and competitive pressures may have a material and adverse effect on its business, financial condition and results of operations.

 

If Reebonz is unable to maintain a strong buyer base by offering luxury goods that attract new buyers and repeat purchases from existing buyers, or if it is unable to build and sustain an integrated ecosystem for luxury goods, Reebonz’s business, financial condition and results of operations may be materially and adversely affected.

 

Reebonz’s future growth depends on its ability to continue to attract new buyers as well as new purchases from existing buyers. More importantly, its future growth also depends on its ability to leverage its platform and build an integrated ecosystem for luxury goods where customers are able to become both buyers and sellers. Ever-changing consumer preferences have affected and will continue to affect the online luxury goods market. Reebonz must stay abreast of emerging consumer preferences and anticipate upcoming trends. In addition, maintaining effective marketing is important for its business. Reebonz increasingly plans to use technology to enable its systems to make recommendations to buyers based on its past purchases or on goods that it viewed but did not purchase. Reebonz’s ability to make individually tailored recommendations is dependent on its business intelligence system, which tracks, collects and analyzes its customers’ browsing and purchasing behavior, to provide accurate and reliable information. Reebonz believes that buyers choose to purchase authentic and quality luxury goods on its platform because it offers a wide selection of goods, and they may choose to shop elsewhere if Reebonz cannot match the range of goods or the prices offered by other websites or by physical stores. If buyers cannot find their desired luxury goods on Reebonz’s websites or through its mobile application, they may lose interest in us and visit us less frequently or stop visiting us altogether. Likewise, if Reebonz’s buyer base diminishes, fewer buyers could potentially be converted to sellers on its platform, hindering the growth of its Marketplace Business. It could also cause existing luxury goods sellers in Reebonz’s marketplace to perceive its platform as less valuable and leave its platform. In addition, potential merchants and individual sellers could be deterred from joining Reebonz. Sellers may also regard Reebonz as less valuable for various other reasons, such as the perceived ineffectiveness of its marketing efforts or the emergence of alternative platforms that charge lower commissions and fees. Any of the above scenarios in turn may materially and adversely affect its business, financial condition and results of operations.

 

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If Reebonz is unable to conduct its marketing activities in a successful and cost-effective manner, its results of operations and financial condition may be materially and adversely affected.

 

Reebonz believes that consistent marketing communication supports its level of sales and brand identity as a trusted name for buying and selling luxury goods. As a result, Reebonz has incurred significant expenses on a variety of marketing and brand promotion campaigns, both broad-based and targeted, that are designed to enhance its brand recognition and increase sales. Reebonz’s brand promotion and marketing activities may not be well received by customers and may not result in the levels of product sales that it anticipates. Reebonz incurred S$13.4 million and S$10.5 million of marketing expenses in 2016 and 2017, respectively. Reebonz expects that it could incur higher amounts of expenses in the foreseeable future, as its customer acquisition cost increases over time as a result of greater competition and market saturation. Marketing approaches and tools in the luxury goods market in the Asia Pacific region are evolving. This further requires Reebonz to enhance its marketing approaches and experiment with new marketing methods to keep pace with industry developments and consumer preferences. Failure to refine its existing marketing approaches, failure to introduce new marketing approaches in a successful and cost-effective manner, or failure of its innovative marketing initiatives, such as Reebonz Mobil (a truck that features a mobile luxury goods boutique), to bring about desired results could reduce its market share, cause its revenue to decline and negatively impact its profitability.

 

If Reebonz’s senior management is unable to work together effectively or efficiently, or if it loses their service, its business may be severely disrupted.

 

Reebonz’s success depends heavily upon the continued services of its management. In particular, Reebonz relies on the expertise and experience of Mr. Samuel Lim, its Co-Founder and Chief Executive Officer, and other executive officers. If Reebonz’s senior management cannot work together effectively or efficiently, its business may be severely disrupted. If one or more members of its senior management were unable or unwilling to serve in their current positions, Reebonz might not be able to locate an appropriate replacement, if at all, and its business, financial condition and results of operations may be materially and adversely affected. If any member of Reebonz’s senior management joins a competitor or forms a competing business, Reebonz may lose customers, suppliers, know-how and key professionals and staff. Reebonz’s senior management has entered into employment agreements with it, which contain confidentiality and non-competition provisions. There can be no assurance that any such non-competition provision will be enforceable in the Singapore courts. In addition, under these agreements, members of Reebonz’s senior management team can resign by giving it prior notice or through forfeiture of compensation during the notice period in lieu of giving prior notice. Reebonz currently does not maintain any insurance coverage for loss of key management personnel. If any dispute arises between Reebonz senior management and Reebonz, especially one that results in any resignation, Reebonz may suffer negative publicity and erosion of investor confidence, and it may have to incur substantial costs and expenses in order to enforce such agreements, or it may be unable to enforce them at all.

 

Reebonz depends on talented, experienced and committed personnel to grow and operate its business, and if Reebonz is unable to recruit, train, motivate and retain qualified personnel or sufficient workforce while controlling its labor costs, its business may be materially and adversely affected.

 

A fundamental driver of Reebonz’s continued success is its ability to recruit, train and retain qualified personnel with deep experience in the luxury retail industry, particularly in areas of technology, authentication, marketing and operations. For example, Reebonz faces difficulty recruiting experienced technology personnel, whose responsibility is to design and maintain user-friendly websites and mobile applications.

 

Reebonz’s senior management and mid-level managers are instrumental in implementing its business strategies, executing its business plans and supporting its business operations and growth. The effective operation of Reebonz’s managerial and operating systems, fulfillment services, customer service centers and other back office functions also depends on the knowledge and diligence of its management and employees. Since the online luxury retail industry is characterized by high demand and intense competition for talent, Reebonz can provide no assurance that it will be able to attract or retain qualified staff or other highly skilled employees that it will need to achieve its strategic objectives. Reebonz plans to hire additional employees both in its technology department, in order to enhance user experience for all its online touch points, and in its finance department. Reebonz has observed an overall tightening of the labor market and an emerging trend of shortage of labor supply and this requires it to be more creative and pro-active in its talent sourcing rather than only depending on traditional recruitment channels. Failure to obtain experienced and dedicated employees may lead to underperformance of these functions and cause disruption to its business. Labor costs in the countries in which Reebonz operates have increased with the economic development in the Asia Pacific region. In addition, Reebonz’s ability to train and integrate new employees into its operations may also be limited and may not meet the demand for its business growth in a timely fashion, if at all, and rapid expansion may impair Reebonz’s ability to maintain a dynamic corporate culture. Furthermore, additional employees that Reebonz plans to hire may be located at its offices and facilities outside Singapore. As a result, Reebonz may have less control over these employees, and it may experience increased difficulty in integrating them into its corporate culture.

 

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Reebonz depends on its Reebonz ateliers, its in-house team of trained experts, to ensure the authenticity of the luxury goods it carries on its platform. If Reebonz ateliers fail to identify counterfeit goods or it is unable to recruit and train qualified professionals for the atelier team, its business may be materially and adversely affected.

 

Reebonz believes that an important measure to maintain buyer confidence in the Reebonz brand is to provide buyers with the assurance that the items they purchase are authentic. Reebonz ateliers, which consist of its in-house team of appraisers, trained gemologists and watch technicians, authenticate all pre-owned luxury goods sold by Reebonz or through its C2C Individual Seller’s Marketplace. Each pre-owned item sold through Reebonz’s B2C Merchandise Business and its C2C Individual Seller’s Marketplace is authenticated, appraised, valued and graded by an atelier. Reebonz’s ateliers also support other areas of its business by, for example, providing authentication services to sellers and buyers using its B2C Merchant’s Marketplace in the event of a dispute.

 

There can be no assurance that Reebonz ateliers will identify all counterfeit goods and not certify such goods as genuine. Any failure by Reebonz ateliers to identify counterfeit goods could significantly harm its reputation and could result in brand owners making legal claims for infringement of trademark, copyright or other intellectual property rights, which in turn could materially and adversely affect its results of operations and prospects. In the event counterfeit goods are sold in its marketplaces, the authentication services Reebonz provides may also expose Reebonz to a heightened risk of contributory liability compared to other online marketplace operators that do not offer such services. In addition, Reebonz’s atelier team authenticates products sold through its C2C Individual Seller’s Marketplace, consisting of Reebonz Closets and its White Glove Service, which could lead to a backlog if Reebonz is unable to increase the size and efficiency of its atelier team as its C2C Individual Seller’s Marketplace grows. In Reebonz’s B2C Merchant’s Marketplace, it does not, except in certain circumstances, authenticate products sold by merchants to buyers, which increases the possibility that counterfeit products could be sold through its platform.

 

Reebonz’s team of ateliers currently consists of 12 professionals located across its collection spokes. As its business grows, Reebonz may need to retain additional ateliers, and it could experience a backlog if it is unable to increase the size and efficiency of its atelier team as its C2C Individual Seller’s Marketplace grows. The market competition for experienced luxury goods authentication professionals is intense, and there is no assurance that Reebonz will be able to hire and retain a sufficient number of professionals with the required experience on acceptable terms or that its training programs for new ateliers will be effective. Furthermore, counterfeiters and the products they produce are increasingly sophisticated, such that there can be no assurance that Reebonz’s ateliers will be able to consistently differentiate between authentic and counterfeit goods. If Reebonz is unable to grow its team of ateliers at the rate, and with the degree of sophistication, that Reebonz expects to require as its business grows, Reebonz’s authentication capabilities could be impacted, which could result in counterfeit or defective products being sold on its platform. Any of the foregoing could have a material and adverse effect on Reebonz’s business, results of operations and prospects.

 

Customer behavior on mobile devices is rapidly evolving, and if Reebonz fails to successfully adapt to these changes, its competitiveness and market position may suffer.

 

In line with the significant growth in smartphone usage and the global shift in online activity towards mobile devices, a significant portion of Reebonz’s sales are made through mobile devices. In addition, the company’s Reebonz Closets, which Reebonz launched in February 2015, is significantly dependent on its mobile application for a number of its functions, including uploading items for sale and interaction among customers. Use of mobile devices and platforms is relatively new and developing rapidly, and Reebonz may not be able to continue to increase the level of mobile access to, and engagement on, its business. The variety of technical and other configurations across different mobile devices and platforms increases the challenges associated with this environment. Reebonz’s ability to successfully expand the use of mobile devices to access its platform is affected by the following factors:

 

its ability to continue to provide a compelling e-commerce and mobile commerce platform and tools in a multi-device environment;

 

its ability to successfully deploy and update its application on popular mobile operating systems that it does not control, such as iOS and Android;

 

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its ability to adapt to the device standards used by third-party manufacturers and distributors; and
   
the attractiveness of alternative platforms.

 

If Reebonz is unable to attract significant numbers of new mobile buyers and increase levels of mobile engagement, its ability to maintain or grow its business would be materially and adversely affected.

 

The proper functioning of Reebonz’s information technology platform is essential to its business. Any failure to maintain the satisfactory performance of its website, mobile application and systems could materially and adversely affect its business and reputation.

 

The satisfactory performance, reliability and availability of Reebonz’s technology platform are critical to its success and its ability to attract and retain buyers and sellers of luxury goods and provide superior customer service. Substantially, all of Reebonz’s sales of products are made online through its websites and mobile application, and the fulfillment services Reebonz provide to merchants and individual sellers is related to sales of their products through its website and mobile applications. Any system interruptions caused by telecommunications failures, computer viruses, software errors, third party services, cloud computing providers, cyberattack or other attempts to harm Reebonz’s systems that result in the unavailability or slowdown of its websites or mobile application or reduced orders and fulfillment performance could reduce the volume of products sold and the attractiveness of product offerings on its website. Reebonz’s cloud servers may also be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to system interruptions, websites or mobile application slowdown or shutdown, delays or errors in transaction processing, loss of valuable data or the inability to accept and fulfill orders. In December 2014, Reebonz was the victim of a distributed denial of service (DDOS) attack, which overloaded its servers and resulted in approximately three hours of downtime. While Reebonz has implemented security measures for DDOS prevention and full-time security monitoring, there can be no assurance that its websites will not be victimized by such attacks in the future. Security breaches, computer viruses, software errors and cyberattacks have become more prevalent in Reebonz’s industry. Because of its brand recognition in the online luxury retail industry in its Core Asia Pacific Market, Reebonz believes it is a particularly attractive target for such attacks. Reebonz has experienced in the past, and may experience in the future, such attacks and unexpected interruptions. Reebonz can provide no assurance that its current security mechanisms will be sufficient to protect its information technology systems from any third-party intrusions, viruses or cyberattacks, information or data theft or other similar activities. Any such future occurrences could reduce customer satisfaction, damage Reebonz’s reputation and result in a material decrease in its revenue. Additionally, Reebonz must continue to upgrade and improve its technology platform to support its business growth, and failure to do so could impede its growth. However, Reebonz cannot assure you that it will be successful in executing these system upgrades, improvement strategies or updates by its third party technology service providers. In particular, Reebonz’s systems may experience windows of down time during upgrades, and the new technologies or infrastructures may not be fully integrated with the existing systems on a timely and reliable basis, if at all. In October 2012, a system administrator erroneously made a configuration change at the database level, which resulted in approximately 25 hours of downtime for its websites. While Reebonz has implemented standard operating procedures to prevent such incidents, there can be no assurance that human error will not result in website downtime or any other technological problems in the future. In addition, Reebonz experiences surges in online traffic associated with promotional activities and holiday seasons, which could strain its technology platform. During a certain sales event in 2011, Reebonz’s server was unable to handle the volume of traffic to its websites and it experienced three days of downtime as its websites were moved to a dedicated hosting site. While Reebonz has implemented procedures to add server capacity prior to such events, there can be no assurance that its servers will not be overloaded in the future due to the popularity of sales events or for any other reason. If its existing or future technology platform does not function properly, it could cause system disruptions and slow response times, affecting data transmission, which in turn could materially and adversely affect Reebonz’s business, financial condition and results of operations.

 

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The costs of fulfillment services that Reebonz incurs may increase, and Reebonz may not be able to pass the increased costs on to its buyers and sellers.

 

Reebonz provides fulfillment services both in its B2C Merchandise business and in its Marketplace Business. Reebonz incurs significant costs in providing fulfillment services, such as logistics center labor costs and third-party courier costs. Reebonz cannot assure you that these costs will stay at the current level in the future, and if they increase, it may not be able to pass the increased costs on to its buyers and sellers. For example, shipping costs are currently borne by the buyer in its Reebonz Closets and B2C Merchant’s Marketplace, and if one or more of Reebonz’s third-party couriers decide to charge it increased shipping fees, Reebonz may decide to absorb the increased cost ourselves in order to stay competitive and retain customers. This may have a material and adverse effect on its business, financial condition and results of operations.

 

Uncertainties relating to the growth and profitability of the online luxury goods industry in the Asia Pacific region could adversely affect Reebonz’s revenues and business prospects.

 

Reebonz generates substantially all of its revenues from online sales of new and pre-owned luxury goods. While the online retail business has existed in the Asia Pacific region since the 1990s and has flourished in recent years, the long-term viability and prospects of various online B2C and C2C luxury retail business models in the Asia Pacific region remain relatively untested. Reebonz’s future results of operations will depend on numerous factors affecting the development of the online luxury retail industry in the Asia Pacific region, which may be beyond its control. These factors include:

 

the growth of internet, broadband and mobile penetration and usage in the Asia Pacific region, and the rate of such growth;
   
the trust and confidence of online luxury retail consumers in the Asia Pacific region, as well as changes in customer demographics and consumer tastes and preferences;
   
the selection, price and popularity of luxury goods that Reebonz and its competitors offer online and offline;
   
whether alternative retail channels or business models that better address the needs of existing and potential luxury buyers emerge in the Asia Pacific region;
   
the development of fulfillment, payment and other ancillary services associated with online purchases;
   
government policies that affect the luxury goods industry, such as tax policies in connection with online sales, luxury goods, or both; and
   
governmental actions that affect the luxury goods industry, such as the introduction or relaxation of anti-corruption campaigns (similar to the ongoing anti-corruption campaign in China), which could be implemented by countries in which Reebonz operates.

 

A decline in the popularity of online shopping in general, or any failure by Reebonz to adapt its websites and improve the online customer experience in response to trends and consumer requirements, may adversely affect its revenue and business prospects.

 

The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on Reebonz’s business, results of operations and financial condition.

 

The accessories, footwear and apparel industries have historically been subject to cyclical variations, recessions in the general economy and uncertainties regarding future economic prospects that can affect consumer spending habits. Purchases of discretionary luxury items, such as Reebonz’s products, tend to decline during recessionary periods when disposable income is lower. The success of Reebonz’s operations depends on a number of factors impacting discretionary consumer spending, including general economic conditions, consumer confidence, wages and unemployment, housing prices, consumer debt, interest and tax rates, fuel and energy costs, taxation and political conditions. A worsening of the economy may negatively affect consumer and wholesale purchases of Reebonz’s products and could have a material adverse effect on its business, results of operations and financial condition.

 

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Any deficiencies in the internet infrastructure of any particular country in which Reebonz operates or any disruption in Reebonz’s arrangements with third-party providers of communications and storage capacity could impair its ability to sell products over its website and mobile applications, which could cause Reebonz to lose customers and harm its operating results.

 

The majority of Reebonz’s sales of products are made online through its websites and mobile application, and the fulfillment services it provides to merchants and individual sellers are related to sales of their products through its websites and mobile application. Reebonz’s business depends on the performance and reliability of the internet infrastructure in the Asia Pacific countries in which it operates. The availability of Reebonz’s websites depends on telecommunications carriers and other third-party providers of communications and storage capacity, including bandwidth and server storage, among other things. If Reebonz is unable to enter into and renew agreements with these providers on acceptable terms, or if any of its existing agreements with such providers are terminated as a result of its breach or otherwise, Reebonz’s ability to provide its services to its customers could be adversely affected. For example, on July 8, 2015 Reebonz’s website in Hong Kong experienced an outage which lasted approximately two hours, due to communication breakdown between its telecommunications provider and its internet service provider. Service interruptions prevent Reebonz’s buyers and sellers from accessing its websites and mobile application, and frequent interruptions could frustrate them and discourage them from attempting to place orders, which could cause Reebonz to lose customers and harm its operating results.

 

If Reebonz fail to adopt new technologies or adapt its websites, mobile application and systems to changing customer requirements or emerging industry standards, its business may be materially and adversely affected.

 

To remain competitive, Reebonz must continue to enhance and improve the responsiveness, functionality and features of its websites and mobile application. The internet and the online retail industry are characterized by rapid technological evolution, changes in customer requirements and preferences, frequent introductions of new products and services embodying new technologies and the emergence of new industry standards and practices, any of which could render its existing technologies and systems obsolete. Reebonz’s success will depend, in part, on its ability to identify, develop, acquire or license leading technologies useful in its business, and respond to technological advances and emerging industry standards and practices, such as mobile internet, in a cost-effective and timely manner. The development of websites, mobile applications and other proprietary technology entails significant technical and business risks. Reebonz cannot assure you that it will be able to use new technologies effectively or adapt Reebonz’s websites, mobile application, proprietary technologies and systems to meet customer requirements or emerging industry standards. If Reebonz is unable to adapt in a cost-effective and timely manner in response to changing market conditions or customer requirements, whether for technical, legal, financial or other reasons, its business prospects, financial condition and results of operations may be materially and adversely affected.

 

Customer growth and activity on mobile devices depends upon effective use of mobile operating systems, networks and standards that Reebonz does not control.

 

Reebonz has seen an increase in the use of mobile devices by buyers to place orders and by sellers to showcase their products (through, for example, its Reebonz Closets), and Reebonz expects this trend to continue. To optimize the mobile shopping experience, Reebonz guides its customers to download its mobile application to their devices as opposed to accessing Reebonz’s sites from an internet browser on their mobile device. As new mobile devices and platforms are released, it is difficult to predict the problems it may encounter in developing applications for these alternative devices and platforms, and it may need to devote significant resources to the development, support and maintenance of such applications. In addition, Reebonz’s future growth and its results of operations could suffer if it experiences difficulties in the future in integrating its mobile application into mobile devices or if problems arise with its relationships with providers of mobile operating systems or mobile application download stores, if its applications receive unfavorable treatment compared to competing applications on the download stores, or if it faces increased costs to distribute or have customers use its mobile application. Reebonz is further dependent on the interoperability of its sites with popular mobile operating systems that it does not control, such as iOS and Android, and any changes in such systems that degrade the functionality of its sites or give preferential treatment to competitive products could adversely affect the usage of its sites on mobile devices. In the event that it is more difficult for Reebonz’s customers to access and use its websites or application on their mobile devices, or if Reebonz’s customers choose not to access or to use its websites or application on their mobile devices or to use mobile products that do not offer access to its websites or application, Reebonz’s customer growth could be harmed and its business, financial condition and operating results may be adversely affected.

 

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The wide variety of payment methods that Reebonz accepts subjects it to third-party payment processing-related risks.

 

Reebonz accepts payments using a variety of methods, including major credit card networks, bank transfers and payment gateways such as Adyen, Alipay and PayPal. For certain payment methods, including credit cards, Reebonz pays transaction fees, which may increase over time and increase its operating costs and lower its profit margins. Reebonz may also be subject to fraud and other illegal activities in connection with the various payment methods it offers. Reebonz also relies on third parties to provide payment processing services. If these service providers fail to provide adequate services or if its relationships with them were to terminate, Reebonz and its third party merchants’ ability to accept payments could be adversely affected, and its business could be harmed. One of Reebonz’s payment service providers has experienced a network failure in the past, and it cannot assure you that similar incidents will not occur in the future. Reebonz is also subject to various rules, regulations and requirements, regulatory or otherwise, governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for it to comply. If Reebonz fails to comply with these rules or requirements, it may be subject to fines and higher transaction fees and lose its ability to accept credit card payments from its customers, process electronic funds transfers or facilitate other types of online payments, and its business, financial condition and results of operations could be materially and adversely affected.

 

Reebonz’s results of operations are subject to seasonal fluctuations.

 

Reebonz experiences seasonality in its business, reflecting a combination of traditional retail seasonality patterns and new patterns associated with online luxury retail in particular. Reebonz’s sales have historically been higher during festive periods, especially the December holiday season, as its business tends to benefit from consumers’ increased leisure time and discretionary spending (as a result of, for example, year-end bonuses). Reebonz’s sales during the fourth quarter tend to be higher than the other quarters. In addition, certain luxury brand owners and their authorized distributors tend to reduce the retail prices of their luxury goods during end-of-season sales events, and Reebonz may be forced to reduce its prices of these goods in order to remain competitive. As a result, its profit margin during such periods may be impacted. Reebonz’s financial condition and results of operations for future periods may continue to fluctuate. As a result, the trading price of the ADSs may fluctuate from time to time due to seasonality.

 

Future strategic alliances, joint ventures, investments or acquisitions may have a material and adverse effect on Reebonz’s business, reputation and results of operations.

 

Reebonz has in the past and may in the future enter into strategic alliances or joint ventures with various third parties from time to time to further its business purposes. Strategic alliances or joint ventures with third parties could subject Reebonz to a number of risks, including risks associated with sharing proprietary information, non-performance by the counterparty, and an increase in expenses incurred in establishing new strategic alliances or joint ventures, any of which may materially and adversely affect its business. Reebonz may have little ability to control or monitor its partners’ actions. To the extent its partners suffer negative publicity or harm to their reputations from events relating to their business, Reebonz may also suffer negative publicity or harm to its reputation by virtue of its association with such third parties.

 

In addition, if Reebonz is presented with appropriate opportunities, it may invest in or acquire additional assets, technologies or businesses that are complementary to its existing business. Future investments or acquisitions and the subsequent integration of new assets and businesses into its own would require significant attention from its management and could result in a diversion of resources from Reebonz’s existing business, which in turn could have an adverse effect on its business operations. The costs of identifying and consummating investments and acquisitions may be significant. Reebonz may also incur significant expenses in obtaining necessary approvals from relevant government authorities. Acquired assets or businesses may not generate the financial results Reebonz expects. In addition, investments and acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. The cost and duration of integrating newly acquired businesses could also materially exceed Reebonz’s expectations. Any such negative developments could have a material and adverse effect on Reebonz’s business, financial condition and results of operations.

 

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Reebonz may need additional capital, and financing may not be available on terms acceptable to it, if at all.

 

Reebonz may, from time to time, require additional cash resources. For example, Reebonz uses trust receipt loans to fund a portion of its ongoing liquidity requirements. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.” In the future, to fund Reebonz’s liquidity requirements, acquisitions, marketing efforts or other corporate actions, Reebonz may seek to obtain additional credit facilities or offer additional equity or debt securities for sale. The sale of additional equity securities could result in dilution of its existing shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict its operations. It is uncertain whether financing, if required, will be available in amounts or on terms acceptable to Reebonz, if at all, in the future. Any non-compliance with the terms of Reebonz’s financing agreements in the future could trigger the acceleration of other indebtedness and could make it more difficult and costly to obtain additional financing.

 

Reebonz’s major shareholders will have the ability to significantly influence the outcome of shareholder actions in its company.

 

Upon completion of the Business Combination and assuming no shares of DOTA Common Stock is redeemed for cash, Reebonz’s Co-Founder and Chief Executive Officer, Mr. Samuel Lim, will beneficially own approximately 16.9% of its ordinary shares and voting power. Furthermore, several of Reebonz’s shareholders are entities affiliated with the Singapore Government, namely Vertex Asia Growth Ltd., Vertex Asia Investments Pte. Ltd, MediaCorp Pte. Ltd. and SGInnovate, collectively will beneficially own approximately 19.3% of the ordinary shares after the business combination, assuming no shares of DOTA common stock is redeemed for cash. Their voting power gives those shareholders the ability to significantly influence actions that require shareholder approval under the laws of the Cayman Islands, the Articles of Association or NASDAQ requirements, including the election of Holdco’s board of directors, significant mergers and acquisitions and other business combinations, amendments to the Articles of Association, and amendments to the Holdco’s equity incentive plans.

 

Such concentration of voting control may cause transactions to occur that might not be beneficial to you, and may prevent transactions that would be beneficial to you. For example, such significant shareholders may prevent a transaction involving a change of control of the company, including transactions in which you might otherwise receive a premium for your securities over the then current market price. In addition, Reebonz’s major shareholders are not prohibited from selling a controlling interest in it to a third party and may do so without your approval and without providing for a purchase of your securities.

 

Reebonz does not own a majority of the shares in certain of its subsidiaries.

 

Reebonz operates its businesses in Korea and Thailand through subsidiaries that are not wholly owned by it. Reebonz owns, directly or indirectly, 58.4% of Reebonz Korea Co., Ltd. and a legal interest of 49% in Reebonz (Thailand) Limited. Pursuant to a shareholders agreement, Reebonz is entitled to appoint the majority of the directors of Reebonz Korea Co., Ltd. Revenues from Korea accounted for 19.6% of its revenue of 2017. The remaining 51% interest in Reebonz (Thailand) Limited is legally owned by local Thai shareholders who Reebonz has entered into loan agreements with and who have assigned their power to direct relevant activities and the right to variable returns to Reebonz. Revenues from Thailand accounted for 1.2% of its revenue in 2017. However, to the extent there are disagreements between Reebonz and the other holders of equity interests in its subsidiaries regarding the business and operations of these companies, Reebonz cannot assure you that it will be able to resolve them in a manner that will be in Reebonz’s best interests. Reebonz’s partners in its subsidiaries may be unable or unwilling to fulfill its obligations, whether of a financial nature or otherwise; have economic or business interests or goals that are inconsistent with it; take actions contrary to its instructions or requests, or contrary to its policies and objectives; take actions that are not acceptable to regulatory authorities; or experience financial difficulties. Furthermore, there are restrictions on foreign ownership in Thai companies and it is possible that regulatory authorities may challenge Reebonz’s ownership structure for Reebonz (Thailand) Limited and may deem such structure as non-compliant with applicable law. Any dispute or regulatory action that results in Reebonz’s inability to control these entities could result in Reebonz having to de-consolidate these entities in its results of operations. Any of the foregoing could have an adverse effect on Reebonz’s business, prospects, financial condition and results of operations. In addition, Reebonz may operate its business in other countries using similar arrangements in the future, which could impact Reebonz’s business and expose it to additional risks.

 

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Reebonz may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position.

 

Reebonz regards its trademarks, copyrights, domain names, know-how, proprietary technologies, and similar intellectual property as critical to its success, and it relies on a combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and non-compete agreements with its employees and others, to protect its proprietary rights. Although Reebonz is not aware of any copycat websites that attempt to cause confusion or divert traffic from it at the moment, Reebonz may become an attractive target to such schemes in the future because of its brand recognition in the online luxury retail industry in the Asia Pacific region. Despite these measures, any of its intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide it with competitive advantages. Further, because of the rapid pace of technological change in its industry, parts of Reebonz’s business rely on technologies developed or licensed by third parties, and it may not be able to obtain, or continue to obtain, licenses and technologies from these third parties at all or on reasonable terms. It may be difficult to register, maintain and enforce intellectual property rights in the jurisdictions in which Reebonz has operations. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to Reebonz for any such breach. Accordingly, Reebonz may not be able to effectively protect its intellectual property rights or to enforce its contractual rights. Policing any unauthorized use of its intellectual property is difficult and costly and the steps Reebonz takes may be inadequate to prevent the infringement or misappropriation of its intellectual property. In the event that Reebonz resorts to litigation to enforce its intellectual property rights, such litigation could result in substantial costs and a diversion of its managerial and financial resources, and could put its intellectual property at risk of being invalidated or narrowed in scope. Reebonz can provide no assurance that it will prevail in such litigation, and even if it does prevail, it may not obtain a meaningful recovery. In addition, Reebonz’s trade secrets may be leaked or otherwise become available to, or be independently discovered by, its competitors. Any failure in maintaining, protecting or enforcing Reebonz’s intellectual property rights could have a material and adverse effect on its business, financial condition and results of operations.

 

Reebonz does not have, and may be unable to obtain, sufficient insurance to insure against certain business risks. As a result, Reebonz may be exposed to significant costs and business disruption.

 

The insurance industry in certain jurisdictions where Reebonz operates is not yet fully developed, and many forms of insurance protection common in more developed countries are not available on comparable or commercially acceptable terms, if at all. Reebonz does not currently maintain insurance coverage for business interruption, product liability, or loss of key management personnel. Reebonz does not hold insurance policies to cover for any losses resulting from counterparty and credit risks and fraudulent transactions, nor for losses from cyberattacks, software failures and data loss. Reebonz’s lack of insurance coverage or reserves with respect to business-related risks may expose it to substantial losses. As to those risks for which Reebonz has insurance coverage, the insurance payouts Reebonz is entitled to in case of an insured event are subject to deductibles and other customary conditions and limitations. For instance, Reebonz stores a large volume of luxury goods in its seven logistics centers throughout the Asia Pacific region, and it cannot rule out the possibility that natural disasters, fire or theft would destroy valuable inventory in one or more logistics centers, in which case the damages it suffers may exceed the insurance payouts to which it would be entitled. This, and various other scenarios, if materialized, could materially and adversely affect Reebonz’s business, financial condition and results of operations.

 

Reebonz may be the subject of anti-competitive, harassing, or other detrimental conduct by third parties including complaints to regulatory agencies, negative blog postings, negative comments on social media and the public dissemination of malicious assessments of its business that could harm its reputation and cause it to lose market share, customers and revenues and adversely affect the price of Holdco’s ordinary shares.

 

In the future Reebonz may be the target of anti-competitive, harassing, or other detrimental conduct by third parties. Such conduct includes complaints, anonymous or otherwise, to regulatory agencies. Reebonz may be subject to government or regulatory investigation as a result of such third-party conduct and may be required to expend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that it will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Additionally, allegations, directly or indirectly against Reebonz, may be posted in internet chat-rooms or on blogs or websites by anyone, whether or not related to it, on an anonymous basis. Consumers value readily available information concerning retailers, manufacturers, and their goods and services and often act on such information without further investigation or verification and without regard to its accuracy. The availability of information on social media platforms and devices is virtually immediate, as is its impact. Social media platforms and devices immediately publish the content their subscribers and participants post, often without filters or checks on the accuracy of the content posted. Information posted may be inaccurate and adverse to Reebonz, and it may harm its financial performance, prospects or business. Given that the comments and posts on social media also tend to spread broadly and quickly, the harm may be immediate without affording Reebonz an opportunity for redress or correction. Reebonz’s reputation may be negatively affected as a result of the public dissemination of anonymous allegations or malicious statements about its business, which in turn may cause it to lose market share, customers and revenues and adversely affect the price of Holdco securities.

 

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Any natural or other disasters, including outbreaks of health epidemics, and other extraordinary events could severely disrupt Reebonz’s business operations.

 

Reebonz’s operations are vulnerable to interruption and damage from natural and other types of disasters, including earthquakes, fire, typhoons, floods, environmental accidents, power loss, communication failures and similar events. If any natural disaster or other extraordinary events were to occur in the area where Reebonz operates, its ability to operate its business could be seriously impaired. Reebonz’s business could be materially and adversely affected by any outbreak of H7N9 bird flu, H1N1 swine influenza, avian influenza, severe acute respiratory syndrome, or SARS, Ebola virus disease, Middle East respiratory syndrome, or MERS, or another epidemic. Any prolonged occurrence of these adverse public health developments in the Asia Pacific region could severely disrupt its business operations and adversely affect its results of operations. Reebonz’s operation could also be severely disrupted if its suppliers, buyers and sellers, or business partners are affected by such natural disasters or health epidemics.

 

Reebonz could face uncertain tax liabilities in various jurisdictions where it operates, and suffer adverse financial consequences as a result.

 

Reebonz believes it is in compliance with all applicable tax laws in the various jurisdictions where it is subject to tax, but its tax liabilities, including any arising from restructuring transactions, could be uncertain, and it could suffer adverse tax and other financial consequences if tax authorities do not agree with its interpretation of the applicable tax laws. Although Reebonz is domiciled in Singapore, Reebonz and its subsidiaries collectively operate in multiple tax jurisdictions and pay income taxes according to the tax laws of these jurisdictions. Various factors, some of which are beyond its control, determine its effective tax rate and/or the amount it is required to pay, including changes in or interpretations of tax laws in any given jurisdiction and changes in geographical allocation of income. Reebonz accrues income tax liabilities and tax contingencies based upon its best estimate of the taxes ultimately expected to be paid after considering its knowledge of all relevant facts and circumstances, existing tax laws, its experience with previous audits and settlements, the status of current tax examinations and how the tax authorities view certain issues. Such amounts are included in income taxes payable or deferred income tax liabilities, as appropriate, and are updated over time as more information becomes available. Reebonz believes that it is filing tax returns and paying taxes in each jurisdiction where it is required to do so under the laws of such jurisdiction. However, it is possible that the relevant tax authorities in the jurisdictions where it does not file returns may assert that it is required to file tax returns and pay taxes in such jurisdictions. There can be no assurance that Reebonz’s subsidiaries will not be taxed in multiple jurisdictions in the future, and any such taxation in multiple jurisdictions could adversely affect its business, financial condition and results of operations. In addition, Reebonz may, from time to time, be subject to inquiries from tax authorities of the relevant jurisdictions on various tax matters, including challenges to positions asserted on income and withholding tax returns. Reebonz cannot be certain that the tax authorities will agree with its interpretations of the applicable tax laws, or that the tax authorities will resolve any inquiries in its favor. To the extent the relevant tax authorities do not agree with its interpretation, Reebonz may seek to enter into settlements with the tax authorities which may require significant payments and may adversely affect its results of operations or financial condition. Reebonz may also appeal against the tax authorities’ determinations to the appropriate governmental authorities, but it cannot be sure it will prevail. If Reebonz does not prevail, it may have to make significant payments or otherwise record charges (or reduce tax assets) that could adversely affect its results of operations, financial condition and cash flows. Similarly, any adverse or unfavorable determinations by tax authorities on pending inquiries could lead to increased taxation on Reebonz that may adversely affect its business, financial condition and results of operations.

 

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Reebonz is subject to extensive government regulation in the countries where it operates, including regulations with respect to e-commerce, intellectual property rights, consumer protection and fair trade.

 

Reebonz is subject to extensive government regulation in the countries where it operates that cover many aspects of its sales practice. In particular, Reebonz is subject to laws relating to e-commerce, intellectual property rights, consumer protection and fair trade in jurisdictions such as Singapore, Australia, Hong Kong, South Korea and Taiwan. Reebonz may be subject to regulatory investigations by governmental agencies and may be subject to fines or sanctions by those governmental agencies or other claims from third parties in the event of non-compliance with relevant statutory or regulatory requirements. Any such claims or sanctions, including the costs of settling claims and operational impacts, could materially and adversely affect Reebonz’s business and results of operations. Reebonz’s business may also be materially and adversely affected by changes in laws or regulations that may be introduced concerning various aspects of its sale practices, including in relation to online content, e-commerce, foreign ownership of internet or retail companies operating in a particular jurisdiction, liability for third-party activities and user privacy.

 

Reebonz’s business and results of operations are also affected by taxation legislation and other fiscal policies adopted by the governments in the countries where it operates. For example, the sales of stock, financing and administration or management service arrangements between Reebonz and its Australian subsidiary must be consistent with the relevant provisions of Australian taxation laws relating to transfer pricing. Future changes in taxation laws or changes in the way in which taxation laws may be interpreted may adversely affect its business, financial position and results of operations.

 

Risks Related to Doing Business in Countries in Which Reebonz Operates

 

Developments in the social, political, regulatory and economic environment in Singapore, or other countries where Reebonz operates, may have a material and adverse impact on it.

 

Reebonz’s business, prospects, financial condition and results of operations may be adversely affected by social, political, regulatory and economic developments in countries in which it operates. Such political and economic uncertainties include, but are not limited to, the risks of war, terrorism, nationalism, nullification of contract, changes in interest rates, imposition of capital controls and methods of taxation. For example, Reebonz derives a substantial portion of its revenue from the Singapore market, and negative developments in Singapore’s socio-political environment may adversely affect its business, financial condition, results of operations and prospects. Although the overall economic environment in Singapore and other countries where it operates appears to be positive, there can be no assurance that this will continue to prevail in the future.

 

Disruptions in the international trading environment may seriously decrease Reebonz’s international sales.

 

The success and profitability of Reebonz’s international activities depend on certain factors beyond its control, such as general economic conditions, labor conditions, political stability, macro-economic regulating measures, tax laws, import and export duties, transportation difficulties, fluctuation of local currency and foreign exchange controls of the countries in which it sells its products, as well as the political and economic relationships among the jurisdictions where it sources products and jurisdictions where its customers are located. As a result, Reebonz’s services will continue to be vulnerable to disruptions in the international trading environment, including adverse changes in foreign government regulations, political unrest and international economic downturns. For example, certain countries in which Reebonz sells its products may require that its customers or freight forwarders obtain import licenses, and there can be no assurance that, where required, its customers or freight forwarders will be aware of or obtain such licenses. If licenses are not obtained by its customers or freight forwarders, this may subject its sales transactions to greater scrutiny and could result in more stringent regulations being applied to it in the future. It may also subject Reebonz to additional costs and expenses in the event it experiences returns and may cause it to lose existing customers or discontinue or re-design some of its fulfilment processes in some or all of its business lines in certain countries, all of which may materially and adversely affect Reebonz’s results of operations.

 

Any disruptions in the international trading environment may affect the demand for Reebonz’s products, which could impact its business, financial condition and results of operations.

 

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FORWARD-LOOKING STATEMENTS

 

DOTA believes that some of the information in this proxy statement/prospectus constitutes forward-looking statements. You can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,” “believe,” “estimate,” “intends,” and “continue” or similar words. You should read statements that contain these words carefully because they:

 

discuss future expectations;
   
contain projections of future results of operations or financial condition; or
   
state other “forward-looking” information.

 

DOTA believes it is important to communicate its expectations to its security holders. However, there may be events in the future that DOTA is not able to predict accurately or over which it has no control. The risk factors and cautionary language discussed in this proxy statement/prospectus provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by DOTA or Reebonz in such forward-looking statements, including among other things:

 

the number and percentage of its public stockholders voting against the business combination proposal and/or seeking redemption;
   
the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement ;
   
Holdco’s ability to maintain the listing of its securities on Nasdaq following the business combination;
   
changes adversely affecting the business in which Reebonz is engaged;
   
management of growth;
   
general economic conditions;
   
Reebonz’s business strategy and plans; and
   
the result of future financing efforts.

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus.

 

All forward-looking statements included herein attributable to any of DOTA, Reebonz or any person acting on either party’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, DOTA and Reebonz undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

Before a stockholder grants its proxy or instructs how its vote should be cast or vote on the business combination proposal, incentive compensation plan proposals, the share issuance proposal or the adjournment proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect DOTA, Holdco and/or Reebonz.

 

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SPECIAL MEETING OF DOTA STOCKHOLDERS

 

General

 

DOTA is furnishing this proxy statement/prospectus to DOTA’s stockholders as part of the solicitation of proxies by DOTA’s board of directors for use at the special meeting in lieu of annual meeting of DOTA stockholders to be held on              , and at any adjournment or postponement thereof. This proxy statement/prospectus provides DOTA’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

 

Date, Time and Place

 

The special meeting of stockholders will be held on               , at 10:00 a.m., eastern time, at the offices of Ellenoff Grossman & Schole LLP, DOTA’s counsel, at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105.

 

Purpose of the DOTA Special Meeting

 

At the special meeting, DOTA is asking holders of DOTA Common Stock to:

 

consider and vote upon a proposal to adopt the business combination agreement and approve the business combination contemplated by the Business Combination Agreement (business combination Proposal);

 

consider and vote upon proposal to approve the adoption of the 2018 Omnibus Equity Incentive Plan, the 2018 Reebonz Share Option Plan and the Management Performance Plan of Holdco (incentive compensation plan proposals);

 

consider and vote upon a proposal to approve issuances of 20% or more of DOTA’s common stock in connection with financing related to the proposed business combination (the share issuance proposal); and

 

consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated votes at the time of the special meeting, DOTA would not have been authorized to consummate the business combination (adjournment proposal).

 

Recommendation of DOTA Board of Directors

 

DOTA’s board of directors has unanimously determined that the business combination proposal is fair to and in the best interests of DOTA and its stockholders; has unanimously approved the business combination proposal; unanimously recommends that stockholders vote “FOR” the business combination proposal; “FOR” each of the incentive compensation plan proposals; unanimously recommends that stockholders vote “FOR” the share issuance proposal and unanimously recommends that stockholders vote “FOR” an adjournment proposal if one is presented to the meeting.

 

Record Date; Outstanding Shares; Stockholders Entitled to Vote

 

DOTA has fixed the close of business on ________, as the “record date” for determining DOTA stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on ___________, the Record Date, there were 7,575,000 shares of DOTA Common Stock outstanding and entitled to vote. Each share of DOTA Common Stock is entitled to one vote per share at the special meeting.

 

Pursuant to agreements with DOTA, the 1,437,500 Founder Shares held by the initial stockholder, the shares included in the 272,500 private units held by the initial stockholder and any shares of DOTA Common Stock acquired in the aftermarket by such stockholder, will be voted in favor of the business combination proposal. Such holder has indicated it intend to vote its shares in favor of the other proposals presented at the special meeting.

 

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Quorum

 

The presence, in person or by proxy, of a majority of all the outstanding shares of DOTA Common Stock entitled to vote constitutes a quorum at the special meeting.

 

Abstentions and Broker Non-Votes

 

Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to DOTA but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. The latter will not be treated as shares entitled to vote on the matter as to which authority to vote is withheld from the broker. If a stockholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on “non-routine” proposals, such as the business combination proposal and the incentive compensation plan proposals.

 

Vote Required

 

The approval of the business combination proposal, the incentive compensation plan proposals, the share issuance proposal and the adjournment proposal (if presented) will require the affirmative vote by the holders of a majority of the shares of DOTA Common Stock present and entitled to vote at the Special Meeting. Abstentions will have the same effect as votes “against” these proposals. Broker non-votes will have no effect on the vote on the business combination proposal and the incentive compensation plan proposals.

 

Voting Your Shares

 

Each share of DOTA Common Stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of DOTA Common Stock that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

There are two ways to vote your shares of DOTA Common Stock at the special meeting:

 

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by DOTA’s board “FOR” the business combination proposal, the incentive compensation plan proposals, the share issuance proposal and the adjournment proposal, if presented. Votes received after a matter has been voted upon at the special meeting will not be counted.

 

You Can Attend the Special Meeting and Vote in Person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way DOTA can be sure that the broker, bank or nominee has not already voted your shares.

 

If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the meeting and vote in person and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way DOTA can be sure that the broker, bank or nominee has not already voted your shares.

 

Stock Ownership of and Voting by DOTA Directors and Officers

 

Current DOTA directors and officers beneficially own an aggregate of 1,437,500 shares of DOTA Class F Common Stock and 218,000 DOTA Class A Common Stock. Each current director and officers has agreed to vote their shares of DOTA Common Stock in favor of the business combination proposal.

 

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Revoking Your Proxy

 

If you are a stockholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

you may send another proxy card with a later date;

 

you may notify DOTA’s secretary, in writing before the special meeting that you have revoked your proxy; or

 

you may attend the special meeting, revoke your proxy, and vote in person, as indicated above.

 

Who Can Answer Your Questions About Voting Your Shares

 

If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of DOTA Common Stock, you may call Aamer Sarfraz of DOTA at (713) 213-7061 or Morrow Sodali LLC, DOTA’s proxy solicitor, at (800) 662-5200 or (203) 658-9400 for banks and brokers.

 

Redemption rights

 

Holders of public shares may seek to convert their shares, regardless of whether they vote for or against the business combination proposal. Any stockholder holding public shares as of the record date may demand that DOTA convert such shares into a full pro rata portion of the trust account (which was $__ per share as of _________, the record date), calculated as of two business days prior to the anticipated consummation of the business combination. If a holder properly seeks redemption as described in this section and the business combination is consummated, DOTA will convert these shares into a pro rata portion of funds deposited in the trust account and the holder will no longer own these shares following the business combination.

 

DOTA’s Sponsor, officers and directors will not have redemption rights with respect to any shares of DOTA Common Stock owned by them, directly or indirectly.

 

DOTA stockholders who seek to convert their public shares are not required to vote for or against the business combination proposal in order to exercise their redemption rights. DOTA stockholders who do not vote with respect to the business combination proposal, including as a result of an abstention or a broker non-vote, may still convert their shares into cash. Holders may demand redemption no later than 5:00 p.m. Eastern Time on ______ (two(2) business days prior to the special meeting) by (A) either checking the box on their proxy card or by submitting their request in writing to Continental Stock Transfer & Trust Company, DOTA’s transfer agent and (B) delivering their stock, either physically or electronically using The Depository Trust Company’s DWAC System, to DOTA’s transfer agent. If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting stockholder. In the event the proposed business combination is not consummated this may result in an additional cost to stockholders for the return of their shares.

 

Any request to convert such shares, once made, may be withdrawn at any time up to the vote on the business combination proposal. Furthermore, if a holder of a public share delivered its certificate in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).

 

If the business combination is not approved or completed for any reason, then DOTA’s public stockholders who elected to exercise their redemption rights will not be entitled to convert their shares into a full pro rata portion of the trust account, as applicable. DOTA will thereafter promptly return any shares delivered by public holders. In such case, holders may only share in the assets of the trust account upon the liquidation of DOTA. This may result in holders receiving less than they would have received if the business combination was completed and they had exercised redemption rights in connection therewith due to potential claims of creditors. If DOTA would be left with less than $5,000,001 of net tangible assets as a result of the holders of public shares properly demanding redemption of their shares, DOTA will not be able to consummate the business combination.

 

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The closing price of DOTA Common Stock on the Record Date was $__. The cash held in the trust account on such date was approximately $_______ ($_ per public share). Prior to exercising redemption rights, stockholders should verify the market price of DOTA Common Stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. DOTA cannot assure its stockholders that they will be able to sell their shares of DOTA Common Stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their shares.

 

If a holder of public shares exercises its redemption rights, then it will be exchanging its shares of DOTA Common Stock for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption no later than the close of the vote on the business combination proposal, and deliver your stock certificate (either physically or electronically) to DOTA’s transfer agent prior to the vote at the meeting, and the business combination is consummated.

 

Appraisal Rights

 

None of the stockholders, unit holders, warrant holders or rights holders of DOTA have appraisal rights in connection the business combination under the DGCL.

 

Proxy Solicitation Costs

 

DOTA is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. DOTA and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. DOTA will bear the cost of the solicitation.

 

DOTA has hired Morrow Sodali LLC to assist in the proxy solicitation process.

 

DOTA will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. DOTA will reimburse them for their reasonable expenses.

 

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THE BUSINESS COMBINATION PROPOSAL

 

General

 

Holders of DOTA Common Stock are being asked to approve and adopt the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination. DOTA stockholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. Please see the section entitled “—The Business Combination Agreement” below, for additional information and a summary of certain terms of the Business Combination Agreement. You are urged to read carefully the Business Combination Agreement in its entirety before voting on this proposal.

 

Because DOTA is holding a stockholder vote on the Business Combination, DOTA may consummate the Business Combination only if it is approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of DOTA Common Stock as of the Record Date for the Special Meeting.

 

The Business Combination Agreement and Related Agreements

 

The subsections that follow this subsection describe the material provisions of the Business Combination Agreement, but do not purport to describe all of the terms of the Business Combination Agreement. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a copy of which is attached as Annex A hereto. Stockholders and other interested parties are urged to read the Business Combination Agreement carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the Business Combination.

 

The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates, which may be updated prior to the closing of the Business Combination. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in important part by the disclosure schedules attached thereto which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders. The disclosure schedules were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure schedules contain information that is material to an investment decision.

 

General Description of the Business Combination Agreement

 

On September 4, 2018, DOTA entered into the Business Combination Agreement with Holdco, Merger Sub, Reebonz, Draper Oakwood Investments, LLC, a Delaware limited liability company, in the capacity as the Purchaser Representative thereunder (the “Purchaser Representative”), and the shareholders of Reebonz named therein (the “Sellers”).

 

Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) Merger Sub will merge with and into DOTA, with DOTA continuing as the surviving entity, and with holders of DOTA securities receiving securities of Holdco, and (b) Holdco will (i) acquire all of the issued and outstanding capital shares of Reebonz from the Sellers in exchange for ordinary shares of Holdco, with Reebonz becoming a wholly-owned subsidiary of Holdco, and (ii) assume Reebonz’s outstanding options, warrants and other securities convertible into or that have the right to acquire Reebonz shares (the foregoing collectively, “Reebonz Convertible Securities”) (with equitable adjustments to the number and exercise price of such assumed Reebonz Convertible Securities) with the result that such assumed Reebonz Convertible Securities shall be exercisable or convertible into ordinary shares of Holdco (the transactions described in clauses (i) and (ii), the “Securities Exchange”, and together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Transactions”). The Reebonz options to be assumed by Holdco will also be amended so that (1) subject to approval by Holdco’s compensation committee, they may be exercisable on a cashless basis, (2) 50% of any unvested Reebonz options will vest at the Closing and the balance will vest on the one year anniversary of the Closing, (3) all vested options (including those that accelerate) expire 15 months after Closing, and (4) all remaining unvested options expire 90 days after the one year anniversary of the Closing.

 

The total consideration to be provided at the Closing by Holdco to the Sellers and the holders of in-the-money Reebonz Convertible Securities that are assumed by Holdco will be based on an enterprise value of Reebonz (the “Exchange Consideration” and the Holdco shares issuable to the Sellers, the “Exchange Shares”) of (i) US$252 million, less (ii) the aggregate amount of any outstanding indebtedness, net of cash and cash equivalents, of Reebonz and its subsidiaries (the “Target Companies”) as of the end of the last fiscal quarter for which there are auditor-reviewed financial statements as of the Closing, with the price per share of Reebonz shares determined on a fully diluted basis using such valuation. However, ten percent (10%) of the Exchange Shares otherwise issuable to the Sellers at the Closing (the “Holdback Shares”) will be held back and not issued until twelve (12) months after the Closing to the extent that the Holdback Shares are not used to satisfy the Sellers’ indemnification obligations under the Business Combination Agreement. For purposes of determining the number of Exchange Shares, each Holdco share will be valued at a price per share equal to the price at which each share of DOTA common stock is redeemed or converted pursuant to the redemption by DOTA of its public stockholders in connection with DOTA’s initial business combination, as required by its amended and restated certificate of incorporation (the “Redemption”).

 

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A calculation detailing the per share consideration as of the anticipated closing date to be received by holders of Reebonz securities in such a scenario pursuant to the Business Combination Agreement is provided in the table below:

 

Basic Exchange Consideration   $ 252,000,000    
Minus, Net Debt of Reebonz as of June 30, 2018        (57,723,000 )   
Plus, Aggregate Exercise Price of Outstanding In-the-Money Reebonz Options *     10,316,937    
Adjusted Exchange Consideration   $ 204,593,937    
Number of Fully-Diluted Reebonz Shares     35,526,897    
Per Share Price     $204,593,937 divided by 35,526,897 = $5.7588 per share
Redemption Price of DOTA Public Shares     $10.27 per share [as of anticipated closing date of the Business Combination]
Exchange Ratio       $5.7588/$10.27 = 0.5607

 

*In-the-Money Options refer to options with an exercise price less than the Per Share Price. Exercise prices of options held by certain former employees of Reebonz are estimated based on a blended rate of the remaining Reebonz options.

 

The table below illustrates the number of Holdco shares to be issued to Reebonz and DOTA security holders and their respective ownership percentages subsequent to the Business Combination assuming no redemption and maximum redemption and based on trust account balance as of November 30, 2018, the anticipated closing date, and indebtedness of Reebonz as of June 30, 2018. The number of shares and ownership percentages listed below are based on an estimated redemption price of $10.27 as of the anticipated closing date. Accordingly, these numbers may change if the redemption price at closing is different from the assumed redemption price used in the analysis.

 

    No Redemption     % Owned     Max Redemption     % Owned  
IPO Public Shares     6,325,000       22.5 %     3,112,917       12.5 %
Draper Shares     1,677,300       6.0 %     1,677,300       6.7 %
EBC Shares(1)     174,950       0.6 %     174,950       0.8 %
Reebonz Shares(2)(3)     19,921,519       70.9 %     19,921,519       80.0 %
Total     28,098,769       100.0 %     24,886,686       100.0 %

 

(1) Does not include shares underlying Unit Purchase Options.
(2) Include holdback shares and securities to be issued to holders of Reebonz in-the-money options on an as converted basis.
(3) Does not include any earnout shares to be issued under the Business Combination Agreement or any awards under the compensation plans to be approved at the Special Meeting.

 

In addition to the Exchange Consideration, the Sellers (but not holders of Reebonz Convertible Securities) will also have a contingent earnout right to receive up to an additional 1,000,000 Holdco shares (the “Earnout Shares”) after the Closing based on the consolidated revenues of Holdco and its subsidiaries, including the Target Companies, and Holdco’s stock price, during the calendar years 2019 and 2020 (each, an “Earnout Year”), as follows:

 

If during the calendar year ended December 31, 2019 (i) the consolidated revenue of Holdco and its subsidiaries (based on audited financial statements) is at least SGD$199,000,000 (Singapore Dollars), and (ii) the closing sale price of Holdco ordinary shares on its principal securities market equals or exceeds US$11.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)) for any 20 trading days within any 30 trading day period, then the Sellers shall be entitled to receive from Holdco, an earnout payment equal to 500,000 Earnout Shares.

 

If during the calendar year ended December 31, 2020 (i) the consolidated revenue of Holdco and its subsidiaries (based on audited financial statements) is at least SGD$290,000,000 (Singapore Dollars), and (ii) the closing sale price of Holdco ordinary shares on its principal securities market equals or exceeds US$13.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)) for any 20 trading days within any 30 trading day period, then the Sellers shall be entitled to receive from Holdco, an earnout payment equal to 500,000 Earnout Shares.

 

Both the revenue target and the stock price target must be met for the applicable Earnout Year; except that if the revenue target, but not the stock price target, is met for an Earnout Year, then if the stock price target for such Earnout Year is met in the subsequent year, the earnout payment for such Earnout Year will still be made promptly after it is determined in the subsequent year that such stock price target was met.

 

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Additionally, if after the Closing and prior to the later of (x) the 15 month anniversary of the Closing and (y) the 90th day after the 1 year anniversary of the Closing, there are any in-the-money Reebonz options assumed by Holdco that (i) were unvested at Closing and did not vest (and accordingly were forfeited) by such date or (ii) were not exercised prior to their expiration or termination, Holdco will issue to the Sellers (on a pro rata basis in accordance with their shareholdings immediately prior to the Closing) an additional number of Holdco shares equal to difference between the number of Holdco shares actually issued in exchange for Reebonz shares at the Closing and the number of shares that would have been issued to them had such unexercised options not been issued and outstanding at the time of the Closing.

 

The issuances of Holdco securities in connection with the share exchange will be exempted from registration under the Securities Act in reliance upon Section 4(a)(2) thereof because securities of Holdco will issued to a limited number of holders of Reebonz securities without involving a public offering. Such issuances will also be exempted from registration in reliance upon Regulation S of the Securities Act with regard to certain holders of Reebonz securities receiving Holdco securities who are qualified as non-U.S. persons thereunder.

 

Representations and Warranties

 

The Business Combination Agreement contains a number of representations and warranties made by DOTA and Holdco, on the one hand, and Reebonz and the Sellers, on the other hand, made solely for the benefit of the other, which in certain cases are subject to specified exceptions and materiality, Material Adverse Effect, knowledge and other qualifications contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to the Business Combination Agreement. “Material Adverse Effect” as used in the Business Combination Agreement means with respect to any specified person or entity, any fact, event, occurrence, change or effect that has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, results of operations, prospects or condition (financial or otherwise) of such person or entity and its subsidiaries, taken as a whole, or the ability of such person or entity or any of its subsidiaries on a timely basis to consummate the transactions contemplated by the Business Combination Agreement or the ancillary documents to which it is a party or bound or to perform its obligations thereunder, in each case subject to certain customary exceptions. The representations and warranties are customary for transactions similar to the Transactions.

 

In the Business Combination Agreement, Reebonz made certain customary representations and warranties to DOTA and Holdco, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary agreements; (3) capitalization; (4) subsidiaries; (5) governmental approvals; (6) non-contravention; (7) financial statements; (8) absence of certain changes; (9) compliance with laws; (10) permits and licenses; (11) litigation; (12) material contracts; (13) intellectual property; (14) taxes and returns; (15) real property; (16) personal property; (17) title to and sufficiency of assets; (18) employee matters; (19) benefit plans; (20) environmental matters; (21) transactions with related persons; (22) insurance; (23) suppliers; (24) ethical business practices; (25) Investment Company Act of 1940; (26) finders and brokers; (27) information supplied; and (28) disclosure. Each of the Sellers also made certain customary representations and warranties to DOTA and Holdco on a several and not joint basis, including representations and warranties related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary agreements; (3) ownership of the Reebonz shares to be acquired by Holdco; (4) governmental approvals; (5) non-contravention; (6) litigation; (7) investment representations; and (8) finders and investment bankers.

 

In the Business Combination Agreement, DOTA made certain customary representations and warranties to Reebonz and the Sellers, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary agreements; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) SEC filings and financial statements; (7) absence of certain changes; (8) compliance with laws; (9) litigation, orders and permits and licenses; (10) taxes and returns; (11) employees and employee benefit plans; (12) properties; (13) material contracts; (14) transactions with related persons; (15) Investment Company Act of 1940; (16) finders and investment bankers; (17) ethical business practices; (18) insurance; and (19) trust account. Additionally, Holdco also made certain customary representations and warranties to Reebonz and the Sellers, including representations and warranties related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary agreements; (3) governmental approvals; (4) non-contravention; (5) capitalization, (6) title and ownership of the Holdco shares to be issued to the Sellers; (7) Holdco and Merger Sub activities; (8) finders and investment bankers; and (9) Investment Company Act of 1940.

 

Covenants of the Parties

 

Each party agreed in the Business Combination Agreement to use its commercially reasonable efforts to effect the Closing. The Business Combination Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Business Combination Agreement and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms (the “Interim Period”), including covenants regarding (1) the provision of access to their properties, books and personnel, (2) the operation of their respective businesses in the ordinary course of business, (3) DOTA public filings and Reebonz’s interim financial statements, (4) no insider trading, (5) notifications of certain breaches, consent requirements or other matters, (6) efforts to consummate the Closing and obtain third party and regulatory approvals, (7) further assurances, (8) public announcements, (9) confidentiality, (10) retention of documents and information, (11) indemnification of directors and officers, (12) use of trust proceeds after the Closing, and (13) efforts to support a private placement, if sought. Each party also agreed not to solicit or enter into any alternative competing transactions during the Interim Period.

 

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The parties also agreed that they will take all necessary actions to cause Holdco’s board of directors immediately after the closing to be a classified board, with directors in each class serving three year terms, and consisting of 5 directors, 2 appointed by DOTA prior to the Closing (at least 1 of which will be independent under Nasdaq requirements) and 3 appointed by Reebonz prior to the Closing (at least 2 of which will be independent under Nasdaq requirements). The initial board after the Closing will designate the directors to serve until the annual meetings in the first, second and third years following the Closing. The parties also agreed that the individuals serving as the chief executive officer and chief financial officer of Reebonz will serve as the chief executive officer and chief financial officer of Holdco immediately after the Closing.

 

It is intended that Holdco will adopt three new equity incentive plans in connection with the Closing:

 

a plan to cover the options that are assumed from Reebonz at the Closing, which will be issued under substantially the same terms as they were immediately prior to the Closing, except with the amendments and modifications described in the second paragraph under the heading “General Terms, Effects and Consideration” above;

 

a management performance plan, which will provide for up to a total of 1,500,000 Holdco ordinary shares (subject to equitable adjustment) to be issued to participating management of Holdco and its subsidiaries if Holdco attains the same performance requirements for the 2019 and 2020 calendar years that apply to the Earnout Shares as described above (750,000 shares for each such calendar year); and

 

a public company equity incentive plan that will provide for awards relating to a number of Holdco shares equal to 10% of the aggregate number of Holdco shares issued and outstanding immediately after the Closing. 

 

DOTA and Holdco also agreed to prepare, with the assistance of Reebonz, and use their commercially reasonable efforts to file with the SEC a registration statement on Form F-4 in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”) of the issuance of securities of Holdco to the holders of the DOTA securities and containing a proxy statement/prospectus for the purpose of soliciting proxies from the stockholders of DOTA for the matters to be acted on at the special meeting of the stockholders of DOTA and providing such holders an opportunity to participate in the Redemption. The matters to be acted upon at such special meeting include (i) the Business Combination Agreement and transactions contemplated by the Business Combination Agreement, (ii) the adoption of the three equity incentive plans, as described above, (iii) the appointment, and designation of classes, of the members of the Holdco post-Closing and (iv) such other matters as Reebonz and DOTA shall mutually determine to be necessary or appropriate to effect the Transactions.

 

Conditions to Closing

 

The obligations of the parties to consummate the Transactions are subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the Business Combination Agreement and the transactions contemplated thereby and related matters by the requisite vote of DOTA’s stockholders; (ii) expiration of any waiting period under applicable antitrust laws; (iii) receipt of requisite regulatory approvals and specified third party consents; (iv) no law or order preventing or prohibiting the Transactions; (v) no pending litigation to enjoin or restrict the consummation of the Closing; (vi) DOTA having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption; (vii) the election or appointment of members to Holdco’s board of directors as described above; (viii) the effectiveness of the Registration Statement; and (ix) the assumption by Holdco of the Reebonz Convertible Securities, as described above.

 

In addition, unless waived by Reebonz, the obligations of Reebonz and the Sellers to consummate the Transactions are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of Purchaser and Holdco being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to Material Adverse Effect); (ii) Purchaser, Holdco and Merger Sub having performed in all material respects the respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the Closing; (iii) absence of any Material Adverse Effect with respect to Purchaser or Holdco since the date of the Business Combination Agreement which is continuing and uncured; (iv) the shareholders of Holdco will have adopted a new amended and restated memorandum and articles of association in substantially the form attached to the Business Combination Agreement; and (v) Purchaser, Holdco and the other parties thereto will have amended, in substantially the forms attached to the Business Combination Agreement, Purchaser’s Registration Rights Agreement and Stock Escrow Agreement that were entered into by Purchaser at the time of its initial public offering, to among other matters, have such agreements apply to Holdco and the Holdco securities to be received by Purchaser’s shareholders that are parties to such agreements.

 

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Unless waived by Purchaser and Holdco, the obligations of Purchaser, Holdco and Merger Sub to consummate the Transactions are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of Reebonz and the Sellers being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to Material Adverse Effect); (ii) Reebonz and the Sellers having performed in all material respects the respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the Closing; (iii) absence of any Material Adverse Effect with respect to any Target Company since the date of the Business Combination Agreement which is continuing and uncured; and (iv) the Lock-Up Agreements, Registration Rights Agreement, Non-Competition Agreements and acknowledgements from certain holders of Reebonz warrants and options shall be in full force and effect as of the Closing.

 

Termination

 

The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons: (i) by mutual written consent of DOTA, Holdco and Reebonz; (ii) by written notice by either DOTA or Reebonz if the Closing has not occurred on or prior to December 19, 2018, (iii) by written notice by either DOTA or Reebonz if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such order or other action has become final and non-appealable; (iv) by written notice by the Company for Purchaser’s, Holdco’s or Merger Sub’s uncured breach, such that the related closing condition would not be satisfied; (v) by written notice by Purchaser or Holdco for the Company’s or any Seller’s uncured breach, such that the related closing condition would not be satisfied; (vi) by DOTA or Holdco if there has been a Material Adverse Effect on any Target Company since the date of the Business Combination Agreement which is uncured and continuing; (vii) by written notice by either DOTA, Holdco or Reebonz if DOTA holds its stockholder meeting to approve the Business Combination Agreement and the Transactions and such approval is not obtained; and (viii) by written notice by Sellers holding at least 50.1% of Reebonz’s shares (on an as-converted to ordinary share basis) if the closing has not occurred on or prior to June 30, 2019.

 

If the Business Combination Agreement is terminated, all further obligations of the parties under the Business Combination Agreement (except for certain obligations related to publicity, confidentiality, fees and expenses, trust fund waiver, termination and general provisions) will terminate, and no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability for fraud or for willful breach of the Business Combination Agreement prior to termination. There are no termination fees in connection with the termination of the Business Combination Agreement. 

 

Survival, Indemnification and Escrow

 

Only certain fundamental representations and warranties of Reebonz and the Sellers (representations relating to organization and standing, authorization and binding effect, capitalization, subsidiaries, ownership of the Reebonz shares, and finders and brokers) (the “Fundamental Reps”) and fraud claims survive the Closing, which Fundamental Reps and fraud claims survive for a period of 12 months after the Closing. All other representations and warranties of the parties, including any representations and warranties of Purchaser and Holdco, terminate as of and do not survive the Closing. The covenants and agreements of the parties to be performed prior to the Closing do not survive the Closing, and after the Closing the parties have no obligations with respect thereto. The parties’ covenants and agreements to be performed after the Closing survive until fully performed.

 

From and after the Closing, the Sellers and their respective successors and assigns are required to indemnify Holdco, Purchaser, the Purchaser Representative and their respective affiliates and their respective officers, directors, managers, employees, successors and permitted assigns from and against any losses from (a) the breach of any of Fundamental Reps, (b) fraud claims, (c) the breach of any of Reebonz’s or the Sellers’ respective covenants or Purchaser’s or Holdco’s post-closing covenants, or (d) any actions by persons who were holders of equity securities (including options, warrants, convertible securities or other rights) of any Target Company entity prior to the Closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities.

 

Any indemnification claims will be solely satisfied using the Holdback Shares, with such indemnification being on a pro rata basis among all Sellers (based on ownership of Reebonz’s shares immediately prior to the Closing), except that a breach of a representation, warranty or covenant of, or fraud claims relating to, a Seller will be solely borne by that Seller.

 

Draper Oakwood Investments, LLC, DOTA’s sponsor, is serving as the Purchaser Representative under the Business Combination Agreement, and in such capacity will represent the interests of Holdco’s shareholders (other than the Sellers) after the Closing with respect to certain matters under the Business Combination Agreement, including the determination of any indemnification claims made against the Sellers.

 

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Trust Account Waiver and Seller Release

 

Reebonz and each of the Sellers have agreed that they and their affiliates will not have any right, title, interest or claim of any kind in or to any monies in DOTA’s trust account held for its public stockholders, and have agreed not to, and waived any right to, make any claim against the trust account (including any distributions therefrom).

 

Each Seller, on behalf of itself and its affiliates that own shares of such Seller, also provided a general release of the Target Companies, effective as of the Closing, other than its rights under the Business Combination Agreement and ancillary documents.

 

Governing Law and Dispute Resolution

 

The Business Combination Agreement is governed by New York law. Any disputes under the Business Combination Agreement, other than claims for injunctive or equitable relief (including specific performance to strictly enforce the terms of the Business Combination Agreement), will be subject to arbitration by the American Arbitration Association to be held in New York County, New York. Any claims that are brought before a court will be subject to the exclusive jurisdiction of the state and federal courts in New York, New York (and appellate courts thereof), and each party has waived its rights to a jury trial in connection therewith.

 

Related Agreements

 

This section describes the material provisions of certain additional agreements entered into or to be entered into pursuant to the Business Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, copies of each of which are attached hereto as part of Annex A. Stockholders and other interested parties are urged to read such Related Agreements in their entirety.

 

Lock-Up Agreement

 

On September 4, 2018, each Seller entered into a Lock-Up Agreement with Holdco and the Purchaser Representative (each, a “Lock-Up Agreement”) with regard the Exchange Shares to be received by such Seller, such Lock-Up Agreement to become effective upon the Closing. In such Lock-Up Agreement, each Seller agreed that such Seller will not, during the period commencing from the Closing and ending on the first anniversary of the Closing (or if earlier, the date on which Holdco consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Holdco’s shareholders having the right to exchange their equity holdings in Holdco for cash, securities or other property), subject to earlier release with respect to 50% of the Exchange Shares if the closing sale price of Holdco shares equals or exceeds $12.50 per share (as equitably adjusted) for any 20 trading days within any 30 trading day period commencing after the Closing (such period, the “Lock-Up Period”), (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to any of its Exchange Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of its Exchange Shares, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii). However, each Seller is allowed to transfer any of its Exchange Shares (other than its rights to the Holdback Shares prior to such shares being issued) by gift, will or intestate succession or to any immediate family member (or related trust), trustor or trust beneficiary, as a distribution to equity holders upon liquidation or to an affiliate or pursuant to a court order or settlement agreement in divorce; provided in each such case that the transferee thereof agrees to be bound by the restrictions set forth in the Lock-Up Agreement. Additionally, each Seller is permitted to encumber its Exchange Shares (other than Holdback Shares) during the Lock-Up Period, but such encumbrance can only be enforced after the Lock-Up Period.

 

Registration Rights Agreement

 

On September 4, 2018, Holdco, the Purchaser Representative and the Sellers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with respect to the Exchange Shares and Earnout Shares to be received by the Sellers, such Registration Rights Agreement to become effective upon the Closing. Under the Registration Rights Agreement, the Sellers have registration rights that will obligate Holdco to register for resale under the Securities Act all or any portion of their Exchange Shares and Earnout Shares (together with any securities issued as a dividend or distribution with respect thereto or in exchange therefor, the “Registrable Securities”), except that Registrable Securities that are subject to transfer restrictions in the Lock-Up Agreement may not be requested to be registered or registered until the end of the Lock-Up Period and the Holdback Shares may not be requested to be registered or registered until they are issued. Sellers holding a majority-in-interest of Registrable Securities will be entitled under the Registration Rights Agreement to make a written demand for registration under the Securities Act of all or part of the their Registrable Securities, and other Sellers holding Registrable Securities will be entitled to join in such demand registration. Subject to certain exceptions, if any time after the Closing, Holdco proposes to file a registration statement under the Securities Act with respect to its securities, under the Registration Rights Agreement, Holdco shall give notice to the Sellers holding Registrable Securities as to the proposed filing and offer them an opportunity to register the sale of such number of Registrable Securities as requested by them in writing, subject to customary cut-backs. In addition, subject to certain exceptions, Sellers holding Registrable Securities will be entitled under the Registration Rights Agreement to request in writing that Holdco register the resale of any or all of such Registrable Securities on Form S-3 and any similar short-form registration that may be available at such time. Under the Registration Rights Agreement, Holdco will indemnify the holders of Registrable Securities and certain persons or entities related to them, such as their officers, directors, employees, agents and representatives, against any losses or damages resulting from any untrue statement or omission of a material fact in any registration statement or prospectus pursuant to which they sell Registrable Securities, unless such liability arose from their misstatement or omission, and the holders of Registrable Securities, including Registrable Securities in any registration statement or prospectus, will agree to indemnify Holdco and certain persons or entities related to Holdco, such as its officers and directors and underwriters, against all losses caused by their misstatements or omissions in those documents. 

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Non-Competition Agreement

 

On September 4, 2018, certain Sellers who were executive officers or directors of Reebonz and held at least a 0.25% ownership interest in Reebonz each entered into a Non-Competition and Non-Solicitation Agreement (each, a “Non-Competition Agreement”) in favor of Holdco, DOTA and Reebonz and their respective present and future affiliates, successors and direct and indirect subsidiaries (collectively, the “Covered Parties”). Under each Non-Competition Agreement, for a period of two (2) years after the Closing (such period, the “Restricted Period”), the Seller party thereto has agreed that it will not and will not permit its affiliates to, without Holdco’s prior written consent, directly or indirectly engage in the business of online purchases and sales of luxury goods (the “Business”) (other than through a Covered Party) or own, manage or control, or participate in the ownership, management or control of, or become engaged or serve as an officer, director, member, partner, employee, agent, consultant, advisor or representative of, a business or entity (other than a Covered Party) that engages in the Business in Southeast Asia, South Asia, North Asia, Australia, the Middle East and in any other markets in which the Covered Parties are engaged, or are actively contemplating becoming engaged, in the Business as of the Closing Date or during the Restricted Period. However, such Seller and its affiliates will be permitted under its Non-Competition Agreement to own passive investments of less than 5% of the total issued and outstanding equity interests of a competitor, so long as such Seller and its affiliates and their respective equity holders, directors, officers, managers and employees that were involved with the business of any Covered Party are not involved in the management or control of such competitor. Under each Non-Competition Agreement, the Seller party thereto and its affiliates will also be subject to certain non-solicitation and non-interference obligations during the Restricted Period with respect to the Covered Parties’ respective (i) employees, consultants and independent contractors, (ii) customers, and (iii) vendors, suppliers, distributors, agents or other service providers. Each such Seller will also be subject to non-disparagement provisions regarding the Covered Parties and confidentiality obligations with respect to the confidential information of the Covered Parties.

 

Transaction and Organizational Structures prior to and following consummation of the Business Combination.

 

The following diagram illustrates the transaction structure of the Business Combination and Organizational Structures of the parties thereto.

 

Current Structure and Transactions

 

 

1.Merger: Merger Sub merges with and into DOTA, with DOTA surviving. Existing DOTA shareholders receive ordinary shares of Holdco on a one-for-one basis. Existing holders of DOTA rights receive 1/10th of an ordinary share of Holdco for each DOTA right. Existing holders of DOTA warrants receive a replacement warrant to purchase an equal number of ordinary shares of Holdco at the same price per share. Outstanding Holdco shares prior to the merger are cancelled and DOTA becomes a wholly-owned subsidiary of Holdco.
  
2.Securities Exchange: Reebonz shareholders exchange their shares of Reebonz for ordinary shares of Holdco (including contingent rights to receive additional shares after the closing). Outstanding Reebonz warrants and options are assumed by Holdco so that they are exercisable for ordinary shares of Holdco, with equitable adjustments to the number of shares and exercise price. Reebonz becomes a wholly-owned subsidiary of Holdco.
  
3.Name Change: Holdco changes its name to “Reebonz Holding Limited”.

 

* For a list of subsidiaries of Reebonz Limited and its ownership of each of these entities, please see the organizational structure chart in the section titled “Business of Reebonz.”

 

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The following diagram illustrates Holdco’s Organizational Structure following the consummation of the Business Combination.

 

Post-Closing Structure

 

 

*For a list of subsidiaries of Reebonz Limited and its ownership of each of these entities, please see the organizational structure chart in the section titled “Business of Reebonz.”

 

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Charter Documents of Holdco Following the Business Combination

 

Pursuant to the Business Combination Agreement, upon the closing of the Business Combination, Holdco’s memorandum and articles of association will be amended and restated promptly to:

 

  reflect necessary changes and to be consistent with the proposed amended charter (for a full description of the proposed amendments to the charter see “The Business Combination Proposal – Holdco’s Amended and Restated Memorandum and Articles of Association;” and

 

  make certain other changes that Holdco’s board of directors deems appropriate for a public operating company.

 

Name; Headquarters; Stock Symbols

 

After completion of the transactions contemplated by the business combination agreement:

 

the name of Holdco will be “Reebonz Holding Limited”;

 

the corporate headquarters and principal executive offices of Holdco will be located at 5 Tampines North Drive 5, #07-00, Singapore 528548, which are Reebonz’s current corporate headquarters; and

 

If Holdco’s applications for listing are approved, Holdco’s ordinary shares and warrants will be traded on Nasdaq under the symbols RBZ and RBZW, respectively.

 

Background of the Business Combination

 

The following is a discussion of DOTA’s formation, the background of DOTA’s previous attempts at a business combination, its negotiations with and evaluation of Reebonz, the Business Combination Agreement and related matters.

 

On September 19, 2017, DOTA closed its initial public offering of 5,000,000 units, with each unit consisting of one share of DOTA Class A Common Stock, one warrant to acquire one share of its common stock at a price of $11.50 and one right entitling the holder thereof to received one-tenth (1/10) of one share of DOTA Class A Common Stock. On September 27, 2017, DOTA consummated the sale of an additional 750,000 units which were subject to an over-allotment option granted to the underwriters of its initial public offering. The units from the initial public offering (including the over-allotment option) were sold at an offering price of $10.00 per unit, generating total gross proceeds of $57,500,000. Simultaneously with the consummation of the initial public offering and the exercise of the underwriters’ over-allotment option, DOTA consummated the private sale of 272,500 units to its initial stockholders and EBC and its designees, in each case at $10.00 per unit for an aggregate purchase price of $2,725,000.

 

Promptly following its initial public offering, DOTA commenced consideration of potential target businesses with the objective of consummating a business combination. DOTA sought out potential target businesses based on internal research and through the networks of relationships of DOTA’s management, board of directors and with professional service providers (lawyers, accountants, consultants, finders and investment bankers). DOTA educated these parties on its structure as a special purpose acquisition company and its criteria for an acquisition. DOTA also responded to inquiries from investment bankers or other similar professionals who represented companies engaged in a sale or financing process. On a regular basis, DOTA’s directors were updated with respect to the status of the business combination search. Input received from DOTA’s directors was material to its management’s evaluation of a potential business combination.

 

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From the closing of DOTA initial public offering through the signing of the exclusive letter of intent with Reebonz in April 2018, representatives of DOTA contacted and were contacted by a number of individuals and entities with respect to business combination opportunities and engaged with several possible target businesses in discussions with respect to potential transactions. A majority of these introductions were made through network of DOTA’s senior advisor Timothy Draper as well as network of funds within the Draper Venture Network, of which DOTA’s sponsor is a member.

 

During that period, Roderick Perry, Executive Chairman, Aamer Sarfraz, Chief Executive Officer and Chief Financial Officer and Ali Erfan, Vice Chairman of DOTA, as well as representatives of their team have identified and evaluated over 90 potential transactions from a wide range of industry segments including, among others, consumer products, retail, financial and technology.

 

Based on DOTA’s initial screening efforts and criteria selection, DOTA had substantial discussions with over 40 companies that were determined as appropriate targets. These discussions covered various aspects of potential business combinations such as target business operations, potential deal structures and considerations.

 

After discussions with these candidates, DOTA advanced to the next phase of the selection process and executed non-disclosure agreements with eleven companies in order for DOTA to receive and evaluate these companies’ financial information, access data rooms containing these companies’ materials and/or review other written and verbal confidential information. Upon further discussions and consideration of suitability of each potential target, DOTA executed letters of intent with two companies, including Reebonz and another potential target company. DOTA did not move forward with discussing a business combination with the other nine companies for one or more of the following reasons:

  

The inability of a target to prepare accounts audited to PCAOB standards in a timely manner;
A valuation expectation by a target that DOTA management believed to be excessive;
The lack of experience of a target’s management team in operating a publicly-listed company;
Growth projections by a target that DOTA management considered to be unrealistic;
Proposed deal terms that DOTA management considered to be unacceptable or that would not in the best interests of DOTA shareholders;
Concerns that a target was at too early a stage financially or operationally to justify a public listing;
Concerns regarding unproven or undeveloped technology of a target;
Risk of regulatory changes that could directly or indirectly affect a target’s business operations and financial condition;
Dependence of a target on third party suppliers or service providers, or on a limited number of customers; and
A competing financial offer for a target on terms that DOTA management determined would not be possible or reasonable to match.

   

In early 2018, simultaneously with its discussions with Reebonz, DOTA management team had several conference calls and meetings with the management of a potential target in the enterprise mobile message space and then provided this company a preliminary letter of intent on February 26, 2018. DOTA management team subsequently had several conference calls with this company’s management to discuss a potential transaction, redemption process and post-transaction governance matters. DOTA also discussed key aspects of the proposed transaction with its financial advisor and sought its input on market appetite for the deal. The parties executed a letter of intent on March 15, 2018 and subsequently continued their discussions on the proposed transaction. In April 2018, after having in-depth discussions with this target company, DOTA management discovered that this company had not finalized a potential customer relationship that would have had a material impact on its growth projections. Given such uncertainty and the limited timeframe for DOTA to consummate its initial business combination, DOTA decided not to pursue a business combination with this company.

 

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At the same time, after having in-depth discussions with Reebonz and conducting preliminary business diligence, DOTA’s management determined that Reebonz was a more suitable target based on DOTA’s criteria for selecting initial business combination target and ceased its efforts to pursue an opportunity with this company. The table below sets forth DOTA’s criteria for selecting a business combination target and Reebonz’s compatibility with such criteria:

 

DOTA Evaluation Criteria   Factors in Selecting Reebonz
A high-quality senior management team   Reebonz’s management team has a solid understanding of their business operations, a good reputation and disciplined use of equity capital in financing growth.
     
Review of past financial performance and metrics   Reebonz has had positive financial performance in terms of GMV, revenue, average order values, gross profit per online order, and efficiency of marketing investments.  
     
Assessment of future growth prospects   DOTA anticipates that, with access to the capital markets, Reebonz will be able to grow its business at attractive growth rates.  DOTA believes that Reebonz has a realistic path to profitability.
     
Demonstration of industry leadership   DOTA considered online luxury e-commerce to be an attractive sector, particularly in the Asia Pacific region, where DOTA believes both demands and online penetration are still growing in this sector.  Reebonz has been able to leverage data gathering to assist new product development and also developed thought leadership in the industry, an example being the publication of Reebonz’s annual luxury indices.
     
Promising innovation strategies   Reebonz has been able to turn buyers into sellers, and vice versa. Reebonz has also been able to develop promising strategies, such as its buy back guarantee.
     
An attractive valuation   Reebonz’s valuation expectations are at an attractive discount to public market comparable.
     
Strong references from investors, customers and suppliers   DOTA received positive feedback received in its interviews of Reebonz’s key investors, certain customers and suppliers.
     
Alignment with existing investors   It was DOTA’s strong preference to identify a business combination target whose existing investors were reputable and were not seeking to sell their shares at the time of combination.  Reebonz had well-known technology investors who indicated an interest in remaining investors.
     
Use of proceeds   Reebonz has reasonable expectations relating to the use of the funds it will receive in the business combination, particularly in areas of marketing and customer acquisition where it has demonstrated efficient customer acquisition.  

 

On February 9, 2018, Arun Batavia of Exit Strategy Partners, an independent M&A advisor to DOTA, introduced DOTA to Samuel Lim, co-founder and CEO, and Nupur Sadiwala, then the Head of Corporate Development, and currently the CFO of Reebonz. Also on this date, DOTA and Reebonz executed a non-disclosure agreement.

 

On February 10, 2018, Reebonz provided DOTA with a corporate presentation. Mr. Batavia of Exit Strategy Partners briefed DOTA on Reebonz’s deal expectations and a proposed timeline for a transaction after speaking with Reebonz’s management. Mr. Batavia also discussed considerations and potential transaction structures with DOTA. Representatives of Exit Strategy Partners continued to participate in the discussions between DOTA and Reebonz on a potential business combination that subsequently lead to the execution of the Letter of Intent discussed below.

 

On February 13, 2018, management teams of DOTA, Reebonz and Mr. Batavia of Exit Strategy Partners had a conference call to discuss transaction structure and deal process.

 

On February 14, 2018, DOTA reached out to DVN Singapore fund, a member of the Draper Venture Network, to seek feedbacks on reputation of Reebonz and its business.

 

On February 23, 2018, Mr. Sarfraz and Mr. Perry had a video call with Mr. Lim and Ms. Sadiwala to discuss Reebonz’s growth strategy.

 

On February 27, 2018, DOTA circulated its preliminary due diligence list to Reebonz.

 

On March 1, 2018, DOTA sent a draft Letter of Intent (“LOI”) to Reebonz.

 

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On March 2, 2018, DOTA, Reebonz and Exit Strategy Partners had a conference call to discuss the LOI.

 

From March 1 through March 5, 2018, Reebonz and DOTA had several conference calls and exchanged emails in connection with negotiating the terms of the LOI. In particular, on March 5, 2018, Reebonz provided its comments to LOI, and DOTA sent back a revised LOI in response to Reebonz’s comments on the LOI.

 

On March 5, 2018, Michael Sampoerna, a member of DOTA’s sponsor, visited Reebonz’s offices and conducted on-site diligence.

 

On March 5, 2018, a potential investor confirmed its willingness to support financing in connection with the potential business combination between DOTA and Reebonz.

 

On March 6, 2018, Reebonz sent additional comments to the revised LOI to DOTA.

 

On March 7, 2018, Reebonz sent DOTA a revised LOI and the parties executed the LOI.

 

Starting March 12, 2018, the DOTA and Reebonz deal teams had weekly calls to discuss deal progress.

 

On March 9, 2018, Reebonz provided DOTA and Ellenoff Grossman & Schole LLP, DOTA’s U.S. legal counsel (“EGS”) access to its data room for DOTA’s diligence review in connection the proposed business combination.

 

On March 13, 2018, DOTA management team and Reebonz management team had a conference call to discuss deal structure. Representatives of EGS, Marcum LLP, DOTA’s independent auditors, Skadden, Arps, Slate, Meagher & Flom LLP, Reebonz’s then legal counsel (“Skadden”) and Ernst & Young LLP, Reebonz’s then independent auditors also participated. The participants discussed various topics, including determination of the target company’s foreign private issuer (“FPI”) status and the implication of accounting requirements pre and post combination.  Based upon various precedents provided by legal counsel, the parties discussed the structure of a combination event between a domestic SPAC and FPI in detail.  It was agreed the EGS and Skadden would discuss two potential structures, seek input of tax advisors, and revert to larger group.

 

On March 13, 2018, Ali Erfan of DOTA met with EarlyBirdCapital, Inc. (“EBC”), DOTA’s financial advisor, in New York to discuss Reebonz transaction structure, status of transaction, and get their input on market for potential financing in connection with the proposed business combination. EBC advised DOTA on deal structure alternatives and also analyzed possibilities for financing based on trends in the Special Purpose Acquisition Corporation market.

 

On March 14, 2018, Mr. Sarfraz and Mr. Perry had a conference call with a representative of the Vertex Funds, a shareholder of Reebonz, to discuss diligence questions relating to Reebonz.

 

On March 15, 2018, Mr. Sarfraz, Mr. Perry and Mr. Erfan had a call with Reebonz’s management team to discuss next steps of the transactions.

 

On March 15, 2018, DOTA management had a call with another investor of Reebonz to discuss diligence questions relating to Reebonz.

 

On March 16, March 19 and March 20, 2018, DOTA had diligence calls with retailers on Reebonz’s platform.

 

On April 3, 2018, Tim Draper had a video conference with the Reebonz team to discuss various aspects of Reebonz’s business, industry, management and growth strategies.

 

On April 5 and April 6, 2018, Mr. Sarfraz and Mr. Perry visited Reebonz’s offices in Singapore to conduct on-site diligence.

 

On April 9, 2018, DOTA and Reebonz management teams had a conference call with Cowen, DOTA’s financial advisor in the proposed business combination, to discuss Reebonz’s financial metrics and GMV growth in comparison to its peers. The participants of the call also reviewed an industry-specific cohort analysis on Reebonz.

 

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On April 13, 2018, DOTA board had a conference call to discuss entering into an exclusivity agreement with Reebonz.

 

On April 20, 2018, DOTA and Reebonz management teams had a call to introduce Dentons Rodyk and Davidson LLP (“Dentons Rodyk”), Reebonz’s newly engaged legal counsel for the proposed business combination. Representatives of EGS and Dentons Rodyk participated in the call.

 

On April 27, 2018, DOTA and Reebonz executed first amendment to the LOI, which provided for exclusivity between the parties.

 

On May 9, 2018, DOTA and Cowen discussed a potential advisory engagement in connection with the proposed business combination and related financing.

 

On May 10, 2018, DOTA and EGS had a conference call to discuss due diligence review of Reebonz.

 

On May 14, 2018, Ms. Sadiwala, CFO of Reebonz, met with representatives of Cowen to further discuss Reebonz’s business model.

 

On May 15, 2018, Ms. Sadiwala, CFO of Reebonz, met with representatives of EBC to further discuss Reebonz’s business model.

 

On May 17, 2018, Ali Erfan of DOTA met with EBC and Cowen to discuss strategies of the transaction and deal timeline.

 

On June 8, 2018, DOTA had a call with EBC to discuss advisory services related to the proposed business combination.

 

On June 13, 2018, DOTA had a call with Reebonz to discuss draft business combination agreement.

 

On June 18 and June 21, 2018, DOTA had calls with Cowen to discuss status of the transaction.

 

On June 25, 2018, Reebonz provided Cowen with access to its data room for Cowen’s diligence in connection with the proposed business combination.

 

On June 27, 2018, DOTA executed an engagement letter with Cowen for advisory services in connection with the business combination and related financing.

 

On July 9 and July 10, 2018, Cowen visited Reebonz’s office in Singapore for on-site diligence. Cowen had meetings with Reebonz management teams and employees to discuss business model and other aspects of its business in detail.

 

On July 11, 2018, DOTA had a call with Reebonz to discuss valuation model, comparable and financial assumptions relating to the valuation of Reebonz. In particular, the participants of the call discussed valuations of comparable private and public companies in the e-commerce and luxury retail sectors and also went through GMV, revenue, operating expense and profitability assumptions.

 

On July 13 and July 16, 2018, DOTA had a call with Cowen to discuss transaction marketing strategy and timeline.

 

On July 20, 2018, DOTA had a call with Reebonz to discuss status of audit of Reebonz’s financials.

 

On July 25, 2018, DOTA had a call with Cowen to discuss Reebonz’s visit to New York.

 

During the week of July 30, 2018, Reebonz and DOTA met with several potential investors in New York. DOTA, Reebonz, EBC and Cowen also had several meetings to discuss the proposed transaction, valuation of Reebonz, comparable and also timing and strategy of the transaction. At such meetings, DOTA was presented with the audited financial statement of Reebonz for fiscal year 2017. DOTA reviewed the audited financials with Cowen and also revisited the preliminary valuation concluded in its prior valuation analysis. DOTA and Reebonz then discussed adjustments to such valuation based on Reebonz’s audited financials for fiscal year 2017 as well as feedback from potential investors. The parties agreed on a $252 million valuation of Reebonz. DOTA and Reebonz also discussed potential earnout provisions in connection with the business combination. After consulting Cowen, DOTA proposed both stock price thresholds and revenue targets for issuing earnout shares to Reebonz’s management. Such proposal was agreed upon by Reebonz.

 

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On August 9, 2018, DOTA and Reebonz had a call with Cowen to discuss feedback from prior meetings with investors.

 

During the months of July and August 2018, DOTA, Reebonz and their respective counsels negotiated and prepared the Business Combination Agreement and related agreements. Among other aspects, DOTA and Reebonz reconsidered the $25 million minimum cash condition in the LOI. The parties agreed that removing such provision will mitigate the risk of not being able to consummate a business combination due to the uncertainty surrounding trust account balance. In addition, the parties also discussed the size and classification of the post-closing board as well as tenure of each class and agreed on a board of 5 members with 2 to be designated by DOTA and 3 to be designated by Reebonz. DOTA and Reebonz then each presented the background of its candidates for such board seats and each party agreed to the other party’s designations.

 

On August 10, 2018, DOTA held a conference call with EGS to discuss outstanding points of the Business Combination Agreement.

 

On August 21 and August 22, 2018, DOTA held multiple conference calls with Reebonz to discuss outstanding points of the Business Combination Agreement, including earn-out provisions and forecasted transaction expenses.

 

On August 23, 2018, DOTA held a call with Vertex Funds to discuss status of the transaction and views of existing Reebonz shareholders on the proposed business combination terms.

 

On August 30, 2018, the DOTA board of directors held a meeting, at which the board approved the Business Combination Agreement, related agreements and transactions contemplated thereby.

 

On September 4, 2018, the Reebonz board of directors approved the Business Combination Agreement, related agreements and transactions contemplated thereby via written consent.

 

On September 4, 2018, shareholders of Reebonz approved the Business Combination Agreement, related agreements and transactions contemplated thereby via written consent.

 

On September 4, 2018, the Business Combination Agreement and related agreements were executed.

 

DOTA’s Board of Directors’ Reasons for Approval of the Business Combination

 

The consideration to be paid to the Reebonz shareholders in the business combination agreement was determined by several factors. DOTA’s board of directors reviewed various industry and financial data in order to determine that the consideration to be paid to Reebonz was reasonable and that the Business Combination was in the best interests of DOTA’s stockholders.

 

DOTA’s management conducted a due diligence review of Reebonz that included an industry analysis, an analysis of Reebonz’s existing business model, historical and projected financial results and a valuation analysis in order to enable its board of directors to ascertain the reasonableness of the consideration being paid. In particular, DOTA’s management used four methodologies to estimate a fair market value of Reebonz, including public market comparable analysis, private deal comparable analysis, discounted cash flows analysis and analysis of previous Reebonz funding rounds. Under each of these methodologies, DOTA’s management calculated a fair market value range and an un-weighted mean enterprise value estimate. DOTA’s management then identified in qualitative terms key elements of valuation upside that were not fully captured by each methodology and assigned relevance weightages to the fair market value under each valuation methodology. Based on the foregoing analysis, DOTA’s management then came up with the estimate fair market value of Reebonz. Cowen, DOTA’s financial advisor in the transaction, assisted DOTA’s management in the valuation process by providing public company financial data for the public market comparable analysis. Cowen also advised on the analysis of Reebonz’s indebtedness in connection with DOTA’s valuation of Reebonz and suggested deducting Reebonz’s net debt in calculating exchange consideration for the business combination. The foregoing valuation analysis and financial data in connection therewith were presented to DOTA’s board by key members of its management during board meeting and informal conference calls prior to the execution of the Business Combination Agreement.

  

In addition to the above valuation analysis, DOTA’s management, certain board members and advisors conducted on-site diligence of Reebonz during which they reviewed key aspects of Reebonz’s business operations such as technology programs and infrastructure for Reebonz’s online platform and conducted interviews of Reebonz’s management members, key customers, investors and vendor representatives. DOTA and its legal advisor also reviewed legal, accounting and other materials in the data room set up for the transaction and analyzed issues and risks discovered in this process. DOTA’s management then updated its board of directors on findings in the foregoing diligence process at meetings of the board as well as during conference calls with certain board members and also answered questions raised by board members in relation to diligence on Reebonz, transaction structures, valuation and consideration.

 

DOTA’s management and the members of its board of directors, has long and diverse experience in both operational management and investment and financial management and analysis and, in its opinion, was suitably qualified to conduct the due diligence and other investigations and analyses required in connection with DOTA’s search for a merger partner. A detailed description of the experience of DOTA’s board of directors is included in the section of this proxy statement/prospectus entitled “Other Information Related to DOTA – Directors and Executive Officers.”

 

Based on information provided by DOTA’s management and financial advisors as well as information collected in its own diligence of Reebonz, the DOTA board of directors concluded that the business combination agreement with Reebonz was in the best interests of DOTA’s stockholders. The DOTA board of directors considered a wide variety of factors in connection with its evaluation of the business combination. In light of the complexity of those factors, the DOTA board of directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its decision. In addition, individual members of the DOTA board may have given different weight to different factors.

 

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In considering the business combination, the DOTA board of directors gave considerable weight to the following factors:

 

  Market Leadership Across Multiple Geographies.  Reebonz has built a successful brand and diversified business across multiple countries in North Asia and Southeast Asia.  The majority of Reebonz’s revenue base is spread across two regions with approximately 46% from North Asia (China, South Korea, Taiwan, Hong Kong), and 33% from Southeast Asia (Singapore, Indonesia, Malaysia and Thailand). Understanding the intricacies of each of these local markets, as well as local consumer behavior, is an important competitive edge.  Over the years, Reebonz has developed a strong understanding of local markets in these countries, and has the ability to localize services including payments, deliveries, returns, and customer service. Reebonz has have also developed an operational capability in managing cross-border commerce across these geographies, including managing import/export requirements and exchange rate fluctuations.
     
  Compelling Market Opportunity.  The approximately $43 billion1 personal luxury goods market in Asia, excluding China and Japan, is large, with a rising middle and upper class, increasing brand awareness, and rapidly growing economy.  The increase in online demand for luxury goods has been approximately 27% CAGR since 2010.  DOTA believes that this trend will continue, and Asia Pacific consumers will continue to increase their buying and selling of luxury products online. E-commerce penetration is expected to increase to 6.4% by 2025 in Southeast Asia.2
     
  Unique Ecosystem.  Reebonz has developed a unique luxury ecosystem which caters to both buyers and sellers of new luxury goods, as well as buyers and sellers of pre-owned luxury goods.  This in turn creates a sticky ecosystem where buyers can be encouraged to become sellers. The Reebonz platform also caters to both business-to-consumer (B2C) customers as well as consumer-to-consumer (C2C) customers.  DOTA believes this provides the platform a broad product and customer range, with network effects.     
     
  A Trusted Brand.  Luxury products have frequently been targets of global counterfeiting.  Reebonz employs in-house ateliers, and uses various technologies, to combat counterfeiting.  This has resulted in consumers developing a trust for the Reebonz brand across their geographies, which takes years to develop.  Reebonz is currently advancing their blockchain authentication strategy, which can have a real impact on counterfeiting in luxury goods.
     
  Prominent & Committed Investors.  Reebonz has managed to attract venture capital over multiple rounds from top-tier investors including Vertex Ventures, Intel Capital, GGV Capital, and Matrix China.  Other investors include Mediacorp.   Our business combination is not an exit or liquidity event for any of these investors, and they will remain shareholders in the combined company.   
     
  Poised for Significant Growth. The board believes that with access to the capital markets, Reebonz is positioned for strong growth.  They have knowledge of the products and geographies which drive the highest ROI, and will continue to add more SKU’s and users.